600779083
Energy From the West
Policy Analysis Report
By
Science and Public Policy Program
University of Oklahoma
IrvinL. White Timothy A. Hall
Michael A. Chartock Edward J. Malecki
R. Leon Leonard Gary D. Miller
Steven C, Ballard Edward B. Rappaport
Frank J. Calzonetti Allyn R. Brosz
Michael D. Devine Robert W. Rycroft
MarkS. Eckert
Manager, Policy Analysis Report
Steven C. Ballard
Prepared for:
Office of Research and Development
U.S. Environmental Protection Agency
Project Officer:
Steven E. Plotkin
Office of Energy, Minerals and Industry
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DISCLAIMER
This report has been reviewed by the; Office of: Energy,
Minerals and Industry, U.S. Environmental Protection Agency, and
approved for publication. Approval does not signify that the
contents necessarily reflect the views and policies of the U.S.
Environmental Protection Agency, nor does mention of trade names
or commercial products constitute endorsement or recommendation
for use.
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FOREWARD
The production of electricity and fossil fuels inevitably
impacts Man and his environment. The nature of these impacts
must be thoroughly understood if balanced judgements concerning
future energy development in the United States are to be
made. The Office of Energy, Minerals and Industry (OEMI),
in its role as coordinator of the Federal Energy/Environment
Research and Development Program, is responsible for producing
the information on health and ecological effects - and
methods for mitigating the adverse effects - that is critical
to developing the Nation's environmental and energy policy.
OEMI's Integrated Assessment Program combines the results of
research projects within the Energy/Environment Program with
research on the socioeconomic and political/institutional
aspects of energy development, and conducts policy-oriented
studies to identify the tradeoffs among alternative energy
technologies, development patterns, and impact mitigation
measures.
The Integrated Assessment Program has supported several
"technology assessments" in fulfilling its mission. Assess-
ments have been supported which explore the impact of future
energy development on both a nationwide and a regional
scale. Current assessments include national assessments of
future development of the electric utility industry and of
advanced coal technologies (such as fluidized bed combustion).
Also, the Program is conducting assessments concerned with
multiple-resource development in two "energy resource areas":
o Western coal states
o Lower Ohio River Basin
This report, which reports the results of the analysis
of selected policy responses to the impacts likely to be
experienced when six energy resources are developed in eight
western states, is one of three major reports produced by
the "Technology Assessment of Western Energy Resource Develop-
ment" study. (The other two reports describe the technologies
111
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likely to be used and report impact analysis results.) Nine
major categories of problems and issues are analyzed in
separate chapters: water quality, water availability, air
quality, land use and reclamation, housing, growth manage-
ment, capital availability, transportation, and energy
facility siting. A final chapter discusses policy responses
available to policy makers at various levels of government,
in Indian Trades, and in the private sector.
We would like to receive your comments concerning this
report. Such comments will help us to improve the useful-
ness of the products produced by our Integrated Assessment
Program.
Steven R. Rez.n0k
Acting Deputy Assistant Administrator
for Energy, Minerals and Industry
IV
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PREFACE
This policy analysis report has been prepared as a part of
"A Technology Assessment of Western Energy Resource Development"
being conducted by an interdisciplinary research team from the
Science and Public Policy Program (S&PP) of the University of Ok-
lahoma for the Office of Energy, Minerals and Industry (OEMI),
Office of Research and Development, U.S. Environmental Protection
Agency (EPA). This study is one of several being conducted under
the Integrated Assessment Program established by OEMI in 1975.
Recommended by an interagency task force, the purpose of the Pro-
gram is to identify economically, environmentally, and socially
acceptable energy development alternatives. The overall purposes
of this particular study are to identify and analyze a broad range
of consequences of energy resource development in the western U.S.
and to evaluate and compare alternative courses of action for
dealing with the problems and issues either raised or likely to
be raised by development of these resources.
The Project Director was Irvin L. (Jack) White, Assistant
Director of S&PP and Professor of Political Science at the Univer-
sity of Oklahoma. White is now Special Assistant to Dr. Stephen J.
Gage, EPA's Assistant Administrator for Research and Development.
Michael D. Devine, Professor of Industrial Engineering and Direc-
tor of S&PP, served as Project Director during the final stages
of writing this report. Steven C. Ballard, Research Fellow in
S&PP and Assistant Professor of Political Science has had primary
management responsibility for producing this report. EPA Project
Officer is Steven E. Plotkin, Office of Energy, Minerals, and In-
dustry, Office of Research and Development. Michael A. Chartock,
Associate Professor of Zoology and Research Fellow in S&PP and
R. Leon Leonard, now a senior scientist with the Radian Corpora-
tion in Austin, Texas, formerly an Associate Professor of Aero-
space, Mechanical, and Nuclear Engineering, and Research Fellow
in S&PP, were Co-Directors of the Research Team. Other S&PP team
members are: Edward J. Malecki, Assistant Professor of Geography;
Edward B. Rappaport, Visiting Assistant Professor of Economics;
Frank J. Calzonetti, Research Associate (Geography); Timothy A. .
Hall, Research Associate (Political Science); Gary D. Miller,
Graduate Research Assistant (Civil Engineering and Environmental
Sciences); Allyn R. Brosz, Graduate Research Assistant (Political
Science); and Mark S. Eckert, Graduate Research Assistant (Geog-
raphy) . Professors Malecki and Rappaport are also Research Fellows
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in S&PP. Robert W. Rycroft, Assistant Professor of Political
Science, University of Denver, Larry W. Parker, Research Assistant
(Political Science), and Phil Kabrich, Research Assistant (Polit-
ical Science) also participated as team members in the preparation
of this final report.
Don E. Kash, former Director of S&PP and Professor of Polit-
ical Science and now serving as Chief of the Conservation Division
of the U.S. Geological Survey, assisted the "team in a number of
ways.
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ABSTRACT
This is a report of the results of policy analyses conducted
as a part of a three-year "Technology Assessment of Western En-
ergy Resource Development." The study examines the development
of six energy resources (coal, geothermal, natural gas, oil, oil
shale, and uranium) in eight western states (Arizona, Colorado,
Montana, New Mexico, North Dakota, South Dakota, Utah, and Wyo-
ming) during the period from the present to the year 2000. Pre-
viously published reports have described the analytical struc-
ture and conduct of the study and reported results of a prelimi-
nary analysis of the impacts that are likely to result when west-
ern energy resources are developed. This report: relates those
impacts to the social and political context within which this de-
velopment is and will be taking place. Part I describes the
national and regional context; Part II describes how the policy
analyses were performed and reports the- results of analyses of
nine major problem and issue categories: Water Quality, Water
Availability, Air Quality, Land Use, Housing, Planning and Growth
Management, Capital Availability, Transportation, and Energy Facil-
ity Siting; and Part III identifies and discusses problems and
issues which, cut across either several or all of the separate
problems and issues analyzed in Part II.
v -c
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TABLE OF CONTENTS
ENERGY FROM THE WEST: POLICY ANALYSIS REPORT
Page
Disclaimer ^
Foreword 4,4.4,
Preface \j
Abstract vJ,
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Table of Contents (cont.) Page
2.2 AN OVERALL CHARACTERIZATION OF THE EIGHT-STATE
STUDY AREA 24
2.2.1 Natural Resources 25
2.2.2 Population 31
2.2.3 The Economy 32
2.2.4 Public Values and Attitudes 33
2.2.5 Western Attitudes Toward Energy Resource
Development 33
2.2.6 Summary 35
2.2.7 Organization of This Chapter 35
2.3 ENERGY TECHNOLOGIES AND DEVELOPMENT ALTERNATIVES 36
2.4 NATIONAL AND STATE POLICIES AND WESTERN ENERGY
RESOURCE DEVELOPMENT 45
2.4.1 Introduction 45
2.4.2 Energy, Environmental, and Economic Policies 45
2.4.3 Other Policies 52
2.5 RELATIONSHIPS WHICH HELP TO SHAPE THE REGIONAL
CONTEXT OF WESTERN ENERGY RESOURCE DEVELOPMENT 54
2.5.1 Introduction 54
2.5.2 Public-Private Sector Relationships 54
2.5.3 Intergovernmental Relationships in Western
Energy Resource Development 55
2.6 SUMMARY 63
PART II: AN ANALYSIS OF WESTERN ENERGY RESOURCE
DEVELOPMENT PROBLEMS AND ISSUES 65
CHAPTER 3: POLICY ANALYSIS IN THE WESTERN ENERGY STUDY
3.1 INTRODUCTION 66
3.2 TECHNOLOGY ASSESSMENT AS APPLIED POLICY ANALYSIS 66
3.2.1 Introduction 66
3.2.2 Conceptual Framework 67
3.2.3 Interdisciplinary Core Team 'Approach 67
3.2.4 The Phases of a Technology Assessment 69
3.2.5 Policy Analysis in the Integrative Phase 73
CHAPTER 4: WATER AVAILABILITY
EXECUTIVE SUMMARY 86
4.1 INTRODUCTION 94
4.2 WATER AVAILABILITY PROBLEMS AND ISSUES 95
4.2.1 The Water Availability Impacts of Energy Resource
Development 95
4.2.2 The Context of Water Availability Issues 104
4.2.3 Summary 122
4.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES 123
4.3.1 Introduction 123
4.3.2 Description of Alternatives 125
-ex.
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Table of Contents (cent.) Paae
4.3.3 Evaluation of Alternatives 131
4.4 SUMMARY AND COMPARISON OF WATER AVAILABILITY
ALTERNATIVES 164
CHAPTER 5: WATER QUALITY
EXECUTIVE SUMMARY 169
5.1 INTRODUCTION 176
5.2 WATER QUALITY PROBLEMS AND ISSUES 177
5.2.1 The Water Quality Impacts of Energy Resource
Development 177
5.2.2 The Context of Water Quality Issues in the West 180
5.2.3 Summary 192
5.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES
FOR WATER QUALITY 194
5.3.1 Introduction 194
5.3.2 Description of Alternatives and Implementation
Strategies 196
5.3.3 Evaluation of Alternatives 202
5.3.4 Summary and Comparison of Alternatives 217
CHAPTER 6: AIR QUALITY
EXECUTIVE SUMMARY 223
6.1 INTRODUCTION 231
6.2 AIR QUALITY PROBLEMS AND ISSUES 232
6.2.1 Technological and Locational Factors Affecting
Air Quality Impacts 232
6.2.2 Site-Specific and Regional Air Quality Impacts 241
6.2.3 The Social and Political Context of Air Quality
Issues in the West 245
6.2.4 Summary of Air Quality Problems a.id Issues 271
6.3 ALTERNATIVE POLICIES FOR AIR QUALITY 273
6.3.1 Introduction 273
6.3.2 Description of the Alternatives 273
6.3.3 Evaluation of the Alternatives 281
CHAPTER 7: LAND USE AND RECLAMATION
EXECUTIVE SUMMARY 318
7.1 INTRODUCTION 327
7.2 LAND-USE AND RECLAMATION PROBLEMS AND ISSUES 329
7.2.1 The Land-Use Impacts oi Energy Resource
Development 329
7.2.2 The Context of Land-Use and Reclamation Issues
in the West 343
7.2.3 Summary 365
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Tnble of Contents (cont.) Page
/,J ALTERNATIVE POLICIES FOR LAND USE AND RECLAMATION 369
7.5.1 Introduction 369
7.3.2 Description of Alternatives 370
7.3.3 Evaluation of Alternatives 372
CHAPTER 8: HOUSING
SUMMARY 399
8.1 INTRODUCTION 407
8.1.1 The Population Growth Impacts of Energy
Resource Development 410
8.1.2 Effects on the Quality of Life 414
8.1.3 Organization of the Paper 415
8.2 THE CONTEXT OF HOUSING ISSUES IN THE WEST 415
8.2.1 Housing Financing and Construction 416
8.2.2 Housing Quality 427
8.2.3 Summary 436
8.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES
FOR HOUSING 436
8.3.1 Introduction 436
8.3.2 Evaluation of Alternatives 444
8.4 SUMMARY AND COMPARISON OF HOUSING ALTERNATIVES 456
CHAPTER 9: GROWTH MANAGEMENT
EXECUTIVE SUMMARY 462
9.1 INTRODUCTION 469
9.1.1 The Population Growth Impacts of Energy
Resource Development 469
9.1.2 Effects on the Quality of Life 471
9.1.3 Organization of the Paper 473
9.2 THE CONTEXT OF LOCAL GROWTH MANAGEMENT ISSUES
IN THE WEST 473
9.2.1 Financial Problems and Assistance 476
9.2.2 Health Services and Social Services 489
9.2.3 Planning Responses 493
9.2.4 Summary of Local Services and Facilities Issues 503
9.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES
FOR GROWTH MANAGEMENT 504
9.3.1 Introduction 504
9.3.2 Description of Alternatives 506
9.3.3 Evaluation of Alternatives 516
9.4 SUMMARY AND COMPARISON OF GROWTH MANAGEMENT
ALTERNATIVES 531
9.4.1 How Much Impact Assistance Would These Alter-
natives Provide? 536
9.4.2 What Will These Alternatives Cost? 536
9.4.3 Who Bears the Costs, Risks, and Benefits? 536
X.-L
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Table of Contents (cont.) Page
9.4.4 How Flexible Are the Alternatives? 537
9.4.5 Can These Alternatives Be Implemented? 537
CHAPTER 10: CAPITAL AVAILABILITY
EXECUTIVE SUMMARY 539
10.1 INTRODUCTION 545
10.2 CAPITAL AVAILABILITY PROBLEMS AND ISSUES 546
10.2.1 The Capital Availability Impacts of Western
Energy Resource Development 546
10.2.2 The Context of Capital Availability Issues in
the West 549
10.2.3 Summary 573
10.3 ALTERNATIVE POLICIES FOR CAPITAL AVAILABILITY 574
10.3.1 Introduction 574
10.3.2 Description of Alternatives 576
10.3.3 Evaluation of Alternatives 581
CHAPTER 11: TRANSPORTATION
EXECUTIVE SUMMARY 603
11.1 INTRODUCTION 610
11.2 TRANSPORTATION PROBLEMS AND ISSUES 611
11.2.1 Transportation Impacts of Energy Resource
Development 611
11.2.2 The Context of Transportation Issues in the
West 612
11.2.3 Summary of Problems and Issues 652
11.3 POLICY ALTERNATIVES FOR TRANSPORTATION 653
11.3.1 Introduction 653
11.3.2 Description of Alternatives 655
11.3.3 Evaluation of Alternatives 659
11.3.4 Summary Evaluation 682
CHAPTER 12: ENERGY FACILITY SITING
EXECUTIVE SUMMARY 686
12.1 INTRODUCTION 690
12.2 ENERGY FACILITY SITING PROBLEMS AND ISSUES 693
12.2.1 Siting Impacts of Energy Resource Development 693
12.2.2 The Context of Facility Siting Issues in the
West 697
12.2.3 Summary 717
12.3 ALTERNATIVE POLICIES FOR ENERGY FACILITY SITING 718
12.3.1 Introduction 718
12.3.2 Description of Alternatives 720
1.2.3.3 Assessment of Alternatives 736
12.3.4 Summary and Comparison of Alternatives 762
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Table of Contents (cont.) Page
CHAPTER 13: SUMMARY AND OVERVIEW
13.1 INTRODUCTION 766
13.2 KEY CHARACTERISTICS OF THE POLICYMAKING SYSTEM 766
13.3 CONTROLLING THE CONSEQUENCES OF WESTERN ENERGY
RESOURCE DEVELOPMENT 768
13.3.1 Introduction 768
13.3.2 Local Governments 769
13.3.3 State Governments 776
13.3.4 Indians 787
13.3.5 Federal Responses 791
13.3.6 Energy Developers 804
13.4 Summary 809
GLOSSARY 812
XX,-CX,
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LIST OF FIGURES
Page
1 The Eight-State Study Area and Six Sites 2
2-1 General Distribution of Coal, Crude Oil/Natural
Gas, Geothermal, Oil Shale, and Uranium Resources
in Eight Western States 30
3-1 A Conceptual Framework for Assessing Physical
Technologies 68
3-2 The Phases of a Technology Assessment 69
3-3 The Descriptive Phase 70
3-4 The Interactive Phase 72
3-5 Policy Analysis: Step 1 74
3-6 Policy Analysis: Step 2 76
3-7 Policy Analysis: Step 3 80
4ES-1 Water Requirements for Energy Conversion
Technologies 87
4ES-2 Projections of Water Requirements and
Availability in Colorado River, Year 2000 88
4-1 Major Surface Waters Impacted by Western Energy
Resource Development 96
4-2 Water Requirements for Energy Conversion
Technologies 98
4-3 Estimates of Average Flow in Colorado River 101
4-4 Projections of Water Requirements and Availability
in Colorado River, Year 2000 103
4-5 Western Rivers in Relation to Indian Reservation 113
5ES-1 Effluents from Technologies 170
5-1 Effluents from Technologies 178
6-1 Growth of Sulfur Dioxide Emissions in the Nominal
Dirty Scenario 244
6-2 Mandatory Class I Areas Under the 1977 Clean Air
Act Amendments 255
7ES-1 Land Use by Technology 319
7ES-2 Elements of Land Use Demand 320
7-1 Major Back-Country Areas Likely to Receive
Increased Pressure Due to Energy Development 336
7-2 Elements of Land Use Demand 367
8ES-1 Personnel Requirements for Coal Gasification
Plant Construction 400
8-1 Personnel Requirements for Coal Gasification
Plant Construction and Impacts from Various
Schedules 412
xx, v
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List of Figures (cont.) Page
8-2 Typical Sequence of Housing Development 417
13-1 Projected Tax Revenues for Governmental
Jurisdictions in Campbell County Wyoming (2000) 773
Annual Energy Tax and Property Tax Revenues,
year 2000 777
LIST OF TABLES
1 Development Alternatives 2
1-1 U.S. Energy Consumption, 1950-1977 6
1-2 U.S. Energy Consumption by Economic Sectors 7
1-3 Public Attitudes Concerning Who Caused and Is
Responsible for Energy Shortages 8
2-1 Proven Reserves of Six Energy Resources in the
Eight-State Study Area 28
2-2 Federal and Indian Lands in the Eight-State
Study Area 31
2-3 Coal Resource Development Alternatives 37
2-4 Geothermal Resource Development Alternatives 39
2-5 Uranium Development Alternatives 40
2-6 Oil Shale Resource Development Alternatives 41
2-7 oil and Natural Gas Development Alternatives 42
2-8 Low and Nominal Demand Case Scenarios of Western
Energy Resource Production 43
2-9 State Mineral Severance Taxes 53
3-1 Interest arid Values Checklist 77
3-2 Major Potential Interest and Value Conflicts 78
3-3 Water Availability Alternatives 81
3-4 Evaluation Criteria 83
4ES-1 Water Availability Alternatives 90
4-1 Interstate Compacts and Agreements 107
4-2 Water Availability Alternatives 124
4-3 Implementation Strategies for Increasing
Water Supply 126
4-4 Implementation Strategies for Increasing Use of
Existing Supplies 129
4-5 Evaluative Criteria and Measures 133
4-6 Summary Evaluation of Augmentation Alternatives 143
4-7 Water Consumption and Potential Savings for Coal
Conversion Technologies 147
4-8 Economic Costs of Cooling Water Savings 152
4-9 Summary Evaluation of Conservation Alternatives 160
4-10 Summary and Comparison of Water Availability
Alternatives 165
•1 Water Quality Alternatives 173
•1 Current Federal Effluent Regulations 184
•2 Water Quality Alternatives 195
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List of Tables (cont.) Page
5-3 Implementation Strategies for Improving Water
Quality Controls 197
5-4 Implementation Strategies for Treating Return
Flows 203
5-5 Evaluative Criteria for Water Qua.lity Alternatives 204
5-6 Economic Costs of Controlling Pollution -Sources 208
5-7 Summary Evaluation of Alternatives for Controlling
Pollution Sources - 213
5-8 Summary Evaluation of Alternatives to Treat
Surface Waters 218
5-9 Summary and Comparison of Water Quality
Alternatives 219
6ES-1 Air Quality Policy Alternatives 227
6-1 Air Emissions for Standard Size Energy Facilities 234
6-2 Air Emissions on an Equivalent Energy Basis 236
6-3 Heat and Sulfur Characteristics of Selected
Western Coals 239
6-4 Sulfur Removal Efficiencies Required for Coal-Fired
Power Plants to Meet all Federal and State Sulfur
Dioxide Standards 242
6-5 Worst-Case, Short-Term Visibility Impacts 243
6-6 Chronology of Major Federal Air Quality Laws
Affecting Energy Development 248
6-7 State Sulfur Dioxide Emission Standards for
Coal-Fired Boiler 252
6-8 National Ambient Air Quality Standards 254
6-9 Prevention of Significant Deterioration Regulation
Allowable Increments 257
6-10 Separation Distances from Class I Areas Required
to Meet Prevention of Significant Deterioration
Regulations for Sulfur Dioxide: 30 Percent
Sulfur Dioxide Control 265
6-11 Policy Alternatives for Air Quality Problems
and Issues 274
6-12 Modify Regulations and Standards: Specific
Alternatives, Implementation Strategies, and
Constraints 275
6-13 Implementation Strategies and Constraints for
Siting Alternatives 278
6-14 Improve Procedural Mechanism for Approving New
Facilities: Specific Alternatives, Implementation
Strategies, and Constraints 280
6-15 Evaluative Criteria and Measures for Air Quality
Policy Options 283
6-16 Regional Steam Coal Production Estimates 285
6-17 Regional Sulfur Dioxide Emission Estimates from
Power Plants 287
6-18 Electricity Price Impacts of 90 Percent Sulfur
Dioxide Control: Moderate Growth Scenario 289
X.V-L
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List of Tables (cont.) Page
6-19 Projections of Sludge Produced and Water Consumed
by Flue Gas Desulfurization Systems: 1995, High
Demand Scenario 290
6-20 Return on Equity for Electric Utilities Under
Alternate Scenarios, 1985-1995 292
6-21 Interest Coverage Ratios for Electric Utilities
Under Alternative Scenarios, 1985-1995 292
6-22 Summary of Evaluation of Best Available. Control
Technology 294
6-23 Summary of Evaluation of Smaller Facilities
Alternative 304
6-24 Summary of Evaluation of Commercialization Program 309
6-25 Summary of Evaluation of Siting Task Force
Alternative 312
7ES-1 Land Use for Mines for Six Specific Locations 320
7ES-2 Policy Alternatives for Land Use and Reclamation 324
7-1 Land Use by Technology 330
7-2 Acreage Disturbed by Coal Surface Mining 332
7-3 Permanent Population Increases After 1975 Due
to Energy Development in Eight-State Region 334
7-4 Land Use for Mines for Six Specific Locations 339
7-5 Precipitation Averages in the West 340
7-6 Comparison of State Surface Mining Reclamation Laws 354
7-7 Selected Requirements of the Surface Mining Control
and Reclamation Act of 1977 357
7-8 Summary of Reclamation Management Provisions by
Resource 359
7-9 State Recreation and Management Agencies 366
7-10 Land-Use and Reclamation Objectives and Policy
Alternatives , 371
7-11 Evaluation Criteria and Measures for Reclamation
and Rehabilitation 374
7-12 Implementation Strategies and Constraints for
Reclamation 376
7-13 Estimates of Reclamation Costs in the West, 1977 379
7-14 A Summary Evaluation of the Reclamation Alternative 384
7-15 Implementation Strategies and Constraints for
Redevelopment 386
7-16 A Summary Evaluation of the Redevelopment
Alternative 394
7-17 A Comparison of the Reclamation and Redevelopment
Alternatives 396
8ES-1 Population Increases from Energy Facilities 400
8ES-2 Policy Objectives and Alternatives for Housing 403
8-1 Population Growth in Selected Western Communities,
1970-1977 409
8-2 Construction and Operational Personnel Requirements
for Energy Facilities 411
8-3 Average Price and Total Monthly Costs of Housing
Types for Western Impacted Communities 419
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List of Tables (cont.) Page
8-4 Housing Conditions of Indians in Three Western
Regional Bureau of Indian Affairs Areas 1973 434
8-5 Objectives and Alternative Policies for Housing 437
8-6 Implementation Strategies for Housing 443
H-7 Evaluation Criteria and Specific Measures for
Housing Policy 445
8-8 Evaluation of Alternatives to Decrease the Number
of Workers Living On-Site 451
8-9 Evaluation of Alternatives to Increase Housing
Finance and Construction 457
8-10 A Comparison of the Demand Reduction and Housing
Supply Alternatives 460
9ES-1 Population Growth in Selected Energy-Impacted
Western Communities, 1970-1977 463
9ES-2 Alternative Policies for Growth Management 466
9-1 State Energy-Related Tax Revenues and Redistribu-
tion to Local Governments, Seven Western States 480
9-2 Limitations on Bonded Debt in Six Western States 481
9-3 Number of Communities in Six Western States,
Region VIII, with no Water or Sewage System or
System at Capacity 486
9-4 Sewage Treatment Construction Grants—Allotments
to Western States, Fiscal Years 1973-1976 487
9-5 Number of Towns with a Doctor and with a Hospital
Among Energy-Impacted Communities in Six Western
States 490
9-6 Administrative, Operational, and Planning Capacity
of Impacted Communities in Six Western States 495
9-7 Existing Planning Mechanisms in Six Western States 496
9-8 State Planning Agencies 498
9-9 Alternative Policies for Growth Management. 505
9-10 Implementation Strategies for Growth Management 513
9-11 Evaluation Criteria Applied to Growth Management 518
9-12 State Severance Tax Collections, 1974-1976 521
9-13 A Summary Evaluation of the Tax Structure Category 526
9-14 A Summary Evaluation of the Impact Assistance
Alternatives 532
9-15 Summary and. Comparison of Growth Management
Alternatives 534
10ES-1 Capital Requirements for Energy Facilities 540
10ES-2 Capital Availability Alternative 542
10-1 Potential New Plant Investment in Western Energy 548
10-2 Capital Resources Required for Construction of a
Facility 550
10-3 Representative Firms in Western Energy 551
10-4 Causes of Delay in Power Plant Construction 552
10-5 State Mineral Severance Taxes 560
10-6 Plcinned Western Synfuel Projects 564
10-7 Coal Reserves of Industrial Groups, 1976 571
10-8 Capital Availability Policy Alternatives 575
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List of Tables (cont.) Page
10-9 Financial Subsidies 576
10-10 Improve the Regulatory Environment 579
10-11 Promote New Sources of Investment 580
10-12 Evaluative Criteria for Assessment of Capital
Availability Alternatives 582
10-13 Analysis of Price Guarantee for a Shale Oil Plant 586
10-14 Summary Evaluation of Financial Subsidies
Strategies 590
10-15 Summary Evaluation of Promoting New Sources of
Investment 597
10-16 Summary Comparison of Capital Availability
Alternatives 601
11ES-1 Capital and Land Requirements by 2000 for Three
Transport Modes 604
11-1 Increased Western Energy Transport, 1975-2000 612
11-2 Land and Steel Requirements by the Year 2000 613
11-3 Costs and Operating Characteristics of Transport
Modes 614
11-4 Estimated Physical Impacts of Transport Modes 618
11-5 Federal Land Grants to Railroads in the Western
Study Area 621
11-6 Key Railroad Transport Legislation 622
11-7 Approved and Pending Track Abandonments 1971-1977 629
11-8 Cost Comparison for Alternating Current and Direct
Current High Voltage Transmission Lines at Various
Voltages 632
11-9 Impacts of Transmission Lines on the Environment 641
11-10 Western Water Requirements for Energy Conversion
and Transportation 644
11-11 State Control of Transportation Siting 649
11-12 Transport Right-of-Way Acquisition 650
11-13 Transportation Policy Alternatives 654
11-14 Evaluative Criteria 660
11-15 Railroad Employment in Western States, 1976 665
11-16 Summary Evaluation of Transportation Policy
Alternatives 683
12ES-1 Facility Siting Alternatives 688
12-1 Technological and Locational Factors Affecting
Energy Development Impacts 695
12-2 Important Criteria in Making Siting Decisions
for Utilities 699
12-3 Permits, Approvals, and Certifications Required
Before a Coal Gasification Facility Could Begin
Construction and Operation in North Dakota 712
12-4 Facilities Covered by Siting Laws Enacted by States
in the Eight-State Study Area 714
12-5 Provisions of State Power Plant Siting Laws in the
Eight-State Study Area 715
12-6 Objectives, Categories of Alternatives and Specific
Alternatives for Energy Facility Siting 719
x-ix
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List of Tables (cent.) Page
12-7 Specific Alternatives, Implementation Strategies,
and Constraints for Encouraging and Discouraging
Certain Technology-Location Combinations 721
12-8 Areas Excluded as Sites for New Energy Conversion
Facilities in North Dakota 723
12-9 Example of Criteria Used in Site Screening Process 724
12-10 Specific Alternatives, Implementation Strategies,
and Constraints for Reducing Undesirability of
Energy Facilities at Chosen Sites 726
12-11 Specific Alternatives, Implementation Strategies,
arid Constraints for Increasing Citizen Involvement
in Siting Decisionmaking 729
12-12 Legislative and Administrative Regulations
Governing Public Participation in Energy Decisions
in Colorado and Montana 732
12-13 Criteria for Evaluating Energy Facility Siting
Alternatives 737
12-14 A Summary Evaluation of Encouraging and Discouraging
Certain Technology-Location Combinations 744
12-15 A Summary Evaluation of Reducing the Undesirability
of Energy Facilities at Chosen Sites 752
12-16 A Summary Evaluation of Increasing Citizen
Involvement in Siting Decisionmaking 759
12-17 Summary and Comparison of Energy Facility Siting
Alternatives 763
13-1 Median Household Incomes in Ten Energy-Impacted
Counties (1969 dollars) 771
13-2 Policy Alternative at the Local Level 775
13-3 Policy Responses by State Governments 780
13-4 Policy Alternatives for the Federal Government 794
13-5 Policy Alternatives for Energy E'evelopers 807
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LIST OF ACRONYMS AND ABBREVIATIONS
AAR
AC
acre-ft/yr
BACT
bbl/day
BIA
BLM
BOD
Btu
BuRec
CAA
CERT
CHESS
CO
COG'S
CONEG
CWA
CWIP
CZMA
dBA
DC
DOE
DOI
DOT
EDA
EIS
EMARS
EPA
EPRI
ERA
ERDA
EMS
ESECA
FEA
FERC
FGD
FHA
FHLMC or
Freddie Mac
FmHA
Association of American Railroads
alternating current
acre-feet per year
Best Available Control Technology
barrels per day
Bureau of Indian Affairs
Bureau of Land Management
biochemical oxygen demand
British thermal unit
Bureau of Reclamation
Clean Air Act
Council of Energy Resource Tribes
Community Health and Environmental Surveillance
System
carbon monoxide
councils of government
Coalition of Northeastern Governors
Clean Water Act
construction work in progress
Coastal Zone Management Act
decibel(s) A-weighted
direct current
Department of Energy
Department of the Interior
Department of Transportation
Economic Development Administration
environmental impact statement(s)
Energy Minerals Allocation Resource System
Environmental Protection Agency
Electric Power Research Institute
Economic Regulatory Administration
Energy Research and Development Administration
emergency medical services
Energy Supply and Environmental Coordination
Act of 1974
Federal Energy Administration
Federal Energy Regulatory Commission
flue gas desulfurization
Federal Housing Administration
Federal Home Loan Mortgage Corporation
Farmers Home Administration
XXX,
-------
FNMA or
Fannie Mae
4--R Act
FPC
FTC
FWPCA
FY
GNMA or
Ginnie Mae
HC
HEW
HUD
HVTL
ICC
IRS
kV
kwh
LAER
lb(s)
LNG
MESA
MMtpy
MWe
NAAQS
NAS
NEP
NEPA
NHSC
N0x
NPDES
NRDC
NSPS
OCS
OPEC
ORV
OSM
PSD
Q
R&D
RARE
RD&D
S&PP
SEAM
SEPA
SIP
SNG
S02
SRI
TA
TSP
Federal National Mortgage Association
Railroad Revitalization and Regulatory Reform
Act of 1976
Federal Power Commission
Federal Trade Commission
Federal Water Pollution Control Act
fiscal year
Government National Mortgage Association
hydrocarbon(s)
Department of Health, Education and Welfare
Department of Housing and Urban Development
high voltage transmission line(s)
Interstate Commerce Commission
Internal Revenue Service
kilovolt(s)
kilowatt-hour
lowest achievable emission rate
pound(s)
liquefied natural gas
Mining Enforcement and Safety Administration
million tons per year
megawatt-electric
National Ambient Air Quality Standards
National Academy of Sciences
National Energy Plan
National Environmental Policy Act
National Health Services Corps
oxides of nitrogen
National Pollutant Discharge Elimination System
Natural Resources Defense Council
New Source Performance Standards
outer continental shelf
Organization of Petroleum Exporting Countries
off-road vehicle(s)
Office of Surface Mining, Reclamation, and
Enforcement
prevention of significant deterioration
quadrillion (10 15) Btu's
research and development
Roadless Area Review and Evaluation
research, development and demonstration
Science and Public Policy Program
Surface Environment and Mining Program
state environmental policy act
state implementation pLan(s)
synthetic natural gas
sulfur dioxide
Stanford Research Institute
technology assessment
total suspended participates
-------
UCRB Upper Colorado River Basin
UMRB Upper Missouri River Basin
USGS U.S. Geological Survey
U30s uranium oxide and/or yellowcake
WESCO Western Gasification Company
WESPO Western Governors' Policy Office
WISA Wyoming Industrial Siting Administration
WSGA Wyoming Stock Growers Association
X.X.4. -14.
-------
CONVERSION TABLE
BTU CONTENT OF ENERCY FORMS
Electricity:
Natural gas:
Petroleum:
1 kWh - 3413 Btu.
1 cubic foot - 1000 Btu.
1 barrel (bbl) - 42 gallons
crude oll--l bbl - 5.8 million Btu;
distillate fuel— 1 bbl - 5.8 million Btu:
residual fuel — 1 bbl - 6.3 million Btu;
gasoline— 1 bbl - 5.3 million Btu;
Uranium — 1 pound Ujjs - 3.6 X 10" Btu.
1 million -
1 billion -
1 trillion -
10'
10'
10"
1 Quad - 10" Btu
1 ncgnwatt - 10* Watts
1 kilowatt - 105 Watts
ENERGY
UNITS
1 joule
1 cal
1 Btu
1 kWh
Joule
1
4.186
1.055 X 10'
3.6 X 10*
cal
2.389 X 10"'
1
2.52 X 10l
8.6 X 105
Btu
9.48 X 10"*
3.97 X 10"'
1
3.«13'X 10'
kWh
2.778 X 10"'
1.163 X 10"'
2.93 X 10"*
1
RATE
UNITS
1 gallon/minute
1 acre-foot/year
Cubic Meter/Tear
1.9898 X 101
1.2335 X 10'
Gallon /Minute
1
6.2 X 10"*
Acre-1'eet/Tcar
1.613
1
PRESSURE
UNITS
1 atmosphere
1 pound/sq. Inch
atmospheres
1
6.304 X 10~2
klloera-.s/5auare
centiliter
1.033
7.03 X 10~*
pounds per
sqL.are Inch
1.449 X 101
1
N/m', Pa
1.03 X 10s
6894.76
LESCTH
UNITS
1 meter
1 yard
1 mile
Meters
1
9.14 X 10~l
1.609 X 10'
Feet
3.28
3.0
5.28 X 10J
Yards
1.093
1
1.''6 X 101
Kl!es
6,21 X Kf
5.68 X 10"*
1
WEIGHT
UNITS
1 kilogram
1 metric ton
1 ton (short)
Kilogran
1
1.0 X 10J
9.072 X 102
Pound
2.2046
2.205 X 10*
2.0 X 10'
Metric Too
1.0 X 10~3
1
9.078 X 10"'
Ton (Short)
1.102 X Id" '
1.102
1
VOLUME
UNITS
1 liter
1 acre-foot
1 gallon (U.S.)
Liters
1
1.234 X 10«
3.785
Cubic Feet
3.531 X 10"J
4.356 X 10*
1.337 X 10"'
Acre-Feet
8.107 X 10"'
1
3.068 X 10"'
Gallons
2.642 X 10"'
3.259 X 105
AREA
UNITS
1 square meter
1 square yard
1 acre
1 square mile
Square Meters
I
8.361 I 10~'
4.W7 X 10s
2,5? X 10'
Souare Feet
1.076 X 10
9.0
4.35 X 10*
2.788 X 10'
Square Yards
1.196
1
4.84 X 101
3.098
Acras i S,:unrc Kilt."
2.471 I 10" I 3. 56 Z 10"'
2.066 x 10 " 13 :;s i. 10"'
1 j 1,562 X Hf J
6.402 X IV | I
atm
psl
cal
« atnospheres
" pounds per square Inch
- calorie
H/'m* ,
Btu «
Fa - Nf
British
kllnwar
wton per
thermal
t hour
square B
unl t s
neter^ Tasca
X K4. V
-------
ACKNOWLEDGEMENTS
The research reported here could not have been completed
without the assistance of a dedicated administrative support
staff. Members of the staff are an integral part of the interdis-
ciplinary team approach employed by the Science and Public Policy
Program. This staff is headed by Janice Whinery, Assistant to the
Director, and Ellen Ladd, Clerical Supervisor. Staff members are:
Cyndy Allison, Amber Adams, Pam Odell and Judy Williams. Other
members of the staff that assisted in the earlier preparation of
this report were: Nancy Heinicke, Patti Mershon, Brenda Skaggs,
and Julia Leonard.
The research support staff is headed by Martha Jordan, Librar-
ian. Research Team Assistants are Mary Sutton, Diane Dean, Lorna
Caraway, and David Sage. Phil Kabrich.assisted as Research Team
Assistant in the final production of the report.
Nancy Ballard, graphics arts consultant, designed the title
page. Virginia Newman, graphic artist, assisted with the graphics
in the final production of the report. Gary Parent, Graduate Re-
search Assistarxt. in Political Science, contributed to the water
policy analysis.
Steven E!. Plotfc; n, EPA Project Officer, has provided continu-
ing support and assistance in the preparation of this report. In
addition to his assistance as an expert critic, he was an invalu-
able source of information; and he assisted directly in the water
polir-/ ana lysis in Chapters 4 and 5.
7ir- Advisory Committee has assisted the team since the project
was initiated in July 1975. The members of this committee are:
Mr, John Bermingham Dr. Thadis W. Box
Attorney Dean
D- ••. • -, '.olorado College of Environmental Studies
U> :.-eriy Regional Represen- Utah State University
tati-'/e for the Secretary, U.S. Logan, Utah
Department of Commerce)
Governor Jack Campbell Mr. Bill Conine
President Environmentalist
Federation of Rocky Mountain Energy Minerals—U.S. and Canada
States Mobile Oil Corporation
Denver, Colorado Denver, Colorado
X.X.V
-------
Mr. Michael B. Enzi
Mayor
Gillette, Wyoming
Mr. Kenneth Kauffman
Chairman
Water for Energy Management Team
U.S. Department of the Interior
Engineering and Research Center
Denver, Colorado
Mr. Leonard Meeker
Attorney
Center for Law and Social
Policies
Washington, D.C.
Dr. Raphael Moure
Industrial Hygienist
Oil, Chemical, and Atomic
Workers Union
Denver, Colorado
Mr. Robert Richards
Urbanologist
Kaiser Engineers
Division of Raymond International
Oakland, California
Mr. Warren Schmeche.l
President and Chief Operating
Officer
Western Energy Company
Butte, Montana
Ms. Sharon Eads
Attorney
Native American Rights Fund
Boulder, Colorado
Mr. Lionel S. Johns
Program Manager
Office of Technology
Assessment
U.S. Congress
Washington, D.C.
Mr. S.P. Mathur
Division of Regional
Assessment
U.S. Department of Energy
Washington, D.C.
(formerly ERDA Representative
to Water Resources Council)
Dr. Richard Meyer
ABT Associates
7503 Marin Drive
Anglewood, Colorado
(formerly Acting Director,
Western Governors' Energy
Policy Office)
Mr. Bruce Pasternack
Booz, Allen, Hamilton
Bethesda, Maryland
(formerly Assistant Adminis-
trator, Policy and Program
Evaluation, Federal Energy
Administration, Washington,
D.C.)
Mr. H. Anthony Rickel
Regional Lawyer
Sierra Club Legal Defense Fund
Denver, Colorado
Mr. Vernon Valantine
Colorado River Board of
California
Los Angeles, California
The Advisory Committee met on April 24, 1978, at the
University of Oklahoma to review an earlier draft of this report.
Mr. Bruce Glenn, Bureau of Reclamation, Denver; Mr. Marvin Ott,
XX.V-L
-------
Office of Technology Assessment, Washington; and Mr. Terry Thoem,
Environmental Protection Agency, Denver also attended that meeting
and contributed to the review.
Several persons have also assisted by critiquing chapters of
a draft of this report:
Professor Larry Canter
Director and Professor,
School of Civil Engineering
and Environmental Science
University of Oklahoma
Norma n, Ok1ahoma
Mr. William R. Frendeberg
Department of Sociology
Yale University
New Haven, Connecticut
Dr. Mary R. Hamilton
Manager, Energy Policy
Department
BDM Corporation
McLean, VA
Mr. W.W. Reedy
Chief,
Division of Planning and
Technology Services
Bureau of Reclamation, Denver
Denver, Colorado
Mr. Temple A. Reynolds
Superintendent,
Glen Canyon National Recreation
Area
Page, Arizona
Mr. John Cummings
Housing Specialist
State of Wyoming
Cheyenne, Wyoming
Mr. Edwin L. Hamilton
Chief Electrical Engineer
The Central Nebraska Public Power
and Irrigation District
Holdrege, Nebraska
Professor Charles 0. Jones
Department of Political Science
University of Pittsburgh
Pittsburgh, Pennsylvania
Mr. John Reuss
Director of Science & Technology
National Conference of State
Legislators
Denver, Colorado
xxv-t-t
-------
PART I: THE CONTEXT OF WESTERN ENERGY RESOURCE DEVELOPMENT
INTRODUCTION
•
Background
This is a report of the results of policy analyses conducted
as a part of a three-year "Technology Assessment of Western
Energy Resource Development." The assessment is being performed
for the Office of Energy, Minerals and Industry, Office of
Research and Development, U.S. Environmental Protection Agency
by an interdisciplinary research team from the Science and Public
Policy Program (S&PP) , University of Oklahoma.1 The major objec-
tives of the study are to identify and analyze a broad range of
consequences of energy resource development in the western U.S.
and to evaluate and compare alternative courses of action for
dealing with these consequences. Other reports2 present the
results of analyses undertaken to identify and evaluate the im-
pacts likely to occur at specific sites and within the eight-state
study area when energy development takes place. The purpose of
this report is to relate these impact findings to the social and
political context within which they would occur, identify the
problems and conflicts that can be anticipated, and describe,
evaluate, and compare alternative policies and implementation
strategies for dealing with these problems and conflicts.
*Two subcontractors, Radian Corporation, Austin, Texas, and
Water Purification Associates, Cambridge, Massachusetts, provided
major technical support.
Preliminary results of our impact analyses were reported in
White, Irvin L., et al. Energy From The West; A Progress Report
of a Technology Assessment of Western Energy Resource Development,
4 vols. and Executive Summary. Washington, D.C.: U.S., Environ-
mental Protection Agency, 1977. (NTIS Order Nos.: Vol. I, PB-271
752, Vol. II, PB-271 753, Vol. Ill, PB-271 754, Vol. IV, PB-272
243.) The results of our initial impact analyses were extended
and refined during the second and third years of the project.
Results of these analyses are reported in White, Irvin L., et al.
Energy From the West: Impact Analysis Report. Washington, D.C.:
U.S., Environmental Protection Agency, forthcoming.
-------
The study focuses on the
'development of six energy re-
sources in the eight-state area
and at the six sites shown in
Figure 1. Coal, geothermal,
natural gas, oil, oil shale,
and uranium are the six energy
resources being considered;
the technological alternatives
being assessed for developing
them are identified in Table 1.
The time period during which
the consequences of development
are being assessed extends to
the year 2000.
TABLE 1: DEVELOPMENT ALTERNATIVES1
Coal:
Surface and Underground Mining
Direct Export by Unit Train and
Slurry Pipeline
Electric Power Generation
Gasification
Liquefaction
Transportation by Pipeline and EHV
Oil Shale:
Underground Mining
Surface Retorting
Modified In-Situ
Transportation by Pipeline
Uranium:
Surface, Underground, and
Solutional Mining
Milling
Transportation by Truck
Oil and Natural Gas:
Conventional Drilling and Production
Enhanced Oil Recovery
Transportation by Pipeline
Geothermal
Hot Water and Hot Rock
Electric Power Generation
Transportation by EHV
Kaiparowits
Escalante
FIGURE 1: THE EIGHT-STATE STUDY
AREA AND SIX SITES
Organization
This report is divided
into three parts. The purpose
of the two chapters in Part I
is to describe the national
and regional context within
which western energy resources
are being and will be developed.
In the first chapter the over-
all national policy context is
described. In addition to dis-
cussing some of the effects of
this national context, the
second chapter describes major
regional factors and consider-
ations which will also help to
shape western energy resource
development policies.
1 These development alternatives are briefly described in
Section 2.3.
-------
CHAPTER 1
THE NATIONAL CONTEXT OF
WESTERN ENERGY RESOURCE DEVELOPMENT
1.1 INTRODUCTION
The 1973 Organization of Petroleum Exporting Countries (OPEC)
oil embargo shocked the U.S. into recognizing that the days of
abundant, cheap energy were over and that being dependent on for-
eign energy sources can be a significant threat to our nationaJ
security. Since energy has historically been considered the life-
blood of our highly industrialized, technological society, this
realization led to energy immediately becoming a highly visible,
high priority public policy problem. Three successive adminis-
trations and each Congress since the 93rd have attempted to deal
with the complex problems and issues that are involved. Their
efforts have been affected by the nature and character of the
overall context within which energy policy is being made.
Several major factors shape this context:
• After absorbing the initial shock of waiting in long
lines at gas stations, paying more for energy, and
experiencing interruptions in energy supplies, most
Americans still do not believe that there really
is an energy crisis.
* Although institutional arrangements affecting energy
policymaking have been extensively modified since 1973,
these arrangements are still inadequate in some energy
policy areas, including arrangements which affect inter-
governmental and public-private sector roles and rela-
tionships, and those which provide for broadened partic-
ipation in energy policymaking.
* Existing knowledge about energy and other resources,
energy technologies, and the impacts of energy resource
development is not adequate to eliminate the uncertainty
policymakers often face when making policy choices.
* It has become increasingly obvious that energy problems
are inextricably linked with economic and environmental
problems and that policies intended to solve problems
in one area will affect problems in the other two.
-------
This chapter briefly discusses these factors and generally
describes the overall national policy context within which west-
ern energy resource policy is being and will be made. In the fol-
lowing chapter, the focus will be narrowed to the West and to
those factors and considerations likely to affect the formula-
tion and implementation of western energy resource development
policies most significantly.
1.2 PUBLIC ATTITUDES TOWARD ENERGY AS A PUBLIC POLICY PROBLEM
1.2.1 Public Perceptions of Energy as a Public Policy Problem
Since 1974, the Federal Energy Administration (FEA) (and now
the Department of Energy [DOE]) has surveyed public attitudes to-
ward the costs and availability of energy.1 Dr. Jeffrey S.
Milstein, Director of Marketing Research in DOE's Office of Con-
servation and Solar Applications, reports that these surveys have
consistently shown that less than one-half of the public believes
that the energy shortage is real.2 A published summary of the re-
sults of the March 1974 survey indicates that slightly more than
20 percent of the public believed energy shortages to be serious
and long-term at that time.3 In May 1977, following President
Carter's energy message in which he called on the nation to wage
the "moral equivalent of war," the percentage of the public
taking this position peaked at about 40 percent.4 The percent-
age believing that energy is a serious long-term problem has now
stabilized at about 30 percent.5
1 Opinion Research Corporation. General Public Attitudes and
Behavior Toward Energy Saving, prepared for the U.S. Federal
Energy Administration (now DOE). Springfield, Va.: National
Technical Information Service, monthly beginning in September
1974. (Title varies.)
2Milstein, Jeffrey S. "How Consumers Feel About Energy:
Attitudes and Behavior During the Winter and Spring of 1976-77."
Unpublished paper, June 1977, p. 5. Milstein1s paper is not an
official statement of either DOE or of the U.S. Government.
3Opinion Research Corporation. General Public Attitudes and
Behavior Toward Energy Saving, Vol. 1, prepared for the U.S. Fed-
eral Energy Administration. Springfield, Va.: National Technical
Information Service, September 1974, p. 2.
''U.S., President. "Energy Address to the Nation: Broadcast
Remarks of President Carter, April 18, 1977," in Bureau of Na-
tional Affairs. Energy Users Report, Current Report No. 193
(April 21, 1977) ,~pp. 41-43.
^Milstein, Jeffrey S. Personal communication.
4
-------
The FEA/DOE surveys have consistently found that more persons
with "some college or more" or who are "environmental activists"
have consistently viewed the energy problem as serious and long-
term. 1 The difference between the public-at-large and these two
groups seems to be explained by a difference in their knowledge
of and interest in the problem. According to the results of a
May 1977 Gallup survey, slightly less than half the public is
even aware that "...the United States must import oil to satisfy
its energy demands, and only one-tenth of the public has an accu-
rate idea of how much petroleum the United States does import."2
This lack of knowledge, which helps to explain the general
public's skepticism, has to be viewed in perspective. Citing a
University of Texas survey which found less than half of the
adult population to be "functionally competent,"3 Milstein con-
cludes that "if a large fraction of people are generally unaware
of what is happening in the world outside of their personal expe-
rience, it is not surprising to find them unaware of the nation's
energy policies. " "*
What has happened in energy consumption also helps to explain
the public's perceptions about the seriousness of our energy prob-
lems. Total annual energy consumption in each of the first three
years following the OPEC embargo was below 1973 levels. However,
energy consumption is increasing again. Table 1-1 shows that con-
sumption in 1976 was only slightly less than in 1973 and that es-
timated total consumption in 1977 was the highest it has ever been,
Table 1-1 also shows that after two consecutive years in which
annual growth rate was negative, the energy consumption growth
rate in 1977 was the third highest since 1950.
1FEA defines environmental activists as "those persons who
either belong to an environmental accented organization or have
written a letter on an environmental subject to a newspaper, leg-
islator or other government body, or have done both." According
to Milstein, these two groups together constitute about 15 per-
cent of the total sample.
2Milstein, Jeffrey S. "How Consumers Feel About Energy:
Attitudes and Behavior During the Winter and Spring of 1976-77."
Unpublished paper, June 1977, p. 5.
3 Ibid. The study surveyed 10,000 people on a variety of
topics to determine their level of awareness and knowledge. See
University of Texas at Austin. Adult Functional Competency; A
Summary. Unpublished paper, Austin, Texas, March 1975.
^Milstein. "How Consumers Feel About Energy."
-------
TABLE 1-1: U.S. ENERGY CONSUMPTION, 1950-1977
YEAR
1950
1955
1960
1965
1970
1971
1972
1973
1974
1975
1976
1977
TOTAL ENERGY
CONSUMPTION
(1015 Btu's)3
34.0
39.7
44.6
53.3
67.1
68.7
71.9
74.7
72.9
71.0
74.0
77.6
AVERAGE ANNUAL
GROWTH RATE
(percent)
3.. I
2.3
3.6
4.8
2.4
4.9
3.6
-2.4
-2.5
4.1
4.6
Btu = British thermal unit
Source: U.S., Department of the Interior. Energy Perspectives 2,
Washington, D.C.: Government Printing Office, 1976.
a
Total energy consumption is the sum of inputs into the economy
of the primary fuels (petroleum, natural gas, and coal, including
imports) or their derivatives, plus the generation of hydro and
nuclear power, converted to equivalent energy inputs.
Estimated.
As the data in Table 1-2 show, increased consumption has
varied considerably among sectors. In 1950, the industrial sec-
tor consumed 40 percent of U.S. net energy, but only about one-
third in 1975.l On the other hand, transportation and household-
commercial consumption rose from about 25 percent each to
*Two factors help to explain industry's behavior since 1973,
First, increased energy prices motivate industry to effect energy
savings where possible; second, energy price increases affected
the economy in numerous ways, including lowering production and,
thereby, energy consumption.
-------
TABLE 1-2: U.S. ENERGY CONSUMPTION BY ECONOMIC SECTORS
(quadrillion Btu's)
YEAR
1950
1960
1970
1971
1972
1973
1974
1975
1976
HOUSEHOLD
AND
COMMERCIAL
8.1
11.4
17.0
17.4
18.1
18.0
17.6
17.3
18.8
INDUSTRIAL
11.9
14.4
19.8
19.6
20.0
20.0
20.2
19.0
21.2
i
NONFUEL
USES
1.0
1.5
2.9
2.8
3.1
3.2
3.2
3.1
TRANSPORTATION
8.6
10. 8
16.4
16.9
17.9
18.8
18.3
18.4
NA j 19.3
1
LOSSESb
4.3
6.4
11.1
11. 7
12.4
13. 4
13.6
13.6
14.4
GROSS
ENERGY
34.0
44.6
67.1
68. 7
71.9
74.7
72.9
71.1
74.0
Btu = British thermal unit
NA = Not available
Source: U.S., Congress, House, Committee on Interstate and Foreign
Commerce, Subcommittee on Energy and Power; and Senate, Committee on
Energy and Natural Resources and the National Ocean Policy Study of the
Committee on Commerce. Project Interdependence: U.S. and World Energy
Outlook Through 1990, Committee Print. Washington, D.C.: Government
Printing Office, 1977, p. 114.
3Lines may not add due to rounding.
Losses are primarily due to conversion inefficiencies, for example,
the loss which occurs when coal is converted into electricity.
one-third during the same period. The data for the period since
1973 show that if they changed their consumption habits at all
since the 1973 embargo, most Americans apparently changed for only
a short time and only slightly. In fact, except for experiencing
the initial shortages that followed the embargo and feeling the
effects of an occasional inadequate energy supply in some parts
of the country, such as during periods of severe weather, con-
sumers have been able to obtain all the energy they want. Of
course, they have had to pay higher prices for it--and the FEA/
DOE surveys show that they are very concerned about this.
^.S., Congress, House, Committee on Interstate and Foreign
Commerce, Subcommittee on Energy and Power; and Senate, Committee
on Energy and Natural Resources and the National Ocean Policy
Study of the Committee on Commerce. Project Interdependence; U.S,
and World Energy Outlook Through 1990, Committee Print.
ton, D.C.: Government Printing Office, 1977, p. 114.
Washing-
Milstein, Jeffrey S. "How Consumers Feel About Energy:
Attitudes and Behavior During the Winter and Spring of 1976-77."
Unpublished paper, June 1977.
-------
TABLE 1-3:
PUBLIC ATTITUDES CONCERNING WHO CAUSED
AND IS RESPONSIBLE FOR ENERGY SHORTAGES
(percent)
C TT D T HT T C1 \T "P Q Q
OF THE
SHORTAGE
Very Serious
Somewhat Serious
Not at all
Serious
MOST RESPONSIBLE FOR
THE SHORTAGE
OIL
BUSINESS
22
33
57
PUBLIC/
EVERYONE
23
25
5
GOVERNMENT
17
19
35
NATURE OF
THE SHORTAGE
REAL
51
38
7
CONTRIVED
26
30
78
BOTH
16
27
9
Source: Opinion Research Corporation. General Public Attitudes and
Behavior Toward Energy Saving, Vol. I, prepared for the U.S. Federal
Administration. Springfield, Va.: National Technical Information Service,
September, 1974, p. 5. The more detailed data breaking down the responses
to individual questions are not available.
The 1974 FEA survey of public attitudes showed that the pub-
lic was just about evenly divided on whether the energy shortage
was real or contrived.1 As shown in Table 1-3, there was a high
correlation between those who believed that the shortage was "con-
trived" and "not very serious." The table also reveals a gener-
ally high degree of skepticism about the oil industry—and govern-
ment.2 This skepticism has undoubtedly been reinforced by the
failure of most consumers to experience any energy supply problems
In fact, what they hear about or experience is an international
1 Opinion Research Corporation. General Public Attitudes and
Behavior Toward Energy Saving, Vol. I, prepared for the U.S. Fed-
eral Energy Administration. Springfield, Va.: National Technical
Information Service, September 1974, p. 5.
2Milstein reports that the results of the FEA/DOE survey con-
sistently show that about one-third to one-half of the public be-
lieve that the oil and gas industry is trying to rip them off-
Personal communication.
-------
oil glut1 and a gasoline surplus.2 It is difficult, therefore,
for most Americans to believe that there really is an energy
crisis, an attitude which is reinforced by their perception of
the way the problem is being dealt with by government.
1.2.2 The Effects of Public Attitudes on Energy Policymaking
Given these public attitudes, the Administration and the Con-
gress find it difficult to respond to energy as a public policy cri-
sis. In the absence of a clear public demand that energy problems
be dealt with as though they are serious and long-term, it is dif-
ficult for policymakers to propose and enact policies that promise
to deal effectively with the root causes of our energy problems.
It is not obvious that such policies are politically feasible.
And at the present time, the Administration and the Congress's
estimate of what is publicly responsive and politically achievable
is conditioned by the fact that most Americans do not believe that
energy is a serious long-term public problem.
In this kind of policy environment, policymakers have tended
historically to opt for policies which maintain things as they are
or which are expected to produce only small remedial changes. At
the present time this kind of response in energy policymaking gen-
erally works to the advantage of the energy industry. Although
participation in energy policymaking has broadened to include a
range of interested parties such as environmentalists and con-
sumers, the energy industry as a whole has a comparatively unam-
biguous, obvious, and direct stake in energy policymaking.3 And
even though it is not monolithic, industry is generally better
1 See, for example, "Now an Oil Glut." Newsweek, September 19,
1977, pp. 86-87; "Guess What? We've Got an 'Oil Glut.'" Dun's
Review, September 1977, pp. 58-60; and "Why Oil Refiners are
'Drowning' in Crude." Business Week, August 15, 1977, pp. 37-38.
2"U.S. Gasoline Sales Up, But Majors' Share Slips." Oil and
Gas Journal, Vol. 75 (June 20, 1977), pp. 29-31. Gasoline demand
in 1977 set new records, a daily average during the first nine
months of 7.1 million barrels per day as compared to 6.7 million
in 1973. See U.S., Department of Energy, Energy Information Ad-
ministration, National Energy Information Center. "Motor Gasoline."
Monthly Energy Review, November 1977, p. 10.
3See Kash, Don E. , et al. Energy Under the Oceans; A Tech-
nology Assessment of Offshore Oil and Gas Operations. Norman,
Okla.: University" of Oklahoma Press, 1973, pp. 107-11; and
Lindblom, Charles. Politics and Markets>. New York, N.Y.: Basic
Books, 1977.
-------
organized and can mobilize more resources to influence policy-
making than can other interested parties.1
As noted earlier, the FEA/DOE surveys have consistently re-
vealed a public skepticism about the oil industry. This skepti-
cism was reflected in the Congress where some members were clearly
suspicious of the industry and the extent to which it was respon-
sible for and would benefit from the energy crisis.2 When it was
learned that the oil industry's 1973 profits were almost 50 per-
cent higher than in 1972 and even higher in 1974, this suspicion
and skepticism was heightened.3
The public and Congress's skepticism helps to explain the
Congress's subsequent elimination of the depletion allowance and
the close vote on a bill that would have forced the break-up of
vertically integrated energy companies.4 But over the long-term,
industry benefits both from advantages it possesses as a partici-
pant in public policymaking and the existing policy environment.
This helps explain why industry-supported positions have fared so
well in the Congress. Industry typically supports market solu-
tions rather than regulation and taxation. This often puts indus-
try in the posture of opposing many policy initiatives proposed by
the Administration and introduced into the Congress. This has been
the case with many provisions of the President's National Energy
Plan (NEP}, for example, with the plan's proposals for gas guzzler
taxes, standby gasoline taxes,5 and the extension of pricing con-
trols.6 In the present policy context, it is easier for policy-
makers to be responsive to industry's negative demands, than to
advocates of policies which would result in significant changes.
Another factor in the policy environment goes largely unno-
ticed at the present time but is likely to be important in the
1 See Kash, Don E., et al. Energy Under the Oceans: A Tech-
nology Assessment of Offshore Oil and Gas Operations. Norman,
Okla.:University of Oklahoma Press, 1973, Chapter 5.
2Congressional Quarterly, Inc. Congress and the Nation, Vol.
IV: 1973-1976. Washington, D.C.: Congressional Quarterly, 1977,
p. 203.
3 Ibid.
* Ibid.
5 See "Who's Who in the Lobby." Newsweek, June 27, 1977,
pp. 18-21.
f'This is not to say that industry is the only interest wh_i_ch
has opposed the NEP. Consumer groups, environmentalists, labor
unions, and many others have opposed at least some provisions.
10
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future. This factor is that a majority of Americans are very con-
cerned about the increasing cost of energy, a consistent finding
of the FEA/DOE surveys mentioned earlier. This concern has not
yet been translated into a strong, persistent demand that proposed
solutions to our energy problems include an effort to keep energy
prices down. The fact is, of course, that energy prices are
likely to continue to increase. And major policy proposals, in-
cluding the NEP, call for using increased prices to decrease con-
sumption. But it seems likely that policymakers will have to deal
eventually with their constituents' demand that energy not consume
so large a portion of their income.
This discussion points up the dilemma which policymakers
often face, having to choose between policies which are politi-
cally achievable and ones which promise to resolve problems most
effectively. While these may be the same policies, they often are
not. And both kinds of choices are speculative. That is, it is
not always clear that what policymakers decide is politically
achievable is the "best" actually achievable. And it is almost
never possible to know with complete confidence that a policy
choice will effectively solve a problem. Both public confidence
and the confidence of policymakers is affected by just how specu-
lative these kinds of choices are. The point to be stressed with
regard to energy policymaking at the present time is that a major
factor affecting the Administration and the Congress's estimate
of what is publicly responsive and politically achievable is
conditioned by the fact that most of their constitutents do not
believe that energy is a serious long-term public problem.
1.3 INSTITUTIONAL ARRANGEMENTS FOR ENERGY POLICYMAKING
One response that both the Administration and the Congress
have made since energy became an important public policy problem
has been to modify the institutional arrangements for energy pol-
icymaking that existed in 1973. Within the federal government
this has included establishing new energy research and development
(R&D) and policy agencies, and, eventually, a new cabinet depart-
ment. In the Congress, committees have been renamed and restruc-
tured to focus more attention on energy and natural resources.
Intergovernmental and public-private sector relations have also
been modified; and the demands of a range of interested parties to
participate in energy policymaking have to some extent been
accommodated.
1.3.1 Intragovernmental
Major intragovernmental changes occurred in 1974 when most
federal energy R&D programs were combined in a single agency, the
Energy Research and Development Administration (ERDA) and a new
energy policy agency, FEA, was established. Together with the
Federal Power Commission (FPC) and several components drawn from
other agencies, these two have now combined to create DOE. This
11
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new department, which was established late in 1977, is still in
the throes of working out many of the problems that seem inevita-
ble when a major new agency is established.1 In this case these
include, for example, how to be both rational and fair in combin-
ing ERDA and FEA personnel and programs. DOE also inherited sev-
eral major unresolved problems from its predecessors, including
learning how to be effective in managing large-scale government
R&D programs in an area previously left largely to the private
sector.2 A major aspect of this problem remaining'* unresolved is
how to insure that energy technologies developed in government
R&D programs get commercially deployed by the energy industry.3
Another unresolved intragovernmental problem is the overlap-
ping jurisdiction of agencies. For example, as will be discussed
in Section 1.5, energy, economic, and environmental policies and
programs are inherently interdependent and interrelated. There
have been efforts to deal with some of the problems which occur be-
cause of this; for example, there is an active Interagency Energy-
Environment Research and Development Program. But the problem per-
sists. In fact, the Congress is currently considering an Office
of Management and Budget proposal to transfer energy environmental
control R&D from the Environmental Protection Agency (EPA) to DOE
and health effects R&D from DOE to EPA. Even more basic is a pro-
posal to establish a Department of Natural Resources as a way of
consolidating functions, programs, and responsibilities now spread
among several agencies.
^orrigan, Richard. "The Department of Energy's Continuing,
Confusing Shake-Down. " Natioria 1 Journal, Vol. 10 (February 4,
1978), pp. 184-87.
2 In fiscal 1974, the Administration's energy R&D request was
a little less than $1 billion. The request for fiscal 1975 was
almost twice that; and the Administration requested $3.2 billion
for fiscal 1978 and has requested $3.3 billion for fiscal 1979.
See Barfield, Claude E. "Science and Energy." National Journal
Reports, Vol. 6 (February 9, 1974), pp. 202-05; and Hammond,
Allen L. "Carter Budget Tilts 'Back to Basics1 for Research."
Science, Vol. 199 (February 3, 1978), pp. 507-10.
3See House, Peter W., and David W. Jones, Jr. Getting It Off
The Shelf: A Methodology for Implementing Federal Research.
Boulder, Colo.: Westview Press, 1977; and Hamilton, Mary R.
"Energy Policy and Changing Public-Private Relations." Policy
Studies Journal, Vol. 7 (Autumn 1978) ; and Hamilton, Mary R~~™~
"Considerations in the Development of a Preliminary Plan for Fed-
eral Government Involvement in the Commercialization of Photo-
voltaics," Chapter VI in BDM Corporation. Draft I n t e r i m _Report
for the Program to Develop a Preliminary Implementation Plan for
the Federal Photovoltaic Utilization Program and a Preliminary
Commercialization Plan for Photovoltaics. McLean, Va.: BDM Corp-
oration, January 20, 1978.
12
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1.3.2 Intergovernmental
Intergovernmental relations have also been significantly
affected since energy became an important public problem, espe-
cially relationships between the federal government and the states,
The states have traditionally established policies in such areas
as energy facility siting and the regulation of public utilities.
Although they retain a major role in some policy areas such as
siting, states' role in energy has tended to diminish as the fed-
eral government has become a more active participant in the energy
policy area, including, for example, setting prices on new intra-
state natural gas, something that had previously been left to the
states.
Although they have had major responsibilities for implement-
ing federal programs such as fuel allocations and the 55 mile-per-
hour speed limit, the states have generally had a minor role in
the formulation of energy policies. For example, the states still
have a relatively minor role in making policies concerning the
development of publicly-owned resources such as offshore oil and
gas and the large amounts of oil shale, coal, and other energy re-
sources located in western states. And the NEP1 gives the states
a limited role in energy policymaking, primarily restricting this
role to information gathering and fuel allocation.2 Some states
are seeking a larger role, particularly the coastal and western
states most directly affected by federal policies for developing
publicly-owned energy resources.
States have been encouraged to develop and implement energy
conservation plans for reducing energy consumption.3 Under the
"Weatherization for Low-Income Groups" provisions of the Energy
Conservation and Production Act,1* local governments or community
action agencies may carry out weatherization (primarily insula-
tion) projects. However, state and local government participation
in federal conservation programs is voluntary.
1U.S., Executive Office of the President, Energy Policy and
Planning. The National Energy Plan. Washington, D.C.: Govern-
ment Printing Office, 1977.
2See U.S., Congress, Office of Technology Assessment. Anal-
ysis of the Proposed National Energy Plan. Washington, D.C.:
Government Printing Office, 1977, pp. 174-87.
3 See the Energy Policy and Conservation Act, Pub. L. 94-163,
89 Stat. 871.
4 See the Energy Conservation and Production Act, Pub. L. 94-
385, 90 Stat. 1125, as amended by Pub. L. 95-70, 91 Stat. 275.
13
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1.3.3 Public-Private Sector Relationships
Public-private sector relationships in energy policymaking
are also in transition. With the exceptions noted earlier, en-
ergy was largely a private sector concern until the early 1970's.
This has now changed and government has become a major partici-
pant in energy policymaking. In addition to its large-scale en-
ergy R&D programs, government now controls prices, surface mine
reclamation, the choice of fuels for electric power and indus-
trial facilities, and the installation of environmental control
technologies.
Prior to 1973, while energy was still largely a private sec-
tor concern, few institutional arrangements structured public-
private sector relationships. The most, fully developed of those
that did exist regulated natural monopolies (the FPC), promoted
the development and deployment of nuclear power technologies (the
Atomic Energy Commission) and conducted or supported relatively
small scale energy R&D (the Bureau of Wines). Otherwise public-
private sector relationships tended to follow the pattern of en-
ergy policymaking. That is, they tended to be structured around
a particular energy resource such as coal, oil, or natural qas.
Government's greatly expanded, much more active energy roie
has changed this. But public-private sector relationships have
not yet successfully adapted to this fundamental change. This is
most obvious at the national level where, as mentioned earlier,
government's energy R&D programs will be effective in achieving
their intended objectives only if the private sector accepts and
commercially deploys the technologies that these programs develop,
There is widespread agreement that cooperation and coordination
between the two sectors is an essential requirement if federal
programs are to succeed and serious, long-term energy problems
are to be resolved.! At the national level this cooperation and
coordination must begin with the initiation of an R&D program and
continue through successful commercialization of the technologies,
As the discussion in the following chapter will show, the
need for effective public-private sector cooperation and coordi-
nation can be just as great at the local level as, for example,
when energy facilities are being sited and policies and programs
to avoid or mitigate adverse impacts are being formulated and
1 See, for example, Hamilton, Mary R. "Energy Policy and
Changing Public-Private Relations," Policy Studies Journal, Vol.
7 (Autumn 1978), pp. 90-96;.and Knight, Kenneth E. "Business-
Government Relations: Some Key Problems Facing the Federal
Government's Energy Programs, 1975-1985," in Minger, Terrell J.,
and Sherry D. Oaks, eds. Growth Alternatives for the Rocky
Mountain West: Papers from the Vail Symposium V. Boulder, Colo.:
Westview Press, 1976, pp. 41-72.
14
-------
implemented. Without the cooperation of the energy developer, a
community may not have the information required to formulate such
policies and programs until the development is almost ready to be-
gin. These problems will be discussed in more detail in Chapter 2.
1.3.4 Participation in Policymaking
In recent years, in response to the demand of a variety of
interests (such as environmental and consumer interest groups),
participation in policymaking in most areas of public policy has
boon expanded to include a range of interested parties who previ-
ously had either not participated in policymaking at all or had
participated only occasionally. Participation in energy policy-
making has been broadened, frequently through mechanisms such as
public hearings and procedures for commenting on environmental
impact statements (EIS), but also through legal actions brought
against a particular proposed energy development such as siting
a specific energy facility.
Leaving aside the question of whether the results of this
broadened participation have been and are likely to be socially
beneficial, the overall effect has been to expand the range of in-
terests that have to be accommodated in the policymaking process.
This has inevitably complicated energy policymaking since, whether
these interests are accommodated while policy alternatives are
being formulated or when an attempt is made to implement them, it
generally takes longer to take a broad range of interests into
account than it does the interests of a few like-minded partici-
pants. For example, prior to about 1970, direct continuous par-
ticipation in making and implementing outer continental shelf
(OCS) oil and gas policies had been largely limited to the petro-
leum industry and government. Since government and industry had
almost identical policy objectives, policymaking and implementa-
tion was relatively uncomplicated. But a generally increased con-
cern for the environment and several specific events such as oil
spills and oil well blowouts led new participants representing new
interests to demand a role in making and implementing OCS policies.
As a consequence, changes proposed to the basic legislation gov-
erning OCS development have been being debated since about 1973; 2
and the development of OCS resources off the East Coast which was
planned to begin in 1975, began only recently.
xKash, Don E., et al. Energy Under the Oceans: A Technology
Assessment of Offshore Oil and Gas Operations. Norman, Okla.:
University of Oklahoma Press, 1973, Chapter 5.
2See, for example, Congressional Quarterly, Inc. Congress
and the Nation, Vol. IV: 1973-1976. Washington, D.C.:Congres-
sional Quarterly, 1977, pp. 252-53, and 279-82.
15
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The case of OCS policymaking is not unique. In many areas of
energy policymaking, including the development of western energy
resources, the broad range of interests represented in energy pol-
icymaking have yet to be accommodated. The implications of this
for western energy resource development will be discussed in gen-
eral in Chapter 2 and in the specific problem and issue categories
analyzed in Part II.
1.4 ADEQUATE, RELIABLE, AND CREDIBLE KNOWLEDGE FOR ENERGY
POLICYMAKING
Policymakers almost always have to make choices under condi-
tions of uncertainty. But the level of their uncertainty can be
quite different depending upon the relative adequacy, reliability,
validity, and credibility of the knowledge base available to them.
The lack of an adequate, reliable, and credible knowledge base con-
cerning energy resources, energy technologies, and their impacts
largely determines the level of confidence that policymakers, other
interested parties, and the general public can have in energy
policies and programs.1
Two examples of resources for which the existing knowledge
base is inadequate are uranium and natural gas. Estimates of
uranium resources vary significantly. For example, ERDA's 1976
estimate of potential resources was 2.9 million tons at a price of
$30 per pound or less; another contemporary nongovernmental esti-
mate is that potential resources are only about one-third that
amount. These are only two of the several, often confusing and
conflicting estimates.2
The situation in natural gas is somewhat the same. A Na-
tional Academy of Sciences study currently in progress has pub-
lished results which show that offshore natural gas reserves es-
timates in three of four fields tested as a part of the study are
on the average 40 percent high.3
1Kash, Don E., et al. Our Energy Future: The Role of Energy
Research, Development, and Demonstration in Reaching a Nationa1
Consensus on Energy Supply. Norman, Okla.: University of Okla-
homa Press, 1976, Chapter 2.
2Ibid., pp. 295-96.
3The study is being conducted by a National Research Council
Committee on Gas Production Opportunities. The four fields tested
by the committee's consultants were Tiger Shoal, East Cameron 64,
Eugene Island 266, and Vermilion 14. Results of field tests on
two other fields, South Marsh Island 48 and East Cameron 271,
are similar.
16
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The lack 'of adequate, reliable, credible knowledge about en-
ergy technologies and their impacts is illustrated by the absence
of data on most synthetic fuel technologies at a commercial scale.
With the exception of Lurgi high-British thermal unit (Btu) gasifi-
cation, data exist for only bench or pilot scale facilities.1 The
lack of data and experience either handicaps or makes impossible
the anticipation and analysis of the impacts or effects that can
be expected to occur where these energy technologies are deployed.
If the existing knowledge base is inadequate because of a
lack of theoretical understanding, no amount of data will elimi-
nate the high level of uncertainty which policymakers will con-
front. For example, at the present time, the understanding of how
trace elements are chemically bonded in different types of coal
and how different chemical bonds will affect what happens when
coal is burned in various types of boilers is quite limited. Con-
siderable analytical chemical and bench or pilot scale testing in
different kinds of boilers will be required to acquire the empir-
ical knowledge base that may eliminate the knowledge gap and make
it possible to predict what will happen when a coal with known
characteristics is burned in various kinds of boilers.2 For ex-
ample, results of such research would make it possible to predict
what portion of the trace elements will be emitted as air and
water pollutants.
Problems that are more clearly data problems may be just as
difficult for policymakers to deal with. For example, the problem
may be the lack of adequate baseline data in the area surrounding
a proposed energy development. The data required to identify and
analyze the impacts that would likely occur can usually be col-
lected. However, the geographical area for which data would be
required may be so large and the time period for which data are/
needed so long that it is practically impossible to afford, col-
lect, manage, and make the data available when they are needed.
Policymakers frequently have to deal with credibility prob-
lems which also involve adequacy and reliability. For example,
much of the existing data on energy resources are industry data.
The data on natural gas mentioned earlier are, for the most part,
either industry data or based on information supplied by industry.
Such data can affect policymaking in a variety of ways. Data on
natural gas, for example, affect government policies which set
wellhead prices. Even when industry makes its data available to
government, the data have to be treated as proprietary. This com-
plicates policymaking since consumer and environmental groups,
data for Lurgi are proprietary and, therefore, generally
not available to public policymakers.
2The characteristics of coal vary considerably, often within
the same coal field.
17
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among others, believe that data which industry makes public or
furnishes to government are often self-serving, and therefore,
totally inappropriate as the basis for informed public policy-
making. l
Policymakers are constantly confronted with a dilemma when
dealing with the uncertainties associated with making policy
choices in the absence of an adequate, reliable, credible knowl-
edge base. As noted earlier, policymakers almost always have to
make choices under conditions of uncertainty. At times, the level
of uncertainty is so high that they have to decide whether it
would be more socially responsible to choose not to do something,
or to delay doing something until a test has been conducted, more
data collected, and more analysis completed. This is the case in
several areas of energy policymaking, as, for example, in the case
of government funding or guarantees to support the deployment of
the synthetic fuel technologies mentioned earlier and government
policies promoting the development and deployment of nuclear tech-
nologies which pose significant waste disposal and nuclear safe-
guards problems. In almost all such cases, policymakers have to
deal with participants in the policymaking system who argue that
the existing knowledge base is inadequate, unreliable, or not
credible. And in many such cases, policymakers are at the same
time made to feel a sense of urgency, either as a consequence of
their'own knowledge about our energy problems or because of the
pressure of other participants in energy policymaking.
Of course, it is not only public sector policymakers who have
to deal with uncertainty. Private sector policymakers also deal
with various uncertainties, not the least of which is related to
government policies, for example, environmental control require-
ments and energy facility siting policies.
1.5 ENERGY, ECONOMICS, AND THE ENVIRONMENT
Each of the factors and considerations discussed briefly
above in some way affects or is affected by the pervasive inter-
dependence and interrelatedness of energy, economics, and environ-
ment. This interdependence and interrelatedness is perhaps the
single most critical category of factors shaping the energy pol-
icymaking context both nationally and regionally.
As highly industrialized, technological western societies
have evolved, a basic assumption has been that there is a direct
correlation between economic growth and human welfare and that
economic growth, if not directly dependent upon, is directly,re-
lated to energy consumption. These assumptions are based on a
1 See, for example, Stacks, John F. Stripping. San Francisco,
Calif.: Sierra Club, 1972; and Novick, Sheldon. "Special Report:
Energy Roundup." Environment, Vol. 19 (June/July 1977), pp. 29-33.
18
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materialistic definition of human welfare and what constitutes
the "good life." That is, the "good life" has historically been
defined in the Western world in terms of happiness and material
comfort; and it has been assumed that both are achieved by extend-
ing man's control over nature, by producing more and more material
products. The means to this end has been the acquisition and ap-
plication of knowledge; in short, the principal means for attain-
ing the "good life" has been through science and technology—which
has resulted in western societies becoming increasingly energy-
intensive. Although seriously challenged in recent years, it is
this logic put into practice which leads to the conclusion, and,
at present the condition, that energy is the lifeblood of our
highly industrialized, technological society.1
As societal values other than economic growth have received
more attention (environmental quality, for example), and as a less
materialistic definition of what constitutes the "good life" has
become more popular, a variety of energy, economic, and environ-
mental conflicts have arisen. Already underway in 1973, energy,
economic, and environmental conflicts have intensified since the
embargo and subsequent realization that the days of abundant,
cheap energy were effectively over.
The decade preceding the embargo might well be called the de-
cade of the environment. Acceptance of public responsibility for
the quality of human environment was acknowledged in the National
Environmental Policy Act of 1969.2 Public attitudes about envi-
ronmental quality changed significantly during this period. For
*As Rene Dubos, among others, has argued, it has become obvi-
ous that the advancement of knowledge doesn't automatically improve
the human condition. (See his Reason Awake: Science for Man.
New York, N.Y.: Columbia University Press, 1970 ; and So Human an
Animal. New York, N.Y.: Charles Scribner's Sons, 1968.) Others,
Barry Commoner, for example, agree with Dubos1 general statement.
But Commoner also argues that a part of our energy problem is a
consequence of the inappropriate uses to which we have put high
quality fuels such as electricity and natural gas. Energy ana-
lysts of the H.T. Odum or "eco-energetics" school go even further,
arguing that our basic energy problems result from not accounting
for energy subsidies from the natural environment. (See, for ex-
ample, Odum and Martha Gilliland in Gilliland, Martha, ed. Energy
Analysis: A New Public Policy Tool. Boulder, Colo.: Westview
Press, 1978; and Nicholson, Jean Martin. "The Three E's: Eco-
nomics, Energy, and Environment." EPA Journal, November-December
1977, pp. 16-18.)
2See National Environmental Policy Act of 1969. Pub.~L. 91-
190, 83 Stat. 852; and Caldwell, Lynton Keith. Environment: A
Challenge to Modern Society. Garden City, N.Y.: Anchor Books,
Doubleday, 1970.
19
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example, whereas in 1965 only 28 percent of the American public
believed air quality and 35 percent water quality to be problems,
by 1968 these percentages had increased to 55 and 53 percent re-
spectively.1 By 1970, the public considered air pollution to be
our second most important domestic problem.
While a clear causal relationship cannot be established, it
seems likely that a number of environmental catastrophes involving
either energy production or transportation contributed to this
change in public attitudes. For example, the Torrey Canyon acci-
dent in the English Channel and Union Oil's blowout in the Santa
Barbara Channel were given extensive coverage by the news media,
thereby focusing the public's attention on the undesirable conse-
quences of large oil spills. Coupled with the kinds of highly
visible air and water quality problems which were becoming in-
creasingly obvious to everyone, a majority of the public became
convinced that many environmental problems were serious.2 Given
this kind of policy context, these problems received priority
attention. Major environmental legislation was passed (for ex-
ample, air and water quality acts), new institutions were estab-
lished (for example, EPA and the President's Council on Environ-
mental Quality), mechanisms for expanded public participation in
public policymaking were established (for example, in the EIS pro-
cess and Corps of Engineers hearings), new intergovernmental rela-
tionships were developed (for example, state and federal relation-
ships in air and water quality),3 and public-private sector rela-
tionships were significantly altered (for example, a range of gov-
ernmental interventions requiring industry to acquire permits to do
many things that previously had often bee a unregulated such as
obtaining air and water pollutant discharge permits).
As indicated earlier, prior to the embargo, Americans had en-
joyed an abundance of cheap energy. One of the most basic changes
which occurred following the embargo was a dramatic increase in en-
ergy costs', in large part due to the almost 400 percent increase
in the cost of foreign oil—from $3.00 per barrel on October 1,
1973 to $11.65 on January 1, 1974." Purchasing power and
JAs reported in Jones, Charles 0. Clean Air: The Policies
and Politics of Pollution Control. Pittsburgh, Pa.: University
of Pittsburgh Press, 1975, pp. 144-46.
2See Chapter V and Appendix A of Kash, Don E., et al. Energy
Under the Oceans: A Technology Assessment of Offshore Oil and Gas
Operations. Norman, Okla.: University of Oklahoma Press, 1973.
3 See Chapters 5 and 6 in Part II.
''Congressional Quarterly, Inc. Congress and the Nation, Vol.
IV: 1973-1976. Washington, D.C.: Congressional Quarterly, 1977,
p. 201.
20
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industrial output both dropped, unemployment rose, and inflation
accelerated. In short, the economic impacts were severe.1 The
Nixon Administration's most significant policy response was to pro-
pose a "Project Independence" to achieve energy self-sufficiency.2
As now articulated, our national energy policy objective is to
achieve independence from insecure foreign sources--it had been
clear to most analysts from the outset that "zero imports" were
neither possible nor desirable. In practice, current policy seems
aimed at reducing impacts to a more economically acceptable level.
The two major elements of energy policies intended to contrib-
ute to achieving independence from insecure foreign sources have
been technological fixes and conservation. The institutional
changes mentioned in Section 2.3 reflect the heavy emphasis on the
technological fix approach. That is, policies and programs have
emphasized dealing with energy supply problems by developing new
technologies which tap previously untapped or largely untapped
resources (for example, the sun and ocean thermal gradients) or
convert resources such as coal and oil shale into fuel forms which
are more compatible with our existing system for distributing and
utilizing energy (gases and liquids, for example). Although the
emphasis on replacing imported oil with domestic resources com-
bines both technological fixes and conservation, the former are
generally more politically attractive since they promise to re-
duce the need for policymakers to make choices which they believe
would require their constituents to undergo significant lifestyle
changes.
The economic impact of these energy policies can be enormous.
Despite a generally agreed upon national energy policy aimed at
lessening our dependence on energy imports, in 1977 imports ac-
counted for almost 50 percent of our oil supply, an increase
of approximately 35 percent over 1973.3 Payments for oil imports
have also increased, from $2.5 billion in 1973 to $31.8 billion
in 1976.^ And the balance of payments effect has been staggering?
Congressional Quarterly, Inc. Congress and the Nation, Vol.
IV: 1973-1976. Washington, D.C.: Congressional Quarterly, 1977"7
p. 201.
2U.S., Federal Energy Administration. Project Independence
Report. Washington, D.C.: Government Printing Office, 1974.
3Corrigan, Richard, Dick Kirschten, and Robert Samuelson.
"Jimmy Carter's Energy Crusade." National Journal, Vol. 9
(April 30, 1977), p. 660.
''U.S., Department of Commerce. Survey of Current Business,
November 1977, pp. S-22 and S-23.
21
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the deficit due to oil imports is presently $27 billion1 in com-
parison to a surplus of $4.2 billion in 1973.2 One consequence of
this increase has been to destabilize the dollar in foreign ex-
change markets; some analysts go so far as to suggest that we are
on a path leading to national bankruptcy.3
At the present time the per barrel price of oil is the yard-
stick against which all energy prices have to be measured. Since
this is an artificial price set by the OPEC cartel, developing do-
mestic alternatives which have a high production cost can be quite
a risky undertaking. For example, if the cartel were to reduce
its high per barrel price of oil to a less artificial level, most
synfuels and advanced technologies would be priced out of the mar-
ket. This is hardly an attractive prospect to private sector in-
vestors and, in fact, most commercial scale synfuels projects have
yet to be implemented. To date, efforts to provide some kind of
government program which would lessen the private sector's risk,
(for example, guarantees and insurance) have been unsuccessful.
As the discussion in Chapter 2 will show, this energy-economics
interface has and will significantly affect the development of
western energy resources.
Reducing imports by switching to domestic supply sources will
affect the environment as well as the economy. For example, fed-
eral emissions and ambient air regulations established before the
embargo increased the attractiveness of clean fuels such as nat-
ural gas and led many utilities and industrial plants to switch
from other fuels, particularly high sulfur coal. The Carter Admin-
istration's fuel switching program will require many of these con-
sumers to switch back to coal. Even with sulfur dioxide scrubbers
and electrostatic precipitators, this conversion will affect air
quality. The apparent economic costs of the switch are also obvi-
ous. That is, the total cost will now include the capital invest-
ment required for the original conversion, the reconversion, and
the installation of environmental controls that weren't necessary
when clean fuels were being burned.
Policymakers are understandably confused when they have to
deal with problems such as these which illustrate that all prob-
lems and solutions seem to be interdependent and interrelated.
1"The Reluctant Exporter." Business Week, April 10, 1978,
p. 54.
2 Department of Commerce. Survey of Current Business,
November 1977, pp. S-22 and S-23.
3"Propping the Dollar at Last." Time, January 16, 1978,
p. 40. The Treasury Department recently announced a new program
intended to stabilize the dollar, a periodic auction of gold from
Fort Knox. See Wall Street Journal, April 20, 1978, p. 1.
22
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They find that an attempt to deal with a problem at one point in
the system produces problems somewhere else. The proposals they
are offered are often contradictory and are challenged by other
participants in energy policymaking. Since energy, economics, and
environmental problems are so obviously interdependent and inter-
related in numerous ways, attempting to resolve our serious, long-
term energy problems is enormously complicated both nationally and
regionally.
1.6 SUMMARY
This brief discussion demonstrates the complexity of the pol-
icy context within which western energy resource development is and
will take place. As noted above, public attitudes and the adequacy
of existing institutional arrangements and knowledge base help to
shape this overall national policy context. But it is interdepen-
dencies and interrelationships among national energy, economic, and
environmental problems, policies, and programs which appear to be
most pervasive in shaping the context within which energy policies
are being made, including western energy resource development pol-
icies. In the following chapter, the likely effects of both na-
tional and state policies as well as regional factors and consider-
ations on western energy resource development will be discussed.
23
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CHAPTER 2
THE REGIONAL CONTEXT OF WESTERN ENERGY RESOURCE DEVELOPMENT
2.1 INTRODUCTION
Western energy resource development is and will be affected
by regional factors as well as by the overall national policy con-
text described in Chapter 1. Among the most important of these
regional characteristics are such things as: natural resources,
population and population patterns, sectors of economic activity,
industrial development, lifestyle, and values; regional attitudes
toward energy development; the likely effects of national arid
state policies on how much of each of the six resources will be
developed, and which technologies will be used to develop them
over what time period; and public-private sector and intergovern-
mental relationships. Each of these will be briefly discussed
in this chapter.
2.2 AN OVERALL CHARACTERIZATION OF THE EIGHT-STATE STUDY AREA1
Among the regional factors and considerations that affect
western energy development, none is more important than the gen-
eral nature and character of the region. In general, the eight-
state study area has the following characteristics:
• Except for water it is rich in natural resources.
• With the exception of several large metropolitan
areas (Albuquerque, Denver, Phoenix, Salt Lake City,
and Tucson), it is sparsely populated.
• Much of the land and many of the mineral rights are
owned by the federal government and Indian tribes.
• Agriculture, mining, tourism, and government service
are the major sectors of economic activity. Manufac-
turing employs more than 10 percent of the labor force
in only three states: Arizona, Colorado, and Utah.
brief description of the eight-state study area is a
summary of our impressions which have been derived from published
materials, personal communications, and field research.
24
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• Rugged individualism is still highly valued and
government intervention is generally strongly opposed.
• Attitudes toward energy resource development range
widely from being strongly supportive to strongly opposed.
In the remainder of this section, each of these character-
istics will be discussed briefly to provide a broad-brushed,
overall description of the study area.
2.2.1 Natural Resources
The natural resources of the area are quite diverse and in-
clude a variety of plant and animal, scenic and aesthetic, min-
eral, and recreation resources. Many of these resources have been
set aside by the federal government as Indian reservations, na-
tional forests, parks, recreation, historic, and wilderness areas.
Large amounts of energy and other mineral resources in the eight-
state study area underlie federal and Indian owned lands.
A. Water Resources
The principal exception to the overall resource-rich char-
acter of the West is water. The two major river basins in the
eight-state study area are the Colorado and the Upper Missouri.
Estimated average instream flow for the Colorado River ranges
from 15.5 million to 16.2 million acre-feet per year (acre-ft/yr);
the most commonly used estimate is 13.5 million to 14.0 million
acre-ft/yr.1 Annual stream flow estimates for the Upper Missouri
range from 12.5 million to 21.8 million acre-feet.'0
Current water consumption in the Upper Colorado is approxi-
mately 3.5 million acre-ft/yr. Existing interstate compacts
obligate Upper Colorado Basin states to provide 7.5 million
Plotkin, Steven E., Harris Gold, and Irvin L. White.
"Water and Energy in the Western Coal Lands." Water Resources
Bulletin, Vol. 15 (February 1979) for details on surface water
estimates and possible shortages.
2See White, Irvin L., et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy"Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Chapter 12, for a description of surface and ground-
water resources in the study area.
25
-------
acre-ft/yr to the Lower Basin.1 If Upper Basin states are assumed
to be obligated to supply one-half of the 1.5 million acre-ft/yr
obligated to Mexico by the Mexican Water Treaty of 1944, an obli-
gation they do not accept,2 the quantity of water which must be
delivered to the Lower Basin each year is 8.25 million acre-feet.
Given the above stream flow, consumption estimates,- and uncer-
tainties about the obligation to Mexico, this would seem to leave
from 1.75 to 3.5 million acre-ft/yr for future increases in water
use in the Upper Colorado River Basin (UCRB). This is somewhat
misleading, however, since this much or more has already been al-
located but is not being used at the present time.3
The picture in the Upper Missouri is somewhat different. An
estimated 19 million acre-ft/yr is the practical limit for deple-
tions above Sioux City, Iowa.1* Current depletions above this
point are about 6.5 million acre-ft/yr which leaves up to 13.5
million acre-ft/yr for future uses including energy development.
However, as with availability in the Upper Colorado, this is some-
what misleading because of existing allocations and, in this case,
the location of surface waters in relation to energy resources.5
!More precisely, the 1922 Compact (Colorado River Compact of
1922, 42 Stat. 171, 45 Stat. 1064, declared effective by Presiden-
tial Proclamation, 46 Stat. 3000 [1928]), guarantees 75 million
acre-feet over each consecutive 10 year period. See Chapter 4 and
Plotkin, Steven E., Harris Gold, and Irvin L. White, "Water and
Energy in the Western Coal Lands." Water Resources Bulletin,
Vol. 15 (February 1979) .
2In a letter to Mr. Harl Noble, Acting Director, Upper Colo-
rado Region, Bureau of Reclamation, Governor Richuird D. Lamm of
Colorado, states that "in view of the almost indisputable evidence
at this time, the state of Colorado must insist by all means avail-
able to it, that Colorado and the other Upper Basin states must
not current1" or in the foreseeable future be charged with a
Mexican Treaty deficiency." See Chapter 4.
3 In addition to overallocations in at least some of the states,
uncertainties concerning water availability are affected by un-
quantified federal and Indian water rights. See Chapter 4 for a
discussion of these rights and the potential effects of quantifi-
cation.
4U.S., Department of the Interior, Water for Energy Manage-
ment Team. Report on Water for Energy in the Northern Great
Plains Area With Emphasis on the Yellowstone River Basin. Denver,
Colo.: Department of the Interior, 1975, p. VII-6.
5For details see Chapter 4 below.
26
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Groundwater resources are being utilized in some parts of
the eight-state area; in fact, in some areas such as southern
Arizona, groundwater resources are currently being overutilized.
Large quantities of groundwater are known to exist in certain
areas, such as in Wyoming, where they are not currently being
used on a large scale. Overall, however, existing knowledge
about groundwater, its quality in relation to how it might be
used, and its location in relation to where it might be needed
is somewhat limited.
B. Energy Resources
The quantities of the six energy resources being considered
are shown in Table 2-1 and their general distribution in the
eight-state study area in Figure 2-1. Coal and oil shale are the
most abundant among the six. In fact, approximately 36 percent
of all U.S. coal is located in the study area, virtually all the
nation's high grade oil shale is located in the Green River For-
mation in western Colorado, Utah, and Wyoming; and almost all of
the nation's high grade uranium ore is located in the eight states,
primarily in New Mexico and Wyoming.
As shown in Table 2-2, the federal government and Indians
own almost 45 percent of the total land in the eight-state study
area. Together, the federal government and Indians own more than
half the land in Arizona, Utah, and Wyoming and more than a third
in Colorado, Montana, and New Mexico.
Data on resource ownership are more difficult to obtain.
However, it appears that the federal government owns about half
the coal, geothermal, and uranium, and about 80 percent of the
oil shale resources in the eight-state area. The 271 Indian
reservations in the U.S. are estimated to contain from 10 to 16
percent of the nation's coal reserve1 and one-third of all lands
held for uranium exploration and development. Most of these re-
sources are located on a few of the approximately fifty Indian
reservations located in our study area.2 For example, Indian
lands in Colorado, New Mexico, arid Wyoming account for 45 percent
of all lands held for uranium exploration and development in
xCrittenden, Ann. "Coal: The Last Chance for the Crow."
New York_ Times, January 8, 1978, Section 3, p. 1.
zSee U.S., Federal Trade Commission, Bureau of Competition.
Report to the Federal Trade Commission on Mineral Leasing on In-
dian Lands. Washington, D.C.: Federal Trade Commission, 1975.
27
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—
: /
D Coal
^ Oil Shale
^ Uranium
• Geotherma.1
D Crude Oil/
Natural Gas
FIGURE 2-1:
GENERAL DISTRIBUTION OF COAL, CRUDE OIL? NATURAL
GAS, GEOTHERMAL, OIL SHALE, AND URANIUM RESOURCES
IN EIGHT WESTERN STATES
30
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TABLE 2-2:
FEDERAL AND INDIAN LANDS IN
THE EIGHT-STATE STUDY AREA
STATE
Arizona
Utah
Wyoming
New Mexico
Colorado
Montana
South Dakota
North Dakota
Total
TOTAL AREA
(thousands of acres)
72,688
52,697
62,343
77,766
66,486
93,271
48,882
44,452
518,585
PERCENT
FEDERAL
43
66
48
34
36
30
7
5
35
PERCENT
INDIAN
29
4
3
8
1
6
12
5
9
PERCENT FEDERAL
AND INDIAN
72
70
51
42
37
36
19
10
44
Sources: U.S., Department of the Interior, Bureau of Land Management.
Public Land Statistics 1976. Washington, D.C.: Government Printing
Office, 1977, p. 10; and U.S., Department of Commerce. Federal and
State Indian Reservations and Indian Trust Areas. Washington, D.C.:
Government Printing Office, 1974.
these three states. Over 85 percent of the nation's proven
uranium reserves are located in these three states.1
2.2.2 Population
Compared to much of the rest of the nation, the eight states
in our study area are small in population. Colorado is largest
with about 2.5 million, followed by Arizona with about 2.2 million,
The remaining six states have from 1.2 million (Utah) to .4 mil-
lion (Wyoming) and rank among the 15 least populated states in the
Field Engineering Corp. Survey of Lands held for
Uranium Exploration, Development and Production in Fourteen West-
ern States in the Six Month Period Ending December, 1976, GJBX-
33(77). Grand Junction, Colo.: U.S., Energy Research and Develop-
ment Administration, 1977, p. 1; and U.S., Energy Research and De-
velopment Administration, Grand Junction Office. Statistical Data
of the Uranium Industry, GJO-100(77). Grand Junction, Colo. :
U.S., Energy Research and Development Administration, 1977, p. 61.
31
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country. All of the eight states are substantially under the 4.3
million average population of the 50 states.1
Except for the five large metropolitan areas identified ear-
- lier, the states are relatively sparsely populated. Only three
of the eight states have population densities of greater than 10
per square mile; Wyoming, with fewer than 4 per square mile, is
the least densely populated state in the study area. In contrast,
the national average is approximately 60 persons per square mile.
Only in North and South Dakota do more than 50 percent of the
people live in rural areas, about 55 percent in both cases. The
other six states range from about 55 to 80 percent urban, the
most urban being Utah, Arizona, and Colorado, each of which is
about 80 percent urban. As the data on population density indi-
cates, this high percentage is a consequence of the concentration
of state's population in large metropolitan areas.
2.2.3 The Economy
Agriculture, mining, government, and services are the major
sectors of economic activity in the eight-state study area. Manu-
facturing is a major employer in only three of the eight states:
Arizona, Cclorado, and Utah. Overall, states in the area are
less manufacturing oriented than are states in any other region
of the nation.
Census data for 1970 indicate that median family income in
all eight of the states is below the national average of approxi-
mately $9,600 per year. Arizona, Colorado, and Utah, the three
most populous states, come closest to the national average: Colo-
rado (-$35); Arizona (-$403); and Utah (-$207).2
Industrial development in the area is concentrated in sev-
eral large metropolitan areas: Albuquerque, Denver, Phoenix,
Salt Lake City, and Tucson. Heavy manufcicturing is confined ex-
clusively to the vicinity of those cities while some light manu-
facturing is found in smaller urban areas (such as Casper, Grand
Junction, e.nd Billings). Outside these areas, industrial devel-
opment is generally limited to mining and wholesale and retail
trade. The metropolitan and smaller urban areas are where most
of the financial and government employers are located.3
^.S., Department of Commerce, Bureau of the Census. Pocket
Data Book, USA 1976. Washington, D.C.: Government Printing Office,
1976, p.~"?G~All data are for 1975.
2Median family income in Arizona woiild be above the national
average if the Navajo reservation were excluded. This emphasizes
how low income is on the reservation.
3Denver ranks second among U.S. cities in terms of federal
employment.
32
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2.2.4 Public Values and Attitudes
Outside the five major metropolitan areas, the lifestyle
reflects the slower, more relaxed pace generally associated with
small towns and rural areas. A sense of the frontier is still
evident, and rugged individualism remains a highly regarded value.
The area is not identified with any particular religion
although Catholicism is more prevalent than in the nation as a
whole. Mormonism is pervasive in several of the Rocky Mountain
states. An obviously strong feeling in the area is that "you take
care of your own" rather than depend on government. If this feel-
ing is not attributable to Mormonism, it appears to be strongly
reinforced by it.
Whatever its source, there is a strong strain of populism in
the eight-state area. One manifestation of this is an obviously
strong opposition to most kinds of government intervention, includ-
ing environmental controls which affect resource development.
There is also a very distinct antipathy toward planning, partic-
ularly any attempt to put limits on the uses to which owners can
put their real property.
2.2.5 Western Attitudes Toward Energy Resource Development
It is difficult to generalize about attitudes toward energy
resource development within the eight-state study area. Environ-
mental quality, scenic beauty, and present lifestyle are obviously
widely held values. But so are higher personal incomes, more job
opportunities, more amenities, easier access to medical services,
and a variety of other benefits associated with energy resource
development. Both kinds of values can be and apparently often are
held by the same person. Since these values are often in conflict,
it is difficult for westerners both individually and collectively
to be consistent in expressing their attitudes toward energy
development.
However, there do seem to be several consistent themes among
westerners. For example, outside the large metropolitan areas
there is a general opposition to the intervention of outsiders
whether the intervenor be the federal government or the Sierra
Club. Westerners generally seem to believe that they should be
the ones to decide their futures; for example, public officials
in southern Utah believe they should decide whether maintaining
75-mile visibility is more or less highly valued than the antici-
pated economic and fiscal benefits of energy resource development.:
]This is the position strongly expressed to members of t
Science and Public Policy Research Team who visited the area.
33
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Public opinion concerning energy resource development in the
eight-state study area has not been scientifically polled. How-
ever, Colorado, Wyoming, and Utah were included in a recent opin-
ion poll conducted by U.S. News & Work Report in a number of west-
ern states. A higher percentage of the residents in these three
states believe that the energy problem is serious than do resi-
dents of the nation generally—47 percent as compared to 30 per-
cent.1 More than half (52.5 percent) of those polled in the three
states responded negatively to the statement that "Having com-
pletely clean air and water is worth paying whatever higher prices
and higher taxes are needed"—in contrast to a 41 percent negative
response to the same question nationwide.2 And when asked whether
"government should permit increased strip mining because of the
country's need for coal," 62.1 percent of those polled in the three
states responded affirmatively as compared to 56.9 percent affirm-
ative response nationwide.3
On the basis of our contact with public officials in local
and state government, our overall impression is that much of the
West is more prodevelopment than is generally realized. Although
the strength of these feelings varies considerably among the eight
states, Utah and Wyoming seem to us to manifest the strongest pro-
development position and Montana the weakest.4 But in several of
the states, it is not so much an antidevelopment attitude that
is being manifested as a demand that the West not be treated as a
national sacrifice area.
Westerners often ask "Why should we develop our energy re-
sources for the benefit of other regions of the country?" For
example, Governor Apodoca of New Mexico has stated explicitly
that "We're not interested in being a colony for the rest of the
country."5
Colorado's Senator Hart has introduced legislation in the
U.S. Senate calling for federal impact assistance to compensate
the West and to help state and local governments mitigate the
Reported in the Denver Post, May 14, 1978, p. 3E.
2Ibid.
3Ibid.
"*See Christiansen, Bill and T.H. Clack, Jr. "A Western Per-
spective on Energy: A Plea for Rational Energy Planning."
Science, Vol. 194 (November 5, 1976), pp. 578-84.
5Congressional Quarterly, Inc. Congress and the Nation,
Vol. IV: 1973-1976. Washington, D.C.: Congressional Quarterly,
1977, p. 205.
34
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undesirable consequences of energy resource development. And
several states have enacted severance taxes which are intended
to insure that consumers who enjoy the energy benefit of western
energy development compensate the West for the development costs
the region experiences.2
2.2.6 Summary
The overall picture which emerges from this description of
energy resource development is that the eight-state study area is
large in land area, sparsely populated, energy-rich, water-poor,
relatively unindustrialized, largely subject to the control of
the energy resource and land-use policies of an absentee federal
landlord, and strongly opposed to federal intervention, partic-
ularly when it affects westerners' right to do what they want to
do with their personal property and lives.
2.2.7 Organization of This Chapter
The remainder of this chapter is divided into three major
sections. The first of these describes the energy technologies
and development alternatives being considered in this study. In
the second major section, national and state policies which can
significantly affect western energy resource development are iden-
tified and discussed. This discussion links western energy devel-
opment to the discussion of national policies in Chapter 1 and to
the specifically regional factors and considerations which affect
western energy resource development, including some of those iden-
tified above. A final section summarizes some of the major aspects
of public-private and intergovernmental relationships which help
shape the regional context of western energy resource development.
1 Senate Bill 1493, Inland Energy Development Impact Assis-
tance Act of 1977.
2See Section 2.4.2. Montana's severance tax on coal is the
highest in the area. Wisconsin Power and Light Co. is challen-
ging this tax on the basis that it is excessive and a burden on
commerce. See "The Fuels Outlook." Electrical World, Vol. 189
(March 1, 1978), p. 49.
35
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2.3 ENERGY TECHNOLOGIES AND DEVELOPMENT ALTERNATIVES1
When the western energy resources described above are devel-
oped, the effects on the West and the rest of the nation will
vary depending upon the level, rate, pattern, and technological
alternatives chosen. In general, the higher the level of re-
gional development the greater the contribution of the West to
national energy supplies and the greater the costs, risks, and
benefits for the West.
With regard to patterns of development and technological al-
ternatives, coal offers the greatest range of options. Coal can
either be burned directly or converted to electricity, synthetic
gas, or a synthetic liquid. The coal conversion technologies ex-
amined in this study are: steam electric power generation, Lurgi
and Synthane high-Btu (British thermal unit) gasification, and
Synthoil liquefaction (see Table 2-3). All of these are sited at
or near the mine-mouth. Both surface a.nd underground mining are
considered. Both unit train and slurry pipeline transportation
are examined for exporting coal to load center conversion sites.
In contrast to coal, geothermal, oil shale, and uranium can-
not be exported as raw resources. The geothermal development al-
ternative considered is on-site steam-electric power generation
(see Table 2-4). Both surface and solutional mining alternatives
are examined for uranium with both kinds of mines supplying ura-
nium ore to a uranium mill for processing into yellowcake (see
Table 2-5).
Two oil shale conversion options are considered: underground
mining with TOSCO II surface retorting; and modified in_ situ (see
Table 2-6). Shale oil can either be upgraded on-site or trans-
ported to a refinery for processing. Both conventional extraction
and production enhanced recovery technologies are examined for oil,
Conventional extraction and production of natural gas are also con-
sidered (see Table 2-7). Both synthetic oil and gas are trans-
ported by pipeline, and electricity is transmitted by extra-high
voltage transmission lines.
!The energy technologies considered in this study are de-
scribed in White, Irvin L., et al. Energy From the West^ Energy
Resource Development Systems Report. Washington, D.C.: U.S. ,
Environmental Protection Agency, forthcoming. The preliminary re-
sults of our analysis of the impacts of deploying these technolo-
gies in the West are reported in White, Irvin L., et al. Energy
Fjrom the West; A Progress Report of a Technology Assessment of
Western Energy Resource Development. Washington,. D.C.: U.S.,
Environmental Protection Agency, 1977. Final results will be re-
ported in White, Irvin L., et al. Energy From the West: Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protec-
tion Agency, forthcoming.
36
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TABLE 2-4 :
GEOTHERMAL RESOURCE DEVELOPMENT
ALTERNATIVES3
ALTERNATIVE EXAMINED
BRIEF DESCRIPTION
Drilling
Geothermal drilling is similar
to drilling for oil or gas
except that penetration rates
are generally slower (due to
harder rock), temperatures are
higher, and cooling towers
may be required to cool
drilling mud.
Production of Hot
Water and Hot Rock
Reserviors
In hot water reservoirs, pres-
sure differentials force steam
or hot water to the surface.
The surface installation in-
cludes valves to control
pressure and separators to
remove liquids and solids.
When hot rock resources are
being produced, water is in-
troduced from the surface and
heated or converted to steam
when it contacts the hot rock
at the bottom of the hole.
The hot water or steam is
then returned to the surface.
Conversion to
Electricity
The heat energy from geothermal
resources is used to produce
electricity by driving a steam
turbine and a generator.
Based on University of Oklahoma, Science and Public Policy
Program. Energy Alternatives; A Comparative Analysis.
Washington, D.C.: Government Printing Office, 1975; and
White, Irvin L., et al. Energy From the West: Energy
Resource Development Systems Report. Washington, D.C.:
U.S., Environmental Protection Agency, forthcoming.
39
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42
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TABLE 2-8:
LOW AND NOMINAL DEMAND CASE SCENARIOS OF
WESTERN ENERGY RESOURCE PRODUCTION
ENERGY TYPE
Coal Production3
Direct Use
Q'S FROM EIGHT STATE REGION3
1975
1.57
1.50
Unit Train ; 1.50
Slurry Pipeline
Gasification
Liquefaction
Electrical Generation
Oil Shale
Uranium Fuel
Gas (Methane)
Domestic Crude Oil
Geothermal
Total
0
0
0
0.03
0
1.95
1.71
1.43
0
6.66
NOMINAL DEMAND CASE
1980
5.04
3.73
3.14
0.52
0
0
0. 48
0.001
4.77
1.97
1.67
0
13.45
1990
12.60
8. 30
5.33
2.97
0.23
0.001
1.08
0.95
12 .70
2.08
1.32
0.09
29. 74
2000
29.90
14.80
7.07
7.75
3.83
0.31
1.43
4.76
23.80
1.06
1.03
0.15
60.70
LOW DEMAND CASE
1980
4.28
3.13
2.71
0.42
0
0
0.41
0.001
4.15
1.99
1.74
0
12.16
1990
9.80
6.33
4.13
2.26
0.15
0.001
0. 34
0.19
9.46
1.89
1.34
0.01
22.69
2000
22.10
11.10
5.28
5.79
2.30
0.38
1.08
0.95
17.10
1.19
1.2CT
0.02
42.56
Q = 10 l5 British thermal units. One Q equals approximately 175 million
barrels of oil, 60 million tons of western coal, or one trillion cubic
feet of natural gas.
Input values for coal direct use; output values for others.
Coal subcategories do not add to total because of energy losses in the
energy conversion subcategories.
Two energy resource development scenarios, Nominal and Low
Demand cases, were developed to serve as a basis for identifying
impacts and issues resulting from energy development in the eight
western states. The Stanford Research Institute's interfuel com-
petition model was used to construct these two scenarios, which
are further described in Chapter 11 of our Impact Analysis Report.l
The Nominal and Low Demand case scenarios contain a national
energy supply of 155.1 quads (Q) and 124.0 Q respectively for the
year 2000. The contribution from the eight state study area in
the year 2000 is 60.70 Q and 42.56 Q for the Nominal and Low De-
mand cases, respectively. The amount of energy by resource type
produced by the eight western states for these two scenarios is
shown in Table 2-8.
TWhite, Irvin L., et al. Energy From the West; Impact Analy-
sis Report. Washington, D.C.: U.S., Environmental Protection
Agency, forthcoming, Chapter 11.
43
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The consequences for the West can be quite different depend-
ing upon whether an export or mine-mouth alternative is chosen.
For example, converting coal to electricity or a synthetic gas
or liquid within the eight-state area will almost always increase
the costs, risks, and benefits; for the area. On the other hand,
exporting raw coal will usually decrease them. Just how much con-
version within the area will increase and export decrease costs,
risks, and benefits will depend upon national, state, and local
laws, regulations, and policies. For example, a major economic
benefit produced by converting coal within the eight-state area
will be a large increase in the property tax base. A state might
elec?t to use a severance tax to obtain the same increase in reve-
nues from exported coal; however, if the conversion facility is
not located within the area, employment opportunities will be
fewer, population growth lower, and overall economic growth less.
Air and water quality impacts will silso generally be less in
the eight-state area if raw coal is exported rather than converted
on-site. While there will still be air and water quality impacts
from mining and transporting the coal, these will be much less than
would be experienced if the coal were converted on-site to electric-
ity or to a synthetic gas or liquid. Again, regulations and pol-
icies can be designed to lessen the adverse impacts of on~site con-
version. For example, highly efficient environmental control tech-
nologies can be required and strict siting requirements imposed.
Water availability problems can be decreased in water-scarce
areas if coal is exported by train. But again, these problems can
be lessened by requiring the use of water minimizing technologies
such as we'I/dry rather than wet, cooling and process design changes
which would decrease water consumption.
Exporting coal can also export some of the costs and benefits
£0 the demand center where the coal is burned or converted. For
example, exporting the coal from the West will generally increase
air quality problems in the demand center, many of which already
have air quality problems. While the increased ambient concen-
trations of air pollutants in the West might decrease visibility
and produce: episodic violations of ambient air quality standaxds,
the same incremental increase in the vicinity of the demand center
might have serious economic and human health effects.
As noted above, the on-site effects of developing geothermal,
oil shale, oil, natural gas, and uranium generally cannot be ex-
ported.1 However, effects can vary depending upon which develop-
ment alternative is chosen. These differences are reported in
Energy From_the West: A Progress_ Report of a Technology
lAs noted above, shale oil can either be upgraded on-site or
shipped to a refinery. Exporting the shale oil for processing
decreases on-site effects.
44
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Assessment of Western Energy Resource Development1 and are sum-
marized where appropriate in the analysis of categories of prob-
lems and issues in Part II below.
National and state policies will determine which of the range
of possible levels, rates, patterns, and technological alterna-
tives will actually be chosen in developing western energy re-
sources. Policies most likely to have a significant effect on
these choices are discussed in the following section.
2.4 NATIONAL AND STATE POLICIES AND WESTERN ENERGY RESOURCE
DEVELOPMENT
2.4.1 Introduction
As stated in the context of energy policy, our overall na-
tional, energy, economic, and environmental objectives are to pro-
vide sufficient energy from secure sources to support continued
economic growth and to minimize changes in lifestyles while con-
tinuing to maintain and enhance environmental quality. The obvi-
ous interdependenci.es and interrelationships among these three
areas of public policy at the national level were discussed
briefly in Chapter 1. In this section, both national and state
energy, economic, and environment policies as they affect western
energy development will be discussed. The effects of other re-
lated policies such as siting, land use, and water policies will
also be discussed briefly.
2.4.2 Energy, Environmental, and Economic Policies
A. Introduction
The elements of national energy policy which will affect west-
ern energy resource development most directly through the year 2000
are those which emphasize domestic energy development, promote the
production and utilization of certain energy resources (particu-
larly coal, uranium, and oil shale), and support the development
and encourage the deployment of certain technologies (such as coal
gasification and liquefaction) . Otherwise it is likely to be ei- .
ther the economic or environmental elements of national energy pol-
icies that will most significantly affect how much and where west-
ern energy resources will be developed and which technologies will
be used to develop them. It is also likely that it will be the
western states' environmental, economic, and other policies such
as siting and water policies that will play the major role in
shaping energy resource development in the study area.
1 White, Irvin L., et aI. Energy From the West; A Progress
Report of a Technology Assessment of Western Energy Resource Devel-
opment . Washington, D.C.: U.S., Environmental Protection Agency,
1977.
45
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B. Energy Policy
Since the 1973 Organization of Petroleum Exporting Countries
embargo, a consistent theme in national energy policy has been
to achieve independence from insecure foreign sources of energy.
Until the President's National Energy Plan1 (NEP) was proposed
and the Clean Air Act Amendments of 19772 enacted, this policy
had the effect of promoting western energy production, particularly
coal. But the NEP proposes and the amendments require all new
coal-burning facilities to be equipped with the "best available
control technology" (BACT) to reduce the emission of air pollu-
tants. Since the principal advantage western coal has had over
coal from other regions is its low sulfur content, the BACT re-
quirement can be, at least in the short term, a significant fac-
tor in determining how much western coal is produced.3
The NEP assumes that, in the short term, most coal will be
burned directly (including coal-fired steam-electric power gener-
ation) . In fact, the NEP, which promotes coal production and uti-
lization, includes several provisions which encourage the direct
burning of coal, including policies which would raise oil and nat-
ural gas prices, fuel switching requirements which would switch
industrial and utility users from oil and natural gas to other
fuels, primarily coal, a prohibition against the use of oil and
natural gas in new industrial and utility boilers, and taxes on
the use of oil and natural gas.
Although the NEP does call for government support of
commercial-size demonstrations of both solvent refined coal and
low-Btu gasification technologies and an active high-Btu gasifi-
cation research and development program,, it does not propose either
to subsidize coal gasification or liquefaction or to insure private
developers against the large financial risks currently associated
with these technologies. This policy does not encourage and, in
fact, probably has the effect of discouraging the development and
deployment of coal gasification and liquefaction technologies.
Oil shale is not emphasized by the NEP either. While noting
that oil shale is the potential source of billions of barrels of
oil, the NEP states that environmental and economic problems will
have to be overcome for this potential to be realized. The
1U.S./ Executive Office of the President, Energy Policy and
Planning. The National Energy Plan. Washington, B.C.: Govern-
ment Printing Office, 1977.
2Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
685.
3This topic will be discussed in more detail in the follow-
ing section.
46
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contribution of the NEP toward resolving these problems is to
entitle shale oil to the world price of oil. This policy has al-
ready been put into effect and could speed up the development of
this resource.
The NEP deemphasizes advanced nuclear technologies, largely
because of safeguards problems, but it does call for more light-
water reactors, and, therefore, increased uranium production. As
for the other resources considered in this study, geothermal is
to receive the same tax deduction for intangible drilling costs
that oil and natural gas now receive, streamlined leasing proce-
dures are to be developed, and additional research and develop-
ment funding is proposed. With regard to oil and natural gas,
the NEP calls for pricing policy to provide new incentives. The
intended effect is to increase the identification and production
of oil and natural gas resources, including those located in the
western U.S., and to promote production from stripper wells and
enhanced recovery in old fields.
C. Environmental Policies
As noted earlier, both national and state environmental pol-
icies can have a significant effect on western energy resource de-
velopment. For example, energy development in the West will have
to meet either national ambient air quality standards (NAAQS) or
more stringent state standards (of the eight states studied only
Utah does not have more restrictive standards), new source perfor-
mance standards (NSPS), prevention of significant deterioration
(PSD) increments, and the BACT requirements mentioned above.
Energy development in the region will be especially affected by
PSD regulations which are intended to protect air quality in areas
where air quality is currently better than the quality provided b,y
NAAQS. This is because there are many areas in the West which
either already are or are potentially Class I PSD areas (such as
national parks, forests, wilderness, and recreation areas). One
likely effect of PSD requirements will be to limit the size and
probably the number of energy conversion facilities (such as coal-
fired steam-electric power and synfuels plants) that can be sited
in the West.l
As mentioned above, the BACT requirement decreases the advan-
tage low sulfur western coal has over coal from other regions. A
recently published report on the effects of the BACT requirement
indicates that western coal production will be substantially lower
more details, see Chapter 6 below on Air Quality Prob-
lems and Issues.
47
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than it would have been in the absence of this requirement.2 This
study found that the reduction could be about 23 percent by 1985 and
about 42 percent by 1990.2 The National Environmental Policy Act of
19693 (NEPA) has also had and can be expected to continue to have a
significant impact on western energy resource -development, both on
a site-specific and region-wide basis; among the provisions intended
to achieve the overall objectives of the Act is a requirement that
an environmental impact statement (EIS) be prepared by federal agen-
cies for any proposed action which would significantly affect the
quality of the human environment.1* An agency's draft EIS is widely
reviewed both within government and externally before a final EIS
is approved. And the adequacy of the final EIS subsequently ap-
proved may be challenged. For example, the Department of the Inte-
rior's Final Coal Programmatic EIS was challenged by the Natural Re-
sources Defense Council (NRDC) on the grounds that the statement
failed to demonstrate the need for more federal coal leasing and that
the description of the proposed leasing systems in the EIS was in-
adequate.5 The U.S. Court of Appeals for the District of Columbia
sustained NRDC's challenge and enjoined the Department of the Interi-
or (DOI) "from taking any steps, whatsoever, directly or indirectly,
to implement the new coal leasing program."6 This injunction has
the effect of continuing a moratorium on coal leasing which was
officially in effect while the Department of Energy (DOE) reviewed
^rohm, G.C., C.D. Dux, and J.C. Van Kuiken. Effect on
Regional Coal Markets of the "Best Available Control Technology"
Policy for Sulfur Emission, National Coal Utilization Assessment.
Argonne, 111.: Argonne National Laboratory, 1977. Reduced pro-
duction would be due primarily to transportation costs. That, is,
if BACT has to be installed regardless of: what coal is used,
transporting either coal or electricity from the West would be
more expensive than using local coal.
2 Ibid., p. 47. The decrease would occur mainly in the North-
ern Great -Plains. Production in the rest of the West would in-
crease slightly less than 2 percent by 1985 and 15 percent by 1990,
primarily by replacing Northern Great Plains coal in southwestern
markets.
3National Environmental Policy Act of 1969, Pub. L. 91-190,
83 Stat. 852, 42 U.S.C. § 4321-47 (1970).
''Ibid. , Section 102(2) (C) .
5Quoted by Turcott, George L. (Associate Director, Bureau of
Land Management, Department of the Interior). "The Full Scope of
the Hydrocarbon Leasing Program." Paper presented at the annual
meeting of the American Association for the Advancement of Science,
Washington, D.C., February 16, 1978.
6 Ibid.
48
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its procedures and issued the final coal programmatic EIS. Although
the official moratorium was not announced by Secretary of the
Interior Morton until February 1973, coal leasing has actually
been stalled since May 1971.l A major effect has been to reduce
speculative activity about coal development in the West since the
federal government controls such a large percentage of the coal
located there.
Secretary of the Interior Kleppe terminated the moratorium
in January 1976, but no coal leases were made prior to the current
injunction being granted. Secretary Andrus recently announced an
agreement which would allow Interior to resume limited leasing of
coal deposits on federal lands in the West to allow operators to
fulfill existing contracts. However, the plan still must be ac-
cepted by the district court which issued the injunction.
Five of the eight states in our study area have also either
enacted environmental protection acts or established an adminis-
trative equivalent. To date none of these acts of administrative
programs has had the effect on western energy resource development
that NEPA has had. On the other hand, they have not been in ef-
fect as long.
Other national environmental or environmentally-relatea pol-
icies and regulations which will affect western energy development
include those which are intended to protect water quality,2 main-
tain the natural character of wild and scenic streams,3 protect
and preserve endangered species,4 control the disposal of toxic
Magida, Arthur J. "Environmental Report/Major Revisions
Likely in Federal Coal Leasing Program." National Journal, Vol. 7
(August 2, 1976), pp. 1101-9; and "U.S. Coal Leasing of West's
Coal Lands to Resume." Denver Post, February 26, 1978.
2Federal Water Pollution Control Act as amended by Clean
Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566.
3Wild and Scenic Rivers Act of 1968, Pub. L. 90-542, 82
Stat. 906.
^Endangered Species Preservation Act of 1973, Pub. L. 93-
205, 87 Stat. 884.
49
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substances,1 protect drinking water supplies,2 restore surface-
mined lands,3 and develop comprehensive land-use plans.1*
D. Economic Policies
The economic effects of several of the energy and environ-
mental policies discussed above can also affect western energy
resource development. For example, the previously cited Argonne
study of the effects of the BACT requirement, found that the BACT
requirement will increase the "within the fence" economic cost of
using coal in areas where low sulfur western coal is now being
used to meet NSPS by 20 to 25 percent. In contrast, the increased
cost in areas where high sulfur eastern coal is now being used, to
meet NSPS will be 8 to 10 percent.5 An additional effect is to
"...make coal-generated electrical power more expensive relative
to nuclear power. This should widen the cost advantage that
nuclear plants appear to enjoy in many areas."6 Consequently, the
BACT requirement could have the added effect of increasing uranium
production in the eight-state study area.
As noted earlier, the NEP does not propose either to subsidize
synfuels or to insure private developers against the large finan-
cial risk currently associated with their production. The excep-
tion is entitling shale oil to world prices, otherwise, without a
subsidy, synfuels are not currently competitive. And, as noted
earlier, one economic effect of the NEP's synfuels provisions will
likely be to downplay the development and deployment of coal gas-
ification and liquefaction and oil shale retorting technologies.
'Toxic Substances Control Act of 1976, Pub. L. 94-469, 90
Stat. 2003.
2Safe Drinking Water Act of 1974, Pub. L. 93-523, 88 Stat.
1660.
3Surface Mining Control and Reclamation Act of 1977, Pub. L,
95-87, 91 Stat. 445.
^Federal Land Policy and Management Act of 1976, Pub. L. 94-
579, 90 Stat. 2743.
5Krohm, G.C., C.D. Dux, and J.C. Van Kuiken. Effects on Re-
gional Coal Markets of the "Best Available Control Technology"
Policy for Sulfur Emission, National Coa". Utilization Assessment.
Argonne, 111.: Argonne National Laboratory, 1977. The percent-
age increase would probably be less if overall costs such as
transportation were included.
6 Ibid.
50
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Environmental laws and requirements can also increase the
economic cost of energy resource development by providing oppo-
nents of particular projects (such as constructing a single coal-
fired steam-electric power plant) or of major regional programs
(such as coal leasing) a means of delaying or stopping such pro-
jects and programs. For example, in April 1976, four Arizona,
California, and Utah utilities abandoned plans to build a large
coal-fired steam-electric power complex in the Kaiparowits Plateau
in southern Utah. This project was opposed by environmental inter-
ests, represented primarily by the Audubon Society and the Sierra
Club, primarily because of concern about the effect on air quality
both within the immediate vicinity of the complex and on the eight
national parks located within a 200 miles radius of the develop-
ment site. When the decision was made to abandon the project, the
four utilities had already invested four and one-half years and
about $5 million. The point here is not to establish whether the
utilities had proposed a "bad" siting choice for a large power com-
plex; rather it is that objections based on environmental laws and
regulations contributed to a decision to abandon the project. How-
ever, other factors contributed to the decision as well, including
economic consideration and a decision by California to assume juris-
diction over California utilities' out-of-state facilities.
The complexity of existing siting processes also affected the
utilities' decision and economic costs in the Kaiparowits case.
Had they continued to try to win approval, the four utilities
would still have had to obtain more than 200 permits from more
than 40 federal, state, and local agencies prior to beginning con-
struction. l As the discussion of siting problems and issues in
Chapter 11 indicates, uncertainties associated with existing sit-
ing processes can add significantly to the economic costs of
energy development.
As noted in the brief discussion of the NEP, tax policies
affect the economics of energy development. For example, allow-
ing intangible drilling costs to be written off by geothermal de-
velopers is intended to be a tax incentive. And, as mentioned
earlier, the NEP proposes taxes which would increase the economic
cost of using oil and natural gas. ,
At the state and local level, property and sales taxes can
also affect the economic costs of energy. But severance taxes
could have a larger effect on western energy development. The
effective severance on tax rates of states in our study area are
1Hall, Christian. "Huge Plant's Demise Signals Trouble Ahead
for Energy Expansion." Wall Street Journal, September 7, 1976.
51
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listed in Table 2-9. l While such taxes could have the effect of
discouraging development in states that have high taxes, there is
no evidence that this effect is occurring in the West. However,
severance taxes do affect energy prices and, as will be described
in Section 2.5, this can affect interstate relations when con-
suming states believe they are being "ripped off" by producing
states .
2.4.3 Other Policies
Policies outside the energy, economic, and environmental pol-
icy areas can also affect western energy development. The effects
of one of these, facility siting, were briefly mentioned above;.
Five states in our study area have energy facility siting laws:
Arizona, Montana, New Mexico, North Dakota, and Wyoming. While
provisions vary, these laws generally have two or more of the fol-
lowing provisions or requirements: application fees, public par-
ticipation, review of site selection, establishing need by fore-
casting demand , citizen suits, and environmental reports. These
laws and siting problems arid issues generally are discussed in
detail in Chapters 7 and 12. The point to be made briefly here is
that land-use policies generally and siting policies specif ically
can help to shape energy development.
Water availability ranks with air quality as one of the fac-
tors that can affect western energy development most significantly,
particularly in the Upper Colorado River. As the description in
Section 2.1 above noted, water is a scarce resource in much of the
eight-state study area. Federal and state laws, interstate com-
pacts, and international treaties can affect how much water is
available and who gets it for what purposes. For example, each of
the eight states has its own s/stem for allocating water resources.
The amount of water that the states can allocate is constrained not
only by what is physically available, but also in the Colorado River
Basin, by an interstate compact and a treaty with Mexico which to-
gether require either that 7.5 million acre-feet or 8.25 million
acre-ft/yr .oe delivered to the Lower Basin.2 The state allocation
system is also threatened by the unquantified prior rights held by
the point, of view of municipal officials, severance
taxes do not necessarily solve problems, primarily because the
monies are not getting to the municipalities. This distribution
problem is discussed in Chapter 10.
2 Existing compacts call for 7.5 million acre-ft/yr to be de-
livered. The Mexican Treaty requires that 1.5 million acre-ft/yr
be delivered to Mexico. As noted in Section 2. 2.1. A, Upper Basin
states maintain that they are not obligated to deliver any of this
required water to the Lower Basin. If they are required to de-
liver half of this amount, the total they would have to deliver
to the Lower Basin each year would be 8.25 million acre-feet.
52
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TABLE 2-9:
STATE MINERAL SERVANCE TAXES
(percent)
Colorado
Montana
New Mexico
North Dakota
Utah
Wyoming
COAL3
7.2b
30.0
4.6b
h
11.3
0.0
F
10.5"
GAS
AND OIL
5.0C
2.65
4.9b'e
p
5.0°
2.0
4.0
URNAIUM
2.5C
d
5.0b
H
vJ.
1.0
5.5
Source: Bronder, Leonard D. Severance
Tax Comparisons Among WGREPO States,
Staff Analysis No. 77-28. Denver, Colo.:
Western Governors' Regional Energy
Policy Office, June 1977.
Surface-mined.
Law written in cents per unit. Values
of resources assumed here of: $8.33/ton
for coal in Four Corners States, $5.73/ton
for coal in Northern Great Plains,
$1.45/thousand cubic feet for gas, $9.15/
barrel for oil, $40/lb. for uranium
(yellowcake).
Before property tax credits.
No taxable production in 1977.
3.4 percent effective rate for gas.
Reverts to 8.5 percent after the 2
percent special levy has accumulated to
$160 million (probably around 1993).
53
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the federal government and Indian tribes. If the federal govern-
ment quantified these, the whole state allocation system could be
thrown into chaos.1
Water policies can also have economic effects. While high
water prices are not likely to have much of an effect on energy
prices, they can have a significant effect on other users, such as
agricultural users. And if water users are required to use water
minimizing technologies, economic costs will be high. For example,
agricultural users could be required to use water-saving irriga-
tion technologies such as a trickle system and energy developers
could be required to use wet/dry rather than wet cooling as well
as water minimizing process designs.2
Other policies can, of course, affect energy development.
The detailed analyses of problems and issues in Part II will ex-
tend this brief introductory examination of how national and state
policies can affect the development of energy resources in our
eight-state study area.
2.5 RELATIONSHIPS WHICH HELP TO SHAPE THE REGIONAL CONTEXT OF
WESTERN ENERGY RESOURCE DEVELOPMENT
2.5.1 Introduction
A range of public-private sector and intergovernmental re-
lationships bring together the regional factors and national and
state policies discussed above. In this section, some of the most
important aspects of these relationships are discussed together
with their possible effects on western energy resource development.
2.5.2 Public-Private Sector Relationships
Public-private sector relationships can affect energy resource
development in a variety of ways. For example, siting decisions
obviously involve government agencies, industry, and environmental
interest groups. And landowners, local residents, chambers of com-
merce, labor unions, and others may also participate. Conflicts
which arise among these participants as a consequence of a siting
decision can have important political effects in the local commu-
nity and surrounding area. For example, in Wyoming, energy devel-
opment and subsequent conflicts over water rights have created
alliances among traditional enemies. The Wyoming Stock Growers
Association (WSGA) competes with the Union Pacific Railroad for
Neither the Congress nor the Administration is likely to
claim prior federal rights apart from the existing state allocation
system. However, it is not clear that Indian rights will not be
quantified. In fact, several cases are now before the courts.
2 See Chapter 4.
54
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water supplies. This competition has led WSGA to join forces with
environmental interest groups and Union Pacific to become an ally
of labor.1 Based on their past relationships, both alliances are
clear cases of common interests resulting in strange bedfellows.
Changing public-private sector relationships can also have
consequences far beyond the immediate area around an energy devel-
opment as the fifteen-year battle over the Kaiparowits project men-
tioned earlier illustrates. In part, that case represented a clas-
sic confrontation between industry and environmental interests. It
illustrates both the level of complexity and uncertainty encoun-
tered in attempting to balance energy and environmental interests
and values. As at the national level, increasing the number of
participants and the range of interests that must be accommodated
considerably increased the time required to make and implement
workable policies and programs.
2.5.3 Intergovernmental Relationships in Western Energy Resource
Development
A. Federal-State Relations
The response of western states to energy and environmental
policy represents a change in federal-state relationships with re-
spect to environmental standards. Environmental policy has been
characterized historically by the federal government requiring
states either to develop their own standards or to comply with fed-
eral regulations.2 The intensity of the states' responses to this
increases the likelihood of federal-state conflict. In fact, con-
flict has already emerged, for example, over the extent of state
authority over reclamation on federal lands and whether energy de-
velopment should occur on specific federal lands. Questions about
state authority over reclamation on federal lands arose largely be-
cause there was no federal reclamation legislation before the Sur-
face Mine Reclamation Act of 1977.3 Because of the ambiguity of
existing laws and regulations, most western states enforced their
own laws on federal lands; in fact, all reclamation statutes en-
acted by the eight states either explicitly or implicitly stipulate
that they apply to all mining activity within their boundaries,
Richards, Bill. "Changes Sweep into Wyoming." Washington
Post, June 25, 1977.
2For an elaboration of this trend in air quality control, see
Jones, Charles 0. Clean Air; The Policies and Politics of Pollu-
tion Control. Pittsburgh, Pa.: University of Pittsburgh Press,
1975.
3Surface Mining Control and Reclamation Act of 1977, Pub. L.
95-87, 91 Stat. 445.
55
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regardless of who owns the land.1 Reclamation regulations proposed
by DOI in January 1975 provided that federal reclamation provi-
sions would prevail over state law on federal lands, and that DOI
has the sole authority for designating federal lands suitable for
mining.2 In part, because of substantial opposition to these regu-
lations by western states,3 DOI changed the regulations to provide
that states would be permitted as much control as constitutionally
possible and that the states and DOI would enter into an agreement
providing for joint administration and enforcement.1*
This failed to satisfy Wyoming which brought suit against DOI
seeking recognition of Wyoming jurisdiction over mined land recla-
mation under its police powers.5 DOI subsequently agreed that
Wyoming's reclamation standards would take precedence over con-
flicting federal standards. DOI also indicated a willingness to
negotiate settlements with other states whose reclamation laws
were more stringent than federal regulations.6
However, two reclamation problems remain unresolved: first,
the question of who should have control over the final decision as
to whether energy development should occur on specific lands; and,
second, the effects of the 1977 Surface Mining Act regulations7
on federal-state agreements negotiated with DOI. The critical
1 Barry, Hamlet J. Legal Study; Extent of State Control over
Reclamation on Federal Land. Denver, Colo.: Western Governors'
Regional Energy Policy Office, 1976.
2U.S., Department of the Interior, Geological Survey. "Coal
Mining Operation Regulations." Federal Register, Vol. 40 (Janu-
ary 30, 1975), pp. 4428-38.
3See,, for example, Federation of Rocky Mountain States, Inc.
Proposed Federal Surface Mining Reclamation Requirements; A Re-
port on the Workshop Held July 30, 1975. Denver, Colo.: Federa-
tion of Rocky Mountain States, 1976, p. 4.
"*U.S., Department of the Interior, Bureau of Land Management
and Geological Survey. "Coal Mining Operating Regulations."
Federal Register, Vol. 41 (May 17, 1976), pp. 20,251-78.
5Herscheler v. Kleppe, Docket No. C-76-108 (D. Wyo., filed
June 9, 1976).
6"Wyoming Coal Law Dispute Ends." Denver Post, December 4,
1976. Utah had also reached a similar agreement with Interior.
See Strabala, Bill. "Utah Signs Coal Accord." Denver Post,
January 7, 1977.
7See Federal Register, Vol. 42 (December 13, 1977), pp.
62,637-716.
56
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point about the 1977 Act is that it provides for a strong federal
role in a policy area in which the trend had been toward increased
federal-state cooperative agreements, granting states a larger and
more active role in developing energy and environmental policy.
This tension from reversal of trends in federal-state rela-
tions is perhaps even more evident in water policy. The states of
the region have always had considerable responsibility in allocat-
ing water resources through state appropriation systems and inter-
state compacts and this responsibility had been increased in re-
cent years by federal-state agreements. For example, Interior
Secretary Andrus agreed to allow Montana to resell water from the
Fort Peck Reservoir.1 Further, states in the region have taken
several recent initiatives in water policy, largely designed to
increase state government control. These include Montana's mora-
torium on allocations from the Yellowstone River and Utah's devel-
opment of the "Utah Plan"—a state water allocation system which
substantially modified the appropriation system.
In this context of recent trends, federal-state tensions and
additional demands for states' rights have increased during the
past year because of federal proposals which have repeatedly
threatened the western states. These threats began in the spring
of 1977 with the Carter Administration's "hit list"—a proposal to
limit or stop funding several water development projects because
of questions about their economic and environmental cost benefits.
Although these recommendations met with little success in Congress,2
they were followed by a proposal to enforce a 1902 law which would
limit the amount of land a farmer can irrigate with water from fed-
eral reclamation projects to 160 acres. Even more threatening to
the western states has been the Administration's proposal for a
new national water policy, which considered reforms in irrigation
technologies, water pricing strategies, resource management and
environmental protection strategies, and state water laws.3
1Gill, Douglas. "Water May Be Auctioned Off." Denver Post,
October 3, 1976.
20f the 320 projects reviewed to see if they would receive
federal funding, only eight western projects were cut back by
Congress.
3For a review of these changes in federal policy, see
Kirschten, J. Dicken. "Turning Back the Tides of Long-Time Fed-
eral Water Policy." National Journal, Vol. 9 (June 11, 1977),
pp. 900-903.
57
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Although the Carter Administration has relented on many as-
pects of these proposals,1 they almost certainly have increased
tensions over environmental policy and also have increased the
tendency of western states to press for an active role in deci-
sionmaking. For example, Wyoming Governor Herschler has said
that these federal proposals would "upset the entire western agri-
culture" and called for equivalency standards which would allow
ranchers in arid regions to irrigate more land than those in
humid areas.2 Western groups who have met with President Carter
and Vice-President Mondale have strongly argued for state control
over water management,3 and Governor Lamm of Colorado has sug-
gested that "most or all western governors are upset at the way
the West has been treated in water policy."1*
B. Interstate Relationships
Just as common interests among the states contribute to a
sense of regionalism and give them a common cause in conflicts
with the federal government, conflicting interests among the
states can lead to conflicts among them. States often have dif-
ferent priorities, including the priority to be given to energy
resource development. Utah, for example, seems to rank energy
development higher and environmental prctection lower than does
its neighbor Colorado.5 This raises the real possibility of con-
flicts between the two about air quality. If Utah is successful
in reclassifying large areas within the state to Class III PSD
areas, the resulting air quality effect, will likely extend into
»
1 For example, in his recent tour of western states, Vice-
President Mondale promised that the national water p'olicy would
not make recommendations interfering with state water rights.
See Cannon, Lou. "Carter in Full Retreat on 'War on West.'"
Washington Post, January 15, 1978.
2"Limits on Irrigation Opposed in Wyoming." Denver Post,
November 16, 1977.
3Strain, Peggy, and Gary Cook. "Panelists Stress State
Water Rights." Denver Post, December 19, 1977.
"*Parsons, Dana. "West Fears Federcil Power Grab." Denver
Post, September 3, 1977.
5For example, Utah plans to revise some water projects, pre-
viously planned to promote agriculture, to develop energy resources
See Wynkoop, Steve. "Diversion of Water for Energy Studied."
Denver Post, December 16, 1976. In contrast, Colorado will appar-
ently use its newly acquired veto power to prevent agricultural
water from the Savory-Pot Hook Project ::rom being used for energy.
See Larsen, Leonard. "Lamm Wins Right to Revise Energy Plans,
Water Use." Denver Post, July 10, 1977.
58
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Colorado, and affect Colorado's attempt to preserve its air quality
by means of very strict air quality standards.
Interstate conflicts are also developing in the competition
for scarce resources, particularly water. UCRB states seem to be-
lieve that Lower Basin states fail to take into account operational
losses and uses of water in the Upper Basin, which leads the Lower
Basin to have unreasonable expectations concerning how much water
the Colorado can supply. And some of the states are busily allocat-
ing all of their share to prevent losing it in the future to down-
stream users. In fact, some of the states, such as New Mexico,
have already allocated more than their share under the existing
compact, if the low instream flow estimates are used.
C. Interregional Relations
Energy development also affects the relations of the West and
individual western states with other regions. For example, their
resentment of Montana's high severance taxes has led some nonwest-
erners to call Montanans "blue-eyed Arabs." In Michigan, where
Detroit Edison Company has a 26-year contract for 193 million tons
of Montana coal, one Detroit newspaper called the tax usurious and
"fuel blackmail."1 Last fall Montanans voted to put 25 percent of
their coal tax revenues into a state trust fund with deposits in-
creasing to 50 percent by 1980. States whose residents are paying
higher energy prices because of Montana's severance tax don't be-
lieve Montana should be taxing to enlarge its general fund; they
believe that the tax should only be at a level required to deal with
impacts.2
Interregional disputes are also emerging over the broader
question of where the major coal development will occur. In the
Congress, debate over an amendment called the "local coal use man-r
date" has generated bitter regional rivalry, presented most vocally
by Senators Clifford Hansen of Wyoming and Howard Metzenbaun of
Ohio. As now formulated, the President would be able to require
the use of local coals, in conjunction with appropriate emission
control technologies if he determines that existing supply con-
tracts will not be violated, that energy would not be wasted, and
that significantly high costs to consumers would not result.
President Carter supports this proposal and has announced his in-
tention to reassess "the appropriate contribution of western
Richards, Bill. "Boom in Strip Mining: Windfall for Montana."
Washington Post, May 22, 1977.
2 See "The Fuels Outlook." Electrical World, Vol. 189 (March 1,
1978), p. 49, concerning the previously mentioned challenge of
Montana's tax by the Wisconsin Power and Light Co.
59
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coal to the national energy budget."1 When this amendment was
voted on in June 1977, the Senate dividing largely along regional
lines, adopted it.2 And it subsequently was incorporated into the
1977 Clean Air Act Amendments.3
D. Intrastate Relationships
Energy development also creates conflicts among governmental
units within states. However, conflicts usually arise more in
connection with controlling large population increases than with
balancing energy and environmental concerns. Such is the case for
relations between state and local governments. Local governments
in the West have traditionally paid little attention to the need
for developing mechanisms to cope with energy problems, largely
because energy has not been much of a local problem in the past.
While local governments usually possess some instruments for con-
trolling development, such as zoning ordinances, building codes,
and health and sanitation standards, they also have serious limi-
tations. One such limitation is that energy development usually
occurs near small or rural towns which lack not only financial
resources but also technical or planning expertise and adequate
data bases.
In the West, local governments are often constrained by legal
or constitutional restrictions imposed by the states. In some
states, debt ceilings and limits on interest rates, and the exist-
ing tax structure limit local capacity to finance community facil-
ities. The Utah constitution, for example, prohibits transfer of
state revenues, including impact aid, to cities or counties.1* Some
states also restrict the freedom of loca.. governments to require a
^.irschten, J. Dicken. "Watch OutJ The Great Coal Rush Has
Started." National Journal, Vol. 9 (October 29, 1977), pp. 1,683-85
2Ibid.
3Cleart Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat. 685.
""Although the state cannot transfer revenues, several mecha-
nisms have been tried to get funds to local governments when they
are needed. This has included prepayment of property and sales
taxes (e.g., sales taxes on large components or equipment before
they are needed) and establishing special service districts that
can float bonds. Utah can build access roads and provide aid to
impacted areas.
60
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developer to provide some kinds of public facilities, further
limiting growth management alternatives.1
Another potential problem is fragmented authority over re-
source development. This authority is usually shared by cities,
counties, councils of governments, special districts, and state
agencies. Some of these governmental units further distribute
administrative authority among their own administrative agencies.
In such a fragmented system, the capacity of any one governmental
unit to respond effectively to problems can be constrained to the
point that no adequate response can be implemented.2
The combination of large, rapid population increases com-
bined with existing constraints in intergovernmental relationships
can create conflict among several governmental levels. The city
of Gillette, for example, has had housing developments halted by
the state of Wyoming because of inadequate water and sewage treat-
ment facilities.3 And, in Montana, officials of Miles City have
expressed concern about not being able to obtain impact aid from
the Montana Coal Board, both because they have been classified a
secondary area of development and because they have not been able
to finance an updated census."
Problems also emerge among city versus county, and urban ver-
sus rural interests. The biggest city-county issue appears to be
that costs and benefits of energy development are often distributed
inequitably. Most school districts and county governments can ex-
pect to have a revenue surplus from property or severance tax re-
ceipts since energy facilities are usually located within county
and school district rather than municipal boundaries. However, it
is the cities which experience the large population increase and
:Kutak, Rock, Cohen, Campbell, Garfinkle, and Woodward.
A Legal Study Relating to Coal Development, Vol. I: Responding
to Rapid Population Growth. Omaha, Neb.: Kutak, Rock, Cohen,
Campbell, Garfinkle, and Woodward, 1974, pp. 77-78.
2Task Force on Institutional Arrangements, Final Report, for
Rocky Mountain Environmental Research, Quest for a Future. Logan,
Utah: Utah State University, RMER-QUEST, 1974, p. II-C-I.
3"Gillette Warned on Water Woes." Denver Post, July 22, 1976.
''Barbara Kennedy, City-County Planner, Miles City, Montana,
June 1977. Personal communication.
61
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are expected to meet immediate needs for housing, water, sewers,
and other facilities and services.1
Urban versus rural conflicts of interest have emerged in Colo-
rado over proposed water transfers from the western to eastern
slope. The eastern slope has largely exhausted native supplies
of water and are using groundwater resources up to recharge rates,
and, therefore, depend on new diversions from the western slope to
meet the growing needs of cities such as Denver. Western slope wa-
ter interests include water for energy development, agriculture,
and environmental concerns such as the possibility that diversions
will go to areas under consideration for wilderness classification.2
E. Indian, State, and Federal Relationships
Indians have been similarly affected by energy and environ-
mental conflict, and relationships between Indians and all levels
of government have changed as a result. Indians have become an
important participant in the policy system because substantial en-
ergy resources are located on tribal reservations.? Indian water
rights may significantly influence allocation of limited water
supplies for every resource development, and Indians have become
increasingly concerned about impacts of development such as air
quality and social-economic problems.
Because of these factors, tribes have become more organized.
They are represented by interest groups such as the Native Ameri-
can Rights Fund, Americans for Indian Opportunity, the National
Congress of American Indians, the Council of Energy Resource
Tribes (CERT), and the Native American Natural Resource Develop-
ment Federation. The latter organization represents the Northern
Great Plains tribes for the purposes of :: (1) defining and de-
scribing natural and cultural resources; (2) developing programs
^his was found to be the case in the site-specific impact
analyses reported in White, Irvin L., ej^ al. Energy From the West;
A Progress Report of a Technology Assessment of Western Energy" ~™
Resource Development. Washington, D.C.: U.S., Environmental
Protection Agency, 1977.
2Gill, Douglas. "Growth, Water Diversion Aren't Problems of
Denver Alone." Denver Post, February 1, 1977.
3The 271 Indian reservations in the U.S. are estimated to
contain up to one-tenth of the nation's coal reserves and one-
sixth of recoverable uranium. Most of these resources are con-
tained on few of the more than 75 reservations located in the
eight-state area. See U.S., Federal Trade Commission, Bureau
of Competition. Report to the Federal Trade Commission on Min-
eral Leasing on Indian Lands. Washington, D.C.: Federal Trade
Commission,, 1975, pp. 8-17.
62
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to identify impacts of energy resource development; and (3) rep-
resenting the tribes on federal and state land and water organi-
zations. CERT represents 22 tribes in an effort to form an energy
combine which will maximize the benefits of their resources.
As is the case for most interest groups, Indians participate
largely through the courts. This is especially true regarding def-
inition and quantification of Indian water rights. Indians have
been trying to secure their right to total stream flow when that is
what is required to meet their needs.1 They have also sought to re-
move Indian water rights questions from state court jurisdiction.2
Indians have also had an effect on air quality policy, as
evidenced by the Northern Cheyenne's success in getting their res-
ervation redesignated to a Class I PSD status, allowing very small
additional increments of particulates or sulfur dioxide to the air.3
Although legal questions still exist about whether energy conver-
sion facilities already under construction will be affected by this
redesignation, this is an indication of the potential power of
Indian tribes in the system.
2.6 SUMMARY
This chapter has presented a broad-brush overview of the eight-
state study area, identifying some of its major characteristics and
suggesting how they might affect western energy resource develop-
ment. The picture which emerges is of a region rich in contrasts:
for example, it is rich in natural resources but poor in one 01 the
most essential resources, water; rich in land and energy resources
but subject to outside control by the federal government and Indian
tribes. It is also sparsely populated, particularly in rural areas
where most of the energy resources are located; and populist atti-
tudes prevail, particularly in rural areas where they are reflected
in the lifestyle and commitment many westerners have to a frontier-
like rugged individualism.
•'This right was established in U.S. v. Ahtanum Irrigation
District, 236 F. 2d 321, 327 (9th cir. 1956), cert, denied,
352 U.S. 988 (1957).
2Two recent cases, Colorado River Water Conservation Dis-
trict V. U-S__._ and Akin v. U.S., have held that state courts es-
tablished a system for determining these rights. See McCalister,
Elizabeth. "Water Rights: The McCarren Amendment and Indian
Tribes' Reserved Water Rights." American Indian Law Review, Vol.
4 (Novmber 2, 1976), pp. 303-10. At the present time, whether
these questions are heard in a state or federal court depends
largely on the state's water allocation system.
3They were the first governmental unit to redesignate
certain areas Class I.
63
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This overall regional context will play a significant role
in helping to shape the level, pattern, and technologies that
will actually be deployed to develop western energy resources.
And, as we have seen, so will the energy, economic, and environ-
mental policies discussed in Section 2.3. Finally, the regional
context and national and state policies v/ill affect public-private
sector and intergovernmental relationships, sometimes in rather
fundamental ways. In short, western energy resource development
policies will be influenced by a wide range of factors and con-
siderations. Chapters 1 and 2 have discussed only some of the
most important of these.
64
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PART II: AN ANALYSIS OF WESTERN ENERGY RESOURCE
DEVELOPMENT PROBLEMS AND ISSUES
INTRODUCTION
The first chapter in this part, Chapter 3, describes the
Science and Public Policy Program's interdisciplinary team ap-
proach to technology assessment as a kind of applied policy analy-
sis and how it was used in the Energy From the West study. Chap-
ters 4 through 12 report the results of analysis of nine categor-
ies of problems and issues likely to arrive as a consequence of
western energy resource development: water availability, water
quality, air quality, land use, housing, growth management, capi-
tal availability, transportation, and energy facility siting.
Each of these nine chapters summarizes relevant development im-
pacts, describes the social and political context within which
they would occur, identifies and describes the problems and issues
likely to arise when these development impacts occur in this con-
text, and then identifies, describes, evaluates, and compares
policy alternatives for dealing with these problems and issues.
Chapter 13 then provides an overview and summary of the
issues and policy responses, organized around five major groups
of policymakers: local, state, and the federal government,
Indian tribes, and energy developers.
65
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CHAPTER 3
POLICY ANALYSIS IN THE WESTERN ENERGY STUDY
3.1 INTRODUCTION
As indicated earlier, this study is a technology assessment
undertaken to identify and analyze a broad range of consequences
of energy resource development in the western U.S. and to evaluate
and compare alternative courses of action for dealing with these
consequences. In this chapter, we describe both our approach to
technology assessment as a kind of applied policy analysis and
how we have used this approach to attempt to achieve the policy
objectives of this "Technology Assessment of Western Energy Devel-
opment . "
3.2. TECHNOLOGY ASSESSMENT AS APPLIED POLICY ANALYSIS
3.2.1 Introduction
Technology assessments (TA) are conducted to achieve two kinds
of objectives: -first, to inform public and private policymakers
and interested citizens about the likely consequences of a decision
to develop and operate a technology;1 and second, to identify,
evaluate, and compare alternative policies and implementation
strategies for dealing with problems and issues that either are
perceived or are actually likely to arise when a technology is
actually sited and operated. Three questions must be answered to
achieve the first objective of informing policymakers and citizens
about consequences:
• Are the anticipated consequences actually likely to occur?
1 As used here, the term develop includes research, develop-
ment, and demonstration. Operate refers to postdemonstration
utilization.
2The term anticipated rather than perceived consequences is
used to emphasize the anticipatory or future orientation of TA
research as well as an emphasis of both first and higher order
consequences.
66
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• Are there also likely to be consequences which have not
been anticipated?
• If either anticipated and/or unanticipated consequences
occur, how serious will they be?
To achieve the second objective of identifying, evaluating, and
comparing alternatives, the answers to the above three questions
must be related to the social and political context within which
the technology will be developed and operated. The questions to
be answered in this case are:
• What alternative policies and implementation strategies
can reasonably be used to maximize benefits and minimize
costs and risks when the technology is developed and
operated?
• How will these alternatives distribute costs, risks, and
benefits throughout society?
3.2.2 Conceptual Framework
A systems diagram of the general conceptual framework used
to structure our research effort to answer these five questions
in EnergyFrom the West is presented in Figure 3-1. This sim-
plified diagram shows that when a technology is operated, it makes
input demands (such as for capital, materials, and labor) and pro-
duces outputs (such as electricity, air emissions, and water efflu-
ents) . When these inputs and outputs interact with the conditions
existing at the deployment site (such as ambient air quality, water
availability, and the availability of community services and facil-
ities) , a range of impacts occur (such as changes in air and water
quality and a need for more housing). Some of these impacts are
perceived as causing problems and raising issues. When policy-
makers respond to these probleras and issues, they operate under a
variety of constraints (such as legal, technical, and political)
which affect the feasibility and/or acceptability of alternative
policies and implementation strategies.1
3.2.3 Interdisciplinary Co ire Team Approach
To implement this framework, the analytical skills and per-
spectives of multiple disciplines are required. We have taken an
interdisciplinary core team approach to insure a range of skills
and perspectives; and we have used procedures which provide for
!This general conceptual framework is discussed in more de-
tail in White, Irvin L., et al. First Year Work Plan for a Tech-
nology Assessment of Western Energy Resource Development. Wash-
ington, D.C.: U.S., Environmental Protection Agency, 1976,
Chapter 2.
67
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POLICY
ALTERNATIVES *
IMPLEMENTATION
STRATEGIES
FIGURE 3-1:
A CONCEPTUAL FRAMEWORK FOR ASSESSING
PHYSICAL TECHNOLOGIES
all research team products to be processed through several drafts,
each of which is subjected to an intensive critical review by the
core team and then redrafted. The prodact of this internal review
process is still considered a draft and is subjected to extensive
external critical review by an advisory committee, subcontractors,
consultants, and a broad range of interested parties or stake-
holders .
Internal reviews are intended to bring the team's collective
knowledge, analytical skills, and perspectives to bear on the tech-
nology assessment topic and to produce a well-informed, technical-
ly correct, reasonably comprehensive, and, to the extent possible,
unbiased team product. The external reviews have two major pur-
poses: first, to involve potential users of the team's products
in the research in order to increase the likelihood that the re-
sults of the TA will be useful and used; and second, to provide a
means for insuring that the team's final products are as well in-
formed, technically correct, adequately comprehensive, and unbiased
as possible."
*This interdisciplinary core team approach is described in
more detail in White, Irvin L., et al. First Year Work Plan for
a Technology Assessment of Western Energy Resource Development.
Washington, D.C.: U.S., Environmental Protection Agency, 1976;
Kash, DOR E., and Irvin L. White. "Technology Assessment: Har-
Chemical and Engineering News, Vol. 49 (Novem-
. 36-41; and White, Irvin L. "Tnterdisciplinar-
nessing Genius."
ber 20, 1971), pp.
ity," in Arnstein, Sherry, and Alexander N. Christakis, eds.
Perspectives on Technology Assessment. Columbus, Ohio: Academy
for Contemporary Problems, 1975, pp. 87-96.
68
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DESCRIPTIVE PHASE
Identify and describe the technology
Describe the existing conditions
INTERACTIVE PHASE
Relate the technology to existing conditions
Identify and describe initial changes
Identify and define higher order consequences
INTEGRATIVE PHASE
Identify and define problems and issues
Describe the policy context
Identify, evaluate, and compare alternative
policies and implementation strategies
FIGURE 3-2: THE PHASES OF A TECHNOLOGY ASSESSMENT
In addition to providing the variety of expertise, analytical
skills, and disciplinary perspectives required for a TA, the in-
terdisciplinary team approach also helps to temper what could be-
come an excessive analytical formation. The three phases described
here and the procedural steps for performing the tasks in each
phase are not nearly so sequential and formal as they might appear.
We purposely employ the creative tensions generated within the
core research team and the extensive internal and external review
process briefly described above to prevent the research effort
from becoming a rote, box-filling exercise.
3.2.4 The Phases of a Technology Assessment
The tasks that must be completed when the general conceptual
framework shown in Figure 3-1 is operationalized can be divided
into three categories: Descriptive, Interactive, and Integrative
(see Figure 3-2).
69
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STEP
IDENTIFY AND DESCRIBE THE TECHNOLOGY
For the single process (such as Lurgi gasi-
fication) or a combination of processes
(such as coal mining, power generation, and
high voltage transmission), specify:
1. Input requirements—water, capital,
manpower, and materials, for example;]
2. Outputs or residuals--high-Btu gas,
S02, NOX, particulates, sludge, liq-
uid wastes, and noise, for example;
3. Social controls — such as permits
and standards
STEP
II
DESCRIBE EXISTING CONDITIONS
For the site or area within which the tech-
nology is to be deployed, describe existing]
conditions, including, among others:
1. Topography and geology
2. Climatology
3. Ecology
4. Social infrastructure
5. Sectors of economic activity
6. Land-use patterns
7. Active parties-at-interest
8. Problems and issues
9. Policymaking systems
FIGURE 3-3: THE DESCRIPTIVE PHASE
A. The Descriptive Phase
In Energy From the West, products of the Descriptive Phase
characterize both the technologies expected to be used to develop
western energy resources and the conditions existing in the vi-
cinity of the sites where these technologies might be operated
(see Figure 3-3). Technologies for the development alternatives
briefly described in Chapter 1 of this report are described in
more detail in Energy From the West: Energy Resource Development
70
-------
Systems Report.1 The resource base, technological alternatives,
in"put~~requirements, product and residual outputs, economic costs,
energy efficiencies, and resource-specific laws and regulations
for each of the six resources being considered in Energy From the
West are described.
The descriptions of existing conditions at six sites and for
the entire eight-state area more generally are presented in Energy
From the West: A Progress Report of a Technology Assessment of
Western Energy Resource Development2and Energy From the West;
Final Impact Analysis Report.3The six sites identified in Chap-
ter 1 above were chosen because they appear to be representative
of the sites where energy development is either taking place or is
likely to take place in the eight-state area in the future.
B. The Interactive Phase
These descriptions of the technologies and sites are the
source of most of the data base needed for an analysis of the im-
pacts of deploying a particular technology or some combination of
technologies at a specific energy development site or of develop-
ing specified quantities of energy within the eight-state study
area. These are Iritegrative Phase analyses (see Figure 3-4). In
Energy From the West, site-specific impacts in four major cate-
gories haVe~T~>elin~lu;^lyzed: Air Quality, Water Quality and Avail-
ability, Socioeconomic, and Ecology. In addition, certain local
impacts which are not. particularly site-specific or which are
highly speculative because of the inadequacy of existing knowledge,
data, and/or analytical tools have also been analyzed. The results
of these analyses are reported in the Energy From the West progress
and final impact analysis reports mentioned earlier. The results
of our more general regional and national impact analyses are also
reported in these two reports. In addition to the four categories
listed above, Aesthetic, Health Effects, Transportation, and Noise
Inputs were analyzed at the regional level. The steps followed
in performing these Interactive Phase analvses are shown in Figure
3-4.
'White, Irvin L., et al. Energy From the West: Energy Re-
source Development Systems Report. Washington, D.C.: U.S.,
Environmental Protection Agency, forthcoming.
'White, Irvin L. , et al. Energy From the West: A Progress
Report, of a Technology Assessment of Western Energy Resource Devel-
opment. Washington^D.C. : U.S., Environmental Protection Agency,
T9TT7"
'White, Irvin L., et al. Energy From the West; Impact Anal-
ysis Report. Washington, D.C.: U.S., Environmental Protection
Agency, forthcoming.
71
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STEP
DETERMINE INITIAL CHANGES IN EXISTING
CONDITIONS
Determine the changes likely to occur when
the technology is constructed, operated,
and shutdown, for example, changes in:
1. Air quality
2. Water quality
3. Water availability
4. Population
5. Land use
STEP
II
IDENTIFY AND ANALYZE HIGHER ORDER
CONSEQUENCES
Trace impacts to identify higher order con-
sequences, for example, consequences for:
1. Human health
2. The availability of social services
and facilities
3. Sectors of economic activity
4. Quality of life
5. Power structure
6 . Habitat attrition
FIGURE 3-4: THE INTERACTIVE PHASE
C. The Integrative Phase
Together the Descriptive and Interactive Phases are intended
to provide results which make it possible to evaluate and compare
technologies and potential energy developments on the basis of
objective and, to the extent possible, unbiased, scientific and
technical criteria. The descriptions of energy development tech-
nologies and locations and the results of the analyses of impacts
likely to occur when technologies and locations are interacted can
be used to inform policymakers about the costs, risks, and bene-
fits of various technology and siting options for western energy
resource development. For example, on the basis of these tech-
nical analyses, policymakers can make better informed choices about
which technology-location combinations to encourage or discourage
72
-------
or to permit or prohibit in order to achieve their objectives
within what they consider to be acceptable limits of costs and
risks. But the results of technical analyses such as these, in-
cluding ours in Energy From the West, are almost always incom-
plete, largely because of the limited explanatory power of existing
theories and either the inadequacy or unavailability of data and
analytical tools.1 But even if it were possible to overcome these
limitations, the results of these technical analyses would not be
an adequate basis for policymaking. Policymakers need to know
more than the results of these analyses tell them. They need to
know how costs, risks, and benefits identified by the technical
analyses will be distributed, which interests and values in so-
ciety will be promoted at the expense of which others, how to
promote the interests and values they wish to promote, and how to
avoid unwanted costs and risks. Providing policymakers this kind
of information is the objective of the Integrative Phase of a TA.
Given the focus of this report, the Integrative Phase of Energy
From the West is described in more detail than were the Descrip-
tive and Interactive Phases.
3.2.5 Policy Analysis in the Integrative Phase
A. The Three Steps in Policy Analysis
The policy analyses in Energy F'rom the West are being
conducted in three steps:
• The identification and definition of problems
and issues;
• The description of the policy context within
which the development and operation of the
technology will occur;
• The identification, evaluation, and comparison of
alternative policies and implementation strategies.
limitations of our analyses will be described in detail
in a forthcoming research needs report.
73
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(1) The Identification and Definition of Problems and IssuesJ
Some problems and issues associated with the development and
operation of a technology in the western U.S. were identified by
the team when the conditions existing at the time and location of
deployment were being described. That is, some problems and
issues were anticipated independently of the technical analyses
described in Section 3.2.1, in some instances on the basis of
analysis, but often on the basis of past experience, analogy, and
informed speculation. However, some problems and issues were not
anticipated; consequently, as shown in Figure 3-5, a beginning
step in policy analysis was for the interdisciplinary research
team to review systematically the results of the technical anal-
yses to guard against otherwise unanticipated consequences being
overlooked,, Others were added or redefined as a result of the
policy analyses themselves.
IDENTIFY AND DEFINE PROBLEMS AND ISSUES
Define problems and issues:
- already identified and being discussed
by participants in the policy system
- identified by the interdisciplinary
research team
FIGURE 3-5: POLICY ANALYSIS: STEP 1
lThe terms ''problems" and "issues"
lems such as those resulting because of
tensity of a technology may or may not 1
raised. The key distinction is that iss
competing interests and values. Not all
flicts, consequently, both terms must of
quently is awkward, and in this chapter
ordinarily be used, "problem" when conf]
not being emphasized, "issue" when it is
are not synonyms. Prob-
the labor and capital in-
ead to an issue being
ues involve conflict among
problems produce con-
ten be used. This fre-
only one or the other will
ict is not involved or is
74
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(2) The Description of the Policy Context
In the second policy analysis step, both anticipated and
unanticipated problems and issues are related to the social and
political conte.xt within which the development and operation of
the technology is expected to take place. This requires that the
relevant policy system or systems be identified and described in
substantive terms.1 The interests and values at stake, relevant
institutional arrangements, applicable laws and regulations, gov-
ernmental and nongovernmental participants, and intensity of in-
volvement of various participants can vary on the basis of the
substance of the problem.
For issues that the political system has dealt with in the
past, the identification of the issue system begins with an exam-
ination of key elements in the historical development of the issue:
when did the issue arise; which participants in the system per-
ceived that it was an issue and what interests and values did they
represent; when did government respond; how did government respond
and what policies were enacted; who administers these policies;
and, how have these policies affected the issue? This step also
includes a more detailed identification and description of the
existing system for dealing with the issue: what are the rele-
vant current public and private, formal and informal institutional
arrangements; what interests and values are at stake, who repre-
sents them and what strategies and tactics are they employing;
and, are there situational or social and physical environmental
conditions and circumstances that either affect or could poten-
tially affect whether and how the issue is processed?
The procedural steps the team used in describing the develop-
ment and deployment context in Energy From the West are outlined
in Figure 3-6. 2
One essential task in this step in policy analysis is the
identification of the interests and values that are at stake.
Given the range of interests and values potentially at stake and
"issue systems" approach is based on the observation
that political systems vary according to the substance of the is-
sue being processed. An issue system may be defined in terms of a
single issue such as what the ambient concentration standard for
sulfur dioxide should be, or on a category of problems and issues
such as air quality.
2Not all of the items listed here apply to all problems and
issues. Which of them apply is determined by the stage of devel-
opment of the problem or issue. Some will be "well developed,"
and all of the listed items will be applicable; others will be
just emerging or not yet anticipated independently of the TA and
few, if any, of the listed items will be applicable.
75
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DESCRIBE THE POLICY CONTEXT
Describe the key elements in the historical
development of the issue:
- When did the issue arise?
- Which participants in the system perceived
it as an issue?
- What interests and values did these
participants represent?
- When and how did government respond?
- What policies were enacted or established?
- What agency administered these policies?
- How have these policies affected the issues?
Describe the existing policymaking system or
systems for dealing with the issue:
- What are the relevant, current public and
private, formal and informal institutional
arrangements and processes?
- What interests and values are at stake?
- Who represents these interests and values
and what strategies and tactics are they
using?
- How is the problem or issue being dealt with
by the existing policymaking system?
- Are there situations or social and physical
environmental conditions and circumstances
that either affect or could affect whether
and how the issue is processed by the system?
FIGURE 3-6: POLICY ANALYSIS: STEP 2
the numerous ways they can be categorized, this is a difficult
task to perform systematically and comprehensively. As an aid in
performing this task, we constructed the interest and value check-
list presented in Table 3-1.1 We also used a checklist of the
categories of interests and values most, likely to be in conflict
Clearly this list is inadequate for any purpose other than
to encourage the researcher to search broadly when taking an in-
terests and values inventory. This was how we used the list; and
we found the list to be helpful even though it contains apples
and oranges.
76
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-------
TABLE 3-2:
MAJOR POTENTIAL INTEREST
AND VALUE CONFLICTS
CATEGORIES OF INTERESTS AND VALUES
POTENTIALLY IN CONFLICT
Economic Growth v. Environmental Quality
Energy v. Environment
Clean Air v. Health
Autonomy/Independence v. Regulation/Control
Stability v. Change
Conservation v. Production
Public v. Private
Economic Sector v. Economic Sector
as a consequence of western energy resource development. This
list is presented in Table 3-2. Neither list is altogether satis-
factory and considerable resources could be expended to improve
them. We found them to be useful despite their limitation and
did not believe that the benefits of an incremental improvement
to be great enough to warrant expanding the resources.
(3) The Identification, Definition, Evaluation, and Comparison
of Alternative Policies and Implementation Strategies
In the third policy analysis step, policy alternatives and
implementation strategies are being identified, defined, evalu-
ated, and compared. Alternatives and implementation strategies
for dealing with issues already being processed by the system were
identified in step two above. However, the interdisciplinary
research team has also formulated alternatives itself, both for
issues already being processed and for problems and issues Likely
to arise as a consequence of unanticipated impacts identified when
the results of our technical analyses were reviewed. Drawing from
both sources, the team has reduced the number of alternatives and
strategies to be evaluated and compared in detail to a manageable
78
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number.1 As described in our First Year Work' Plan,2 this was
accomplished by applying a number of filters to isolate alterna-
tives and strategies that appear to be most significant and feas-
ible. Since alternatives distribute costs, risks, and benefits
differently, the filtering of alternatives required at least a
preliminary assessment of what the distributive effects of each
alternative would be. For example: (1) which individuals, groups,
or organizations would benefit more than or at the expense of
others; (2) which costs, risks, benefits would be transferred from
some individuals, groups, or organizations to others; and (3) would
existing regulations have to be modified, eliminated, or new regu-
lations have to be added to existing programs, or would new regu-
latory programs have to be established? A detailed evaluation and
comparison of all possible alternatives is not feasible and is be-
ing limited to the few alternatives which survive the internal and
external review processes mentioned earlier (see Figure 3-7).
To structure the formulation, evaluation, and comparison of
the selected alternative policies and implementation strategies,
the Science and Public Policy (S&PP) interdisciplinary team iden-
tified :
• The policy objectives to be achieved in each problem or
issue category;
• Categories or kinds of alternatives that could be used
to achieve each objective;
» Specific alternatives within each category;
• How each specific alternative might be implemented;
• The implications of choosing and implementing each
alternative and strategy.
A table similar to that shown in Table 3-3 was used in each
chapter to provide the reader a convenient reference for. organiz-
ing the introduction and general description of alternatives. The
:The selection from among all possible alternatives (or all
that team members can identify) was necessarily arbitrary. There
are two major checks on this arbitrariness: first, the interdisci-
plinary team reviews the inputs of individual team members; and
second, the team's collegial products are subjected to extensive
external reviews. As noted earlier, both internal and external
review help to minimize bias, factual and interpretative errors,
and errors by oversight.
2White, Irvin L. , et al. F_irs_t_Year Work Plan for a Tech-
nology Assessment of Western Energy Resource Development. Wash-
ington, D.C.: U.S., Environmental Protection Agency, 1976.
79
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IDENTIFY, EVALUATE, AND COMPARE ALTERNATIVE
POLICIES AND IMPLEMENTATION STRATEGIES
• Identify and describe alternative policies and
implementation stragegies already being proposed
for dealing with existing problems and issues;
• Describe alternative policies and implementation
strategies formulated by the interdisciplinary
research team;
• Reduce the number of alternative policies and
implementation stragegies to a manageable number
by identifying those which are most significant
and feasible.
- Filter the complete list of alternative
policies and implementation strategies by
conducting a preliminary evaluation of how
they distribute costs, risks, and benefits;
- Identify the barriers or constraints (e.g.,
legal, ethical, moral, difficulty of imple-
mentation, economic, etc.) to acceptance
and implementation;
• Describe the costs, risks, and benefits of each
alternative and implementation strategy:
- Which individuals, groups, or organizations
would benefit more than or at the expense
of others?
- Would existing regulations have to be modi-
fied, eliminated, or new regulations added
to existing programs or would a new program
have to be established?
• Compare alternatives and strategies on the basis
of explicit criteria using a variety of measures.
• Submit the team's evaluation and comparison of
alternatives and strategies to external review.
FIGURE 3-7: POLICY ANALYSIS: STEP 3
80
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81
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entries in Table 3-3 are from the table used in the analysis of
water availability problems and issues in Chapter 4. These
entries illustrate how this procedure was operationalized.
For example, if policymakers choose to try to meet the ex-
panded needs of water users, one general alternative for accom-
plishing this objective is to increase tne use of existing sup-
plies. Specific options within this general alternative include
forced conservation by energy industries, by irrigated agricul-
ture, and by municipalities. Each of these options has a variety
of specific implementation streitegies which can be carried out by
several levels of government and with various implications for
environmental quality, cost of energy products, etc. Focusing on
this sequence of questions helps to systematically structure the
analysis of policy alternatives. Of course, at each step consid-
erably more detail is added.
A separate table in these chapters elaborates the implementa-
tion strategy, identifying and describing specific strategies for
each alternative and how each alternative might be constrained by
political/economic, environmental, or other considerations. Again
the objective is to provide the reader a convenient reference to
follow when various implementation strategies are described.
B. Criteria for Evaluating and Comparing Alternatives
While the results of the policy analyses described above; will
seldom if ever eliminate the uncertainties that public and private
policymakers face in making decisions to develop and deploy tech-
nologies, these results can help them to make better informed
choices than they would otherwise be able to make. Results of
policy analyses are useful in this regard to the extent that they
systematically describe, evaluate, and compare alternatives using
clearly specified criteria and appropriate qualitative and quanti-
tative measures; indicate theoretical, data, and analytical tool
limitations; and specify confidence levels.
The five basic criteria used in the evaluation and comparison
of alternative policies and implementation strategies Ln Chapters
4-11 are listed in Table 3-4. Each criterion has to be defined
more specifically for the category of problems and issues being
evaluated and compared. And specific qualitative and quantitative
measures have to be specified for each. For example, as applied
to water availability, effectiveness is defined in terms of how
much water an alternative would save or add, whether it would
avoid or mitigate the problem, and whether it would offer a long-
or short-term solution. Among the quantitative measures used in
this case are gallons or acre-feet per year saved or added, the
percentage increase in supply, and the duration of the solution
in time (years, months); the anticipated degree to which the prob-
lem is avoided or mitigated is an example of a qualitative measure
in this instance.
82
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TABLE 3-4: EVALUATION CRITERIA
CRITERION
WHAT DOES IT EVALUATE?
Effectiveness
Efficiency
Equity
Flexibility
Implementability
Achievement of Objective
Avoid or mitigate the problem or issue?
Short- or long-term resolution or
solution?
Dependency on state-of-society
assumptions?
Costs, Risks, and Benefits
Economic costs, risks, benefits?
Social costs, risks, benefits?
Environmental costs and risks?
Reversible/irreversible, short- or long-
term?
Distribution of Costs, Risks, and Benefits
Who will benefit? experience costs?
assume risks?
- Geographically?
- Sectorially?
- Socially?
Applicability/Adaptability
Are local and regional differences
accommodated?
Are social and sectorial differences
taken into account?
How difficult will it be to administer?
How difficult will it be to change?
Adoptability/Acceptability
Can it be implemented within existing
laws, regulations, and programs?
Can it be implemented by a single agency
or level of government?
Is it compatible with existing societal
values?
Is it likely to generate significant
opposition?
83
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The basic point about measures is that while many policy-
makers desire to have a "bottom line," no single measure or evalu-
ation criterion can provide an adequate summary of the costs, risks,
and benefits of alternative policies and implementation strategies.'
The combination of measures and criteria to be used is determined
both by what is being evaluated and the interests and values that
are at stake. Although economic measures and criteria are used
most frequently, they are not always applicable and do not always
provide an adequate basis for evaluation. For example, dollars
are not an adequate measure of aesthetic values nor do they always
provide the best indication of how equitably an alternative may
distribute costs, risks, and benefits,. And while it is possible
to determine the dollar cost of environmental controls, the asso-
ciated social costs often cannot be determined. By themselves,
economic measures and criteria can be used to evaluate only one
component of overall costs, risks, and benefits.
C. A Summary of the Evaluation and Comparison of Alternative
Policies and Strategies
The desired end product cf these poJicy analyses is a sum-
mary of costs, risks, and benefits which, to the maximum extent
possible, inform policymakers about the consequences of their
policy choices. We expect to be more advanced in this stage of
our analysis in the final policy analysis report than we are in
this draft.
D. Integrating the Results of Policy Analyses
Results of analyses must be summarized across problem or
issue categories and integrated on a geographical, level of gov-
ernment, and other appropriate basis. Chapter 13 provides this
summary and integration in this report.
E. Utilization
Utilization activities are an integral part of the approach to
TA described in this chapter. Extensive contacts are established
and maintained with germane government agencies and officials, and
participants in the policy systems being studied. In addition to
the external review process described above, this has involved a
good deal of field work and formal and irformal communication, in-
cluding meetings and presentations in the eight-state study area
and in Washington as well as continuing contact by telephone and
correspondence. We believe that this participatory approach to TA
*We have discussed the use of multiple measures and evaluation
criteria in Chapter 5 of White, Irvin L., et al. First Year Work
Plan_for a Technology Assessment of Western Energy Resource Devel-
opment^Washington,D .C. :uTs., Environmental Protection Agency,
1976.
84
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provides two major benefits: first, by involving potential users
of our reports in our research, they are more likely to find our
work useful; and second, the. research team helps to develop a
communication link among participants in the policy systems being
studied. Given the nature of our federal system, and the complex-
ity of many of the problems policymakers have to deal with, it is
difficult to introduce research results into the policymaking sys-
tem effectively. The S&PP research team's efforts to insure suc-
cessful and effective utilization will be a major continuing
activity during the fourth year of the project.
85
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CHAPTER 4
WATER AVAILABILITY
EXECUTIVE SUMMARY
Water availability problems and issues are among the most
critical associated with western energy resource development. As
energy resources are developed during the next several decades,
water supplies are likely to be inadequate to meet increased de-
mands of water users. Shortages are likely to intensify existing
political conflicts over how resources will be allocated and who
will pay the costs, receive the benefits, and assume the risks of
water resource policies.
Impacts
Findings from our analysis of impacts suggest that:
• Electric power generation consumes more water than does
any other conversion technology on a per unit of energy
produced basis, assuming a high level of wet cooling
(Figure 4ES-1).
• Among synthetic fuel technologies considered, Synthane
gasification may demand 25 to 60 percent more water than
Lurgi gasification and more than any other synthetic fuel
technology to produce the same amount of energy (Figure 4ES-1)
• Process water requirements are generally very small
compared to water lost to evaporation in cooling towers.
Assuming wet cooling is used, cooling is the largest
single water requirement for both electric power plants
and synthetic fuel facilities, representing about 50 to
95 percent of the total water requirements.
• If water-saving cooling technologies are used, water
requirements for electric power plants can be reduced
about 60 to 90 percent and requirements for synthetic
coal facilities can be reduced about 40 to 95 percent.
• Siting alternatives can affect water consumption because
of the moisture and British thermal unit (Btu) content
of the coal. For example, water requirements for a Lurgi
86
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•a
2
3
4J
a
10
o
Max.
Figure 4ES-J:
Technology
Water Requirements For Energy
Conversion Technologies
gasification facility can be 40 percent lower in the
Northern Great Plains than in the Four Corners area.
• Water for mine reclamation and new municipal demands
range up to 10 percent of the water required for con-
version facilities. However, municipal demands still
create local water shortages if new treatment and dis-
tribution systems are required.
Depending on technologies and sites chosen, western energy
resource development may create local and possibly regional water
shortages. On a basinwide level, the most severe problems are
likely to occur in the Upper Colorado River Basin. When energy
requirements for water are added to nonenergy requirements for the
year 2000, the total may exceed minimum availability estimates by
87
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as much as one million acre-feet per year (acre-ft/yr) (Figure
4ES-2), Even using the most optimistic combination of these esti-
mates of water requirements and availability, energy resources de-
velopment will consume a large percentage of available surface wa-
ter, and thus, heighten existing conflicts over appropriate water
uses.
15-,
1C.
1922
Compact
Powe]1
Avallabilit y
r- 15
,10
Maximum
Requirements
Figure 4ES-2: Projections of Water Requirements and
Availability in Colorado River - Year 2000
Water availability does not appear to be a problem in the
Upper Missouri River Basin as a whole, since water riot already al-
located is well in excess of maximum anticipated requirements.
However, some energy resources are located close to stream segments
already subject to conflict over beneficial use of water, as is
true for the Yellowstone River. Further, much energy development
will occur in areas distant from surface water supplies and neces-
sitate pipelines or other means of water transfer.
Groundwater is also available in both river basins and in some
cases might be an alternative water source for energy development
-------
facilities and related populations. However, relying on ground-
water will also produce problems, particularly if it is mined (con-
sumed faster than the aquifer from which it is being withdrawn is
recharged) or affects surface stream flows.
The Policy Context
Competition for water and concern for its quality have led to
a complex regulatory system—including international treaties, in-
terstate compacts, state appropriation systems, conflicting court
decisions, and unanswered questions such as the quantification of
federal and Indian reserved rights and the value of water from
federal projects. Together with the complex physical controls on
western water systems (dams, impoundments, and diversions), the
regulatory system has generally promoted two primary interests:
• Downstream users, who attempt to maximize guarantees of
supplies, for example to states of the lower Colorado
and lower Missouri River basins;
• Irrigated agriculture, a basic industry in each of the
eight states often dependent on water supplies from
distant sources.
However, these traditional interests have been seriously challenged
recently by interests representing energy development, environmen-
tal values, Indian nations, city and county government, and others.
Competition among these interests in conjunction with the complex-
ity and ambiguity of the regulatory system suggest that the follow-
ing water availability issues are likely to occur:
• Energy resource development, particularly on-site con-
version of resources, may be restricted in many areas
of the West, especially in the Upper Colorado River
Basin. This situation would create barriers to the
National Energy Plan and mean a loss of economic ben-
efits to western states and municipalities.
• Environmental resources may be damaged as stream flows
are increasingly depleted to meet the needs of indus-
trial, agricultural, and municipal uses. Threatened
environmental values include loss of recreational uses,
habitat damage from reduced flows and wetlands removal,
and damage to scenic and aesthetic values.
• Restricted development of Indian lands and/or damage
to Indian values and culture may occur if Indians are
denied adequate water supplies. This could reduce
overall energy development by impeding the utilization
of extensive resources located on Indian lands and would
further complicate the legal and political problems.
89
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• Irrigated agriculture could be restricted or eliminated
in many areas of the West if existing water resources
are diverted for use in energy resource development.
Since this situation would change the basic economic
structure and threaten many western values, political
conflicts would almost certainly increase between the
federal and state governments, among regions, and among
states in the West.
Alternative Policies
Policymakers can seek two kinds of policy objectives in deal-
ing with water availability problems and issues: first, to try to
meet the expanded needs of water users; and second, to meet only a
part of those needs by redistributing supplies.
As shown in Table 4ES-1, two general categories of alterna-
tives can be used to attempt to achieve the objective of meeting
the expanded needs of water users:
* Increase water supply (augmentation);
• Increase the use of existing supply (conservation).
TABLE 4ES-1: WATER AVAILABILITY ALTERNATIVES
POLICY OBJECTIVE
Meet the needs of
water users
Meet only a part of
total water needs
CATEGORY OF
ALTERNATIVE
Increase water
supply (aug-
mentation)
Increase use of
existing sup-
ply (conser-
vation)
Limit or elimi-
nate some
uses
SPECIFIC ALTERNATIVE
Surface diversion, transfer, and storage
Groundwater storage
Groundwater use
Weather modification
Vegetation nanagement
• runoff modification
• remove nonproductive vegetation
Conservation for resource development
• choice cf technology
• cooling and process designs
• municipal wastewater for cooling
Conservation for agriculture
• irrigation efficiency improvements
• crop selection
Conservation for municipalities
Limit or eliminate water-intensive
agriculture
Limit or E'l.iminate water-intensive energy
development
90
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Increasing water supply has been the traditional response to
water availability problems in the West. This policy approach
could be continued by adopting specific augmentation alternatives
such as intrabasin diversions and transfers and increased storage
in surface impoundments. Existing water supplies can also be aug-
mented by other alternatives such as interbasin transfers, ground-
water storage, weather modification, and managing natural vegeta-
tion. In order to meet expanded needs of water users, policymakers
may also choose to improve the use of existing supplies through
conservation in energy resource development, irrigated agriculture,
municipal, and industrial uses.
Policymakers may take a much different approach by meeting
only a part of future water needs. By choosing this objective,
policymakers explicitly acknowledge that water supplies are inade-
quate and that available supplies need to be allocated to those
uses most valued in specific areas. As suggested in Table 4ES-1,
this objective can be achieved by limiting or eliminating water-
intensive uses, including both energy resource development and
irrigated agriculture.
Findings
Substantial quantities of water can be added to existing sup-
plies if both augmentation and conservation are employed exten-
sively, perhaps enough to avoid water shortages in many areas of
the West. Effective augmentation choices to achieve this goal,
potentially capable of adding millions of acre-ft/yr, include in-
terbasin transfers, weather modification, and vegetation manage-
ment. Conservation alternatives appear generally less effective
than augmentation, and considerable uncertainty is associated with
estimating the effects of each alternative. However, conservation
for energy facilities by employing water-efficient cooling tech-
nologies can save about 400,000 acre-ft/yr by the year 2000.
Although augmentation and conservation alternatives can poten-
tially supply large quantities of water, many of the specific al-
ternatives are likely to produce unacceptable consequences to many
stakeholders. Several alternatives will produce substantial envi-
ronmental costs and risks. This is more likely to be the case for
augmentation, particularly for transfers (interbasin and intra-
basin) , impoundments, and vegetation management. In contrast, en-
vironmental benefits, largely associated with preserving instream
flows, are derived from most conservation alternatives.
If used extensively, augmentation and conservation would also
result in significant economic costs. In fact, because of their
economic costs many alternatives appear to require federal subsi-
dies. This is especially true for transfers, impoundments, under-
ground storage, and conservation in irrigated agriculture, largely
because of construction costs. The most effective conservation op-
tion, mimimum wet cooling for energy facilities, is very expensive
91
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for the amount of water saved. Intermediate wet cooling can save
almost as much water and is more cost-effective.
Economic and environmental risks contribute to political prob-
lems for several alternatives. For example, interbasin and intra-
basin transfers create inequities for the donor basins or subbasins,
In fact, perception of such inequities has already created legal
barriers to interbasin transfers from the Columbia River system,
and generated conflict between west and east slope interests in
Colorado. Equity problems are also important for conservation al-
ternatives, since irrigated agriculture in general may not be able
to afford the capital costs of more efficient mechanical irriga-
tion systems. Because irrigated agriculture is already heavily
subsidized, additional federal support is likely to require local
and state cost sharing in order to remain feasible.
Political questions are also likely to arise over the flexi-
bility of many of these alternatives. Because water availability
problems depend on many locational conditions, and western states
have increasingly demanded more control over their own growth,
future water policy will probably require responses which account
for western values and can be applied according to local conditions,
However, these considerations will make it more difficult to adopt
equitable responses, to the extent that policymakers opt for alter-
natives which apply uniform standards or attempt to distribute
costs, risks, and benefits equitably among states and sectors of
society. Hence, there will be strong pressures for flexible al-
ternatives which can be applied to locational conditions, such as
weather modification. Our analysis also highlights the importance
of implementation strategies to apply policy responses to loca-
tional circumstances. For example, wet/dry cooling might best be
implemented by imposing location-dependent ceilings on water use
rather than requiring a uniform technology.
Conclusion.
This evaluation does not lead to the identification of one
category of alternatives that is superior to all others—in fact,
a mix of policy alternatives will probably be required to address
the complex problems of water resource development. This is in
part because of the lack of adequate information about water prob-
lems and policy alternatives. However, it is also because of the
nature of water availability problems and issues, which incorpor-
ate a wide range of interests and values and critically affect
growth and development on a region-wide basis. It is not at all
clear that the regulatory system as currently constructed is capa-
ble of addressing these complex issues in a comprehensive and
timely manner, other than by letting events and ad hoc, incremen-
tal decisions shape policy. This approach will almost certainly
deprive some interests and values, particularly those of irrigated
agriculture, if economic considerations dominate. If policymakers
92
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choose to try to meet water needs rather than explicitly eliminat-
ing some uses, this evaluation suggests that intermediate wet cool-
ing technologies for energy conversion facilities, weather modifi-
cation, groundwater storage, and selective vegetation management
can add or save substantial quantities of water while minimizing
many adverse consequences.
93
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CHAPTER 4
WATER AVAILABILITY
4.1 INTRODUCTION
Water availability can seriously constrain large-scale energy
resource development in the West, particularly coal and oil shale
conversion and development within the Upper Colorado River Basin
(UCRB). Competition for water is already keen and energy develop-
ment will add another major competitor, worsening existing polit-
ical conflicts over how and to whom water resources are allocated.
These conflicts are, in part, a product of uncertainties associ-
ated with the existing complex system of appropriated rights,
interstate compacts, international treaties, and court decisions
as well as numerous unanswered questions about prior rights,
beneficial uses, and linkages between ground and surface water.
But the basic underlying causes of water problems and issues are
its scarcity throughout the region, the inadequacy of water re-
sources data, particularly on groundwater, and the multiplicity
of political jurisdictions involved.
This chapter focuses on water availability problems and
issues. In the following section, the imp-acts of energy resource
development on water availability, reported in detail in our
Energy From the West progress and impact analysis reports,1 are
summarized and related to the social and political context within
which western energy resource development will take place. This
includes identifying the interests and values which are at stake,
the stakeholders or parties-at-interest who represent and promote
them, and the existing systems and processes for dealing with
water availability problems and issues. Relating water availabil-
ity impacts to the context within which development will take
place leads to the identification and definition of the signifi-
cant water availability problems and issues that policymakers are
likely to have to deal with as a consequence of energy resource
development. These problems and issues are summarized in Section
1White, Irvin L., et al. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977; and White, Irvin L. et al. Energy From the West:
Impact Analysis Report. Washington, D.C.:U.S., Environmental
Protection Agency,forthcoming.
94
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4.2.3, and Section 4.3 identifies, evaluates, and compares
alternative policies and implementation strategies for dealing
with them.
4.2 WATER AVAILABILITY PROBLEMS AND ISSUES
4.2.1 The Water Availability Impacts of Energy Resource
Development
A. Impacted Waters
Figure 4-1 shows the major surface waters in the eight-state
study area likely to be affected by energy resource developments
considered in the Energy From the West. The Upper Missouri
especially the Yellowstone, Belle Fourche, and Little Missouri
tributaries, will be affected by developments in Montana, Wyoming,
and North Dakota. Upper Colorado tributaries, especially those in
the San Juan system, will be affected by developments in Colorado,
Utah, and New Mexico. Although these will be the surface waters
most affected, withdrawals from these streams will have downstream
effects.
Although the Upper Colorado apparently has less groundwater
available than does the Upper Missouri, numerous aquifers in
alluvial deposits along rivers and streams may provide a potential
water source for energy development in both basins. The Madison
aquifer and several shallow aquifers in the Fort Union Coal Forma-
tion (Wyoming, Montana, North Dakota) are the most likely sources
of groundwater for conversion facilities in the UMRB. The pos-
sibility exists for some of these groundwater sources to be mined
if the water is used for conversion facilities or coal slurry
pipelines.
B. Water Availability Impacts
The impact analyses reported in our Energy From the West
progress and impact analysis reports1 were designed to identify
the potential impacts of energy resource development on water
availability in the eight-state study area. These analyses
attempted to identify two kinds of factors, technological and
locational, which will largely determine the seriousness and
Irvin L., et al. Energy From the West; A Progress
Report of a Technology Assessment of Western Energy Resource "™~~
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977; and White, Irvin L., et al. Energy From the West:
Impact Analysis Report. Washington, D.C.: U.S., Environmental""
Protection Agency, forthcoming.
95
-------
FIGURE 4-1:
MAJOR SURFACE WATERS IMPACTED BY
WESTERN ENERGY RESOURCE DEVELOPMENT
96
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magnitude of the water availability problems actually likely to
occur when development takes place. We found that the water
requirements and labor intensity of development technologies and
the type of mining used are the most critical technological fac-
tors; and that water availability, climatic conditions, and the
coal characteristics (heat content and moisture, ash and sulfur
contents) are the most important locational factors. This section
summarizes the results of our water availability impact analyses
and identifies the problems and issues which are likely to arise
as a consequence of these impacts.
(1) Water Requirements
As shown in Figure 4-2, energy conversion facilities can
vary considerably in terms of their water requirements. On an
equivalent energy product basis, electric power generation re-
quires more water than either of the synthetic fuel technologies
considered and more than slurry pipelines. This is true whether
the energy product is valued as thermal energy or as electrical
energy. However, it should be noted that thermal and electric
outputs cannot be compared directly and thermal and electrical
energies have different economic values. Based on the best
available data, high Btu coal gasification consumes more water
than coal liquefaction but less than that for oil shale conver-
sion by TOSCO II surface retorting.
Process water requirements are generally much smaller than
are requirements for cooling.1 The single exception is TOSCO II,
the most water-intensive of the surface oil shale retorting pro-
cesses currently being developed.2 When wet cooling is used,
cooling water requirements account for 53 to 96 percent of the
*Water requirements for holding ponds are even less, repre-
senting about 1 to 3 percent of total water requirements for
power plants and about 3 to 8 percent of total requirements for
synthetic coal facilities.
2See White, Irvin L., et al. Energy From the West: Energy
Resource Development Systems Report. Washington, B.C.: U.S.,
Environmental Protection Agency, forthcoming.
97
-------
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FIGURE 4-2:
Technology
WATER REQUIREMENTS FOR ENERGY CONVERSION
TECHNOLOGIES
Btu = British thermal unit
E = electric
Th = thermal
98
-------
total water requirements for electric power plants and synthetic
fuel facilities.1
Location can also affect water consumption, primarily because
of the difference in the coal characteristics and the climatic
conditions. For example, water requirements for a Lurgi facility
in the Four Corners area can be about twice that required for the
same facility in the Northern Great Plains. This is because of
the low moisture content of the coal in New Mexico, the fact that
the Lurgi process accepts wet coal, the high ash New Mexico coal
requiring more water for disposal, and the need for supplemental
irrigation to reclaim the land.2
Water requirements for mining and for energy related popula-
tion increases represent at most ten percent of the water required
for conversion facilities. However, these demands may still lead
to water problems, especially if treatment and distribution sys-
tems are required to supply the water. Water requirements for
most small communities are obtained from groundwater. In con-
-junction with withdrawals for mine dewatering and agricultural
purposes, aquifer depletion is a potential problem.
Our estimates of the annual water requirements for energy
resource development in the eight-state study area by the year
2000 are 1.4 million acre-feet per year (acre-ft/yr) for a Low
Demand case (124 quadrillion British thermal units [Btu's]
[124 Q's]) and 2.3 million acre-ft/yr for a Nominal Demand case
(155 Q's);3 this estimate calls for 350,000 to 1,117,000 acre-
ft/yr to be used in the Upper Colorado and 990,000 to 1,225,000
acre-ft/yr in the Upper Missouri.
White, Irvin L. , et al. Energy From the West: Energy
Resource Development Sy s terns" Repor t~. Washington , D. C. : U . S . ~,
Environmental Protection Age.'fcy^ Forthcoming. Water requirements
can be decreased considerable by using some combination of wet
and dry cooling, dry cooling, and by incorporating process design
change. See Gold, Harris, e - al . Water Requirements for Steam-
Electric P ower Generation a! g~5yrithetic Fuel Plants in the
Western United States. Washington , D.C.: U.S., Environmental
Protectfon Agency", T9~77. See also Section 4.3 below.
2See White, Irvin L. , et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy Resource
DevelcSplnen'tr Washington, D.C. : U.S. , EnvironmerTta"! Protection
Agency , 19 7 7 ; and White, Irvin L., e t al . Energy From the West:
Impact Analysis Report. Washington^ D.C. : U.S., Environmental
Protection" Agency^ forthcoming .
3This mostly assumes a high degree of wet cooling, the choice
developers are most likely to make at the present time, given eco-
nomic considerations and current water management practices.
99
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(2) Water Availability
Water availability estimates vary widely, especially for the
Colorado River. Under the provisions of the 1922 Colorado River
Compact,1 Upper Basin states guarantee Lower Basin states 75
million acre-ft/yr over each consecutive ten year period or an
average of 7.5 million acre-ft/yr. In the Mexican Water Treaty
of 1944, the U.S. agreed to guarantee Mexico 1.5 million acre-
ft/yr. 2 Assuming that the Upper Basin states are responsible for
supplying half this amount (which they apparently do not assume),
on the average, 8.25 million acre-feet roust flow into the Lower
Basin each year.3
Three of the most frequently cited annual virgin flow
estimates for the Colorado are shown in Figure 4-3. If it is
assumed that 8.25 million acre-feet will be delivered to the
Lower Basin each year, on the average ar estimated 5.25 to 7.95
million acre-feet would be available to the Upper Basin.
These estimates are based on average flows, around which
considerable variation occurs from year to year. For example,
Stockton and Jacoby estimate the average yearly virgin flow at
13.5 million acre-feet with a standard deviation of 3.4 million
acre-feet. This means that in 67 percent of the years, flow
would be between 10.1 and 16.9 million acre-feet. In drought
years, flow could be much less. It now appears that 1977 will
be the dryest year on record with a virgin flow at Lee Ferry
estimated at 5.3 million acre-feet.1*
Colorado River Compact of 1922, 42 Stat. 171, 45 Stat.
1064, declared effective by Presidential Proclamation, 46 Stat.
3000 (1928).
2Treaty between the United States of America and Mexico
Respecting Utilization of Waters of the Colorado and Tijuana
Rivers and of the Rio Grande, February 3, 1944, 59 Stat. 1219
(1945), Treaty Series No. 994.
JColorado Governor Richard D. Lamm maintains that Colorado
and other Upper Basin states are not responsible for meeting the
Mexican Treaty obligation.
14 On these two points see, respectively: Stockton, Charles W. ,
and Gordon C. Jacoby, Jr. Long-term Surface Water Supply and
Streamflo\v Trends in the Upper Colorado River Basin, Lake Powell
Research Project Bulletin Number 18. Los Angeles, Calif.:
University of California, Institute of Geophysics and Planetary
Physics, 1976; and Colorado River Basin Salinity Control Forum.
Second Annual Progress Report: Water Quality Standards for
Salinity in Colorado River System?Salt Lake City, Utah: Colorado
River Bai"in Salinity Control Forum, January 1978, p. 3.
100
-------
S-l
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20 _
15 —
10
13.5
8.25 MM acre-ft/
yr Flow To
Lower Basin
1922 TIPTON LAKE
COMPACT3 & POWELL0
KALMBACKb
FIGURE 4-3: ESTIMATES OF AVERAGE FLOW IN COLORADO RIVER
Colorado River Compact of 1922, 42 Stat. 171, 45 Stat. 1064
declared effective by Presidential Proclamation, 46 Stat. 3000
(1928) .
Tipton and Kalmbach, Inc. "Water Supplies of the Colorado
River," in U.S., Congress, House of Representatives, Committee on
Interior and Insular Affairs. Lower Colorado River Basin Project.
Hearings before the Subcommittee in Irrigation and Reclamation,
89th Congress, 1st Session.
cStockton, Charles W., and Gordon C. Jacoby, Jr. Long-term Sur-
face Water Supply and Streamflow Trends in the Upper Colorado
River Basin,Lake Powell Research Project Bulletin Number 18.
Los Angeles, Calif.: University of California, Institute of
Geophysics and Planetary Physics, 1976.
'"This estimate assumes 7.5 million acre-feet to meet the obli-
gation of the 1922 Compact and .75 million acre-feet to fulfill
the Upper Basin's Share of the Mexican Water Treaty.
101
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Current consumption in the Upper Basin is estimated to be
3.2 million to 3.7 million acre-ft/yr.1 The projected increase
for nonenergy users is 1.5 million to 1.6 million acre-ft/yr by
the year 2000.2 As shown in Figure 4-4, if maximum estimates of
current consumption and projected energy and nonenergy water re-
quirements are combined, by the year 2000 water requirements in
the Upper Colorado River could exceed the average flow estimate
(13.5 million acre-feet) by over one million acre-ft/yr. If mini-
mum estimates of requirements are used, a large percentage (ap-
proximately 95 percent) of supplies will be depleted. This will
almost certainly intensify existing water conflicts and over-tax
the capability of existing institutions for allocating water-
rights and dealing with water conflicts.
Water availability does not appear to be as much of a prob-
lem in the Upper Missouri as a whole since water not currently
being used is well in excess of maximum anticipated requirements.
However, in many cases, surface water would have to be transported
relatively long distances. And there are ongoing conflicts over
beneficial uses of some stream segments, and some stream segments
are over allocated, for example, in the Yellowstone River.3
Groundwater is also available in both river basins and, in
some cases, might be an alternative water source for energy devel-
opment. However, relying on groundwater can also produce problems,
particularly if it is mined (consumed faster than the aquifer from
which it is being withdrawn is recharged) or affects surface
stream flows. An estimated 115 million acre-feet is contained in
aquifers in the UCRB at a depth of less than 100 feet.1* They are
recharged at a rate of 4 million acre-ft/yr. Substantially
greater quantities are estimated to occur in deeper reservoirs.
•'U.S., Department of the Interior, Bureau of Reclamation.
Westwide Study Report on Critical Water Problems Facing the
Eleven Western States. Washington, D.C."~: Government Printing
Office, 1975.
2U.S., Department of the Interior, Water for Energy Manage-
ment Team. Report on Water for Energy in the Upper Colorado
River Basin. Denver, Colo.: Department of the Interior, 1974.
3See U.S., Department of the Interior, Bureau of Reclamation.
Westwide Study Report on Critical Water Problems Facing the Eleven
We s t ei r n' ~Sta tes~. Washington, D. C. : Government Printing Office^
1975, pp. 298-303.
"*Price, Don, and Ted Arnow. Summary Appraisals of jthe
Nation's Ground-Water Resources--Upper Colorado Region,U.S.
Geological Survey Professional Paper 813-C. Washington, D.C.:
Government Printing Office, 1974.
102
-------
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In the UMRB a total of 860 million acre-feet is estimated to be
stored in the upper 1,000 feet of rock.] But most of these aqui-
fers are not highly productive and will probably be used mainly to
supply water for population growth associated with energy develop-
ment. The Madison aquifer in northern Wyoming, southern Montana,
and western North Dakota is currently being studied as a possible
source of water for energy development.2 The use of the Madison
aquifer for energy development, is limited by insufficient knowledge
about its location and properties3 and by its great depth in most
areas of the basin. It is located at about a 7,500 foot depth at
Colstrip, Montana, for example. Alluvial aquifers and aquifers in
the Fort Union Formation also occur in the UMRB and are presently
used only for municipal and agricultural needs.
The use of aquifers, especially in the UCRB, can affect flow
in nearby streams which depend themselves on groundwater to main-
tain flows. This can result in conflicts with those having sur-
face water rights. Until legal procedures are well defined for
the resolution of conflicts over the interrelationships between
groundwater and surface water flow, the use of groundwater for
energy development will be restricted.
4.2.2 The Context of Water Availability Issues
The national and regional social and political contexts of
western energy resource development were described generally in
Chapters 1 and 2. This section focuses more specifically on the
relevant western context within which the: water availability im-
pacts described above will occur. Following a general descrip-
tion of the historical development of water availability, the
development of policies in three major areas of water availability
policy are discussed: water rights and beneficial uses, conser-
vation, and the roles and responsibilities of participants in the
water policy system.
Missouri Basin Inter-Agency Committee. The Missouri River
Basin Comprehensive Framework Study, 7 vols. Denver^Colo.:OTS.,
Department of the Interior, Bureau of Land Management, 1971.
2U.S., Department of the Interior, Geological Survey. Plan
of Study of the Hydrology_of the Madison Limestone and Associated
RocksTTn Parts of Montana, Nebraska, North Dakota, South Dakota,
and Wyoming. Open-File Report 75-631. Denver, Colo.: Geological
Survey, 1975.
3Swenson, Frank A. Possible Development of Water from
Madison Group and Associated Rock in Powder River Basin, Montana-
Wyoming. Denver, Colo.: Northern Great Plains Resources Program,
197T.
104
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A. Historical Development
Because water has always been a vital but scarce resource
in the West, the history of legal and physical controls is both
complex and lengthy. Such controls have promoted two primary
interests. The first is geographic equity; that is, diversions,
impoundments, legal doctrines, and interstate compacts were needed
to protect downstream users within a state and to provide at least
minimal water supplies to states of the Colorado and Missouri
River systems. The second is the economic interests of irrigated
agriculture, a basic industry in each of the states which often
depends on water supplies from distant sources.1 Only relatively
recently have water supplies for these interests been seriously
challenged by other interests, such as energy resource develop-
ment, environmental values for conservation, scenic beauty and
natural habitats, Indian water needs, and increased municipal
needs among others.
Although primarily serving agricultural interests, reservoir
development for irrigation water and hydroelectric power have
played an important part in the settlement of the West by
increasing supplies to municipal users and in the utilization of
other valuable resources, such as recreational uses of reservoirs.
Physical controls also brought the federal government into western
water policy at an early stage. The Reclamation Acts of 1902 and
1939 gave the Bureau of Reclamation (BuRec) a general mandate to
make arid lands available for agricultural development and pro-
vide for construction of works to improve and divert water for
irrigation, power generation, and other uses. BuRec has been
largely responsible for the development of major western impound-
ments (such as Hoover, Glen Canyon, Flaming Gorge, and Navajo
Dams in the Colorado River Basin) and, thus, has ongoing manage-
ment responsibility for waters of these impoundments. For
example, BuRec"s responsibilities include water resources planning,
operating irrigation networks and drainage systems, and meeting
obligations of interstate compacts and private contracts. A
critical element of these management responsibilities is to
establish prices for the sale of waters from federal projects.
As will be discussed below, these projects and federal pricing
policies which reflect national goals have subsidized agricul-
tural users of water by selling water well below the actual cost
Irrigation generally accounts for 80 to 85 percent of
total consumptive use in the West. See Glenn, Bruce, and Kenneth
0. Kaufman. "Institutional Constraints on Water Allocation."
Paper presented at the Energy, Environment, and Wild Rivers in
Water Resource Management Conference, Moscow, Idaho, July 6-8,
1977.
105
-------
of providing it.1 However, most of the West's water resources
have been developed privately and approximately 75 percent of all
irrigated agricultural usage in the eight-state study area is
based on either private or nonfederal development.2
The legal and institutional mechanisms for allocating and
regulating this scarce resource also have a long history and are
well established. As shown in Table 4-1, both the Colorado and
the Missouri Rivers are subject to several intergovernmental agree-
ments. One of the most important of these is the Colorado River
Compact referred to earlier.3
The legal and institutional framework of western water policy
is complicated by federal and Indian reserved water rights. Re-
served rights recognize that when the U.S. establishes a federal
reservation such as a national park, military installation, or
Indian reservation, a sufficient quantity of unappropriated water
is reserved to accomplish the purposes for which land was re-
served. The reservation doctrine has been affirmed in the courts
to hold that federal reserved rights are not subject to state ap-
propriation laws and that federal water rights are not lost if
they are not used.1* These doctrines are significant because the
federal government owns large percentages of western lands, for
example about 70 percent of the land in the Colorado River Basin,
and because Indians have claimed rights to as much water as is
needed in many segments of the Colorado. This issue is elaborated
in Section 4.2.2.B below.
a comprehensive overview of the traditional federal
role in water resource management, see Ingram, Helen, and J.R.
McCain. "Federal Water Resources Management: The Administra-
tive Setting." Public Administration Review, Vol. 37 (September/
October 1977), pp. 448-55.
2National Water Commission. Water Policies for the Future,
Final Report. Washington, D.C.: Government Printing Office,
June 1973, p. 127.
3Colorado River Compact of 1922, 42 Stat. 171, 45 Stat.
1064, declared effective by Presidential Proclamation, 46 Stat.
3000 (1928) .
^Specific extensions of the reservation doctrine are the
product of over fifty years of refinement of the Winters ruling
(Winters v. U.S., 207 U.S. 564 [1908]). This doctrine also has
been confirmed in Arizona v. California, 373 U.S. 546 (1963),
Decree 373 U.S. 340 (1964).
106
-------
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State appropriation systems are also critical elements in
the development of western water policy,,1 The appropriation sys-
tem establishes priority rights which grant a continuing right
to the first user of water. A second user, whether upstream or
downstream, is only entitled to whatever water remains after the
first user has met his needs. Hence, in drought years or in
areas of limited supplies, secondary users may be denied water.
An appropriation right is generally quantified and sustained
only by actual and continuous beneficial use. Although "benefi-
cial use" is defined differently by different states, it is a
critical element of traditional water policy which has required
withdrawal from the stream for the use to be beneficial. Within
the past several years this traditional definition has been chal-
lenged by environmental interests who, in some cases, have success-
fully redefined beneficial to include instream values, such as
recreation and protection of aquatic habitat. This conflict is
discussed further in the following section.
B. Water Rights and Beneficial Use
Many water-use conflicts concern questions of water rights
and beneficial use. As demands for water have increased, tradi-
tional interests such as irrigated agriculture have come into con-
flict with more recent interests such as energy industry and
environmental interests. Questions over water rights and benefi-
cial use also involve intergovernmental conflicts; most notably
between Indian tribes and state governments, but also among
intrastate agencies, among states, and between the federal
government and states.
eight states in the study area operate under appropria-
tion systems, although North and South Dakota have only recently
(1955) changed and still retain riparian systems for landowners
exercising rights under that system prior to 1955. The riparian
system holds that owners of land contiguous to surface water shall
all have an equal right to "reasonable" use of that water which
is not lost by nonuse.
2Water rights are obtained by application to a state engi-
neer, other right administrator, 'or state water court for an
appropriation or a change of an existing right. If the right is
granted, the permit records the data, quantity, and use of
water.
3Typical definition is "the amount of water that is reason-
able and appropriate under reasonably efficient practices to
accomplish without waste the purpose for which the water appro-
priation is lawful." See Colorado Revised Statutes, § 37-92-103
(4) (1963).
108
-------
As suggested above, important questions and conflicts
concerning beneficial use are being raised in the context of
state water law. Although a variety of requirements on western
water use have developed within each of the states,1 probably the
most important evolution in state water law has been the expansion
of uses which are considered "beneficial." Several recent modi-
fications have been made in definitions of beneficial use "for the
public interests." Wyoming, for example, has added new criteria
for evaluating water transfers which include economic loss to the
community and the state and whether other water sources are avail-
able for the new use.2 Of course, different states define public
interest in different ways. As defined in Utah, the public inter-
est appears to favor insuring a water supply for the development
of the Uinta Basin. The Utah Water Code was revised in 1976 to
allow the state engineer to approve applications to appropriate
water for industrial, power, mining, or manufacturing purposes
for specified time periods, after which the water will revert to
the state for reallocation.3
However, many western states recently have taken action to
recognize a public interest in the environment, such as instream
water use,1* preserving minimum flows, or authorizing appropria-
tions to protect instream values.5 In 1975, Montana responded
to the uncertainties concerning the availability of water resources
and increased conflicts over water rights by imposing a three-
year moratorium on new appropriations from the Yellowstone River
and calling for a thorough study to be made (see box "Yellowstone
River Oversubscribed"). State legislation has been supplemented
by environmental interest groups whose activities include suits
to preserve scenic beauty, natural habitat, and recreational
TFor example, consumptive use laws may require return flows,
limit the timing of return flows, or specify the purposes of a
withdrawal. For a discussion of some of the more well-established
doctrines of the appropriation system, see White, Michael D.
"Problems Under State Water Laws: Changes in Existing Water
Rights." Natural Resources Lawyer, Vol. 8, No. 2 (1975), pp.
359-76.
2Wyoming Statutes § 41.4.1.
3Chapter 23, Laws of Utah, 1976.
^Traditional appropriation law generally held that instream
uses, such as scenic beauty, were not beneficial. See Empire
Water and Power Company v. Cascade Town Company, 205 FecU123
(8th Cir. 1963).
5See National Water Commission. Legal Protection of In-
stream Water Values. Springfield, Va.: National Technical
Information Services, 1971.
109
-------
YELLOWSTONE RIVER
OVERSUBSCRIBED
Requests for water from the Yel-
lowstone River far exceed supplies,
leading to a three year moratorium
(197.'i-1978) on any new water rights,
Demands on Yellowstone water include
8.8 million acre-feet by coal related
industrial users, 6.6 million acre-
feet by the State Health Department,
and 8.2 million acre-feet by the
State Fish and Game Commission. Agri-
cultural interests have asked for
more than is in the river.
— Coal _Week, September 12, 1977; and
Montana Department of Natural Re-
sources and Conservation. Final Envi-
ronmental Impact Statement for Wa-.or
uses. For example, the Colorado
Water Conservation Board, repre-
senting the Colorado Division of
Wildlife, is currently suing the
Colorado River Conservation
District, which represents water
rights holders. The issue is
the preservation of minimum
stream flows in the Crystal
River, near Carbondale, Colorado,
in order to protect the natural
environment, including insuring
enough water for trout.* This
issue is a classic confrontation
between environmental, agricul-
tural, and commercial power in-
terests. It also is indicative
of the challenges being faced in
many streams of the West which,
like the Crystal River, are
already over allocated. On the
other hand, the uncertainties
inherent in the evolving regula-
tory system may become too great
a risk for some potential users
of large quantities of water
such as capital-intensive energy
industries (see box "Project
Threatened").
Environmental values articulated in the Wild and Scenic
Rivers Act also have made new demands on already scarce resources.
In the eight-state study area, portions of twelve rivers in the
Colorado Basin are being considered for inclusion in the wild and
scenic rivers system. Those most likely to affect energy devel-
opment are the Escalante, White, Green, and the Colorado main-
stream between the confluence with the Gunnison and the confluence
with the Dolores.2 The significance of the act is that it may be
used to preserve minimum stream flows in order to protect instream
uses. This could affect the water available for energy develop-
ment and other uses and prevent impoundments or any water resources
project which alters the nature of flow of a wild or scenic river.
However, state water administrators generally do not believe that
this act will reduce water available for appropriation.
"Minimum Stream Flows Sought." Denver Post,
Reservation Applications in the Ye 1 -
lowstone River Basin. Helena, Mont.
Water Resources Division, State of
Montana, 1975.
Bob.
January 20, 1977.
2The National Park Serivce has suggested that further water
withdrawal in the Escalante River will create dangerous flow
levels, affecting habitat and species composition.
Temple A. Personal communication, April 28, 1978.
Reynolds,
110
-------
The question of coal slurry
pipelines has also provoked con-
flict among a variety of inter-
ests. A proposed slurry pipe-
line from Walsenburg, Colorado
to Texas would carry 15 million
tons of Colorado and Wyoming
coal per year and use about
10,000 acre-feet of water per
year. However, Colorado
farmers, ranchers, legislators,
environmental interests, and
railroad interests are opposing
the development of this line
by Houston Natural Gas
Company and Rio Grande Indus-
tries Corporation of Colorado.1
Railroad interests, who say
they currently operate at 30
percent capacity, have aligned
with environmental interests
to prevent the energy companies
rights.2
PROJECT THREATENED
The proposed Juniper Cross
Mountain Project, which would store
up to 1 million acre-feet of water
in reserviors on the Yampa and
Little Snake rivers near Craig,
Colorado, may be blocked by an
endangered species, the squaw fish.
Because the Yampa has been identi-
fied as a prime habitat of the
squaw fish, a construction permit
will not be given until the
potential danger to the fish is
determined.
—"Colorado Water Project Endan-
gered by Fish." Denver Post,
April 20, 1978.
from acquiring eminent domain
Water requirements for this slurry pipeline also concern
Colorado legislators, some of whom have proposed legislation
which would allow the line to run through the state^but would
prohibit the use of Colorado water for exportation.3 This would
produce $2 million to $3 million in taxes for Colorado. The issue
is also being addressed in the courts, where the pipeline com-
pany must prove that their plan to pump underground water will
not injure water supplies for present users. The possibility
of reduced water tables coupled with the fact that the pipeline
companies have already purchased water rights from some area
farmers has infuriated other farmers.1*
Davidson, Craig. "Mesita Battleground For Water Dispute."
Denver Post, December 19, 1977.
Elaboration of these conflicts can be found in Chapter 11,
"Transportation Analysis."
3A temporary prohibition on the export of water was passed
by the legislature in 1977, but it is being reconsidered in the
current session. See "It's Coal Slurry Pipeline'Water That
Worries Lawmakers." Wyoming State Tribune, December 20, 1977.
^Strain, Peggy. "Water, Land, Life - It's All One In
Valley Pipeline Debate." Denver Post, November 13, 1977.
Ill
-------
Because of the potentially large quantity of water at stake,
one of the most important water right conflicts is the quantifi-
cation of Indian reserved rights. Under the reservation doctrine,
some Indian tribes have claimed rights to large quantities of
water, threatening supplies to many current users with appro-
priated rights. These conflicts generally occur between Indian
tribes arid state governments. Indian tribes defending or claiming
water rights usually have to do so originally in state courts.1
Many Indians believe state courts are inherently more sympathetic
to state interests. They also observe that federal courts are
not generally inclined to review findings of fact from lower
courts,2 and conclude that the system is biased against them.
As shown in Figure 4-5, Indian tribes potentially control
large quantities of western surface waters, many of which are
prime sources of water for energy development. If Indians are
ultimately found to hold prior and paramount rights, existing
allocations and appropriations among and within western states
could be seriously affected. In one ceise, the Supreme Court
has held that Indian water rights were included in interstate
compacts.3 If this interpretation is applied generally, states
would have to absorb any changes resulting from the quantifica-
tion of Indian water rights. However, since Indians already
exercise some of their water rights, primarily for agricultural
uses, quantification may not. be so large as to create a separate
problem.
Federal reserved rights may be as important as Indian re-
served rights because the amounts of wetter necessary to fulfill
the purposes for which reservations were created have not been
quantified. Lack of quantification is a problem because it
leaves other water users uncertain as to how much water remains
to fulfill their rights. This uncertainty is especially high
with regard to state water laws. Moreover, the legal system
developed to deal with federal and state water rights grants
is based on the McCarren Amendment, as affirmed in
U.S. v. District Court in and for County of Eagle, 401 U.S. 520
(1971); and U.S. v. District Court in and for Water Division No,
5_, 401 U.S. 527 (1971) .
2For example, state findings concerning questions such as
"practicably irrigable acreage" could be combined with accept-
able legal principles to minimize water available to tribes.
Refer to MacMeekin, Daniel H. The Navajo Tribe's Water Rights
in the Colorado River Basin. Unpublished report, May 1971.
3Arizona v. California, 373 U.S. 546 (1963), Decree 376
U.S. 340 (1964).
112
-------
Indian
Reservation
State Lines
Rivers/Streams
\ ' r
•V4~a--j
FIGURE 4-5: WESTERN RIVERS IN RELATION TO INDIAN RESERVATIONS
113
-------
state and federal courts
concurrent, jurisdiction.1
Determination of federal rights
in state courts and vice versa
adds to the complexities of
problems by creating additional
arenas in which quantification
issues are addressed but not
definitively resolved.
C. Water Conservation
Water conservation has be-
come more important as demands
for water have increased and as
conflicts over water rights and
beneficial use have increased.
Most of the values and interests
identified above also get ex-
pressed over questions about the
efficient use of water.
Further, water conservation threatens existing institutional
mechanisms, especially state appropriation systems and federal
pricing policies. This threat probably has been most visible
regarding the Carter Administration's proposals for a new federal
water policy. President Carter's environmental message of spring,
1977 (see box) and proposals by the Water Resources Council sug-
gested that the Administration was pushing for powers to impose
federal regulation on western water use,,2 At least part of these
proposals were based on specific charges that western states have
failed to conserve water, to integrate ground and surface water
conservation, and to provide minimum stream flows for fish and
wildlife.3
CARTER ADMINISTRATION POLICY
A major aspect of the Presi-
dent's Environmental message to
Congress in May, 1977 was the need
for comprehensive reform of water
resources policy. Carter's mes-
sage emphasized conservation,
going well beyond the much publi-
cized recommendation to cancel
fifteer. public works projects and
to redesign many others. The
Administration has also proposed
legislation to reduce by 30 per-
cent the funds available to muni-
cipalities to construct sewage
plants if cities do not conserve
15 percent of current water usage.
Although the courts have held that, federal reserved rights
are not subject to state appropriation systems (see p. 4-9), the
jurisdiction for hearing Indian claims to water rights depends on
the particular situation. In some cases, Indians must originally
defend or claim water rights in state courts (see p. 4-12), in
other state and federal courts have concurrent jurisdiction.
2Federal and state conflicts over water policy are elabor-
ated in the following section.
3As reported in "Washington Could Wreck Western Water Policy."
Denver Post, December 17, 1977. Details of the Water Resources
.Council's Water Policy Proposal can be found in: Water Resources
Council. "Water Resources Policy Study,," 42 Fed. Reg. 36,787-95
(July 15, 1977).
114
-------
Charges of wasteful and inefficient water use are directly
tied to state appropriation systems, which are often blamed for
discouraging conservation, and to federal subsidies in the form
of dams and irrigation projects that make the price of water
artificially low.l Aspects of appropriation systems such as con-
sumptive use and nonimpairment doctrines2 can create disincentives
to conserve by specifying exact purposes of use. For example,
there may be no incentive to minimize water used for another pur-
pose, thereby requiring any excess water to be returned to the
stream.3
If a user has been diverting only a portion of his total
water right for several years, it is not likely that he would be
able to begin diverting all of his potential allocation if down-
stream users had become dependent on the return flow. This aspect
of the appropriation system, sometimes referred to as "historical
use," creates an incentive for users to "use or lose" all of their
water rights. Some attempts to compensate for the use of another
user's right have also been rejected. As waters of the Colorado
have become overappropriated, some users have tried to devise
means such as using water transferred from another basin for com-
pensatory water rights that might be injured by any change. One
recent attempt to create compensatory water rights was to remove
water-consuming phreatophytes from stream banks.1* This attempt
was struck down by the Colorado Supreme Court as being
1 In general, the percentage of construction costs repaid
by irrigated agriculture has decreased over the years. In
some cases, water users pay about 10 percent of construction
costs. See Mann, Dean E. "Water Planning in the Colorado River
Basin States." Paper presented at the Annual Meeting of the
Western Political Science Association, March 16-18, 1978, Los
Angeles, California.
2 Impairment doctrines and laws are elaborated in White,
Michael D. "Problems Under State Water Laws: Changes in
Existing Water Rights." Natural Resources Lawyer, Vol. 8, No. 2
(1975), pp. 359-76.
3For example, in some states, irrigation farmers apparently
did not gain the right to use the water saved by improved irriga-
tion methods. See, for example, Salt River Valley Water Users'
Association v. Kovacovich, 411 F. 2d 201 (1966), 3 Arizona app,
28; and Southeastern Colorado Water Conservancy District v.
Shelton Farms, Inc., 529 P. 2d 1321 (Colo. 1975).
"*Phreatophytes are riparian vegetation plants which obtain
water from the water table or from the soil just above it.
115
-------
fundamentally different than using transferred water for
compensation.1
Since BuRec operates within state water law, BuRec contracts
for water from federal reservoirs also operate under a "use or
lose" policy. The incentive is for right holders, primarily
farmers and ranchers, to use maximum allocations rather than to
conserve water.2 Secondly, BuRec's "ability to pay" pricing
policy makes supplies available to many users substantially
below costs. Environmental Defense Fund analysis of the Fruit-
land Mesa Project in western Colorado suggests that users of the
project's water, primarily farmers, will return only $3.8 million
of the total construction costs of $86 million.3 Even though
proponents of the project claimed that the remainder of the
project's costs will be paid from hydroelectric power revenues,
the policy does create a cheap resource for consumptive users.^
These policies seem characteristic of the Department of the
Interior's (DOI) traditional approach to water management; that
is, to maximize supply by means of large construction projects
and subsidize some water users such as agriculture. This
approach has come under increasing criticism as demands for
Colorado River water have increased and as more environmental
protection agencies have been established in government.
Secretary of the Interior, Cecil Andrus, has become one of the
more important critics of the traditional water management
system.5 In a recent letter to President Carter, Andrus charged
that:
Southeastern Colorado Water Conservancy District v.
Shelton Farms, Inc. , 529 P. 2d 1321 (Colo. 1975).
2Strabala, Bill. "Farmers Often Overuse Water, U.S. Agency
Says." Denver Post, April 13, 1977.
3El-Ashry, Mohamed T. , and Robert M. Weaver. "Colorado
River Projects: Impacts and Alternatives." Denver Post, April
17, 1977. The Fruitland Mesa Project has been canceled by Con-
gress on recommendation of the President.
data show that those benefiting from federal irrigation
projects pay a nineteen percent share of the costs. As reported
in "Broad Water Reforms Eyed." Denver Post, May 19, 1977.
5For an elaboration of intraagency disputes in the federal
government regarding water policy, see Doerksen, Harvey. "Water
Politics and Ideology: An Overview of Water Resources Manage-
ment." Public Administration Review, Vol. 37 (September/October
1977) , p. 446.
116
-------
Federal financing and an archaic water law system
which rewards early development, no matter what the
use, has been a disincentive to conservation. As a
result, the per capita water consumption in many
areas of the arid and semiarid West exceeds the
national average.1
State governments in the West generally, and state water
engineers in particular, usually disagree with these characteriza-
tions.2 In spite of the incentives, many westerners argue that
most farmers realize supplies are finite and use water judiciously,
They argue that most of the low-cost water is in use, so that most
farmers who do not receive water from a federal project must sup-
plement it with other more costly sources, such as groundwater.
Thus, any subsidized water that is wasted must be replaced by
more costly water. Further, even though federal water is subsi-
dized, it still represents a major expenditure to the farmer, who
is not likely to want to pay for more than he needs. Finally,
irrigation water charges from BuRec projects are often developed
for acres irrigated rather than for acre-feet of water delivered,
although some contracts include water conservation provisions--
providing a base quantity of water for one price and charging
higher prices for additional water.3
Agriculturists also argue that water is a renewable resource
and essentially nondestructible; that is, a farmer cannot con-
sumptively use more than plants on his farm consume; any excess
runs off back into streams or percolates into groundwater systems.
The only wastes involved are those associated with the growth of
nonproductive vegetation and evaporation from wet and marshy
areas. This argument is important, to environmentalists, because
lMAndrus Attacks 'Use or Lose1 Water Policy." Denver Post,
May 19, 1977.
2Fischer, Ward H. "Coloradans are Terrorized by Federal
Water Policy Report." Denver Post, September 4, 1977; and
"Washington Would Wreck Western Water Policy." Denver Post,
December 17, 1977.
3 Irrigation water costs can vary considerably, from a mini-
mum of three to five dollars an acre (including operation and
maintenance costs) in a region of low-value production such as
feed grains up to a maximum of 25 to 30 dollars an acre in
regions of high-value crops such as orchards. Hence, to quote
average prices for water supplies can be very misleading.
Kauffman, Kenneth 0., U.S., Department of the Interior, Bureau
of Reclamation, Denver, Colorado. Personal Communication, June
28, 1978.
117
-------
many water resource people favor reducing waste from wetlands and
nonproductive vegetation. Environmentalists usually argue that
wetlands and nonproductive vegetation e.re valuable habitat for
wildlife.
Environmental and agricultural conflict over water conser-
vation appears well-entrenched. The Environmental Defense Fund
argues that quantities of water wasted are not trivial--from 30
to 100 percent.l They also argue that federal subsidies contrib-
ute to the production of water-intensive forage crops, such as
alfalfa. Forage crops apparently account for about 60 percent of
the land irrigated by BuRec's two largest projects in Arizona
(Salt River and Gila projects).2
Environmental interests also include water quality and rec-
reational uses. Excess diversions contribute to poorer water
quality because irrigation return flows are the primary source
of rising salt concentration, already a critical problem in the
UCRB.3 Environmental groups such as the Sierra Club also object
to federal water projects because they prefer free-flowing rivers
to be preserved for recreational uses and to preserve natural
habitats.4
D. Intergovernmental Tensions
Conflicts over water rights, beneficial use, and water con-
servation have raised questions about the roles and responsi-
bilities which various governmental units should play. As indi-
cated in the above discussions, water policy issues involve many
conflicts in intergovernmental relations. The most important of
lAs reported by Gill, Douglas. "U.S. Projects Key to Future
West Water Use." Denver Post, July 17, 1977. These estimates
appear to be based on the inefficiencies of irrigation systems
rather than how much water actually could be saved from consump-
tive use.
2As reported by Ognibene, Peter J. "Wasting the West's
Water." Washington Post, June 5, 1977. The costs, risks, and
benefits of crop switching are evaluated in Section 4.3.
3For example, estimated annual damages because of salinity
will rise from about $53 million in 1973 to $124 million by 2000
unless additional control measures are applied. See Frederick,
Kenneth D. "When the Colorado River Dries Up, What Will We Do?"
Denver Post, July 17, 1977. Water quality is discussed in Chapter
__
''Strain, Peggy. "Water Projects' Need Debated." Denver
Post, February 1977.
118
-------
these conflicts with respect to western water policy appears to
be the tension between individual state initiatives and pressures
for a centralized federal water policy.
As has been suggested, several western states have begun to
take new initiatives in water policy, such as new legislation
protecting diverse interests in water use and Montana's three-
year moratorium on allocations in the Yellowstone River, Utah
has taken a more radical approach by proposing a water manage-
ment plan which could substantially alter its appropriation sys-
tem. Although it has not been implemented, the plan would divide
the state into hydrologic planning units which would be the basis
for quantifying rights, record-keeping of existing water resources,
and establishing the quantity of new water rights and transfers.
The Utah plan is also designed to allow greater access for parties-
at-interest to express their values about beneficial uses. State
initiatives have also begun to affect other western states. For
example, Colorado's temporary law prohibiting Colorado water in
slurry pipelines could affect both the export of coal and energy
development in Texas.
Increased state initiatives have contributed to changes in
traditional relationships between states and DOI. Corresponding
to an increased demand for states' rights (see box "States1 Rights
Stress"), DOI has begun to be more sensitive to the needs of indi-
vidual states. In western Colorado, DOI favored energy develop-
ment by granting contracts for water from federal reservoirs to
oil shale companies. However, DOI also granted Colorado's Gover-
nor Lamm veto power over the sale of some irrigation water to
energy industries if the Governor finds the sale inconsistent
with state plans and programs.1 In Montana, DOI made 300,000
acre-feet of water from the Fort Peck Reservoir avallable to the
state for resale. The water will be available at the same mini-
mum fee for which DOI has been leasing it to private industry.2
Demands for states' rights have been most evident in response
to Carter Administration water policies which have repeatedly
threatened the western states. These threats began with proposals
to limit or stop funding several water-development projects, many
of which were western. Citing a general need for wise management
and conservation, President Carter identified specific western
projects as being inefficient and damaging to water quality and
^trabala, Bill. "Lamm Gets Water Use Veto Power." Denver
Post, February 1977.
2The water is to cost $20 per acre-foot. See Gill, Douglas.
"Water May Be Auctioned Off." Denver Post, October 3, 1976.
119
-------
the environment.1 Although the
President's recommendations have
met with little success in Con-
gress, they were only the begin-
ning of troubles for the western
states.2 They were followed by
a proposal to enforce a 1902
law limiting the amount of land
a farmer is allowed to irrigate
with water from federal reclama-
tion projects to 160 acres.
This proposal brought sharp
reactions from western politi-
cians in several public hear-
ings. Wyoming Governor Ed
Herschler, for example, said the
proposal would "upset the entire
western agriculture" and called
for equivalency standards which
would allow ranchers in arid
regions to irrigate more land
than those in humid areas.
The
STATE'S RIGHTS STRESSED
Colorado political bodies are
stressing state's rights regarding
energy, agriculture, and water
policy. In a recent talk with
President Carter, Coloradans de-
livered a common message that
policies governing water distri-
bution should be controlled by the
states. Coloradans urged the Pre-
sident to view first-hand their
difficulties with water and ex-
pressed strong skepticism of those
who say "I'm from Washington and
I'm here to help you."
—Strain, Peggy, and Gary Cook.
"Panelists Stress State Water
Rights." Denver Posjt, October
1977.
American Farm Bureau Federation "
filed suit in a Federal
District Court in California to prevent implementation of the
proposal on the ground that Secretary Andrus violated the National
Environmental Policy Act by not preparing an environmental impact
statement (EIS) before issuing new rules and regulations.
Probably most: threatening to relationships between the fed-
eral government and the western states has been the Administra-
tion's proposals for a new national water policy. The proposals,
developed by the Water Resources Council in July 1977, were orig-
inally scheduled to be formalized by the President by November
eh, Leonard. "Dams Ineffective, Too Costly, Carter
Says." Denver Post, April 20, 1977.
20f the 320 projects reviewed to see if they would receive
federal funding, only nine projects were halted by Congress,
Eight of these were in the West.
3"Limits on Irrigation Opposed in Wyoming." Denver Post,
November 16, 1977. For an elaboration of the issues involved in
proposals to enforce the 1902 acreage limit, see, Kirschten,
J. Kicken. "The Quiet Before the Shootout Over 'The Water Law
of the West.1" National Journal, Vol. 10 (January 28, 1978),
pp. 149-53.
4"Farmers Ask Stay of New Irrigation Rules."
bune, November 11, 1977.
120
Chicago Tri-
-------
1977. However, because of critical reaction at a series of
public hearings in the West, the review period for the water
policy package was extended to February 1978, and water policy
legislation was not sent to Congress until June, 1978.*
Recommendations of the draft water policy proposal closely
paralleled the conflicts outlined above: reforms to be investi-
gated include more efficient irrigation practices, new water
pricing strategies, better management of groundwater supplies,
and water resource management that would protect the environment.
According to Interior Secretary Andrus:
The day of considering money to be the only solution
to water problems is over. We want results not in the
form of more dams and canals and the like, but in the
form of more rational use of this very precious re-
source . 2
Perhaps most upsetting to the western states were proposals
for a comprehensive national water resources policy that would
fundamentally change state water law. A formal response to the
proposals, submitted on behalf of several Colorado water users
associations and conservation districts, charged that the premise
that state policies are inept and the conclusion that policies
developed by the federal government for the West could be an
improvement "surpasses credulity."3 Further, even though Interior
Secretary Andrus is a former western governor, Governor Lamm of
Colorado suggested that "most or all of the governors were upset
at the way the West was treated in the way of water policy."
Although uncertainty still exists about how these relation-
ships will unfold, President Carter stepped back from many of
his original proposals in the revised national water policy
announced on June 7, 1978. Although the plan retained proposals
to encourage conservation programs and to require states to
further, a federal district judge ruled in March that a
revised federal water policy cannot be submitted to Congress
until an EIS has been developed. See "Judge Blocks Submission
of Water Plan to Congress." Denver Post, March 11, 1978.
2Kirschten, J. Dicken. "Turning Back the Tides of Long-
Time Federal Water Policy." National Journal, Vol. 9 (June 11,
1977), pp. 900-3.
3Fischer, Ward H. "Coloradans are Terrorized by Federal
Water Policy Report." Denver Post, September 4, 1977.
''Parsons, Dana. "West Fears Federal Power Grab." Denver
Post, September 3, 1977.
121
-------
contribute front-end money for new water projects, it explicitly
recognized state water management responsibility. In his announce-
ment of the policy, President Carter said;. "These water policy
reforms will, not preempt state or local water responsibilities."1
Colorado Governor Lamm responded that "The West can definitely
claim a limited victory."2
4.2,3 Summary
Energy resource development in the West can possibly be
constrained by and will add to existing water availability prob-
lems and issues. Development will affect most of the surface
waters in the eight-state area and particularly the Upper Colorado
and Yellowstone River Basins. In fact, it is possible that Welter
demands will substantially exceed available supplies in the UCRB
by the year 2000. On a more localized basis, this has already
occurred for specific stream segments. Hence, energy resource
development will exacerbate conflicts among energy industry,
agriculture, environment, government, arid other water users.
These general conflicts raise the possibility for several
specific problems arid issues:
• Restricted energy development, particularly on~site
conversion of energy resources, throughout the eight-
state study area, and, therefore, loss of corresponding
economic benefits;
* Environmental degradation , particulcirly loss to instream
values of water, habitat damage from wetlands removal,
and scenic and aesthetic values;
• Changes in the western economy, particularly if water for
irrigated agriculture is converted to other uses;
• Restricted development of Indian lands and/or damage to
Indian values and culture;
• Conflicts over political autonomy, authority, and responsi-
bility among governmental units and between public and pri-
vate sector participants.
The importance of water has always been appreciated in the
West, but new and larger demands on existing resources have
increased the visibility and significance of water policies. In
"As reported by Strain, Peggy, and Leonard Larsen. "Water
Policy Victory for West." Denver Post, June 7, 1978.
2Ibid.
122
-------
addition to raising questions about the adequacy of resources and
the distribution of limited supplies, this situation also raises
questions about the adequacy of existing institutions to cope
with new demands for resources and for access to policymaking
processes. The courts have played a major policymaking role;
yet they characteristically operate very slowly and create
piecemeal, localized, and short-term resolutions to problems.
While the judicial process and others have been successful in
some senses, they may not remain viable as problems become
region-wide and begin to influence national goals such as de-
creased dependence on insecure foreign energy sources.
The fragmented nature of the existing regulatory system for
water resources management also raises questions, particularly
regarding the inadequacy of water resource and use data and
resistance to institutional innovations. Hence, mechanisms
for resolving water availability problems and issues associated
with increased energy development will need to address these
potential inadequacies by considering more comprehensive approaches
to water resource management, by accommodating the participation
of diverse interests and values, and by searching for ways to
facilitate compromises before rather than after large scale
impacts are felt.1
4.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES
4.3.1 Introduction
As suggested in the discussion above, conflicts among water
users will almost certainly increase as region-wide as well as
localized water shortages become more likely. Policymakers can
seek to achieve two kinds of policy objectives in dealing with
water availability problems and issues: first, try to meet the
expanded needs of water users; and, second, meet only a part of
those needs.
As shown in Table 4-2, two general categories of alterna-
tives can be used to attempt to achieve the objective of meeting
the expanded needs of water users:
a discussion of approaches to these institutional
problems, see, Kaufman, Kris G., and Alice Shorett. "A Per-
spective on Public Involvement in Water Management Decision
Making." Public Administration Review, Vol. 37 (September/
October 1977), pp. 468-69; Fox, Irving K. "Institutions for
Water Management in a Changing World." Natural Resources
Journal, Vol. 16 (October 1976), pp. 743-58; and Sewell, W.R.
Derrick. "The Changing Context of Water Resources Planning:
The Next 25 Years." Natural Resources Journal, Vol. 15 (October
1976), pp. 791-805.
123
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• Increase water supply (augmentation);
• Increase the use of existing supply (conservation).
Increasing water supply has been the traditional response to
water availability problems in the West. This policy approach
could be continued by adopting specific augmentation alternatives
such as intrabasin diversions and transfers and increased storage
in surface impoundments. Existing water supplies can also be
augmented by other alternatives such as interbasin transfers,
groundwater storage, weather modification, and controlling or
managing vegetation. In order to meet expanded needs of water
users, policymakers may also choose to improve the use of existing
supplies through conservation in energy resource development,
irrigated agriculture, municipal, and industrial uses.
Policymakers may take a much different approach by meeting
only a part of future water needs. By choosing this objective,
policymakers would be explicitly acknowledging that water supplies
are inadequate and a need to allocate available supplies to those
uses most valued in specific areas. As suggested in Table 4-2,
this objective can be achieved by limiting or eliminating water
intensive uses, including both energy resource development and
irrigated agriculture.
In the remainder of this section, these policy alternatives
are discussed in more detail. First, each category of alterna-
tives is described and implementation strategies are identified
(Section 4.3.2). This is followed by an evaluation and compari-
son of augmentation and conservation alternatives (Section 4.3.3
and 4.3.4) .
4.3.2 Description of Alternatives
A. Increasing Water Supply (Augmentation)
Table 4-3 identifies seven specific alternatives for augmen-
ting water supplies. For each alternative, implementation strat-
egies and potential constraints are also identified. Several of
these alternatives are capital-intensive, particularly those in-
volving diversion, transfer, and storage. Thus, most of these al-
ternatives will reguire a federal role, probably in the form of
direct funding. However, states probably will be more involved
than they have been in the past, especially if the recently pro-
posed national water policy requiring states to "front-end" 10
percent of the construction costs of federal water projects is
adopted and implemented. Although diversion, transfer, and stor-
age represent the traditional response in the West, their use in
the future will be constrained by questions about their economic
and environmental costs. Interbasin transfers from the Columbia
River to the Colorado River are currently prohibited by federal
law.
125
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Groundwater development technologies, including both
storage and withdrawal, are less capital-intensive but do require5
pumping and conveyance systems (pipelines or canals). However,
capital costs for groundwater usage could increase substantially
if policymakers choose to develop technologies for developing
deep aquifers. As is true for several augmentation alternatives,
groundwater development is constrained by considerable uncer-
tainty. Inadequate information exists about the quantities of
water available and economically accessible, the potential effect
on surface water flow if groundwater is mined, and the reliability
of aquifers for storage.
Environmental modification alternatives to augment water
supplies include weather modification and vegetation management.
Weather modification by cloud seeding could be used to increase
precipitation either locally or region-wide.1 Although weather
modification technologies are still developing, experiments in
Colorado, Utah, and New Mexico suggest that these technologies
can produce detectable increases in snow accummulation and sub-
sequent runoff.2
Vegetation management includes managing uplands to increase
runoff and removing nonproductive vegetation (phreatophytes'! from
streams, stream beds, and along canals, irrigation ditches, and
other man-made water courses to decrease losses to evapotrans-
piration. Upland vegetation management to increase runoff can be
achieved by reducing density (of trees and shrubs, for example),
converting to a cover type which uses less water, and trapping
or transporting snow to reduce evaporation.
Phreatophytes, such as salt cedar and mesquite, draw signi-
ficant quantities of water from groundwater and reduce stream
flow and discharges from springs. Since phreatophytes occupy
large areas of land in the West, removing them could be used as
an augmentation alternative either locally or region-wide.
Both weather modification and vegetation management will
involve risks, largely because there is so little experience in
actually applying these techniques. Questions have also been
raised about environmental damage from both alternatives, but
1 In the Rocky Mountains weather modification is not likely
to reduce precipitation "downwind," since most moisture on the
Eastern side of the Rockies is derived from air moving up from
the Gulf Coast. Weisbecker, Leo W. Technology Assessment of
Winter Orographic Snowpack Augmentation. Norman, Ok I a.: Univer-
sity of Oklahoma press, 1975.
2National Academy of Sciences, National Research Council.
Weather and Climate Modifications; Problems and Progress.
Washington, D.C.: National Academy of Sciences, 1973, p. 80.
127
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particularly concerning the potential damage to wilderness, scenic,
and forest areas if vegetation is removed, made less dense, or
significantly changed.
B. Increasing Use of Existing Supplies (Conservation)
Conservation alternatives are genercilly less well-developed
and accepted than are options for increasing water supplies by
augmentation. Specific conservation alternatives shown in Table
4-4 emphasize conservation for energy and agricultural uses, but
include two options for municipal conservation. As shown pre-
viously in Section 4.2.1, projected water demands for energy
resource development ove.r the next 25 years are substantial--
reaching as much as 1,200,000 acre-ft/yr by 2000. Since these
are additional demands on an already water-scarce situation,
water conservation for energy is likely to be a logical choice
for increasing the use of existing supplies. Since water for
cooling is the largest single water requirement for electric
power plants and synthetic fuel facilities, conservation alterna-
tives include less consumptive cooling technologies which combine
wet and dry cooling technologies. Policymakers may also choose
to site less water-intensive technologies in some location; for
example, Lurgi requires less water than does Synthane gasification.
There are also indications that water requirements for power
plants may be reduced by using municipal water for cooling.1
Agricultural conservation is also a logical conservation
choice since irrigated agriculture consumes 80 to 95 percent of
the water currently consumed in our eight-state study area. Sug-
gestions for conserving agricultural water often include improved
irrigation technologies such as changing from flooding and furrow
methods2 to mechanical applications, such as sprinkler or trickle
irrigation.3 Water loses from agricultural diversions can be re-
duced by lining canals to prevent loss to groundwater and to
transpiration by weeds. Although each o:: these specific alter-
natives may improve the efficiency of irrigation, this is not
synonymous with conservation since much of the water withdrawn
may be made available to another user. What we mean
^umphris, T.H. "The Use of Sewage Effluent as Power
Station Cooling Water." Water Research, Vol. II, No. 2 (1977),
pp. 217-22.
2That is, land is simply flooded surface-wide or along
furrows with excess water draining off the land or soaking into
the ground,
3Trickle systems generally use pipes, from which water
drips into the soil through outlets near each plant to minimize
evaporation, runoff, and percolation losses.
128
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here by the term water conservation, is reducing consumptive use
and removal from further "beneficial use." Thus, when water is
"lost" by soaking into the ground, it may or may not be consumed
depending on the availability of the groundwater for further use.
Agricultural conservation also includes removal of marginal lands
from production, improving cultivation, and planting practices
such as avoiding cultivation which interferes with root systems,
controlling weeds, and mulching with crop residues. Water can
also by conserved by crop switching. Since different crops are
known to have different water-use efficiencies, water may be
saved by changing crop patterns away from water intensive crops
like alfalfa to crops such as vegetables or wheats which use less
water per acre or less per dollar of crop values.
Municipal conservation techniques are less well-established
and less likely to be a useful alternative in the West because so
few large municipalities exist in the eight-state study area,
particularly in the vicinity of likely developments. However,
the Carter Administration has suggested that municipalities can
conserve 15 percent of their water, and many western areas have
experience in water conservation because of having dealt with
recent drought conditions.
C. Decreasing or Eliminating Some Water Uses
Policymakers may also choose to meet only a part of future
water needs in the West and, therefore, decrease or eliminate
some water uses. This choice is the most radical category of
alternatives, since it departs most drastically from past policies,
If policymakers make this choice, they will be changing the con-
ception of water as an unlimited birthright, a conception which
has been the dominant view of water resource management and
administration in the West.i
Consideration of this ge;neral choice to decrease or elimin-
ate some water uses has apparently become more common in the
policy system as the physical limits on water have become more
obvious and as opposition to traditional augmentation policies
has increased. However, this alternative probably faces more
serious constraints than either augmentation or conservation do.
Many barriers exist largely as a consequence of the entrenched
interests which have developed around water resource management
in the West. Agricultural interests are firmly entrenched in
the West; in fact, agriculture is a prine economic activity in
each of the eight states in the study area. Moreover, irrigated
1 For a discussion of the development of federal water
resource management based on this view of water, see Ingram,
Helen, and J.R. McCain. "Federal Water Resources Management:
The Administrative Setting." Public Administration Review,
Vol. 37 (September/October 1977), pp. 448-55.
130
-------
agriculture which is already heavily subsidized by the regulatory
system, is probably least able to cope with such a policy unless
these policy changes explicitly favor agriculture over other water
users. For example, if water prices increased substantially,
either as a result of increased competition or as a direct govern-
ment policy, it would be much more likely for agricultural uses
to be limited rather than other uses (such as energy development).
Such a basic change in water would also be constrained by
political factors associated with the long and complex history
of water resource management. As discussed in Section 4.2.2
above, the water policy system is characterized by an extremely
fragmented federal administrative system,1 piecemeal and incre-
mental state appropriation systems, and considerable uncertainty
about water rights such as those over federal and Indian rights.
In part, the regulatory system represents a logical approach to
managing an extremely complex, changing policy area. However,
this system impedes more comprehensive approaches to water
policy. For example, region-wide or basin-wide water management
may be required in order to make effective and equitable decisions
about decreasing or eliminating some water uses. However, such
comprehensive approaches would require vast changes in state water
appropriation systems and, probably, in existing interstate com-
pacts .
No comprehensive evaluation of the alternative to decrease
or eliminate some water uses will be made in this chapter. How-
ever, basic choices between incremental and comprehensive policies
are likely to become more focused as more and more demands are
placed on water resources. Thus, some general comparisons are
made among this alternative, augmentation, and conservation.
Comprehensive policy choices for dealing with water availability
problems and issues are also discussed in Chapter 13.
4.3.3 Evaluation of Alternatives
A. Evaluation Criteria
Five basic criteria fcr evaluating and comparing alternative
policies and implementing strategies were identified in Chapter
3. These are: effectiveness, efficiency, equity, flexibility,
and implementability. Each of these criteria will be applied to
Ingram and McCain traced this fragmented system directly
to conceptions of water as unlimited. They state: "Because the
benefits of water policy are so various and all uses are seen as
compatible...the pattern of groups and individuals articulating
demands is extremely compatible." Ingram, Helen, and J.R. McCain.
"Federal Water Resources Management: The Administrative Setting."
Public Administration Review, Vol. 37 (September/October 1977),
pp. 448-55. ~
131
-------
the evaluation of alternative water policies. As shown in Table
4-5, each criterion is defined in terms; of the substance of water
availability problems and issues. That, is, these criteria are
defined taking into account the political and social context of
water availability issues in the West (4.2.2) and are related to
the policy objectives outlined above (4.3.1).
These criteria reflect the kinds of trade-offs which policy-
makers will have to face up to as demands for scarce water re-
sources continue to increase. That is, it will probably be
impossible to choose either individual or combinations of alterna-
tives which satisfy all of these criteria. Hence, this assess-
ment is intended to inform policymakers generally about the con-
sequences of different choices and to identify which alternatives
are likely to contribute most to achieving a particular value.
As suggested by the descriptions provided in Table 4-5, these
five criteria answer two general kinds of questions. The first
is "how well can water needs be met?" Thus, attention is given
to how much water can be saved or added to existing supplies,
what are the costs and benefits of different options and which
individuals, groups, and sectors in society will be benefited or
harmed. The second general question is "what is the best process
for accommodating water needs?" In part, this question refers to
whether or not specific options can be implemented and are flex-
ible enough to be adapted as water problems and needs change.
However, this question also consists of another aspect—whether
or not alternatives are capable of incorporating diverse parti-
cipation in the policymaking process. As suggested in Section
4.2, conflicts over access to policymaking and the appropriate
roles and responsibilities of various participants are a dominant
theme in the policy system. This is perhaps most notable with
respect to recent reactions by western states to federal proposals,.
but it also includes disputes among and within states and between
the public and private sectors. If these demands are not heard in
the policymaking system, current tendencies toward legal conten-
tion and the often fragmented and piecemeal mechanisms for policy-
making may prove to be incapable of resolving conflicts over
which interests will have their water needs met.
B. Evaluation of Augmentation
This section evaluates and compares six specific alternatives
for augmenting water supplies:
• Surface water development
- Interbasin transfer
- Intrabasin transfer
• Groundwater development
- Groundwater storage
- Groundwater mining
132
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• Environmental modification
- Weather modification
- Vegetation management and phreatophyte control
(1) How Much Water Can Be Added?
Considerable uncertainty exists regarding the quantities of
water which can be added to existing supplies by these augmenta-
tion alternatives. For intrabasin transfers, this is largely
because so many impoundments and diversions already exist that
few acceptable locations may remain.1 For other alternatives,
uncertainty is due to inadequate knowledge derived from experience
based on actual applications in the eight-state study area. This
constraint is particularly true regarding groundwater storage,
weather modification, and vegetation management.
Given this uncertainty, several alternatives appear to have
the potential to add large quantities to regional water supplies.
Interbasin transfers are potentially large sources of water,
particularly if water from the Columbia e.nd UMRB' s are diverted
to the upper Colorado. Although these options face severe
institutional constraints,2 one estimate: suggests that several
million acre-feet can be augmented per year.3
Groundwater usage and weather modification can also increase
supplies on a region-wide scale. If groundwater is mined,
1 Since transfers and impoundments redistribute water from
one area to another, rather than adding to total water supplies,
suitability of locations is critical to the long-term use of
this option. See National Water Commission. Water Policies for
the Future, Final Report to the President and the Congress of the
United States. Washington, B.C.: Government Printing Office,
1973, pp. 319-33.
2The Colorado River Basin Project Act, Pub.L. 90-537, 82
Stat. 885 (1968) currently prohibits transfers from the Columbia
River, and the Yellowstone River Basin Compact of 1950, 65 Stat.
663 (1951) requires approval of Wyoming and Montana for inter-
basin transfers (see Section 4.3.3.B.5).
3A 2 to 10 million acre-foot diversion would represent 1 to
5 percent of the net water supply of Washington. See U.S.,
Department of the Interior, Bureau of Reclamation. Westwide
Study Report on Critical Water Problems Facing the Eleven Western
StatesTWashington^D.C.:Government Fnnting Office,1975.
134
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supplies can apparently be increased by millions of acre-ft/yr.1
However, since continuous mining could deplete supplies and limit
surface water recharge in a relatively short time, for example,
in 10 to 20 years in Arizona at current rates, it is more rea-
sonable that groundwater would be mined for a very short time
and subsequently used up to recharge rates. Weather modifica-
tion, if widely used, could also provide significant increases in
water supplies. Although some estimates suggest that the success
of this optzon varies considerably by location and yearly con-
ditions,2 others have found it to offer the greatest potential
for augmenting natural water supplies.3
Other augmentation choices are more limited to specific
areas or locations. Although not an effective choice for
increasing supplies in a river system, intrabasin transfers have
been considered in southern and central Utah, western Colorado,
and along the Yellowstone River in Wyoming and Montana.1* Augmen-
tation by groundwater storage is geographically limited by the
location and accessibility of large aquifers. However, one
estimate suggests that underground storage could reduce evapora-
tion losses in the Colorado River Basin that would save
'•See National Water Commission. Water^ Policies for the
Future, Final Report to the President and the Congress of the
United States . Washington ', D. C. • Gov^ernmentT Printing Office ,
June 1973, pp. 232-45.
2MacDonald, J.F., et al. Weather and Climate Modification:
Problems and Prospects, Vol. I and II.Washington,B.C.:Na-
tional Academy of Sciences, National Research Council, n.d.
3U.S., Department of the Interior, Bureau of Reclamation.
Westwide Study Report on Critical Water Problems Facing the
Eleven Western States. Washington, D~Tc. : Government Printing
Office, 1973, p. 442.
^Ibid., pp. 143-49; and National Petroleum Council. "Water
Availability," in National Petroleum Council, Committee on U.S.
Energy Outlook. U.S. Energy Outlook. Washington, D.C.: National
Petroleum Council, 1972, pp. 245-48.
135
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1 million acre-ft/yr, assuming complete conversion from surface
storage.l
The potential for upland vegetation management to increase
runoff is based on the quantities of water lost to evaporation
and transpiration by plants—approximately 90 percent of the
annual precipitation in the Colorado River Basin. If evapotrans-
piration in the Colorado River Basin were reduced 1 percent, sur-
face water supply could be increased by an average of 1.75 million
acre-ft/yr.2 However, upland vegetation management; is limited to
about 16 percent, or 26 million acres of the basin since so much
area is covered by sparse vegetation which allows little oppor-
tunity for control.
Evaporation losses can also be controlled by removing non-
productive vegetation in streams and stream beds. Although it
has been estimated that this alternative could save several mil-
lion acre-ft/yr on a nationwide scale,3 it is unclear how exten-
sively or effectively it could be used in the West, However,
experiments in the Southwest indicate that about 14,000 acre-ft/yr
could be added by removing 6,000 acres of saltcedar and mesquite
along the Rio Grande and about 40,000 acre-ft/yr by removing
11,000 acres of phreatophytes along the Gila River in southern
Arizona.4
(2) What Are, the Costs, Risks, and Benefits?
Economic costs for interbasin and intrabasin transfers
would probably be higher than for any other alternative. Esti-
mates depend on interest rate, flow rate through pipelines, and
construction and operation costs dependent on location. For
^.S., Department of the Interior, Bureau of Reclamation,
and U.S., Department of Agriculture, Soil Conservation Service.
Final Environmental Impact Statement: Colorado River Water
Quality Improvement Program; Vol. I; Statement and Appendices.
Denver, Colo.: Bureau of Reclamation, Engineering and Research
Centers, 1977, p. 11-30. This assumes a 50 percent reduction in
the existing 2 million acre-feet of water that currently evapo-
rates from major storage reservoirs.
2Hibbert, Alden R. "Vegetation Management For Water Yield
Improvement in the Colorado River Basin." Paper presented at
the Annual Meeting of the Colorado River Water Users Association,
Las Vegas, Nevada, December 1977.
3National Water Commission. Water Policies for the Future,
Final Report to the President and Congress of the United States.
Washington, D.C.:Government Printing Office,1973.
* Ibid, pp. 353-54.
136
-------
pipelines transporting about 30 acre-feet per day, costs will
range from 3 to 7 dollars per acre-foot per mile.1
Larger scale federal projects, transporting about 1,000
acre-feet per day, cost $0.60 to $1.10 per acre-foot per mile.
Interest rates for federally supported water projects have ranged
from 3.5 percent to 6 percent. Costs will be highest for long-
distance transportation and small throughputs. For example,
BuRec has studied the feasibility of diverting water from the
Green River in the Upper Colorado to Gillette, Wyoming, 225 miles
away via the North Platte River and pipelines. Assuming existing
reservoirs are used, capital costs for pipes and pumping stations
would be about $430 million and operating costs about $2.6 mil-
lion per year. Total project costs would be about $132 per acre-
foot. 3
Although less expensive than transfers, groundwater storage
and mining would require fairly large economic investments for
pumping systems to store and/or retrieve the water. Estimates
of pumping costs for groundwater mining in the Madison aquifer
in Montana range from $30 to $50 per acre-foot.1* Costs of ground-
water storage can be twice this high, depending on how water is
introduced into the aquifer.5 The pumping systems (usually
required for deep aquifers) may increase costs to as much as $100
per acre-foot. If aquifers are shallow, large wells or
Harris, and D.J. Goldstein. Aspects of Water Impact
Analysis in Coal Conversion, Draft Report. Cambridge, Mass.:
Water Purification Associates, 1978.
2Water Purification Associates Staff. Personal Communica-
tion, November 1978.
3U.S., Department of the Interior, Bureau of Reclamation.
Appraisal Report on Montana-Wyoming Aqueducts. Billings, Mont.:
Bureau of Reclamation, 1972.
^
Montana, Department of Natural Resources and Conservation,
Water Resources Division. Which Way? The Future of Yellowstone
Water, draft. Helena, Mont.: Montana Department of Natural
Resources, October 1976.
5U.S., Army Corps of Engineers, Phoenix, Arizona. Personal
Communication, June 1978.
137
-------
percolation ponds can be used to reduce costs. Costs of
groundwater storage and mining also will increase if water from
aquifers has to be transported to where it is used.
Economic costs of weather modification, uplands vegetation
management, and phreatophyte removal are more uncertain, but
probably cost less than the options described above. Weather
modification has been estimated at $2 to $3 per acre-foot.1 Up-
lands vegetation management has been estimated at about $1 per
acre-foot for commercial forests in Montana, Wyoming, Colorado,
Utah, New Mexico, and Arizona2 and up to $50 per acre-foot in
Chapparal areas.3 Phreatophyte removal costs have been estimated
at $14 per acre-foot for areas in Colorado, Utah, Arizona, and
New Mexico. **
Other costs and risks are associated with these alternatives.
Both surface and groundwater impoundments will lose water. In
the UCRB, approximately 14 percent of total withdrawals are lost
to evaporation from surface impoundments.5 Storage will eliminate
losses to evaporation, but seepage can still occur.
Nearly every augmentation alternative will result in envi-
ronmental costs and risks. Surface water diversions and storage
projects have been severely criticized (see Section 4.2.2 above)
because of damage to scenic and wilderness areas and decreased
stream flows in areas of the source of the diversion. Although
groundwater storage does not appear to be environmentally
damaging, groundwater mining raises environmental concern because
recharge rates in surface streams would probably be reduced.
!Weisbecker, Leo W. The Impacts of Snow Enhancement.
Norman, Okla.: University of Oklahoma Press, 1974^p~. TX.
2National Water Commission. Water Policies for the Future,
Final Report to the President and Congress of the United States.
Washington, D.C.: Government Printing Office, 1973, p. 357.
3Average cost for vegetation management in Chapparal is
estimated at $20 per acre-foot. See Hibbert, Alden R.
Vegetation Management for Water Improvement in the Colorado
River Basin: Summary and Assessment. Paper presented at the
Colorado River Water Users Association Annual Meeting, Las Vegas,
Nevada, 1977.
National Water Commission. Water Policies for the Future.
p. 357.
5U.S., Department of the Interior, Water for Energy Manage-
ment Team. Report on Water for Energy in the Upper Colorado
River. Denver, Colo.: Water for Energy Management Team, 1974.
138
-------
Vegetation management raises both aesthetic and ecological ques-
tions. Phreatophytes characteristically provide wildlife habitat,
and treatment of riparian areas to remove phreatophytes can in-
crease stream temperatures which could harm fish populations.l
Upland vegetation management in forest areas, particularly clear-
cutting of forests, could also threaten wildlife habitats and
degrade scenic and aesthetic values.2
Weather modification would apparently result in less adverse
environmental consequences. Although weather modification may
contribute to hail damage, floods, avalanches, and biological
changes, risks of these consequences appear low if the technology
is used correctly.3 Ecological research to date indicates that
catastrophic ecological impacts should not be expected, although
some relatively small impacts could occur to some plant and ani-
mal species.4
(3) How Will Costs, Risks, and Bene .ts Be Distributed?
Serious questions have already arisen regarding how equitably
several of these alternatives will distribute costs, risks, and
benefits. This has been particularly true for water transfers,
impoundments, and storage projects. It is difficult if not im-
possible to calculate in economic terms the range of values in-
volved in transferring water from one basin or subbasin to
another. For example, the values of water for economic growth,
hydroelectric production, recreation uses, floating commercial
vessels, supporting aquatic life, and providing scenic and aes-
thetic amenities may need to be compared to the values of trans-
porting water to support energy resource development.5 Even if
these values could be expressed in economic terms, considerable
National Water Commission. Water Policies for the Future,
Final Report to the President and the Congress of the United
States. Washington, B.C.:Government Printing Office, June
1973, pp. 354-58.
2Hibbert, Alden R. Vegetation Management for Water Yield
Improvement in the Colorado River Basin: Summary and Assessment.
Paper presented at the Colorado River Water Users Association
Annual Meeting, Las Vegas, Nevada, December 1977.
?Weisbecker, Leo. The Impact of Snow Enhancement. Norman,
Okla.: University of Oklahoma Press, 1974.
''National Water Commission. Water Policies for the Future,
p. 349.
5For a discussion of economic issues and equity associated
with interbasin transfers, see Ibid., pp. 319-31.
139
-------
uncertainty exists regarding long-term projections of costs,
including construction costs and cost recovery of these projects.
However, some general choices regarding who will pay and
who will benefit can be addressed. Alternatives for transferring,
storing, and mining water will ultimately require the taxpayer
to pay, since the capital and operating costs will probably
necessitate federal authorizations. This would be equitable
if water is transferred to enable energy resource development
in order to meet national energy goals. Since areas receiving
the water would gain other benefits, for example those asso-
ciated with economic growth, they can be expected also to pay
increased costs. Hence, recent proposals for states to share
project costs with the federal government could redistribute some
of the costs to the prime beneficiaries. If the ultimate users
of water are asked to pay the costs of water augmentation, energy
industries could probably afford most of these water prices,
while agricultural interests may only be able to afford weather
modification and the least expensive vegetation management alter-
natives. 1
Groundwater mining and weather modification raise other
equity questions. If groundwater is continuously used beyond
recharge rates, future water users will almost certainly pay the
costs of present use. Weather modification also raises equity
questions about present and future uses. This is because of the
uncertainty about downwind impacts of weather modification, and
because many impacts may take years to detect.2 However, weather
modification appears to raise few of the equity questions associ-
ated with the transfer, storage, and diversion alternatives.
This is in part because total costs are considerably less, but
also because total stream flows are actually increased rather
than redistributed.
(4) Are the Alternatives Flexible?
Questions about the flexibility of these alternatives include
reversibility and adaptability for use in different locations.
Reversibility among the options varies between those choices which
require major capital-intensive structures and those which do not.
Interbasin and intrabasin transfers are probably the least
'•It is generally estimated that water for agriculture is
economic up to about $25 per acre foot while water for energy
may be economic up to about $200 per acre-foot. These ability-
to-pay questions are addressed below in Section 4.3.3.C.
2National Water Commission. Water Policies for the Future,
Final Report to the President and the Congress of the United
States. Washington, B.C.: Government Printing Office,June
1973, p. 349.
140
-------
reversible, since they generally take a decade or longer to build
and, once a project is undertaken, long-term commitments are
made to large sums of capital and to relatively inflexible re-
source allocation procedures.
Groundwater mining and storage also require large capital
investment, although less than for water transfers. Weather
modification, upland vegetation management, and phreatophyte re-
moval offer the greatest degree of flexibility in terms of sunk
capital costs. However, once commitments were made to upland
vegetation management and phreatophyte removal, relatively
irreversible or certainly long-term impacts to forest lands and
streams would occur.
Variation also exists in the adaptability of these options.
Riparian phreatophyte removal is generally limited to the lower
Colorado River Basin, although removal of vegetation from con-
veyance systems and irrigation ditches could be used in most
areas of the West. Upland vegetation management also has wide-
spread potential throughout the eight-state study area, although
it is estimated to be most effective in the forest lands of
Montana and Wyoming.l Similarly, weather modification appears
generally applicable throughout much of the West, although the
most appropriate climates and topography occur along the Rocky
Mountains.
Other augmentation alternatives are more limited. Both
groundwater storage and mining are limited to suitable and
accessible hydrologic areas, eliminating many deep aquifers which
are inaccessible using currently available technologies. Intra-
basin transfers within the Colorado River Basin are probably
limited by general water shortages and political conflicts over
water usage. Interbasin transfers are most likely from the Paci-
fic Northwest and the Northern Great Plains. However, as noted
above, interbasin transfers from the Columbia River are currently
prohibited by law and transfers from the Yellowstone require the
consent of both Wyoming and Montana.
(5) Can the Alternatives Be Implemented?
Implementation of augmentation alternatives will be con-
strained by current political conflicts and by the need for
changes in existing institutions, laws, or regulations. The most
serious constraints probably exist for water storage and trans-
fers. Interbasin transfers from the Columbia River cannot even
National Water Commission. Water Policies for the Future,
Final Report to the President and the Congress of the United
States. Washington, D.C.: Government Printing Office, June
1973, p. 357.
141
-------
be subject to a detailed study under current law,' and transfers
from the Yellowstone would require agreement among signatories
to the Yellowstone River Basin Compact. Further, impoundments
in many areas of the Colorado River Basin and a few areas of the
UMRB are precluded by the Wild and Scenic Rivers Act. Transfers
and impoundments are also constrained by the current political
system, including general opposition by the Carter administration
and widespread opposition among environmental interest groups.
Underground water storage and mining projects will be im-
peded in some states by existing grouncwater law. In Arizona,
for example, groundwater is a private resource conveyed with the
land, excluding underground streams with defined beds. Thus,
surface waters recharged from the ground become landowners' prop-
erty and are outside of governmental control.
Weather modification, upland vegetation management, and
phreatophyte removal can be expected to generate substantial
opposition from environmental interest groups and other stake-
holders. Weather modification has been opposed because of poten-
tial damage to natural ecological conditions. The National Park
Service is also opposed to weather modification unless it can be
demonstrated that modification will not influence the natural or
historic environments of National Park System areas.2 Upland
vegetation management and phreatophyte removal will almost cer-
tainly generate environmental opposition. This will be particu-
larly true regarding attempts to remove vegetation from streams
or stream beds and to clearcut forests.,
(6) Summary of Augmentation Alternatives
Table 4-6 summarizes augmentation alternatives across each
evaluative criteria. This information indicates that, if water
availability were the sole criterion, augmentation alternatives
can apparently provide needed quantities of water throughout the
eight-state study area. Significant quantities of water can be
added by each specific alternative, particularly by interbasin
transfers. Most alternatives appear more effective in particular
locations--interbasin transfers are particularly suited to the
northern states (Montana, Wyoming, and Utah), weather modifica-
tion to the central Rocky Mountain (Utah, Wyoming, and Colorado),
and phreatophyte removal to the Southwest (southern Utah, Arizona,
and New Mexico). Uplands vegetation management and groundwater
mining appear more applicable region-wide. However, it is not
Colorado River Basin Project Act. Pub. L. 90-537, 82 Stat,
885 (1968).
2National Park Service, Glen Canyon National Recreation
Area, Page, Arizona. Personal Communication, April 1978.
142
-------
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clear these alternatives would be effective over the long term.
Groundwater mining appears to be most limited in this regard, and
uncertainty with regard to long-term impacts is greatest with
weather modification.
When economic and environmental costs and risks, and social
and political values are considered, many of these choices become
less attractive. Interbasin and intrabasin transfers and, to a
somewhat lesser extent, groundwater mining and storage will re-
quire high and generally irreversible commitments of capital and
could provide water at costs higher than current water prices
throughout most of the West. Although energy resource developers
could probably afford these increased costs, irrigated agricul-
ture almost certainly could not. In the end, the taxpayer or
energy consumer would pay at least part of these dollar costs.
Further, interbasin and intrabasin transfers and storage projects
raise serious environmental questions because of threats to
scenic and wilderness areas and reduction of stream flows. Trans-
fers also generated considerable political opposition and are
constrained by current laws and interstate compacts. Hence, al-
though transfers, impoundments, and diversions appear to be the
most effective choices, they are problematic with regard to
several other values.
Upland vegetation management and phreatophyte removal raise
the most serious questions about environmental costs and risks
and will probably be unacceptable choices for many stakeholders.
Phreatophyte removal threatens streams and stream beds and, thus,
the habitats of native species, some of which may be endangered.
Upland vegetation management is most environmentally damaging if
forest and chapparal lands are clearcut.
Weather modification also will necessitate trade-offs, but
apparently to a lesser degree than most of the other options.
Weather modification is economically efficient, can provide
environmental benefits by increasing stream flows, and appears
to be more flexible and implementa,ble than most augmentation
alternatives. However, weather modification involves high de-
grees of uncertainty about long-term impacts and damage liability
and has generated opposition from stakeholders who oppose modify-
ing natural conditions and processes.
C. Evaluation of Conservation
This section evaluates and compares five specific alterna-
tives for increasing the use of existing water supplies:
• Choice of energy conversion technology;
• Cooling and process designs for energy conversion
technologies;
145
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• Irrigation technologies;
• Crop selection;
• Reduction in municipal usage.
Several other specific alternatives such as use of municipal
wastewater for energy facility cooling, may be appropriate in the
future but are not addressed in this report because of inadequate
information.
(1) How Much Water Can Be Saved?
Energy
Policymakers may be able to minimize or, perhaps, avoid
many water availability problems by employing the least water-
intensive energy conversion facilities. As discussed above
(Section 4.2.1), synthetic fuel processes generally require much
less water per unit of energy than does electric power generation,
As shown in Table 4-7, if a high degree of wet cooling is used,
electric power generation can require from 1.4 to 2.7 times more
water (gallons per million Btu's energy input) than gasification,
liquefaction, and TOSCO II oil shale reporting. Among coal syn-
thetic fuel technologies, Lurgi gasification requires from 25 to
45 percent more water than Synthoil liquefaction to produce an
equivalent amount of energy at the same site. Thus, some water
savings can be attained by choosing to produce different syn-
thetic fuels. Water savings could be had by choosing to produce
synthetic fuels instead of electricity.
Policymakers may also reduce water requirements for energy
resource development by using a combination of wet and dry cool-
ing (and water minimizing process designs) in conversion facili-
ties. Table 4-7 summarizes the water saved as a function of the
degree of wet cooling for five energy conversion technologies on
an equivalent energy basis.1 Intermediate wet cooling can reduce
the total plant water requirements by as much as 32 percent for
:For the Lurgi, Synthane, and Synthoil conversion technolo-
gies , high wet cooling assumes turbine condensers and gas com-
pressor interstage coolers are entirely wet cooled. Even for a
high degree of wet cooling more than 50 percent of the unrecov-
ered heat is economically dissipated either directly (as up a
stack) or indirectly (through either air or dry cooling). For
electric power generation all of the unrecovered heat is dissi-
pated by the turbine condensers. In the intermediate case, wet
cooling is used for 10 percent of the load on the condensers and
all of the load on the interstage coolers. In the minimum prac-
tical coolers case, wet cooling handles 10 percent of the load
on the condensers and 50 percent on the interstage coolers.
146
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Lurgi gasification and 77 percent for electric power generation.
This could save about 96 to 106 gallons per million Btu's depend-
ing on where the power plant would be located.1 Even larger
quantities can be saved in synfuel processes by using minimum wet
cooling, ranging from a maximum of 25 percent (Synthoil) to 42
percent (Lurgi). If it is assumed that energy resources will be
converted on-site in the eight-state study area, minimum wet cool-
ing could save about 400 thousand acre-feet of water per year by
the year 2000.2
Agriculture
Much more ambiguity exists regarding water savings in agri-
culture.3 For example, in spite of the fact that considerable
research has been done on irrigation efficiency, it is not clear
how much could be saved by using more efficient irrigation tech-
nologies. It does appear that irrigation efficiency can be im-
proved." For example, it has been estimated that conversion
from flood and furrow methods to sprinkler methods can increase
efficiency from below 50 percent to as high as 80 percent and
1 The choice of a particular cooling system and the amount
of wet cooling versus dry cooling in a wet-dry system is made on
an economic basis, that is, by comparing the total annual costs
of obtaining, transporting, treating, recirculating, and dispos-
ing of the water as well as the costs of constructing and operat-
ing the cooling towers. For additional details see Gold, Harris,
et al. Aspects of Water Impact Analysis in Coal Conversion.
Washington, D.C.: U.S., Environmental Protection Agency, 1977.
This estimate is calculated by multiplying the maximum
savings for each facility (see Table 4-8] by the number of facil-
ities projected for the region, based on our Low Demand scenario
for the year 2000. The Low Demand scenario, developed by the
Stanford Research Institute, projects 28 gasification facilities,
2 liquefaction facilities, 17 electric power plants, and 35 oil
shale retorts by the year 2000. For details on the Low Demand
scenario, see White, Irvin L., et al. Energy From the West:
Impact Analysis Report. Washington, D.C.: U.S., Environmental
Protection Agency, forthcoming.
The evaluation of the effectiveness and efficiency of
agricultural conservation benefits from work performed by Gary
Parent for the Science and Public Policy Program.
^Efficiency refers to the ratio of water applied to that
required for maximum plant growth and adequate soil leaching.
148
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thereby reduce per acre water demand by an average of 2.2
acre-feet for Upper Colorado River subbasins.1 Apparently, per
acre water demand can be reduced even more for water-intensive
crops; average reductions for alfalfa have been projected at 3.6
acre-feet per acre in Arizona.2 For the three subbasins above
Farmington, New Mexico, it has been estimated that water require-
ments could be reduced about 250,000 acre-feet, based on uses and
quantities consumed in 1975.3
However, none of these studies quantifies water actually
saved. As mentioned above, improved irrigation efficiency is not
synonymous with "conservation," since much water withdrawn for
irrigation is subsequently returned to its source. In fact, some
studies have shown little if any water actually saved by improved
irrigation ef f iciency. "* Recognizing this uncertainty, improved
irrigation efficiency probably can save water for other uses by
reducing evaporation loss and water lost when return flows move
directly to a saline lake or inaccessible groundwater systems.5
Perhaps even more uncertainty exists regarding water savings
from crop selection. Substantial differences do occur in water
requirements for different crops. In Arizona, shallow and deep
:Utah State University, Utah Water Research Laboratory.
Colorado River Regional Assessment Study, Part II: Detailed
Analyses: Narrative Description, Data, Methodology, and Docu-
mentation, for National Commission on Water Quality. Logan,
Utah: Utah Water Research Laboratory, 1975, p. 60.
2Pritchett, Harold R., and Bruce E. Boesch. Irrigation
Improvement for the We11ton-Mohawk District. Wellton, Ariz.:
U.S.,Soil Conservation Service,1977.
3Utah State University, Utah Water Research Laboratory.
Colorado River Regional Assessment Study, Part II.
"*Wendt, C.W., et al. "Effect of Irrigation Systems on Water-
Use Efficiency and Soil-Water Solute Considerations," in Law,
James P., and G.V. Skogerbee, eds. Proceedings of National Con-
ference on Irrigation Return Flow Quality Management. Fort
Collins, Colo.: Colorado State University, 1977.
5This idea has been supported on a nationwide scale by
findings from U.S., Department of Agriculture, Soil Conservation
Service. Crop Consumptive Irrigation Requirements and Irrigation
Efficiency Coefficients for the United States. Washington, D.C.:
Department of Agriculture, 1976. For an elaboration of this
issue see Plotkin, Steven E., Harris Gold, and Irvin L. White.
"Water and Energy in Western Lands." Paper presented at the
American Water Resources Association Conference, Tucson, Arizona,
November 1, 1977.
149
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vegetables require less than two acre-ft/yr per acre and wheats,
barley, and oats require about 1.9 acre-ft/yr per acre. In con-
trast, cotton (3.0), crop pasture (3.1), and alfalfa (5.0) require
substantially more water per acre.1 Because water-intensive
crops such as alfalfa and other forage crops are commonly grown
in western states, water consumption could be reduced by growing
less water-intensive crops. Although this option involves several
risks (discussed below), it may be a consideration in some sub-
basins.
Municipal
Municipal conservation does not represent a comprehensive
alternative in the West because there are so few large cities
and most western towns rely on groundwater resources. However,
a 15 percent savings as suggested by President Carter could re-
present an important reduction in the UCRB, where approximately
20 percent of annual withdrawal goes to Denver via interbasin
transfer. If all of the 15 percent savings in Denver water use
were subtracted from this interbasin transfer, 96,000 to 111,000
acre-feet could be saved.2
In summary, the total amount of water which can be saved in
western states in our eight-state study area by the widespread
use of these conservation alternatives is uncertain. However,
careful choice of technology, use of water-saving cooling techno-
logies, and perhaps, crop switching could significantly reduce
water demands. While these reductions probably could not avoid
water availability problems, they probably could mitigate many
related conflicts.
(2) What Are the Costs, Risks, and Benefits?
Energy
The economic costs, risks, and benefits of water conserva-
tion for energy will largely depend on the price of water arid how
strictly conservation is defined. Water conservation by inter-
mediate wet cooling for conversion facilities can be economical,
1U.S,f Department of Agriculture, Soil Conservation Service.
Crop Consumptive Irrigation Requirements and Irrigation Efficiency
Coefficients for the United States. Washington, D.C.: Depart-
ment of Agriculture, 1976.
2This estimate assumes a total yearly withdrawal in the
Upper Basin of 3.2 to 3.7 million acre-feet, approximately 20
percent of which (640,000 to 740,000) goes to Denver. See
U.S., Department of the Interior, Water for Energy Management
Team. Report on Water for Energy in the Upper Colorado River.
Denver, Colo.: Water for Energy Management Team, 1974.
150
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but opting for minimum wet cooling will generally increase the
costs of energy products. "High wet" cooling, appears to be the
most economical choice for all coal conversion facilities if
water costs less than about 25 cents per 1,000 gallons ($81 per
acre-foot).1 For synthetic fuel facilities, "intermediate wet"
cooling becomes economical at between 25 cents to $1.50 per 1,000
gallons ($81 to $490 per acre-foot); and "minimum wet" is econom-
ical when water costs more than $1.50 ($490 per acre-foot). How-
ever, for power plants "intermediate wet" cooling does not become
economical until water costs $3.65 to $5.87 per 1,000 gallons
($1,190 to $1,910 per acre-foot).2
Although the costs of water rights are now relatively small,
the cost to transport water to a given site may not be. Except
for synthetic fuels plants located near the mainstera of major
rivers or near large reservoirs, the cost of transporting water
is in excess of 25 cents per 1,000 gallons indicating that inter-
mediate or minimum practical wet cooling is economically desirable
for most of the study sites. However for power plants, high wet
cooling is most desirable since the cost of transporting water
is much less than $3.65 per 1,000 gallons.
Information summarized in Table 4-8 suggests the economic
costs to energy developers if they are forced to use water-saving
cooling technologies. The economic cost penalties for synthetic
fuels facilities will be very small. For example, in the case of
Lurgi, 1,920 to 2,140 acre-ft/yr can be saved in going from high
to minimal wet cooling at a cost not exceeding 1.5 cents per mil-
lion Btu of gas, or about 0.5 percent increase in the cost of the
gas.3 In contrast, the cost increase would be much higher for
power plants, about 8 percent for intermediate wet cooling.1*
!Water rights typically cost $10 per acre-foot to $100 per
acre-foot or 3 cents to 30 cents per 1,000 gallons. See Gold,
Harris, et al. Water Requirements for Steam-Electric Power Gen-
eration and Synthetic Fuel Plan,ts in bhe__ Western United States.
Washington, D.C.: U.S., Environmental Protection Agency, 1977.
2These "breakeven" water costs vary by site. Breakeven costs
for power plants are higher than for synthetic fuel facilities
because of higher capital costs for dry cooling equipment for
power plants. Gold, Harris, et al. Water Related Environmental
Effects In Fuel Conversion. Washington, D.C.: U.S., Environ-
mental Protection Agency, forthcoming.
3This assumes synthetic gas costs $3.00 per million Btu.
At this price, intermediate wet cooling increases costs 0.3 per-
cent, and minimum wet cooling increases costs 0.5 percent.
4This assumes electricity costs 2.5 cents per kilowatt-hour.
This rate is below the national average but appears to be a rea-
sonable approximation for the western states.
151
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Environmentally, conservation of water use in energy con-
version facilities will have a positive effect if water saved
remains in the stream rather than withdrawn for use. While water
savings per facility are not large, they could have a significant
effect on streams with low flows or on a basin-wide scale if many
conversion facilities are sited.
Agriculture
Economic costs of improved irrigation efficiency depend on
the type -of irrigation system, crop, acreage, and local and sea-
sonal conditions.1 One estimate for the Colorado River Basin is
that the annualized cost of installing and operating a sprinkler
irrigation system would be about $50 per acre.2 However, esti-
mates for specific areas can be much higher—for example, $64 to
$148 total annualized cost per acre, depending on the size of the
farm, in southern Arizona.3 Using the $50 per acre estimate and
assuming an average reduction in per acre demand of 2.2 acre-feet
for the UCRB, the average cost would be about $22.00 per acre-foot.
However, in the example discussed above for the three subbasins
above Farmington the costs could be less--$13.89 to $26.32 per
acre-foot to reduce withdrawals 250,000 acre-feet.1*
Other factors influence the efficiency of this alternative.
One of the long-term benefits of sprinkler irrigation systems
appears to be economic savings from reduced labor requirements.5
*
Conservation for agriculture, including economic and
environmental costs, risks, and benefits, will be further
analyzed during the fourth year of this study.
2Utah State University, Utah Water Research Laboratory.
Colorado River Regional Assessment Study, Part II: Detailed
Analyses:Narrative Description, Data,Methodology, and Docu-
mentation, for National Commission on Water Quality. Logan,
Utah: Utah Water Research Laboratory, 1975, p. 249.
3Wade, James C., e t a1. "Sprinkle Irrigation Technologies
and Energy Costs: A Comparative Analysis of Southern Arizona
Irrigated Agriculture." Paper presented at the American Water
Resources Association Conference, Tucson, Arizona, October 31-
November 3, 1977.
4Utah Water Research Laboratory. Colorado River Regional
Assessment Study, Part II.
5Little data appears to be available for evaluating labor
savings. However, the Soil Conservation Service estimates that
irrigation labor can be reduced about 50 percent by mechanical
irrigation. See Pritchett, Harold R., and Bruce E. Boesch.
Irrigation Improvement Program for the Wellton-Mohawk District.
Wellton, Ariz.: U.S., Soil Conservation Service, 1977.
153
-------
And in some cases, the costs of salvaging water may be less than
buying new water.1 However, the basic economic problem for
farmers appears to be capital rather than annual costs. Since
irrigated agriculture in many areas of the West is only a mar-
ginally profitable enterprise,2 capital costs are likely to be
prohibitive for many farmers unless additional subsidies are pro-
vided. Further, under the current system, a large risk is asso-
ciated with spending large amounts to improve irrigation effi-
ciency. This is because appropriation systems may not allow a
user to retain a right to salvaged water, since a downstream
user may depend on the return flow (see Section 4.2.2.C).
Economics of crop switching are also difficult to estimate.
In general, the per acre economic return for vegetables is greater
than that for forage crops.3 However, a comparison of the eco-
nomic return must include the risks associated with crop switch-
ing. First, it is unclear that sufficient markets exist to
support large scale increases in vegetable production. So,
although some farmers may be able to obtain an economic advantage
from crop switching, market-related risks discourage this option
as a broad-scale alternative. Second, vegetable crops are more
susceptible to weather damage (such as late freezes, floods, etc.)
than are forage crops. Hence, in some years vegetables might
provide a good economic return, but in years of adverse weather
they may not return anything. Third, economic return is not the
only decisionmaking factor. For example, many farmers have grown
forage crops for decades and are not likely to be disposed to
radical shifts in crop patterns.1* In 'summary, the economic
efficiency of agricultural alternatives is ambiguous since there
appear to be economic advantages to the individual farmer but
substantial market-related risks associated with crop switching.
Further, these risks would increase as more farmers switched to
lrThis comparison is difficult to make since irrigation water
charges are often based on acres irrigated rather than acre-feet
of water delivered. Costs vary considerably across the West, rang-
ing from $3 to $5 an acre (for low value crops) to $25 to $30 an
acre (for high value crops such as orchards). U.S., Department
of the Interior, Bureau of Reclamation Staff, Engineering Center,
Denver, Colorado. Personal communication, June 28, 1977.
2In some areas of the West, irrigated agriculture is much
more profitable and could apparently withstand higher production
costs.
3This appears to be true even though vegetables generally
cost more to produce.
Bother factors, such as the end use of forage crops, help
to explain their abundance. Alfalfa, for example, is grown to
support Arizona's dairy and cattle industries.
154
-------
vegetable crops. Since the effectiveness of this option would
depend on broad utilization, for example within a subbasin, the
overall economic efficiency appears to be negative.
For irrigated agriculture, improved efficiency will have a
positive environmental effect. Indeed, reduced salinity from
agricultural runoff and from reduced salt concentration may be
the primary benefit of more efficient irrigation systems. In the
UCRB, agricultural irrigation accounts for about 60 percent of
withdrawals from surface waters and return flow from this diver-
sion contributes about 1.5 million tons of salt per year. It has
been estimated that irrigation runoff accounts for about 40 per-
cent of the salt concentration at Lee Ferry.1 Utah State's Re-
gional Assessment study estimated that upgrading on-farm effi-
ciency to 80 percent would substantially reduce saline contamina-
tion attributable to agriculture.2 It is much more difficult to
estimate the environmental costs and benefits of crop selection
beyond the general statement that reduced water consumption has a
positive water quality and overall environmental influence.
Municipal
Since municipal conservation is such a limited option in
the West, negligible environmental costs, risks, and benefits
are associated with it. Whatever slight effects do occur are
likely to be positive if water saved by municipal conservation
reduces total stream withdrawals. Although several western
states have recent experience with water conservation forced by
drought, little data appears to be available for estimating
economic costs associated with a 15 percent usage reduction.
(3) How Will Costs, Risks, and Benefits Be Distributed?
If ability to pay is used as an indicator of equity, con- /
servation costs appear to be disproportionate for irrigated
agriculture. For example, if water prices are increased as an
incentive to improve irrigation efficiency or to switch crops,
xSalt content at Lee Ferry averages about 500 milligrams
per liter (mg/£), of which about 104 mg/£ have been attributed to
salt loading and about 113 mg/£ to the concentrating effect of
evapotranspiration in irrigation systems. Thus, water for
irrigation accounts for about 40 percent of the salt concentra-
tion at Lee Ferry.
2Utah State University, Utah Water Research Laboratory.
Colorado River Regional Assessment Study, Part II: Detailed
Analysis": Narrative Description, Data, Methodology, and Docu-
mentation. Logan, Utah: Utah Water Research Laboratory, 1975,
pp. 249-55.
155
-------
many farmers will be unable to afford an adequate water supply.
One estimate suggests that, if water costs $200 per acre-foot,
agriculture could experience a total cost increase of about 400
percent, whereas production costs of energy products would in-
crease only 1 to 8 percent.l Although the profitability of
irrigated agriculture varies considerably in the West, it will
almost certainly be less able to afford price increases than
energy resource development. In the Colorado River Basin, water
for agriculture is estimated to have a maximum value of about
$25 per acre-foot.2 Some estimates suggest that the relatively
high average annual costs of mechanical irrigation systems might
be profitable if the water saved were used to irrigate idle lands
so that total farm acreage could be productive.3 However, as
discussed above, very marginal increase in production costs
could be prohibitive and in many states, farmers would be unable
to retain the rights to "salvaged" water since this would reduce
return flows. Thus, unless policymakers want explicitly to de-
crease or eliminate agricultural uses of water, conservation will
probably require direct federal subsidies for new irrigation
systems or quarantees for crop switching.
These ability-to-pay issues raise further questions about
decisions to develop the West's energy resources. If the con-
servation alternative is broadly applied as a means to ensure
adequate water supplies for energy resource development, the
citizen ultimately pays the bill. This may occur either directly
in the form of increased costs for energy products (for example,
if minimum wet cooling is used), or indirectly in the form of
subsidies to irrigated agriculture. While these costs may or
may not be large enough to be burdensome by themselves, to the
individual citizen they are likely to be only part of the in-
creased costs associated with developing the West's resources.
]Two hundred dollars per acre-foot is approximately 60 cents
per 1,000 gallons. For an elaboration of these estimates, see
Anderson, Jay C., and John Keith. "Energy and the Colorado Paver."
Natural Resources Journal, Vol. 17 (April 1977), p. 161.
2Anderson, M., J. Anderson, and J. Keith. The Demand for
Agricultural Water in Utah. Logan, Utah: Utah Water Research
Laboratory, PR-WG-100-4, 1973.
Especially in the arid Southwest, most larger farms (over
100 acres) have large amounts of idle lands because water is
insufficient to irrigate total farm acreage. For an elaboration
of the economics of irrigated agriculttare in Arizona, see Wade,
James C., et al. "Sprinkle Irrigation Technologies and Energy
Costs: A Comparative Analysis of Southern Arizona Irrigated
Agriculture." Paper presented at the American Water Resources
Association Conference, Tuscon, Arizona, October 31-November 3,
1977.
156
-------
Moreover, they raise other political issues, such as the political
feasibility of further subsidies for irrigated agriculture. While
agricultural subsidies have been a long-term federal policy, they
have been the subject of increasing political debate, and choosing
conservation alternatives may force policymakers to decide just
how valued irrigated agriculture is. Further, interregional
conflicts may be increased. Since development of energy resources
in the West would be used primarily to meet the needs of other
regions, an equitable alternative may well be one which requires
other regions to pay the largest share of the cost of providing
adequate water and ensuring that water is still available for
current uses.
It is more difficult to estimate whether some western states
will pay disproportionate costs and risks or gain disproportion-
ate benefits from conservation. Generally, if conservation is uni-
formly applied across the region, costs, risks, and benefits may
be shared equitably. While some interests in the UCRB may be
concerned that conservation would primarily benefit lower basin
states, it appears more likely that water saved by a state would
be largely used within the state to meet increased demands. If
conservation is implemented by states, for example, to increase
supplies available for energy resource development, costs and
risks would be more localised. This would appear to be an equi-
table choice in order to generate the economic benefits of energy
resource production. Further, since some states have already
overallocated their shares of the Colorado, conservation may be
a necessary decision in order to meet existing obligations.
(4) Are the Alternatives Flexible?
What is gained in equity may be lost in flexibility. Whereas
equity is generally served by uniform application of laws and
regulations, uniformity may reduce the ability of states and
localities to meet particular demands and characteristics of
specific areas. For example, if a policy requiring "best avail-
able conservation technology" were uniformly applied, it would
negate knowledge about the importance of locational impacts in
determining water availability problems and issues. Indeed,
conservation is likely to be needed in different proportions in
various areas of the West, depending on quantities of water
locally available and demands. Flexibility also includes the
ue'.'d for state and local decisionmaking responsibility, which
\.;'r; !: oen highlighted by recent conflicts among the western states
and the Carter Administration regarding federal water policy.
Tnus, federal attempts to mandate uniform conservation policies
which do not include strong state roles in formulating and
implementing the policies are likely to be very difficult to
enact.
157
-------
Conservation alternatives oriented toward new technologies,
such as water minimizing cooling technologies and mechanical ir-
rigation systems, are generally not reversible, at least in the
short-term, largely because of their capital cost. Two conserva-
tion alternatives, crop switching and municipal conservation, may
not be as restrictive. Although crop switching would require
changes in production techniques, including labor and equipment,
once equipment is obtained several different kinds of crops can
be grown in one year or from year to year. Reversibility of crop
switching would largely depend on implementation strategy. If
crop switching is mandated, it is likely that farmers would make
more permanent commitments to one type of crop than if incentives
were provided to grow several kinds of crops. Municipal conser-
vation could probably be more or less restrictive, depending on
yearly water availability.
(5) Can the Alternatives Be Adopted and Implemented?
As the recent conflicts between the Carter Administration
and the western states indicate, changes in water policy manage-
ment will probably be very difficult to enact and implement. If
it is true that the nature of water resource management is funda-
mentally changing, from a situation of scarce but "unlimited"
resources to one of region-wide shortages, then comprehensive
policy and institutional changes are likely to be required to
deal with future water conflicts. However, because water policy
management has historically been so fragmented and incremental
and because so many interests would be threatened, innovation will
be very difficult to achieve.
Change appears particularly difficult for agricultural con-
servation. Although many institutional arrangements contribute
to the current complexity of water policy, state appropriation
systems and federal pricing policies may be most constraining to
agricultural conservation. This is because, even if farmers could
conserve large quantities of water, the "use or lose" aspects of
these mechanisms mean that water "saved" by the individual farmer
cannot be retained. Although several states have increments!lly
changed appropriation systems and Utah has proposed broad changes,
the long and complex development of these systems suggest that
region-wide change will be very difficult.
Adopting new conservation policies for energy conservation
may be less constrained. This is in part because conservation
for energy resource development appears more effective and effi-
cient; that is, more water can be saved with less cost and fewer
environmental problems. Thus, enactment of new water conservation
laws or regulations for energy may not receive as much resistence
from energy resource developers as agricultural conservation is
likely to receive from agricultural stakeholders. Further, pre-
cedents exist in several areas, such as air quality control, for
improving technological requirements on energy conversion
158
-------
facilities. So, for example, water-saving cooling technologies
could be required for a developer to obtain a permit.
Implementation may also be constrained by the inadequacy of
current institutional mechanisms to allow broad participation in
decisionmaking before critical policy decisions are made and
during the implementation process. For example, one of the causes
of uncertainty about water rights and available water supplies has
been the general exclusion of Indians and environmental interest
groups in decisionmaking processes. Thus, these participants
often resort'to the courts as the only mechanism available for
protecting their interests. Further, uncertainties about how the
courts will define water rights makes it more difficult to plan
comprehensively for water resource management. Although no par-
ticipatory mechanisms would be able to avoid these problems com-
pletely, policy institutions have yet to develop any mechanisms
to encourage comprehensive management and broad participation
among parties-at-interest which also have decisionmaking author-
ity. Implementation of water policy reforms at a regional level
may benefit from experiences with institutions such as the
Colorado River Salinity Control Forum which is designed to pro-
vide comprehensive, intergovernmental water quality management
in the Colorado River.1 Further, if policymakers choose to dis-
courage some technologies to minimize water availability problems,
cooperative siting mechanisms become a possible mechanism for more
comprehensive and participatory policymaking.2
(6) Summary of Conservation Alternatives
Conservation alternatives are intended to help meet the needs
of water users and thereby avoid the necessity of decreasing or
eliminating some current water uses. Table 4-9 summarizes the
potential effectiveness of conservation to achieve this objective
as well as the trade-offs likely to occur if these alternatives
are used. It appears uncertain whether the six alternatives
evaluated in this section would eliminate potential water short-
ages, particularly those predicted for the UCRB by the year 2000.
However, if conservation is adopted for energy, agricultural,
and municipal uses, many water conflicts may be mitigated or
avoided.
1For a discussion of the Forum, see Chapter 5, "Water
Quality."
2Siting is discussed in detail in Chapter 12 and is
evaluated as a comprehensive policy alternative in Chapter 13,
159
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Water conservation alternatives for energy resource develop-
ment appear the most promising. Water requirements for energy
facilities, representing a large percentage of private demands
on available resources, can be reduced about 75 to 85 percent by
opting for synthetic coal facilities rather than coal-fired steam-
electric power plants keeping in mind that the product outputs are
different. Among synthetic fuel technologies, Synthoil liquefac-
tion requires less water than do Lurgi and Synthane gasification
to produce an equivalent amount of energy. Water-saving cooling
technologies can also save large percentages of water required
for coal conversion technologies. Intermediate wet cooling can
reduce water requirements about 15 to 30 percent, and minimum wet
cooling can reduce the total requirements about 20 to 40 percent
of those for a high degree of wet cooling. For power generation,
the water saved can be as high as 80 percent. Water-saving cool-
ing technologies are particularly attractive because they do not
necessarily require high economic costs. Increases in the cost
of the energy product for synthetic coal facilities will be less
than 1 percent, even using minimum wet cooling. Although the
percentage increase in product costs will be larger for electric
power plants (about 8 percent), intermediate wet cooling will not
be economic until the price of water increases to over $1,000 per
acre-foot.
Water savings can probably be attained by the other alterna-
tives as well, particularly crop switching. However, the actual
quantities of water which can be saved are not known, and substan-
tial economic and environmental costs and risks are associated
with these choices. Economic risks of switching from forage to
vegetable crops will be unacceptable for many farmers unless
governmental subsidies or guarantees are provided. Improved
irrigation efficiency and municipal conservation can probably
produce only marginal water savings. Mechanical irrigation
systems are very expensive but would produce environmental bene-
fits by reducing saline contamination and increasing stream flows.
Policymakers will face complex trade-offs associated with
the implementation of these alternatives and the distribution of
costs, risks, and benefits. This assessment suggests that uni-
form implementation strategies which may distribute costs, risks,
and benefits in an equitable way will probably sacrifice flexi-
bility which is needed to address location-dependent problems
and issues. Further, the need for uniform and more comprehensive
water resource management comes at a time when western states and
local governments are pushing for stronger roles in formulating
and implementing policies which determine the kind and extent
of growth in their area.
Based on this evaluation, water conservation for energy
resource development may be the easiest set of alternatives to
enact and implement because they can avoid many of these difficult
implementation questions. That is, conservation for energy
163
-------
resource development can save large percentages of water, has
less uncertainty associated with its effectiveness and efficiency,
energy industries are probably better able to afford associated
cost increases, and it appears easier to implement new regulations
on energy resource development than on agriculture.
However, imposing conservation only on energy resource devel-
opment neglects the apparent need for more comprehensive water
resource management. The demands of growth in the West, the his-
tory of water uses, and the scarcity of water resources suggest
that water policy should consider a mix of water uses, a variety
of values, and locational circumstances. Thus, comprehensive
water resource management will probably require new institutions,
and there are compelling arguments for these institutions to be
regional or basin-wide in scope, with states assuming primary
responsibility. If states are unable or unwilling to develop
these institutions, the probability of federal intervention in-
creases .
4.4 SUMMARY AND COMPARISON OF WATER AVAILABILITY ALTERNATIVES
The western states are likely to face acute water shortages
by the year 2000 particularly if energy resources are converted
within the region. Table 4-10 summarizes and compares alterna-
tives for augmenting and conserving water resources so that cur-
rent and future water needs can be met. This evaluation indicates
that substantial quantities of water can be added to existing
supplies, perhaps enough to avoid water shortages in many areas
of the West, if both augmentation and conservation are employed
extensively. The most effective augmentation choices to meet
this goal, potentially capable of adding millions of acre-ft/yr,
appear to be interbasin transfers, weather modification, vegeta-
tion management, and phreatophyte removal. Although conservation
alternatives appear generally less effective than augmentation,
and more uncertainty may be associated with estimating the effects
of each alternative, cooling technologies for energy facilities
can save as much as 400,000 acre-ft/yr by the year 2000.
Although augmentation and conservation alternatives can
potentially supply large quantities of water, many of the speci-
fic alternatives are likely to produce unacceptable consequences
to many stakeholders. Several alternatives will produce sub-
stantial environmental costs and risks. This is more likely to
be the case for augmentation, particularly for transfers (inter-
basin and intrabasin), impoundments, phreatophyte removal, and
upland vegetation management. In contrast, environmental bene-
fits, largely associated'with preserving instream flows, are de-
rived from most conservation alternatives.
If used extensively, augmentation and conservation would
also result in economic costs. In fact, because of their eco-
nomic costs, many alternatives would appear to require federal
164
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subsidies. This is especially true for transfers, impoundments,
underground storage, and conservation fqr irrigated agriculture,
largely because of construction costs. The most effective con-
servation option, minimum wet cooling for energy facilities,
appears to be economically infeasible. However, this alternative
could still be used to save large quantities of water if costs
were passed on to the consumer.
Economic and environmental risks contribute to several
political problems for several alternatives. For example, inter-
basin and intrabasin transfers could create inequities for the
donor basins or subbasins. In fact, perception of such inequities
have already created legal barriers to interbasin transfers from
the Columbia River system and generated conflict between west and
east slope interests in Colorado. Equity
severe for conservative alternatives, except for irrigated agri-
culture which in general could not afford
more efficient mechanical irrigation syst
agriculture is already heavily subsidized
support may not be feasible.
problems may be less
the capital costs of
sms. Because irrigated
further government
Political questions are also likely to arise over the flexi-
bility of many of these alternatives. Because water availability
problems depend on many locational variables, and because of
western states' demands for control over their own growth, whether
alternatives can be implemented and administered flexibly, re-
versed, and account for western values is likely to be an impor-
tant evaluative criterion. However, flexibility may not be recon-
cilable with equity, to the extent that policymakers opt for al-
ternatives which apply uniform standards or attempt to distribute
costs, risks, and benefits equitably among states and sectors of
society. This suggests that the more flexible alternatives, such
as weather modification, may be more highly valued and that imple-
mentation strategies should provide as much flexibility as possi-
ble. For example, intermediate wet cooling might best be im-
plemented for imposing location-dependent ceilings on water use
rather than requiring a uniform technology
This evaluation does not lead automat
cation of one category of alternatives ove
in part because of a lack of adequate info
limitations. However, it is also because
availability problems and issues, which in
interests and values and critically aff
oJ
opment on a region-wide basis. It is not
regulatory system as currently constructed
ing these complex issues in a comprehensiv
other than by letting events and ad hoc,
shape policy. This approach will almost c
interests and values, particularly those o
if economic considerations dominate.
167
ically to the identifi-
r another. This is
trmation and resource
of the nature of water
orporate a wide range
act growth and devel-
at all clear that the
is capable of address-
s and timely manner,
incremental decisions
srtainly deprive some
: irrigated agriculture
-------
Two overall conclusions stand out from this analysis. First,
if policymakers choose to meet future water needs, a mix of pol-
icy alternatives will need to be used. While augmentation can
apparently add more water than can be saved by conservation, aug-
mentation will generate greater economic, environmental, and po-
litical costs and risks. Thus, balancing the need to meet water
demands with these economic, environmental, and political consid-
erations will require more rational and comprehensive approaches
which consider a mix of alternatives. This analysis suggests that
weather modification, intermediate wet cooling technologies for
energy conversion facilities, groundwater storage, and selective
vegetation management can add or save substantial quantities of
water while minimizing overall consequences. Second, in order to
be successful, policymakers will need to pay careful consideration
to implementation strategies. The effectiveness of any choice can
obviously be determined by how it is implemented. More generally,
implementation strategies will need to allow flexible responses
to local conditions, and to facilitate broad participation by lo-
cal, state, and regional interests in the formulation, as well as
the implementation, of new programs and policies.
168
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CHAPTER 5
WATER QUALITY
EXECUTIVE SUMMARY
Water quality is closely related to water availability and
will become an increasing concern as energy
oped in the eight state study area. Energy
is likely to heighten water quality concerns
First, conversion of energy resources within
quire large quantities of water, which, in conjunction with in-
creased demands from other water users, can
by concentrating pollution. Secondly, water
fected more directly as a consequence of effluents released from
energy resource developments and wastewaters
whose populations are likely to increase dra
struction and operation of energy facilities
Impacts
resources are devel-
resource development
in two general ways.
the region will re-
degrade water quality
quality can be af-
from municipalities
matically due to con-
that:
Our impact analysis of energy facility
Affluents has found
• More effluents are produced from TOSCO JCI and modified
in situ oil shale production than from any coal conver-
sion technology. TOSCO II oil shale production can pro-
duce over 16 million short tons of solid effluents per
year. On a per unit of energy produced basis, this is
over four times the amount produced by
-------
0
>-l
a.
Min.
Max.
Technology
Figure 5ES-1: Effluents From Technologies
• Labor requirements of energy facilities may contribute
to water quality problems because corresponding popula-
tion increases will impose extreme demands on wastewater
treatment facilities. Sewage treatment plants are likely
to be quickly overloaded by these population increases.
• Energy resource development could require as much as 1.2
million acre-feet of water per year in the Upper Colorado
River Basin (UCRB) by the year 2000. If most of these
water requirements are taken from surface waters, salinity
control problems, which are already serious, will be mag-
nified because of the concentration effect of withdrawals.
170
-------
The Policy Context j
i
The federal government has assumed increasing responsibility
for water quality control. The Federal Water Pollution Control
Act (FWPCA) Amendments of 1972 and the Clear! Water Act (CWA) of
1977 have set goals of: water clean enough for boating and fish-
ing by 1978; water clean enough for swimming by 1984; and zero
discharge of pollutants into navigable water by 1985. To achieve
these goals, the Environmental Protection Agency has established
programs to control effluents from both poirt sources, including
energy facilities, and nonpoint sources, such as runoff and seepage
of pollutants to surface water and groundwater from farming, min-
ing, sanitation, and other sources. j
It has been estimated that about 85 percent of industrial pol-
lutants have been eliminated from surface waters since 1972. How-
ever, the remaining pollutants appear the most problematical and
expensive to eliminate, and control of municipal pollution has been
harder to achieve than control of industrial
of nonpoint sources is impeded because they
difficult to quantify. And, even though the
continues to legislate in this area, conflic
of current water quality regulations continu
The most serious water quality conflict
ciated with western energy resource developm
pollution. Control
are generally extremely
federal government
ts over the adequacy
3 (see box) .
likely to be asso-
it appear to be:
• Pollution from holding
ponds: Effluents dis-
charged to on-site evap-
orative holding ponds can
pollute surface water and
groundwater and constitute
a waste disposal problem
after an energy facility
has been shut down. Cur-
rent federal and state
regulations appear inade-
quate to deal with these
potential problems.
• Municipal wastewater
treatment: Inadequate
treatment is already a
problem in many areas, re-
salting in pollution of
surface water and ground-
water, community health
problems, and restricted
municipal growth. Few
communities impacted by
GLEAM WATER COMPROMISE
VIEWS DIFFER
Environmentalists have charged
that the 1977 CWA will slow the pace
of water pollution clean-up. A
spokesman for the Clean Water Action
project said
backward. E
the changes were a step
ipecially troublesome to
some environmentalists were delays
in requiring industry to install
pollution control equipment and per-
mit exemptions for discharge of
dredge or fill-in projects specifi-
cally authorized by Congress. In-
dustry spokesmen, concerned over the
cost of pollution control equipment,
called the bill a reasonable compro-
mise.
—Denver Post, November 12, 1977.
171
-------
energy resource development will be able to afford the
costs of upgrading capacities to meet new demands or in-
stalling secondary and tertiary treatment required by
the FWPCA and CWA. (See Chapter 9, Growth Management,
for an elaboration of this issue.)
• Control of salinity: Substantial agricultural, environ-
mental, industrial, and municipal damage is already caused
by salinity. Salinity control is likely to contribute to
strained intergovernmental relations related to water
quality issues, particularly among states of the Colorado
River Basin.
• Economic costs: Prices for energy products will almost
certainly increase because of the need for improved ef-
fluent control and holding pond design and maintenance.
Costs of agricultural products may also increase because
of the need to improve irrigation efficiencies to reduce
runoff, particularly if reduction of irrigation runoff
is used to offset salinity concentrations due to energy
development in a river basin.
Alternative Policies
Two general policy objectives are considered to deal with wa-
ter quality problems: (1) allow western energy resource develop-
ment while meeting the goals of current water quality laws and
regulations, and (2) revise water quality goals and requirements.
Table 5ES-1 identifies general and specific alternative policies
for meeting these objectives.
If policymakers choose the first objective, to develop energy
resources and meet current water quality goals, two categories of
alternatives have been identified:
• Improve the effectiveness of controls on pollution sources;
• Treat surface water flows to reduce salinity and dissolved
solids.
For each of these general categories, several specific alternatives
can be employed. To improve the effectiveness of current water
quality controls, policymakers can choose to control effluents
from energy facilities, from municipal wastewater, and from non-
point sources. If policymakers choose to emphasize surface water
treatment, specific alternatives include desalination plants, con-
taining flows of poor quality, diverting flows to avoid areas of
high salt pick-up, and evaporation salt removal.
If policymakers choose the second objective of revising water
quality goals and requirements, categories of alternatives include:
172
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TABLE 5ES-1: WATER QUALITY ALTERNATE
POLICY OBJECTIVE
Allow energy re-
source develop-
ment and current
water quality
goals
Revise water qual-
ity goals and
requirements
CATEGORY OF
ALTERNATIVE
Improve effective-
ness of controls
on pollution
sources
Treat surface water
Revise zero dis-
charge goals
Develop alterna-
tives to second-
ary treatment
SPEC:
Improve control of eff]
facilities
• improve design and ms
• treat effluents befor
• select energy convert
water quality problen
Improve control of muni
• provide necessary fun
comprehensive seconda
• improve technologies
municipal sewage
Improve control of nonp
• reduce runoff from en
• reduce agricultural s
switching crops, impr
removing marginal Ian
• control erosion and s
Desalination
Plow diversion or conta
Salt removal by evapora
Apply discharge require
Delay timetable for ach
Require best practical
technology
Reuse municipal wastewa
Allow locational or sit
VES
PIC ALTERNATIVE
uents from energy conversion
intenance of holding ponds
e discharge to ponds
ion facilities which minimize
s
cipal wastewater
ds for western towns to employ
ry or tertiary treatment
for land applications of
Dint pollution
srgy facilities
Durces by controlling runoff,
wing conveyance systems, and
1s from production
jdimentation
.nment
;ion
nents to locational circumstances
.eving goals
!:echnology but not best available
.er
i ational variances
• Revise "ZERO discharge" goals;
• Develop alternatives to secondary treatment of municipal
wastewater.
Some goals of the 1972 PWPCA were recently extended by the CWA of
1977 (see Section 5.2.2 A). In addition to delaying the timetable
for achieving goals, alternatives include applying discharge re-
quirements to specific locational circumstances such as local water
quality conditions instead of uniform application, and requiring
"best practical" rather than "best available' control technologies.
Alternatives to secondary treatment include reusing municipal
wastewater, for example as cooling water in energy facilities, and
allowing locational or situational variances depending on the ex-
tent of existing water quality problems or capacity of existing
treatment facilities.
173
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Findings
This paper evaluates the extent to which improved control of
pollution sources and treatment of surface waters can control sa-
linity and biochemical oxygen demand (BOD) build-up, and reduce
the potential of acute contamination of water resources from toxic
substances released from holding ponds. Assessment of the spe-
cific alternatives identified in Table 5ES-1 indicates that:
• Considerable uncertainty is associated with estimating
the effectiveness of improved holding pond design to
reduce the risks of acute contamination of surface wa-
ter and groundwater. However, it is clear that these
ponds generally contain toxic pollutants and that con-
siderable improvement can be made in their safety by
improving their design and requiring pond liners.
• The most effective alternatives for controlling salinity
appear to be desalination, which could remove up to
600,000 tons of salt per year per plant on the Colorado
River, and reducing runoff from irrigated agriculture,
which apparently can reduce salinity by 700,000 to
1,000,000 tons per year in the UCP.B.
• Although desalination plants are very capital and energy
intensive, they appear to be one of the more efficient
options with respect to cost (less than $70 per ton re-
moved) and reliability. Most alternatives for control-
ling agricultural runoff and erosion (improved irrigation
efficiency, lining distribution canals, and producing
water efficient crops) also cost less than $70 per ton,
except improved irrigation efficiency which costs about
four times as much.
• Control of pollution from municipal sources is consid-
erably .less effective, in terms of both total BOD re-
moved and cost per ton, than control of agricultural
sources and desalination.
• Several water quality control alternatives will be dif-
ficult to enact and implement because of the large cap-
ital investments required. This is particularly so for
municipal waste treatment, desalination, stream flow di-
version, and irrigation efficiency improvements. Each
of these alternatives can contribute to increased public
expenditures, require long-term and generally irrevers-
ible financial commitments, and may not be broadly ap-
plicable across the western states or to the specific
water quality problems associated with individual energy
facilities.
174
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Conclusion
This evaluation reinforces the commonly held notion that wa-
ter quality considerations cannot be separated from those of water
availability. There appears to be little evidence to suggest that
any single alternative or category of alternatives considered in
this analysis would, by itself, be a successful response to water
quality concerns. Particularly if scarce water resources of the
West are continually depleted, none of the alternatives considered
here may be useful in preserving water quality.
Policymakers can choose to trade-off one set of problems for
another. For example, choosing to limit agricultural production
in many areas of the West in favor of energy resource development
could reduce salinity problems, but increase risks of potentially
serious toxic pollution from industrial effluents. Regardless of
which kind of economic development is encouraged or discouraged
and which policy alternatives are chosen, this evaluation suggests
that some of the same kinds of problems can be anticipated. These
include increasing public expenditures for water quality control
and increasing conflict among potential water users, among states
of various water basins, and between the West and other regions.
175
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CHAPTER 5
WATER QUALITY
5.1 INTRODUCTION
Energy resource development in the eight-state study area will
produce water quality problems. The most serious of these are like-
ly to occur as a consequence of the widespread use of evaporative
holding ponds to dispose of water effluents, increased salinity
caused by water withdrawals for energy development, and inadequately
treated municipal wastewater.
Water quality has been a long-term concern in the West. Tra-
ditionally, this has largely but not entirely been a result of pol-
lution from agricultural runoff and from natural sources. However,
these concerns have recently intensified, in part because water
quality is closely related to water availability. As more streams
are overallocated and stream flows reduced, water quality is also
reduced because pollutants are concentrated. Increased concern over
water quality can also be traced to increased demands for water for
energy, environmental, and water users. For example, environmental
interest groups have actively opposed many water construction proj-
ects because of the potential water quality effects. And these and
more recent concerns over water quality have increased intergovern-
mental conflict as well as conflict among potential users. For ex-
ample, intergovernmental disputes have recently arisen between the
federal government (Environmental Protection Agency [EPA]) and the
states, among various states in the region, and among various gov-
ernmental units within states.
Energy resource development in the West is likely to increase
water quality concerns in two ways. First, conversion of energy re-
sources within the region will require large quantities of water and
can affect water quality both locally and in an entire river ba!sin,
especially in the Upper Colorado River Basin. Second, water quality
can be affected more directly as a consequence of effluents released
from energy developments and wastewaters from municipalities whose
populations have greatly increased as a consequence of energy re-
source development. This chapter identifies and describes the water
quality impacts which are likely to occur as a consequence of energy
resource development (Section 5.2.1) and relates them to the exis-
ting social and political context within which they will occur (Sec-
tion 5.2.2). Policy alternatives and implementation strategies for
176
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addressing potential problems and issues are then identified,
evaluated, and compared (Section 5.3).
5.2 WATER QUALITY PROBLEMS AND ISSUES
5.2.1 The Water Quality Impacts of Energy Resource Development
As indicated in Section 4.2.1, both surface and groundwater
are likely to be affected by energy resource development. In the
Upper Missouri Basin, especially the Yellowstone, Belle Fourche,
and Little Missouri, tributaries will be affected by energy devel-
opment in Montana, Wyoming, and North Dakota. Upper Colorado trib-
utaries, especially the San Juan, will be affected by developments
in Colorado, Utah, and New Mexico.
Groundwaters in both the Upper Colorado and Upper Missouri
basins may be contaminated from energy facility effluents and solid
waste disposal, and aquifers may be disrupted by mining. The Madi-
son aquifer and several shallow aquifers in the Fort Union Coal
Formation (Wyoming, Montana, and North Dakota) may be affected by
energy development in the Upper Missouri River Basin.
Impact analysis results reported in our Energy From the West:
Progress Report1 were designed to identify the potentialimpacts of
energy on water quality. The analysis identified two kinds of fac-
tors, technological and locational, which can contribute to surface
water and groundwater pollution. Technological factors include the
quantities and composition of liquid effluents produced by conver-
sion facilities, disposal technique, labor intensity of the facili-
ties, and type of mining employed. Locational factors include the
present quality of water resources in an area, soil permeability
and aquifer depth, and community size and capacity of existing
waste treatment facilities.
The most significant of these factors appears to be the quan-
tity of effluent produced by the conversion facility. Figure 5-1
shows quantities of effluents produced by six conversion technol-
ogies. Effluents from TOSCO II oil shale retorting are the largest,
most of which is spent shale in the form of wet-solid.2
1White, Irvin L. , et al. Energy From the__West: A Prqgre_s_s
Report of a Technology Assessment of Western Energy Resource Devel-
opment. Washington, D.C.: U.S., Environmental Protection Agency,
1977.Final impact analysis results are reported in White, Irvin L.,
et al. Energy From the West; Impact Analysis Report. Washington,
DTcTT U.S., Environmental Protection Agency, forthcoming.
2The spent shale is moisturized to approximately 14 percent
moisture and transported by conveyor belt for disposal. This helps
control dust and appears to lead to cementation of the shale after
proper compaction which reduces leaching.
177
-------
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FIGURE 5-1: EFFLUENTS FROM TECHNOLOGIES
Btu = British thermal unit
E = electric
Th - thermal
178
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Electric power generation compared on .a British thermal unit (Btu)-
electric basis generates more effluents than any synfuel facility
except TOSCO II and in situ oil shale.
Because the Federal Water Pollution Control Act (FWPCA)l limits
the direct discharge of industrial wastewater pollutants into sur-
face water, water quality problems from effluent disposal are not
as likely to arise from direct discharge as from indirect runoff.
This runoff can drain directly into surface water and seep into
groundwater. Runoff from spent shale and water leaching through
the shale are potential water quality problems, particularly from
spent shale dumped into ravines. Total quantities can be large
(110,000 tons of wet-dry solids per day), and thus the potential for
contamination is great.
Effluent treatment practices at coal conversion facilities may
also degrade water quality. The results of our impact analyses sug-
gest that the discharge of effluents into on-site holding ponds can
cause surface and groundwater pollution.3 Potentially significant
problems can arise because of the accumulation of trace quantities
of toxic elements and heavy metals found in fly ash, lime, and lime-
stone from the scrubbers. Total quantities of solids discharged to
the ponds can be quite large—ranging from about 13 million to 100
million tons accumulated over 25 years depending on the type of fa-
cility. If accumulations of wet-solids containing heavy metals and/
or trace elements are released as a consequence of local flooding
or berm failure, they could produce acute effects in local surface
waters. In addition to berm failures, seepage from holding ponds
can contaminate groundwater aquifers, which in turn, may introduce
pollutants into wells or local streams. The extent of this problem
depends in part on whether ponds are lined and the kind of liner
used. Some state guidelines now call for the use of lined disposal
ponds.
federal Water Pollution Control Act Amendments of 1972, Pub.
L. 92-500, 86 Stat. 816. The 1977 amendments to this act are titled
Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566.
2These estimates are for TOSCO II oil shale retorting (100,000
barrels per day). TOSCO officials believe that this is not a prob-
lem. They maintain that the spent shale will be compacted and be
impermeable, thereby virtually eliminating any leaching.
3It should be noted that the use of on-site holding ponds is
partially an economic decision; it is often cheaper to treat and re-
cycle the water as long as possible and discharge effluents into
ponds rather than to discharge treated effluents into navigable
waters. However, holding ponds are also a common response to re-
quirements and guidelines of the FWPCA.
179
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Labor requirements of energy development technologies may also
contribute to water quality problems since the magnitude of the pop-
ulation increases which occur will be directly related to the size
of the workforce. This increased population will impose demands on
wastewater treatment facilities. Our impact analysis results sug-
gest that sewage treatment plants are likely to be quickly over-
loaded by energy-related population increases.
Although the quantities of population-related effluents are
much less than those associated with energy facilities, several
policy problems and issues are likely to arise as a result of large
population increases in small western towns. First, poorly treated
effluents can cause degradation of surface waters. Second, many
communities will be unable to afford the costs of either upgrading
capacities to meet new demands or of installing secondary treatment
required by the FWPCA by 1978. In cases in which the need for sew-
age treatment is higher during the construction phase of a facility
than during its operation, as it is for gasification and power plant
facilities, it may be impractical to build sewage treatment plants
to serve short-term peak demands only to hcive them underutilized
later.! Third, insufficient sewer systems may affect other local
problems and issues; for example, new housing may be delayed and
community health standards may be violated.
5.2.2 The Context of Water Quality Issues in the West
As suggested above, problems and issues related to water qual-
ity are closely tied to those of water availability and, thus, many
of the interests at stake in water quality control are the same as
or related to those discussed in Chapter 4. In the private sector,
values promoted by environmental interest groups often conflict with
those championed by energy industries and agricultural interests.
For example there are already conflicts over controlling the dis-
charge of pollutants and the impact of different water uses on water
quality.
In the public sector, many of the anticipated water quality im-
pacts of energy development will be regulated both by the states
and federal government. Although the federal government, especially
EPA, has taken the lead in this area, intergovernmental relations
have already been strained by the federal-state "partnership" re-
quirements of the FWPCA, by conflicts over salinity control, and by
disputes related to channeling federal funds for wastewater treat-
ment to the states.
The current status of water quality control is mixed. On the
one hand, since passage of the FWPCA of 1972, water quality control
has greatly reduced the discharge of industrial pollutants into sur-
face water. On the other hand, remaining pollutants appear the most
difficult and expensive to eliminate; and the control of municipal
}This problem is discussed in Chapter 9, Growth Management.
180
-------
pollution has been a relative failure compared to control of indus-
trial pollution.1 Further, as knowledge increases, it becomes in-
creasingly clear that water quality control is intricately tied to
water supply and use.
A. Historical Development
Although the federal government has been active in water pollu-
tion control since 1899,2 it is the FWPCA of 1956, as amended in
1961, 1965, 1966, 1970, 1972, and 1977, that is the legal backbone
for clean water, providing for construction and other grants, stan-
dards, enforcement procedures, and research programs. The FWPCA
of 1956 is significant because it began the trend of increasing
federal control of water pollution. The Amendments of 1961, 1965,
1966, and 1970 incrementally expanded the federal role, although
leaving primary responsibility to the states, and also expanded
federal financial support for pollution control.
Corresponding to the environmental movement in general, pres-
sures increased in the late 1960's and early 1970's for strong fed-
eral involvement in water pollution control. This was largely be-
cause of perceptions that water quality was getting worse instead
of better3 and, correspondingly, that states were not doing an ade-
quate job of pollution control. Hence, after two year's work and
an override of a presidential veto, Congress passed a fundamentally
different FWPCA in 1972. Even though states were given administra-
tive and implementation responsibilities, water pollution control
became largely a federal responsibility. Nationwide effluent stan-
dards are set by EPA; and EPA has to approve state implementation
programs--and can disapprove individual permits.1*
As articulated in the FWPCA of 1972, the federal government's
water quality program goals are: water clean enough for boating
lFor example, in 1976 EPA estimated that 85 percent of all ma-
jor industries, but only about 30 percent of the nation's cities and
towns would meet 1977 goals for initial water quality improvements.
See U.S., Council on Environmental Quality. Environmental Quality,
Eighth Annual Report. Washington, D.C.: Government Printing Office,
1977.
2For example, the Rivers and Harbors Act of 1899, 30 Stat. 1121.
3The third annual report of the Council on Environmental Qual-
ity suggested that a higher percentage of surface waters were pol-
luted in 1971 than in 1970. See U.S., Council on Environmental
Quality. Environmental Quality, Third Annual Report. Washington,
D.C.: Government Printing Office, 1972, pp. 11-15.
^Federal Water Pollution Control Act Amendments of 1972, Pub.
L. 92-500, 86 Stat. 816, 33 U.S.C.A. §§ 1251 et seq. (Supp. 1976.)
181
-------
and fishing by 1977; water clean enough for swimming by 1983;
and zero discharge of pollutants into navigable water by 1985.
Midcourse corrections to the FWPCA passed in late 1977 extend the
1977 and 1983 deadlines by one year and make adjustments in stan-
dards and permitting procedures which are discussed below. l Al-
though the proposed amendments are the result of over two years
of bargaining and compromise, they have produced varied reactions
from interested parties (see box).
B. Current Programs and Con-
flicts
(1) Point Sources
The program to regulate
point sources is known as the
National Pollutant Discharge
Elimination System (NPDES).
Under this program, no effluent
can be discharged by a point
source (such as municipal and
industrial discharges, includ-
ing energy facilities) without
a permit which sets the condi-
tions under which the dis-
charge may be made. These
conditions include ensuring
that all requirements of FWPCA
are met. Permits are issued by
EPA or the state, if the state
program has been approved by
EPA.2 However, as noted above,
even when EPA has approved a state program, it still retains con-
trol since it can veto any individual permit proposal and with-
draw its approval of a state's entire permit program.
CLEAN WATER COMPROMISE
VIEWS DIFFER
Environmentalists have charged
that the 1977 FWPCA Amendments will
slow the pace of water pollution
clean-up. Larry Silverman of the
Clean Water Action project said the
changes were a step backward. Es-
pecially troublesome to some envi-
ronmentalists were delays in
requiring industry to install pol-
lution control equipment and permit
exemptions for discharge of dredge
or fill in projects specifically
authorized by Congress. Industry
spokesmen, concerned over the cost
of pollution control equipment,
called the bill a reasonable com-
promise.
—Denver Post, November 12, 1977.
Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566.
2To be approved by EPA, a state's laws must authorize the
state to: issue permits that apply all FWPCA requirements; mon-
itor permittees to the extent required by the FWPCA; notify the
public when an application is made and provide an opportunity for
a public hearing; give EPA, downstream states that would be af-
fected, and the Corps of Engineers an opportunity to object; and
impose requirements on publicly owned treatment facilities. See
Dolgin, Erica L., and Thomas G.P. Guilbert, eds. Federal Environ-
mental Law. St. Paul, Minn.: West, 1974, p. 735. Four of the
eight states in our study area have EPA approved programs: Colo-
rado , Montana, North Dakota, and Wyoming. The regional EPA office
issues permits in those states that do not have EPA approved per-
mit programs.
182
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The Clean Water Act (CWA) of 1977 divide point sources into
three categories: conventional, such as sewage and dirt; non-
conventional, such as pesticides and heavy metals whose toxicity
is yet to be determined; and toxic, for which EPA has a tenative
list of 129 chemicals (see Table 5-1). This revision has drawn
criticism from environmentalists who are concerned that some dan-
gerous chemicals may stay on the unconventional list indefinitely,
but it has been supported in EPA because increased discretion has
been given to the EPA administrator to designate toxic substances.1
In working toward the 1985 goal of zero discharge of pollu-
tants into navigable waters, the 1972 Act established two interim
levels of effluent standards: by July 1, 1977, all point source
discharges except publicly owned treatment works weie required to
meet an effluent level defined by the "best practicable control
technology currently available"; and by July 1, 1983, these dis-
charges must meet a level defined by the "best available techno-
logy economically achievable."2 The reference point for the 1983
levels for point sources is the 1985 goal of zero discharge.3
Both the 1977 and 1983 technology-based standards are defined when
EPA issues discharge permits and establishes effluent standards
for each category of discharge. As noted above, both deadlines
were extended one year by the 1977 Amendments.
As shown in Table 5-1, the FWPCA also requires the EPA admin-
istrator to set effluent standards for new point sources to pro-
vide :
...the greatest degree of effluent reduction...
achievable through application of the best demon-
strated control technology, processes, operating
methods, or other alternatives, including, where
practicable, a standard permitting no discharge
of pollutants.4
Subsequent to these standards being established, they must be met
by all new point sources in each category. Point sources that
1"Water Act Revision Complete." Science, Vol. 198 (December 16,
1977), p. 1130.
2By 1977, publicly owned treatment works were required to meet
levels achievable using "secondary treatment," and by 1983, the
"best practicable waste treatment technology over the life of the
works."
3Dolgin, Erica L., and Thomas G.P. Guilbert, eds. Federal En-
vironmental Law. St. Paul, Minn.: West, 1974, p. 695.
^Federal Water Pollution Control Act Amendments of 1972, § 306,
33 U.S.C.A. § 1316 (Supp. 1976).
183
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existed prior to the establishment of new source standards in
their categories must meet the conditions contained in their dis-
charge permit, including a compliance schedule to bring effluent
limitations to the specified states. New source standards have
been established for the 27 major industrial categories listed in
the FWPCA as well as a number of others. Those categories affect-
ing western energy resource development include: coal mining,
ore mining and dressing (uranium), steam electric power plants,
and petroleum refining.
The FWPCA also requires the Administrator of EPA to set
effluent standards for toxic pollutants.1 These standards are to
provide for "ample safety" and can prohibit the discharge of a
toxic pollutant altogether. Several pesticides, benzidene, and
polychlorinated biphenyls were subsequently designated as toxic
pollutants and standards established regulating their discharge.
In 1976 Congress enacted the Toxic Substances Control Act,2
thereby placing greater emphasis on the control of such substances
and greatly expanding EPA's responsibility for identifying and
controlling them. And meeting this responsibility is receiving
a high priority at EPA.
Effluent standards also apply to thermal discharges. How-
ever, if the point source discharger can show that the limitation
on the thermal component of his discharge is "more stringent than
necessary to assure the protection and propagation of a balanced,
indigenous population of shellfish, fish, and wildlife in and on
the body of water into which the discharge is made," EPA or the
state issuing the discharge permit may make an exception for the
thermal component.3
Prior to 1972, the major federal water quality program re-
quired the states to adopt water quality standards that met the
approval of the Secretary of the Interior (the Administrator of
EPA after EPA was created).4 Under the FWPCA, existing water
1 Toxic pollutants are defined to include any pollutant that
is toxic to any organism and that might cause death, disease, be-
havioral abnormalities, cancer, genetic mutations, physiological
malfunctions, or physical deformations.
2Toxic Substances Control Act of 1976, Pub. L. 94-469, 90
Stat. 2003 (to be codified at 15 U.S.C.A. §§ 2601 et seq.) (1976).
3Dolgin, Erica L. , and Thomas G.P. Guilbert, eds. Federal En-
vironmental Law. St. Paul, Minn.: West, 1974, p. 712. The author-
ity to make this exception is explicitly stated in the statute
(Section 307).
^Water Quality Act of 1965, Pub. L. 89-234, 79 Stat. 903.
185
-------
quality standards for interstate waters continue in effect, and
new standards require federal approval. These standards are en-
forced under the FWPCA requirement that all dischargers meet the
technology-based effluent standards discussed above or more strin-
gent limitations if such limitations are necessary to implement
water quality standards established under the FWPCA.l Streams or
segments of streams can be designated as being either "effluent
limited" or "water quality limited";2 discharges into a "water
quality limited" stream are subject to more stringent limitations.
All these point source requirements affect energy resource
development in the western U.S. The effluent standard limitations
have the effect of requiring discharges to be treated or cooled.
For example, water used for processing and flue gas desulfuriza-
tion would have to be treated and thermal discharges cooled. How-
ever, the costs of supplying water may make it more economical
for the developer to continue to treat and recycle the water as
long as possible and to discharge effluents into evaporative ponds
rather than to discharge treated effluents in'to navigable waters.
Wastes (including wastes from processing and flue gas desulfuri-
zation) will accumulate in these ponds and can create potentially
significant surface water and groundwater quality problems. The
policy point here is that the FWPCA requirements aimed at pro-
tecting surface water quality may contribute to the decision to
use water and effluent disposal alternatives that can lead to
other potentially serious water quality problems.3 Specifically,
the pollutants can be accidentally released into surface waters,
leach into groundwater, and constitute a long-term waste accumu-
lation problem after the energy development has been shut down.
One aspect of wastes being accumulated in evaporative ponds
that may be particularly significant is the presence of trace
materials. The quantities and types of trace materials that may
accumulate in such ponds is not known, but even small concentrations
of the more toxic materials such as lead and arsenic could produce
acute effects and thus must be viewed as potentially significant
federal Water Pollution Control Act Amendments of 1972,
§ 303, 33 U.S.C.A. § 1313 (Supp. 1976).
2U.S., Environmental Protection Agency. Clean Water. Report
to Congress--1974. Washington, D.C.: Environmental Protection
AgerTcy, 1974, p. 8.
3The material stated above about the role of economics in the
decision to treat and recycle water and pond effluents should not
be ignored. What we have found at this stage of our analysis is
not that the FWPCA is the sole cause, but that it may be a contri-
buting cause.
186
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problems. For example, 45 samples of effluents from in situ coal
gasification in Wyoming, a low Btu coal gasification plant in Vir-
ginia, and an in situ oil shale gasification project in Colorado
and Wyoming were analyzed for chemical elements and volatile organic
compounds. More than 74 elements and 200 organic compounds were
reported in some of the samples.1 In effect, discharging such waste
materials into evaporative ponds creates a potential nonpoint source
of pollutants similar to some nonpoint sources discussed in the
following section.
Such wastes may become regulated under the Resource Conserva-
tion and Recovery Act of 1976, the most general Congressional
action directed towards the management of solid waste disposal.
Its impact on energy development will be dependent on how the EPA
decides to interpret one of the Act's main objectives: to provide
for a nationwide system for the management of "hazardous" waste.
If, for example, EPA uses the safe drinking water standards as the
basis for the functional leachate test, it is likely that some solid
waste from coal development will be declared hazardous (such a trend
is already indicated by EPA1s regulation of fly ash leachate as a
polluting point source under FWPCA). Such a definition would have
serious implications for solid waste disposal by the coal industry.
(2) Nonpoint Sources
The federal government's water quality program also deals with
nonpoint sources such as those that result in "...runoff, seepage,
and percolation of pollutants to surface waters and groundwaters
through diffuse and undefined routes."2 Irrigated and nonirrigated
farming, mining, urban runoff, and rural sanitation are examples
of nonpoint sources.
Recognition appears to be increasing that nonpoint sources are
responsible for a substantial percentage of the nation's water qual-
ity problems and may account for as much as 50 percent of total
water pollution.3 This percentage may be higher in the western
states because so much of the land is devoted to irrigated agricul-
ture. These findings suggest that EPA may have to devote more
attention to nonpoint sources, which have been secondary to point
sources in regulation to date. The problem is worsened because
Morgan, George B. "Energy Resource Development: The Moni-
toring Components." Environmental Science and Technology, Vol. 12,
(January 1978), pp. 34-43.
2U.S., Environmental Protection Agency. Clean Water. Report
to Congress--1974. Washington, D.C.: Environmental Protection
Agency, 1974, p. 14.
3Miller, Gay. "Municipalities Trail Industry in Clean-Up of
Water Pollution." Wall Street Journal, October 13, 1976.
187
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nonpoint sources are extremely difficult to quantify and because
nonpoint sources are extremely diverse in nature and location.1
Section 208 of the FWPCA establishes procedures under which
states or regional agencies are required to establish nonpoint
source regulatory programs.2 These procedures require the governor
of each state to designate areas within their states that have "sub-
stantial water quality problems"3 and "a single representative orga-
nization including elected officials from local governments or their
designees" as the 208 areawide planning agency. The designated
planning agency is required to operate "a continuing areawide waste
treatment management planning process."1* EPA must approve the plans
prepared by the designated planning agency.5
Areawide plans must address nonpoint source pollution problems
that are related to: agriculture and silviculture; mining, includ-
ing "new, current, and abandoned surface e.nd underground mine run-
off";5 construction; and "salt water intrusion into rivers, lakes,
and estuaries resulting from reduction of fresh water flow from
any cause including irrigation, obstruction, groundwater extraction,
and diversion."7 Solid waste disposal problems that might affect
surface or groundwater quality must also be addressed in these
plans.
The report on the Colorado River Basin prepared for the Na-
tional Commission on Water Quality by Utah State University's
Utah Water Research Laboratory indicates that the salinity of the
:For example, land runoff pollution may depend upon how long
it has been since a previous rain, storm intensity and duration,
air quality, and land use.
2See Chapter 9 for a discussion of the assistance aspects of
the Section 208 program.
3Federal Water Pollution Control Act Amendments of 1972, §
208, 33 U.S.C.A. § 1288 (Supp. 1976).
'Ibid.
5Dolgin, Erica L., and Thomas G.P, Guilbert, eds. Federal En-
vironmental Law. St. Paul, Minn.: West, 1974, p. 767.
6Federal Water Pollution Control Act Amendments of 1972, §
208(b)(2)(G), 33 U.S.C.A. § 1288(b)(2)(G) (Supp. 1976).
7Ibid., § 208(b)(2)(I), 33 U.S.C.A. § 1288(b)(2)(I) (Supp.
1976) .
188
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Colorado "generally increases from the headwaters to the mouth."1
This salinity increase is attributed to salt loading (i.e., adding
salts to the river) and salt concentrating (i.e., consuming water
from the river). Both nature and people contribute to salinity
through both processes. The Utah Water Research Laboratory esti-
mates that about two-thirds of the salt loading in the Colorado
is due to natural sources and about one-third to "man-manipulated
sources."2 That laboratory also estimates that approximately 84
percent of the salt loading comes from nonpoint sources and 16
percent from point sources such as mineral springs (6 percent)
and "artificial drainage of irrigation return flows" (10 per-
cent) . 3
Although water quality concerns about the Colorado River
were expressed in federal legislation as early as 1956,4 until the
Water Quality Act of 19655 legislation generally did not establish
standards but only provided for such things as studies of water
quality, estimates of the effect of additional developments, and
determination of the water's suitability for various uses. As
noted above, the Water Quality Act required water quality stan-
dards to be established. This requirement led to a series of wa-
ter pollution conferences to negotiate water quality for the Colo-
rado River system.6 At the Seventh Enforcement Conference convened
by EPA in early 1972, the seven Colorado River Basin states agreed
that salinity levels should be held at 1972 levels, that holding
these levels should not prevent development in the Upper Basin,
and that salinity control projects were preferable to salinity
standards. During that same year, the FWPCA was enacted, author-
izing EPA to impose numeric standards on the Colorado (and other
rivers). In the following year, the U.S. entered into the agree-
ment with Mexico,'' the effect of which was to limit the salinity
of Colorado River water flowing into Mexico. And in 1974, the
Colorado River Salinity Control Act was enacted to provide funding
for construction of a large desalting complex in the Lower Basin
iTJtan .State University, Utah Water Research Laboratory. Colo-
rado River Regional Assessment Study, Part I: Executive Summary,
Basin Profile and Report Digest, for National Commission on Water
QuaTTty. Logan,Utah:Utah Water Research Laboratory, 1975, p. 2.
Ibid., pp. 97-98 for a description of this legislation.
bWater Quality Act of 1965, Pub. L. 89-234, 79 Stat. 903.
6Utah Water Research Laboratory. Colorado River Regional
Assessment Study, Part I, p. 98.
7See Chapter 4.2 for a discussion'of this agreement.
189
-------
and four salinity control projects in the Upper Basin and to
expedite planning for other salinity control projects.
In December 1974, EPA, under the authority of Section 303 of
the FUPCA, published a regulation requiring that the average salin-
ity in the Lower Colorado River be maintained at or below the 1972
level. To achieve this objective, Arizona, California, Colorado,
Nevada, New Mexico, Utah, and Wyoming were required to adopt and
submit to EPA for approval water quality standards; identify state
and federal regulatory authorities and programs necessary to
achieve compliance; and treat salinity as a basinwide problem of
maintaining Lower Colorado River salinity levels at or below 1972
averages as basin states continued to develop their compact-
allocated waters. The EPA regulation stated that the goal of the
plan should be to achieve compliance with the adopted standards
bv July 1, 1983.1
To meet these requirements, the seven Colorado River Basin
states negotiated an agreement known as the "Proposed Water Qual-
ity Standards for Salinity Including Numeric Criteria and Plan of
Implementation for Salinity Control, Colorado River System, June
1975" and "Supplement" thereto dated August 26, 1975. Together,
these two documents constitute the water quality standards re-
quired by Section 303 of the FWPCA and EPA's December 1974 salinity
control regulation.3 By November 1975, the appropriate state
agencies had adopted these two documents and had submitted them
to EPA.
Although salinity standards have been agreed to, permit cri-
teria have not been established, and the states and EPA have appar-
ently been unable to agree on how the standards would be imple-
mented. The plan has been criticized by environmentalists, arid
the Environmental Defense Fund has filed suit against EPA for
failure to comply with FWPCA requirements for stream standards
and development of an adequate control plan, including a compliance
schedule (see box entitled, "EDF Sues for Salinity Control").
This lawsuit apparently has contributed to increased conflicts
:41 Fed. Reg. 13,656-57 (March 31, 1976).
2The agreement was negotiated within the Colorado River Basin
Salinity Control Forum, which was formed ro respond to EPA's salin-
ity control regulations.
3The numeric salinity standards are 723 milligrams per liter:
(mg/£) below Hoover Dam, 747 mg/£ below Parker Dam, and 879 mg/£
below Imperial Dam. The plan provided for immediate construction
of four desalting units, future construction of 12 others, place-
ment of effluent limits on industrial discharges, and several
other proposals or studies for identifying salinity control alter-
natives. See 41 Fed. Reg. 13,656-57 (March 31, 1976).
190
-------
among Upper and Lower Basin
states. Upper Basin states per-
ceive that salinity standards
may restrict utilization of
their full entitlement of
Colorado River Water.1
Although at present salinity
problems in the Upper Missouri
are not comparable to those
encountered in the Colorado
River Basin, energy resource
development will generally
voice the same problems and
issues in the basin. However,
these problems and issues may
be dealt with differently by
the states in the two basins
since salinity is already a
serious problem in the Colorado
but not in the Upper Missouri.
Of course, energy resource de-
velopment within the entire
area will be regulated and con-
trolled by the states and feder-
al government, and the point and
nonpoint sources regulatory pro-
grams discussed above will
generally apply.
EDF SUES FOR SALINITY
CONTROL
The Environmental Defense Fund
(EDF) is suing EPA to require
stricter control in the Colorado
River Basin. An EDF spokesman,
calling salinity the most serious
water quality problem in the basin,
estimated the salinity cost for
agricultural, municipal, and indus-
trial users to be over $50 million
annually. EDF will try to get EPA
to enforce existing laws and force
states to meet control deadlines.
Another EDF spokesman called for
the creation of a system of "salin-
ity rights" that could be treated
like current water rights in order
to regulate the quality of water
returned to surface waters.
—See: Gill, Douglas. "Man, Na-
ture Share Blame for Colorado
River's Salinity." Denver Post,
April 24, 1977; and "EDF to Sue
for Water Salinity Control."
Denver jost, April 15, 1977.
As suggested in Section
5.2.1 above, water quality im-
pacts of western energy resource
development could include: run-
off from mines, spoils piles,
facilities, and urban areas; a contribution to the concentration
of salts in surface waters due to the consumptive use of water;
the accidental introduction of pollutants from evaporative ponds
into surface waters; and the contamination of groundwaters, seeps,
springs, and ponds.
As either point or nonpoint sources, energy resource devel-
opment in general may not create as much of a salinity problem as
*Mann, Dean E. "Water Planning in the Colorado River Basin
States: Challenges and Prospects." Paper presented at the annual
meeting of Western Political Science Association, Los Angeles,
California, March 15-18, 1978, pp. 9-10.
191
-------
would some other uses, particularly agricultural irrigation.1
In general, the amount of water consumed (withdrawn and not re-
turned) by such developments should not have as much of a salt-
concentrating effect on area surface streams compared to water
used for other purposes.2 These two tentative conclusions are
important politically, particularly for the Colorado River Basin
states, because of the salinity problem that already exists there.
For example, it may be in California's interest to have any in-
crease in water consumption in the Upper Basin be for energy or
other nonagricultural uses if such uses will create less of a
salinity problem.
However, suggesting that energy development will generally
create less of a salinity problem does not solve all development-
associated water quality problems and issues. Present salinity
levels in the Colorado River Basin are so high that even the var-
ious kinds of runoff from development sites can become a problem
particularly during construction. Also, the accidental release
of pollutants from holding ponds cannot be ruled out at this stage
in our analysis, nor can the possible contamination of ground-
waters by pollutants leaching from evaporation ponds and seeping
from septic tanks in rural areas be ignored.
5.2.3 Summary
Water quality is already an important concern in the eight-
state study area, especially regarding salinity and sediment in
the Colorado River Basin. Energy resource development will in-
crease water quality concerns because of the potential for pol-
lution from energy withdrawals of large quantities of this
Holburt, M.S., and V.E. Valentine. "Present and Future
Salinity of the Cclorado River." Journal of the Hydraulics Divi-
sion, Proceedings of the American Society of Civil Engineers, Vol.
98 (March 1972), pp. 503-20. Of course, the relative impact of
energy resource development and irrigated agriculture on salinity
depends on both type of technology and locational circumstances.
2This does not eliminate the possibility of excessive salt
concentrations occurring locally in some cireas, especially under
low flow conditions, and the basinwide effects must be examined in
more detail than has been possible in this study. From the analy-
sis of alternative futures, the Utah Water Research Laboratory
concluded that taking water out. of the river will have more of a
salt-concentrating effect than will adding salts. This empha-
sizes how important water conservation and minimization tech-
niques are likely to become. See Utah State University, Utah
Water Research Laboratory. Colorado River Regional Assessment
Study, Part I: Executive Summary, Basin Profile and Report
Digest, for National Commission on Water Quality. Logan, Utah:
Utah Water Research Laboratory, 1975.
192
-------
already-scarce resource. Specific water quality problems
include:
• Control of effluents in on-site evaporative holding
ponds which can pollute surface water and groundwater
and constitute a waste-disposal problem after an energy
facility has shut down. Current federal and state reg-
ulations appear inadequate to deal with these potential
problems.
• Inadequate treatment of municipal wastewater, already
a problem, can pollute surface water and groundwater,
cause community health problems, and restrict munici-
pal growth. Few communities impacted by energy resource
development will be able to afford the costs of upgrading
capacities to meet new demands or of installing secondary
and tertiary treatment required by the FWPCA.
• Control of salinity, which already causes substantial
agricultural, environmental, industrial, and municipal
damage. Salinity control is likely to contribute to
already-strained intergovernmental relations related to
water quality issues, particularly among states of the
Upper and Lower Colorado River Basin.
• The potential for increased economic costs for energy
products because of the need for improved effluent
control and holding pond design and maintenance, and/or
increased costs for agricultural products because of the
need to improve irrigation efficiencies to reduce
runoff.
These problems and issues have already led to several politi-
cal conflicts which are likely to increase as energy resource
development makes increasing demands on water resources. The most
critical of these conflicts may occur among the states of the
Upper and Lower Colorado River Basin over the appropriate uses of
Colorado River water in general and salinity control in particular.
Intergovernmental conflicts are also likely to increase between
the western states and EPA over control of salinity and of effluents
from energy conversion facilities. Further, each of the water
quality problems and issues identified are likely to exacerbate
conflicts among environmental, industrial, and agricultural
interests.
193
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5.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES FOR WATER
QUALITY
5.3.1 Introduction
The discussion in the previous two sections makes it clear
that policymakers are likely to have to deal with several water
quality problems and issues as western energy resource develop-
ment progresses. The basic question they must address is whether
present water quality goals and large-scale energy resource devel-
opment are compatible. In structuring their response, they can
opt for one of two general policy objectives: (1) allow western
energy resource development to go ahead while retaining current
water quality laws and regulations; or (2) revise current water
quality laws and regulations to accommodate western energy re-
source development. Table 5-2 identifies two categories and sev-
eral specific policy alternatives which policymakers might choose
to achieve these objectives.
If policymakers choose to attempt to develop energy resources
while achieving current water quality goals, they can either:
• Improve the effectiveness of existing controls on water pol-
lution sources; or
• Treat surface water flows to reduce; salinity and dissolved
solids.
To improve the effectiveness of current water quality controls,
policymakers can choose to control effluents from energy resource
facilities, from municipal wastewater, cr from nonpoint sources.
If policymakers choose to emphasize surface water treatment, spe-
cific alternatives include desalination plants, containing or
diverting flows to avoid areas of salt pack-up, and salt removal
by evaporation.
To revise water quality goals and requirements, policymakers
can choose either to:
• Revise "zero discharge" goals; or
• Develop alternatives to secondary treatment of municipal
wastewater.
In addition to delaying the timetable for achieving goals (as
provided for in the CWA of 1977),l specific alternatives can
include applying discharge requirements to particular locational
circumstances such as local water quality conditions and re-
quiring "best practicable" but not "best available" control
'Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566.
194
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technologies. Alternatives to secondary treatment can include
reusing municipal wastewater (for example as cooling water in
energy facilities) and allowing locational or situational vari-
ances depending on the extent of existing water quality patterns
or capacity of existing treatment facilities.1
In the remainder of this section, the policy alternatives
identified above are discussed in more detail. First, two cate-
gories of alternatives are described and implementation strategies
are identified (5.3.2). Then, alternatives for allowing energy
resource development and meeting current water quality goals and
requirements are evaluated (5.3.3) and compared (5.3.4).
5.3.2 Description of Alternatives and Implementation Strategies
A. Improved Control of Water Pollution Sources
Because increased development of energy resources may be one
of the largest new sources of water pollution in the western
states, improved control of effluents from energy facilities is
likely to be particularly important. This appears to be espe-
cially true in the case of on-site evaporative holding ponds which
can accumulate large quantities of toxic pollutants (see Section
5.2.1 above). As shown in Table 5-3, the potential for pollution
from ponds can be reduced by improving the design and maintenance
of ponds and by treating pollutants before they are discharged.
Improved design includes the use of natural or synthetic liners
to eliminate seepage and reinforcing the sides of ponds to reduce
the potential of berm failure.
Pretreatment of effluents could also be used to reduce the
quantities of toxic substances being discharged.2 Pretreatment
would necessitate disposal of sludge generated by these treatment
processes by decomposition, dewatering, and sanitary landfill
disposal or possibly incineration.
comprehensive description or evaluation of the objective
to revise current water quality goals and requirements is made in
this chapter. However, since this objective may become increas-
ingly feasible, it will be considered for further attention during
the fourth year of this project.
2Pretreatment could include such processes as chemical coag-
ulation and sedimentation (clarification) and carbon absorption.
196
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Both improved pond design and pretreatment could be imple-
mented by modifying the FWPCA1 and the CWA;2 for example, ponds
could be required to employ the best available or practicable
liners, pretreatment could be required, cind monitoring and pen-
alties could be established for violations. The primary con-
straint on these alternatives appears to be economic, since the
price of energy products would be increased.
Policymakers may also reduce the potential for water quality
pollution by regulating the combinations of technologies and sites
which are permitted. For example, if siting conversion facilities
close to flood plains is prohibited, the potential for the con-
tents of a pond to be washed out into surface streams will be
greatly reduced. Policymakers can also discourage facilities
which produce the most liquid effluents and which are the most
labor intensive. (The more labor-intensive a technology, the
more severe municipal wastewater treatment problems are likely
to be.) For example, electric power generation facilities produce
more liquid effluents than any of the other coal conversion facil-
ities considered in this study. And Synthoil liquefaction pro-
duces less liquid effluents than do either Lurgi or Synthane gasi-
fication processes. Further, gasification processes are the most
labor-intensive of the six conversion facilities examined (see
Section 5.2.1 above). And, of the two oil shale development
alternatives considered, in situ processes produce much lower
quantities of effluents than does TOSCO II surface retorting. 3
The choice of technology and location appear to present more diffi-
cult implementation problems than do other options for controlling
pollution from energy conversion facilities. For example, if
synthetic coal processes are chosen, subsidies are likely to be
required for these facilities to be commercially viable; and for
technoloav-location combinations to be considered systematically
and in detail, innovative institutional mechanisms would be re-
quired which ensure that the range of values at stake in the
siting process get taken into account.
Improving the effectiveness of water quality controls also
includes municipal wastewater treatment. As suggested in the
discussion of water quality problems and issues in Section 5.2,
energy resource development will also contribute to water quality
problems associated with municipal wastewater. This is a direct
JFederal Water Pollution Control Act Amendments of 1972, Pub.
L. 92-500, 86 Stat. 816.
-Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566.
3See Chapter 12, Energy Facility Siting, for a more detailed
discussion of the role that the selection of a technology and
location play in determining the impacts of energy resource
development,
198
-------
consequence of population increases attributable to energy devel-
opment. But the problem is exacerbated by the fact that most
communities impacted by energy development will be incapable of
meeting the secondary treatment requirements of the FWPCA.l Ter-
tiary treatment may also be needed to control salinity and fur-
ther reduce pollutants such as nitrogen and phosphorus.2 In
order to implement secondary and tertiary controls, federal con-
struction grants will be required; and these grants may need to
be tailored specifically to the needs of predominantly small,
rural communities most likely to experience rapid population
growth as a consequence of energy development. However, the
"public works" approach to municipal water quality problems is
likely to be constrained by the limited success achieved by the
current wastewater treatment program. Although large public ex-
penditures have been authorized, the program's complicated imple-
mentation procedures have delayed the actual application of those
funds to constructing new sewage treatment systems.3
Municipal wastewater control may also be aided by improving
technologies for land applications of municipal sewage. EPA is
considering several potential application methods for using muni-
cipal sewage to fertilize the growth of certain plants, including
irrigation, infiltration-percolation, and spray runoff. "* However,
there is still a great deal of uncertainty about potential envi-
ronmental hazards and the availability of suitable locations for
land applications.
Improving the control of nonpoint source pollution includes
controlling runoff from energy facilities and from agricultural
lands and ieducing rural and urban erosion. For energy facilities,
1 Refer to Chapter 9, Growth Management, for an elaboration
of this problem.
^Primary treatment involves screening and usually sedimen-
tation to remove gross solid material. Secondary treatment re-
moves fine solid material and oxygen demanding wastes by the use
of such processes as trickling filters and activated sludge units,
Tertiary treatment, such as chemical treatment with lime or the
use of activated carbon, is used to remove specific chemicals
remaining in the wastewater.
3Kirschten, J. Dicken. "Plunging the Problems from the
Sewage Treatment Grant System." National Journal, Vol. 9 (Feb-
ruary 5, 1977), pp. 196-202. ~
"Pound, Charles E., Ronald W. Crites, and Douglas A. Griffes.
Costs of Wastewater Treatment by Land Application, Technical Re-
port. Washington, D.C.: U.S., Environmental Protection Agency,
Office of Water Program Operations, 1976.
199
-------
improvements include requiring contoured topography and revegeta-
tion to reduce runoff from mines. Although this alternative does
not appear applicable in complex terrain, such as that occurring
in southern Utah or western Colorado, improvements could easily
be implemented through the existing 208 planning process.
Alternatives for controlling agricultural nonpoint sources
include increasing the efficiency of irrigation systems, managing
crop-use to eliminate water-intensive crops, removing marginal
lands from production, and improving conveyance systems. In-
creasing the efficiency of irrigation systems could be accom-
plished by switching from flood and furrow to mechanical methods,
such as sprinkler systems. Managing crop-use to eliminate water-
intensive crops could be accomplished by substituting vegetables
for forage crops or corn for sorghum. Together with removing
marginal lands from production, these alternatives could improve
water quality by reducing saline return flows and by avoiding wa-
ter losses which decrease the dilution of dissolved solids from
existing flows. Conveyance systems can be improved by lining
canals and installing pipe to reduce water losses in percolation
and evaporation and eliminate soil leaching. Several programs
to control nonpoint sources have been established by the federal
government and are implemented by state cigencies. Extending these
programs would probably require large federal subsidies or incen-
tives. For example, establishing a planning process for a state
to develop areawide wastewater management from runoff would typi-
cally involve expenditures well in excess of a million dollars;
and additional planning would have to be conducted at the federal
level.l
Coordination among federal agencies including EPA, the Bu-
reau of Reclamation, and the Soil Conservation Service in the
Department of Agriculture would also be necessary. For example,
increasing irrigation efficiency by using trickle or sprinkler
systems rather than less capital-intensive flood and furrow meth-
ods could be an effective way to control saline runoff return.2
But it is also costly and has widespread pricing implications for
maintaining or improving water quality, providing water supplies,
and for agricultural development. Costly programs can either
lead to more farm subsidies or raise costs for farmers and prices
for consumers.
JU.S., Environmental Protection Agency. Areawide Wastewater
Management Planning Program. Washington, D.C.: Environmental
Protection Agency,n.d.
2Utah State University, Utah Water Research Laboratory.
Colorado River Regional Assessment Study, Part I: Executive Sum-
mary, Basin Profile and Report Digest, for National Commission on
Water Quality. Logan, Utah: Utah Water Research Laboratory, 1975,
200
-------
Another implementation strategy would be to internalize
costs. For example, the Environmental Defense Fund has suggested
that "salinity rights" be applied to water. Thus, farmers would
either have their water rights reduced or pay more for water if
runoff from their farm contributed more than a specified amount
to the salinity of a stream. If each farm's contribution to
salinity could be measured, this system would provide an incen-
tive to improve irrigation efficiency, change crop patterns, or
remove some lands from production.
Another strategy would be for states to modify their appro-
priation systems to create water rights for "salvaged water"
thereby removing one of the disincentives for irrigation conser-
vation.
B. Treat Surface Waters
Since much of the salt from man-made or natural sources may
be difficult to manage by either point or nonpoint controls, the
second category of alternatives is to treat surface water efflu-
ents, either by desalination plants, diverting flows around areas
of high salt pick-up, or eliminating saline flows by evaporation.
Technologies for desalination include chemical pretreatment
and several methods for separating dissolved solids from water,
such as freezing, distillation, and filtering through membranes
to remove brine (reverse osmosis). In the case of the desalting
complex authorized by the Colorado River Salinity Control Act of
1974, l a combination of chemical pretreatment and membrane sys-
tems are to be used.2 This plant, now scheduled for completion
in 1981, would treat about 150,000 acre-feet of saline agricul-
tural runoff each year and remove about 600,000 tons of dissolved
solids per year.3 Brine discharge from this plant would be di-
verted from Yuma, Arizona, to a drainage which terminates in the
Gulf of California. In other locations distant from marine water,
Colorado River Salinity Control Act of 1974, Pub. L. 93-
320, 88 Stat. 266.
Construction of the Las Vegas Wash Unit is currently delayed
by several factors, including a suit filed by the cities of Las
Vegas and North Las Vegas against EPA and Clark County to termi-
nate plans for an advanced wastewater treatment plant that is a
part of the salinity project, a reassessment of the economic
benefits of the project, and a conflict over water rights be-
tween the state of Nevada and the Bureau of Reclamation. U.S.,
Department of the Interior, Bureau of Reclamation Staff. Per-
sonal Communication. August 1978.
3Ibid.
201
-------
brines could be disposed by evaporation or removal to isolated
groundwater formations.
Diversions of streams around areas; of high salt pick-up can
also contribute to desalination, and, in fact, several diversions
are included in plans for the Colorado River. Impoundments are
used to prevent high saline waters from flowing into a stream in
which salinity is being controlled; and canals are used to circum-
vent saline seeps or formations. This option is being considered
for the Paradox Valley Unit of the Colorado River Salinity Im-
provement Program.l
Since return flows from agriculture are a large contributor
to salinity, attempting to control salinity by eliminating return
flows would have to include eliminating agricultural return flows.
Given the volume involved, this would require many large ponds.
However, this is at times a viable option, and this approach is
to be used for the Las Vegas Wash Unit of the Colorado River Sa-
linity Control Project.
As shown in Table 5-4, implementing stream flow treatment
alternatives will involve major expenditures on the part of the
federal government; but it will also provide reliable water qual-
ity improvement. For example, five desalting projects were origi-
nally authorized by the Colorado River Basin Salinity Control Act,
and commitments were made to 12 others if planning reports were
favorable.'' Hence, this alternative could be implemented with
existing programs and agreements in the Colorado River Basin.
Implementation of this alternative involves substantial economic
costs on the general public rather than on the agricultural and
industrial sectors most involved.
5.3,3 Evaluation of Alternatives
A. Evaluation Criteria
As indicated in Chapter 3, five basic criteria are being
used by the research team to assess and compare alternative poli-
cies and implementation strategies: effectiveness, efficiency,
equity, flexibility, and implementability. Each of the five is
defined in terms of the substance of water quality problems and
issues in Table 5-5. The use of these criteria illuminates the
kinds of trade-offs policymakers will have to face as demands for
the use of scarce water resources continue to increase and the
quality of water is either threatened or reduced. It is probably
Colorado River Salinity Control Act of 1974, Pub. L. 93-
320, 88 Stat. 266, Title II.
2Colo.rado River Salinity Control Act, Section 320.
202
-------
TABLE 5-4: IMPLEMENTATION STRATEGIES FOR TREATING RETURN FLOWS
ALTERNATIVE
IMPLEMENTATION
STRATEGY
CONSTRAINT
Desalination plants
Flow diversion
around areas of
high salt pick-up
Evaporation ponds
Federal funding for
construction of
plants
Coordination with
Colorado River
Salinity Control
Forum
Very high economic
costs
Plants only useful in
areas of highly sa-
line flows
Federal funding for
impoundments or
canals
Public and private
sector coordination
to locate projects
in suitable loca-
tions
Environmental prob-
lems are associated
with diversions
Economic costs are
high
Federal or state
subsidies for con-
structing the ponds
Payments to water
right holders whose
rights would be
damaged
Total quantities of
consumable water
would be reduced
Few suitable sites
appear available
impossible to develop or choose individual alternatives or combi-
nations which satisfy all of these criteria. Hence this assess-
ment is intended to inform policymakers generally about the likely
consequences of choosing an alternative.
As suggested in Table 5-5, these five criteria address two
general kinds of questions. The first is "how much improvement
in water quality can be achieved?" Thus, attention is given to
how existing stream flow or runoff can be improved and to what
extent this improvement can be achieved given a range of costs,
risks and benefits for given options and what people, groups, and
sectors of society will be benefited or deprived. The second
general question is "what is the optimum process for implementing
water quality improvements?" In part this question refers to
203
-------
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whether or not specific options can be implemented and are flexi-
ble enough to deal with changing water quality problems and needs.
However, this question also has another aspect--whether or not
alternatives are capable of accommodating diverse local or re-
gional interests in the policymaking process. As suggested in
Section 5.2, conflicts over access to policymaking and the appro-
priate roles and responsibilities of various participants are a
dominant theme in the policymaking system. Indeed, "best manage-
ment practices" now being developed in the West for 208 areawide
water quality management must be legitimated through a public
review process which takes into account local public and private
concerns. The implementability of alternatives is in part a func-
tion of how choices compare to accepted social values, a difficult-
to-apply criterion. However, in the case of water quality, some
of these values are embodied in the goals of existing legislation,
such as water quality, agriculture, economic development, and con-
servation legislation, for example. Implementability is also af-
fected by the extent to which changes in existing law are required
and the extent to which bureaucratic cooperation is required.
B. Evaluation of Controlling Pollution Sources
(1) How Much Can Water Quality Be Improved?
Policymakers apparently have a variety of alternatives for
effectively reducing pollution from its source. If salinity and
biochemical oxygen demand (BOD) are the primary concerns, im-
proved municipal and nonpoint source control could eliminate
thousands of tons of pollutants per year. Although existing data
are inadequate for a precise rank ordering of all alternatives,
controlling agricultural sources of pollution appears to be an
effective choice. Improving irrigation efficiency, using water-
efficient crops, and improving conveyance systems by lining
canals can each apparently reduce salt content by 700,000 to
1,000,000 tons per year in the Colorado River Basin.1 Improving
conveyance systems by lining cana;ls has the additional advantage
of diluting pollution, since less water is lost to percolation
and evapotranspiration and, therefore, more runoff ultimately is
returned to the stream.
Other alternatives for controlling runoff and erosion can
also improve water quality, although probably not as effectively
Estimates are derived from cases E-l, E-2, and E-3 in Utah
State University, Utah Water Research Laboratory. Colorado River
Regional Assessment Study, Part II: Detailed Analyses: Narrative
Description, Data, Methodology, and Documentation, for National
Commission on Water Quality. Logan, Utah: Utah Water Research
Laboratory, 1975, pp. 159-63.
205
-------
as the alternatives mentioned above. Erosion control on non~
agricultural lands and removing marginal agricultural lands from
production may be capable of removing 50,000 to 500,000 tons of
salt per year.1 Municipal effluent control is apparently less
effective in reducing salt load. Comprehensive treatment is
estimated to eliminate from 3,500 (secondary) to 60,000 (tertiary)
tons per year on a regional basis.2 These choices can also reduce
BOD by about 12,000 (secondary) to 13,000 (tertiary) tons per
year. Controlling runoff from energy facilities is probably the
least effective alternative in terms of total pollution reduction,
largely because total land areas directed to surface mines are
relatively small regionwide.3 However, controlling runoff from
energy facilities may be useful in areas of very poor water qual-
ity and relatively higher rainfall.
Requirements for holding ponds to be well-designed, built
and equipped with synthetic liners, or pretreating effluents before
discharge can also reduce salinity and BOD content. Pond design
improvements can eliminate about 40,000 tons of salinity and about
1 These estimates assume 50 percent of salt load originates
from agricultural land and 50 percent from nonagricultural lands
and that 1 to 10 percent of both agricultural and nonagricultural
lands are manageable. See Utah State University, Utah Water Re-
search Laboratory. Colorado River Regional Assessment Study,
Part II: Detailed Analyses: Narrative Description, Data, Method-
ology, and Documentation, for National Commission on Water Quality,
Logan, Utah: Utah Water Research Laboratory, 1975, p. 105; and
Leathers, K.L., and R.A. Young. "Economic Evaluation of Non-
Structural Measures to Control Saline Irrigation Return Flows."
Paper presented at the Western Agricultural Economics Association
Meeting, Las Vegas, Nevada, July 1975.
2These estimates represent improvements over primary treat-
ment, assuming population increase of about 650,000 by the year
2000 in the eight-state area, 0.17 pound BOD per person per day,
and 0.58 pound salinity per person per day. Secondary treatment
assumes 90 percent BOD removal and 5 percent salinity removal.
Tertiary treatment assumes 98 percent BOD removal and 90 percent
salinity removal. See Wolman, Nat, and Gilbert Bonem. The Out-
look for Water: Quality, Quantity, and Economic Growth. Balti-
more, Md.: Johns Hopkins Press, 1971.
3Depending on the level of development, between 1,000 and
1,500 square miles of land could be disturbed in the eight-state
study area by the year 2000 by coal mining. See Chapter 7, Land
Use and Reclamation.
206
-------
1,000 to 3,000 tons of BOD on a regional basis.1 Pretreatment
can eliminate 7,000 to 15,000 tons of salinity and 5,000 to 13,000
tons of BOD.2 However, these options appear better suited to re-
duce the biggest potential risk from holding pond failure, acute
contamination of surface water and groundwater from the toxic
chemicals which they store. Although there is considerable uncer-
tainty with regard to both the potential danger of toxic sub-
stances and the effectiveness of improved pond design and pretreat-
ment, these alternatives would almost certainly reduce the risks
of ecological and environmental damage from accidental release
or seepage of toxic substances.
(2) What are the Costs, Risks, and Benefits?
The economic efficiency of most alternatives to improve the
control of pollution sources depends on where and how they are
used. For example, costs of improved pond design depend on the
type of conversion facility and size of the pond, and the cost of
tertiary treatment of municipal wastewater depends on size of
facility. Thus, as shown in Table 5-6, dollar costs for eight
alternatives range widely.
These data suggest that average costs per year per ton of
salt removed are lowest for control of sources related to agri-
culture. This is particularly true for removal of marginal lands,
crop switching, and improved conveyance systems which cost $70 or
less per ton of pollutant removed. Improving irrigation effi-
ciency will cost at least four times as much. Assuming primary
Assuming 1 to 5 percent of ponds would fail without hydrau-
lic concrete and 2 to 10 percent of wastes would leak without
synthetic liners. Estimates are derived from the Low Demand Case
for the year 2000. See Low Demand Case of the Stanford Research
Institute (SRI) Model as described in Cazalet, Edward, et al. A
Western Regional Energy Development Study: Economics, Final Re-
port, 2 vols. Menlo Park, Calif.: Stanford Research Institute,
1976. These calculations are for the projected increase in popu-
lation for the eight western states due to energy development.
See White, Irvin L., et al.. Energy From the West: Impact Analy-
sis Report. Washington, D.C.: U.S., Environmental Protection
Agency, forthcoming, Chapter 12. The Low Demand Case corresponds
to a total U.S. energy supply of 124.0 x 1015 Btu's (British ther-
mal units) (1015 Btu's = 1 Q) of energy for the year 2000. About
37 percent of the energy supply is projected to come from the
eight western states.
2Assuming reverse osmosis to remove 93 percent of salinity
and 95 percent BOD. See Wolman, Nat, and Gilbert Bonem. The
Outlook for Water: Quality, Quantity, and Economic Growth. Bal-
timore, Md.: Johns Hopkins Press, 1971.
207
-------
TABLE 5-6:
ECONOMIC COSTS OF CONTROLLING POLLUTION SOURCES
(dollars per year per ton removed)a
ALTERNATIVE
Energy facilities
Holding pond design
Pretreatment and minimal
ponding
Municipal
Secondary treatment
Tertiary treatment
Agricultural
Irrigation efficiency
Remove marginal agricultural
lands from production"
Crop switching8
(T
Conveyance systems ^
SALIMTY
14, 000-54, 000
3,800- L4,240
1, 700-2,100
400-500
190-310
10-15
20-70
14-30
BOD
83,000-330,000
25,250-93,500
500-600
1,800-2,300
NA
NA
NA
NA
BOD = biochemical oxygen demand
NA = estimates not available
Assumes total costs are averaged per year over a 25-year span. These'costs are in
1975 dollars and have increased significantly since then, perhaps by 100 percent or
more. The relative differences in costs between alternatives are most important and
not the absolute costs.
Range in estimates is principally due to differences among energy conversion facili-
ties regarding quantities of water discharged to ponds and surface area of ponds.
Differences also depend en design—costs for hydraulic concrete are slightly hiqher
than synthetic liners. See Radian Corporation. Survey of^Technological and Environ-
mental Aspects of Wet-Residue Disposal in Evaporativs Holding Ponds. Austin, Tex.:
Radian Corporation, forthcoming.
°Battelle Memorial Institute, Pacific Northwest Laboratories. Evaluation of Municipal
Sewage Treatment Alternatives, Final Report for Council on Environmental Quality and
Environmental Protection Agency. Richland, Wash.: Sattelle, 1974. Minimal ponding
includes the cost of natural liners at about one-fourth the cost of synthetic liners
as assumed in the holding pond design alternative.
Estimates are for costs above primary treatment and assume conventional sedimentation
and trickling filter for nine facilities of 10 million gallons per day capacity. See
Van Note, H.R., et al. A Guide to the Selection of Cost Effective Wastewater Treat-
ment Systems. Washington, D.C.: U.S., Environmental Protection Agency, 1975.
eAssumes treatment beyond secondary to include two-stage tertiary lime treatment, fil-
tration, activated carbon, ion exchange, and disinfection. See Van Note et al. Cost
Effective Wastewater Treatment.
Utah State University, Utah Water Research Laboratory. Colorado River Regional Assess-
ment Study, for National Commission on Water Quality. Logan, Utah: Utah Water Research
Laboratory, 1975, Parts I and II.
^Leathers, K.L., and R.A. Young. "Economic Evaluati.cn of Non-Structural Measures to
Control Saline Irrigation Return Flows." Paper presented at the Western Agricultural
Economics Association Meeting, Las Vegas, Nevada, July 1975.
208
-------
municipal treatment exists, secondary treatment costs about $1,700
to $2,100 per year per ton of salt removed, and tertiary treatment
adds $400 to $500 to this figure.
The least efficient options for controlling effluents on a
regional basis are those for energy facilities, if salinity and
BOD are the target pollutants. Improved pond design is estimated
to cost at least 70 times more than the most expensive agricul-
tural control option (irrigation efficiency) and at least 8 times
more than secondary treatment of municipal wastewater. A much
more efficient alternative for controlling salinity from energy
facilities is to pretreat the effluents, costing about one-third
as much per ton of salt removed. However, "fail safe" pond de-
sign and pretreatment are not primarily intended to reduce salin-
ity and BOD, and no estimates have been made of the efficiency of
these alternatives in reducing hazardous and toxic substances.
Most of these alternatives will have few environmental or
ecological costs or risks, and some will have positive effects
in addition to improving water quality. Increasing irrigation
efficiency, removing marginal lands from production, and crop
switching can potentially increase stream flows and, therefore,
benefit aquatic habitat and recreational uses of water. However,
these alternatives may threaten wetlands in some areas. This
risk is greatest regarding irrigation efficiency, since runoff
often contributes to wetlands.
(3) How Will Costs, Risks, and Benefits Be Distributed?
The equity of improving water quality control depends on both
the mix of alternatives and the implementation strategies used.
In general, if these alternatives are broadly employed, costs will
be distributed among those responsible for water pollution (indus-
trial, energy, agricultural, and municipal sources) and across
most of the states in the region. If only one category of alter-
natives is used, for example improved control of energy facility
effluents, costs for controlling pollution originating from a
variety of sources will be disproportionately placed on that one
particular source.
If ability-to-pay is considered, municipal and agricultural
interests will probably absorb the largest costs and risks, unless
federal money is used to install secondary or tertiary wastewater
treatment systems for municipalities and mechanical irrigation
systems for farmlands. Without federal help, it appears that
many farmers and many western towns will be unable to finance
these improvements. The implications are that many farmers could
be put out of business or forced to reduce total irrigated acreage
and that growth in many towns could be restricted. If federal
support is available, the costs of water quality control are ulti-
mately transferred to the taxpayer. Energy resource developers
appear much more capable of affording price increases, since cost
209
-------
increases would generally represent a small percentage of the
capital investment and operating costs of a conversion facility.
Increases could also be easily transferred to the energy consumer,
in which case the costs of water quality improvement in the West
would be paid largely by consumers in other regions.
Beneficiaries of the alternatives would be varied. Improving
the control of energy facility effluents would benefit both sur-
face and groundwater users by reducing the risks of acute contami-
nation. This may most directly benefit municipal interests close
to energy facilities which often depend on groundwater resources
for water supplies. Environmental interests would also benefit
from this alternative, as well as from improved control of munici-
pal and agricultural pollution, since the risk of instream and
recreational values being damaged would be reduced. Downstream
water users will apparently benefit more from improved pollution
control than will upstream users. This is particularly true for
alternatives which reduce runoff from agricultural lands. How-
ever, this does not necessarily create an inequitable situation.
Since much downstream pollution in the Colorado River Basin origi-
nates in the Upper Basin, an equitable solution may be one which
emphasizes pollution control in the Upper Basin. Whichever alter-
natives are chosen, they are likely to increase perceptions in the
Lower Basin states that the Lower Basin pays a disproportionate
share of the costs of pollution from the Upper Basin. This situa-
tion is the reverse of water availability, in which case the Upper
Basin states generally perceive themselves as being disadvantaged
in the division of the total Colorado River flow.
(4) Are the Alternatives Flexible?
Flexibility can be measured by the extent to which alterna-
tives are reversible and can be applied in several locations.
Among the alternatives being considered, those based primarily on
management strategies are generally the most reversible; these
include removing marginal lands from production, selecting water
efficient crops, and controlling erosion from nonfarm lands. The
least reversible choices appear to be these which require large
capital investments, specifically secondary and tertiary treatment
of municipal wastewater, lining irrigation canals, and pretreating
energy facility effluent.
The adaptability of these alternatives to local conditions
depends on how they are implemented. For example, if regulations
specify a particular type of pond liner, the performance of that
liner will vary with changing environmental conditions since liner
types vary in their ability to withstand extremes in temperature
and sunlight. However, if a performance standard is used, such
as specifying a maximum allowable seepage rate, the liner could
be selected according to local environmental conditions. Consid-
erable uncertainty is associated with the adaptability of pretreat-
ment of pond effluents, especially with regard to the nature of
210
-------
the pollutants that would have to be removed and the appropriate
treatment processes. The uncertainties are largest for synthetic
fuel processes.
Even though most alternatives for controlling pollution from
agricultural and municipal sources are not easily reversed, they
can generally be applied in a variety of locations. In control-
ling municipal effluents, this appears to be more the case with
regard to secondary than tertiary treatment. This is, in part,
due to there being less engineering experience with tertiary
treatment. With regard to controlling pollution from runoff and
erosion, most alternatives can be used region-wide. However, con-
trol of erosion from nonfarm lands is more appropriate in the arid
Southwest where there is less vegetative cover and there is more
erosion.
(5) Can the Alternatives Be Implemented?
The obstacles to be overcome for policies to control agricul-
tural and municipal sources of pollution are formidable. For
agricultural policies, this is largely because of the degree of
change required in the existing system, including both the behav-
ior of the individual farmer and the complex infrastructure sup-
porting irrigated agriculture. For example, even if incentives
for crop switching are provided, farmers who have grown a parti-
cular type of crop for years may resist any substantial changes
in crop patterns. Many farmers are also likely to resist alter-
natives such as removal of marginal lands from production and im-
proved irrigation systems because of the economic cost. Ditch
and irrigation companies are likely to oppose requirements to im-
prove conveyance systems, also because of the costs. Although
each of these alternatives can be supported by public revenues,
many interest groups would be opposed since they argue that exist-
ing federal subsidies in the form of artificially low water prices
already contribute to inefficient irrigation practices.
Secondary and tertiary wastewater treatment would be primarily
constrained by the need for larger construction grants, perhaps
requiring new legislation specifically aimed at western towns.
Such strategies may be very difficult to implement given the prob-
lems with existing construction grant programs and the economics
of municipal wastewater treatment. Specifically, it has been
argued that construction grants both contribute to uneconomical
technological choices and fail to provide any incentives for
municipalities to operate facilities efficiently.]
1 Changing industrial technologies or reaerating water at the
end stage have been suggested as more economical technologies.
See Rhoads, Steven E. "Economists and Policy Analysis." Public
Administration Review, Vol. 38 (March/April 1978), p. 118.
211
-------
Enactment of policies to control energy facility effluents
either by improving holding ponds or pretreatment would require
either changes in the FWPCA or CWA or new state laws. Revisions
in the regulatory structure could include preuse definitions of
best available control technology and standards to control the de-
sign of ponds or allowable seepage from ponds. These strategies
would probably generate substantial opposition from stakeholders
in both the electric power and synthetic fuels industries because
of the associated cost increases.
(6) Summary Evaluation of Controlling Pollution Sources
Table 5-7 summarizes the evaluation of alternatives for con-
trolling sources of water pollution. If salinity is the primary
concern, alternatives for controlling agricultural sources, par-
ticularly improving irrigation efficiency, using water efficient
crops, and improving conveyance systems, appear the most effective.
Alternatives for controlling pollution from energy facilities and
mining wastewater can also be employed to remove thousands of tons
per year of salinity and BOD on a region-wide scale.
Several agricultural control alternatives are also reasonably
efficient, measured by dollar costs per ton of pollutant removed
per year. Improving conveyance systems, removing marginal lands
from production, and crop switching are the most cost-effective
($10 to $70 per ton) in removing salinity. However, improving
irrigation efficiency will apparently cost four to nine times as
much to remove a comparable quantity of salinity. Most of the
options for agricultural control will have overall positive envi-
ronmental effects, such as increasing water availability and stream
flows.
Although several agricultural alternatives are generally ef-
fective and efficient, they appear to face severe constraints re-
garding how they will be financed and implemented. Agricultural
interests are generally incapable of absorbing construction costs
of improved pollution control, and further subsidies to irrigated
agriculture will probably generate serious political opposition.
Further, implementation of some of these alternatives may require
significant changes in the current regulatory structure, including
state appropriation systems.
Improved control of municipal pollution by secondary and ter-
tiary treatment is considerably less cost-effective than control
of agricultural pollution, costing at least seven times as much
as improved irrigation efficiency per unit of salinity removed.
Further, if these programs are implemented as previous municipal
wastewater treatment programs have been, there will be few if any
incentives for the development of new technologies or for munici-
palities to operate plants efficiently. For these and other rea-
sons, enactment of municipal wastewater control alternatives are
212
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Taxpayers in general will pay for these options.
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expected to generate opposition from other parties-at-interest
and be difficult to implement.
Although relatively less effective than other choices for
controlling salinity and BOD, programs to improve control of pol-
lution from energy facilities may be the most important water
quality control measures because of the potential danger of toxic
substances being released from on-site evaporative holding ponds.
Just how effective regulations to improve holding pond design or
to require pretreatment of effluents will be is not at all clear.
However, costs appear to be manageable for most energy producers,
and should not rule out this alternative.
Improved design of holding ponds can be adapted to locational
situations. It is less clear that pretreatment requirements are
this adaptable. Neither option appears to present the implemen-
tation difficulties associated with alternatives to control muni-
cipal or agricultural pollution.
C. Evaluation of Alternatives to Treat Surface Waters
(1) How Much Can Water Quality Be Improved?
Three specific alternatives for treating surface waters are
evaluated in this section: desalination plants, flow diversion
around areas of high salt pick-up, and on-site evaporative hold-
ing ponds. Among these alternatives, desalination plants offer
the greatest potential for removing salinity. Five large desali-
nation plants on the Colorado River could remove up to 3 million
tons of salt per year.1 This removal rate would be considerably
larger than that for any option for controlling point sources of
salinity, and about three times as effective as improved irriga-
tion efficiency. Other alternatives for treating flows are less
effective than desalination plants but can still remove large
quantities of salt. Containing or diverting flows can apparently
remove 300,000 to 400,000 tons of salt per year,2 and
assumes each plant would be equivalent to the pro-
posed Yuma desalination facility. See U.S., Department of the
Interior, Bureau of Reclamation. Status Report: Yuma Desalina-
tion Test Facility. Boulder, Colo.: Bureau of Reclamation, 1978,
pp. 67-69.
2This assumes two plants comparable to the Delores River
Bypass. U.S., Department of the Interior, Bureau of Reclamation,
and Department of Agriculture, Soil Conservation Service. Final
Environmental Impact Statement: Colorado River Water Quality
Improvement Program. Denver, Colo.: Bureau of Reclamation,
Engineering and Research Centers, 1977, p. 1-80.
215
-------
evaporating return flows can remove 10,000 to 100,000 tons per
year.1
(2) What Are the Costs, Risks, and Benefits and How Will They
Be Distributed?
Treating return flows ranks among the most efficient alter-
natives for improving water quality, largely because it can be
applied to areas of highly saline flows. In such locations, de-
salination plants and evaporating return flows can remove a ton
of salt for approximately $30 to $40.2 Flow containment or di-
version costs from $10 to $100 per ton of salt removed.3
Equity considerations of these alternatives closely parallel
those of alternatives for controlling pollution sources. Tax-
payers will ultimately pay many of the costs, since each alter-
native is capital-intensive and each will require public, prob-
ably federal expenditures. Taxpayers living in regions other
than the West will pay a disproportionate share of these costs,
unless the alternatives include implementation strategies which
assess water users for the cost of the project. However, this
strategy will probably increase conflicts among the Upper and
Lower Basins of the Colorado, since downstream users would be
paying for problems largely originating in the Upper Basin,
(3) Are the Alternatives Flexible and Implementable?
The flexibility and implementability of these alternatives
are constrained by their generally high capital costs, particu-
larly for desalination plants, and by their requirements for
suitable locations of highly saline flows. Thus, it appears un-
likely that more than a few of any of these kinds of facilities
could be located on the Colorado River.
The legal and regulatory basis has already been established
for each of these alternatives, so implementation may be less
JThis is based on the estimate of 1.5 million tons of salin-
ity per year originating from irrigation return flows in the Colo-
rado River, and it assumes 0.5 to 5 percent of it can be removed
by this alternative. For estimates of salinity sources, see Utah
State University, Utah Water Research Laboratory. Colorado River
Regional Assessment Study, Part I: Executive Summary, Basin Pro-
file and Report Digest, for National Commission on Water Quality.
Logan, Utah: Utah Water Research Laboratory, 1975, p. 65.
2U.S., Department of the Interior, Bureau of Reclamation.
Status Report; Yuma Desalination Test Facility. Boulder, Colo.:
Bureau of Reclamation, 1978, pp. 195-211.
3Utah Water Research Laboratory. Colorado River Regional
Assessment Study, Part I, p. 262.
216
-------
difficult than for many other alternatives for controlling po1-
lution sources. However, containing, diverting, or evaporating
flows will probably generate substantial opposition among stake-
holders since water availability would be reduced and environ-
mental values threatened. Desalination plants would apparently
generate less opposition, particularly among regional interests
who would not have to pay a proportional share of the costs for
these facilities.
(4) Summary Evaluation of Alternatives to Treat Surface Water
Alternatives to treat surface flows to remove pollution are
a logical choice for improving water quality since many pollution
sources are ill-defined or uncontrollable, technologies for con-
trolling many sources are unproven or very expensive, and flow
treatment can be applied to specific locations where pollution
content is high. As shown in Table 5-8, desalination can remove
up to 600,000 tons of salt per year per plant on the Colorado
River, at a cost of $30 to $40 per ton. Evaporating return flows
can remove about 100,000 tons at a comparable price, and flow con-
tainment or diversion can remove 300,000 to 400,000 tons for $10
to $100 per ton.
Use of these alternatives is constrained by their high capi-
tal and/or operating costs, relative irreversibility, and scar-
city of suitable locations. Further, if these alternatives are
used as the primary means of pollution control, polluters may have
no incentive to control pollution sources, and thus, many stream
segments will be polluted upstream of treatment facilities. Flow
containment and evaporation may be infeasible in the Colorado
River Basin because they reduce total quantities of water avail-
able for consumption.
5.3.4 Summary and Comparison of Alternatives
Table 5-9 summarizes and compares two general alternatives
for maintaining and improving western water quality: improved
control of pollution sources and treating surface waters. These
alternatives address two kinds of problems. The first is the
long-standing problem of salinity and BOD buildup, particularly
in the Colorado River. The second, more directly related to
energy resource development, is the possibility of acute contami-
nation from toxic substances released from holding ponds.
The most effective alternatives for controlling salinity
appear to be desalination, which can reduce salinity levels by
approximately 600,000 tons per year per plant, and reducing run-
off from irrigated agriculture, which can reduce salinity by
approximately 700,000 to 1,000,000 tons per year. Although there
are many other alternatives for reducing salinity, they produce
only marginal improvements in comparison to those listed above.
217
-------
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Alternatives for controlling pollution from energy facilities,
such as erosion control, pond design, and pretreatment of efflu-
ents, are among the least effective salinity-control measures.
However, pond design improvements and pretreatment may be neces-
sary in reducing the risks of pollution from toxic substances.
If cost effectiveness is considered, desalination and agri-
cultural runoff control are comparable, generally costing less
than $70 per ton of salt removed. The exception is improved irri-
gation efficiency, which costs about four times as much. Control
of pollution from municipal and energy facility sources is con-
siderably less cost-effective.
However, these two categories are not comparable if environ-
mental quality and water availability are considered. Whereas
most alternatives for controlling pollution sources increase wa-
ter availability, just the opposite is true for surface flow
treatments. Water availability considerations are particularly
problematic for flow containment and evaporation which may, as a
result, be infeasible in the Colorado River.
Both categories of alternatives raise serious equity ques-
tions, since many current users of water will be unable to afford
the costs of increased control and, since federal subsidies are a
virtual certainty for many options, costs to taxpayers can be ex-
pected to continue to rise, It is not clear how much of an in-
crease would be associated with these alternatives. However, such
increases cannot be viewed in isolation. In fact, when viewed as
part of a larger trend of increasing costs for energy products,
environmental protection, and cost of living in general, the costs
of improved water quality control are likely to contribute to cur-
rent resentment and rebellion on the part of taxpayers.
Many of these alternatives will also be constrained by diffi-
culties in implementation and applicability. This is particularly
true for capital-intensive alternatives which are generally irre-
versible. In addition to being capital-intensive, desalination
will be constrained by suitability of locations. Improved control
of municipal and agricultural sources of pollution may require
substantial changes in the regulatory system, including incentives
for operating treatment facilities more efficiently and changes
in state appropriation systems to reduce the risks of new irriga-
tion technologies.
In summary, this evaluation reinforces the commonly held
notion that water quality considerations cannot be separated from
those of water availability. There appears to be little evidence
to suggest that any single alternative or category of alternatives
considered in this chapter would be a successful response by it-
self to water quality concerns. For example, if the scarce water
resources of the West are continually depleted, none of the alter-
natives considered here may be useful in preserving water quality.
221
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Policymakers may choose to trade-off one set of problems for
another; for example, choosing to limit agricultural production
in many areas of the West in favor of energy resource development
could reduce salinity problems but increase risks of more toxic
pollution from energy production effluents. However, regardless
of which kind of economic development is encouraged or discouraged
and which policy alternatives are chosen, this evaluation suggests
that many similar problems can be anticipated. These include in-
creasing public expenditures for water quality control and in-
creasing conflict among potential water users, among states of
various water basins, and between the West and other regions.
222
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CHAPTER 6
AIR QUALITY
EXECUTIVE SUMMARY
Conflicts between the goal of increased energy development
and the goal of protecting the generally pristine air will continue
to affect western energy resource development, especially develop-
ment of the region's large coal and oil shale reserves. Recent
years have witnessed a rapid expansion in exports of both raw west-
ern coal and electricity generated at western mine-mouth power
plants. This boom was largely related to national energy policies
to increase domestic energy production and federal air quality leg-
islation which enhanced the demand for low sulfur coals. More re-
cent changes in federal air quality regulations, especially pre-
vention of significant deterioration (PSD) standards and "best
available control technology" (BACT) requirements, are likely to
reduce this coal boom as well as affect the development of oil
shale. The complex and constantly changing set of federal and
state air quality regulations are a vital concern to western inter-
ests, including both those who favor accelerated energy development
and those who wish to see such development restricted.
Impacts
Air quality impacts from energy conversion facilities depend
on several key technological and locational factors: type of en-
ergy facility and level of pollution control, labor requirements,
resource characteristics, background levels of pollution, terrain
features, proximity to pristine air quality areas, and meteorolog-
ical conditions. The most important air quality impacts appear to
be :
• Coal-fired electric power plants, even with 80 percent sul-
fur dioxide (S02) and 99 percent particulate controls, emit
more S02, particulates, oxides of nitrogen (NO ), and car-
bon monoxide on a per unit of energy output basis than any
of the other technologies considered in this study. Hydro-
carbon (HC) emissions from synthetic liquid fuel processes
(coal and oil shale) can be high; for example, peak concen-
trations from a Synthoil liquefaction plant (100,000 barrels
per day) in Colstrip, Montana are predicted to be 100 times
higher than the 3-hour federal standard.
223
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• Air emissions from Lurgi coal gasification, geothermal,
oil and gas production, coal mining, and uranium mining
and milling are relatively small; these technologies
should not be significantly affected by current ambient
air quality standards.
• In most cases, pollution concentration levels due to pop-
ulation increases can exceed those from the energy facil-
ities even though emissions are usually only about ten
percent of those produced by the energy facility. This
occurs because population emissions, primarily from auto-
mobiles, are released close to the ground.
• Background levels of total suspended particulates, HC's,
and oxidants (ozone), which apparently are from natural
sources, have been measured near or above federal ambient
standards in some areas of the West. Energy development
could be restricted unless regulations take these natu-
rally occurring conditions into account.
• In some areas, especially southern Utah and western
Colorado, terrain features may limit energy develop-
ment by contributing to high ground level concentra-
tions of pollutants.
• PSD policies could limit energy development in the West
by limiting plant sizes and siting choices. A 3,000
megawatt-electric (MWe) coal-fired power plant could
have to be sited as much as 75 miles from a Class I PSD
area in order not to exceed PSD increments.
• For the six site-specific scenarios analyzed, worst-case,
short-term visibility reductions can range as high as 80 to
90 percent. On an average day, visibility would be reduced
by about 8 percent in the vicinity of the six sites.
On a region-wide basis, emissions and resulting air quality
problems will depend not only on energy development but also on
other major emissions sources; e.g., smelters and urban areas.
Based on one "nominal" level of development scenario, SO2 emis-
sions through 2000 were projected to increase nine-fold in the cen-
tral mountain region and about 150 percent in the Northern Great
Plains, and decrease 50 percent in the southwestern region. The
large increase projected for S02 emissions in Colorado was due to
coal and oil shale development, while in Arizona increased S02
emissions from coal-fired power plants were: more than offset by
tightened controls on copper smelting. By the year 2000, emissions
of N0x, for which effective controls are limited, were projected
to increase 450 percent in the eight-state study area.
224
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The Policy Context
Currently there is limited scientific understanding of the
relationship between levels of air emissions and the resulting im-
pacts on human health, property, and the natural environment. The
lack of scientific agreement of what levels of pollution are ac-
ceptable or even which pollutants should be regulated has resulted
in a continuing debate among industry, environmental interest
groups, and policymakers. The policy system has responded to these
conflicting pressures incrementally by modifying existing regula-
tions and periodically adding new ones, resulting in a complex,
overlapping, and sometimes con-t-radictory regulatory structure.
Prior to the 1960's, government regulation of air quality
was limited to the actions of a relatively few state and local
governments. Because of increasing public concern with air pol-
lution and the perception that state and local government respon-
ses were insufficient, federal authority increased throughout the
1960's, resulting in a major federal role mandated by the 1970
Clean Air Act (CAA) Amendments. This legislation required the En-
vironmental Protection Agency (EPA) to establish National Ambient
Air Quality Standards (NAAQS), but gave the states the major role
in devising plans to meet these national standards. The 1977 CAA
Amendments direct states to implement PSD regulations and emis-
sions offset policies according to federal guidelines, leaving the
federal government with primary control over new source perfor-
mance standards (including BACT standards), hazardous pollutants,
and mobile sources.
Air quality problems and issues, both of a substantive and of
a procedural nature, are potentially one of the most limiting fac-
tors on western energy resource development. Issues which appear
most critical are:
• BACT requirements could sharply reduce the short- and
midterm demand for western coal. Since all flue gases
will require scrubbing, it will be cheaper for many
utilities, especially those in the central part of the
U.S., to use medium and high sulfur local coals rather
than import low sulfur western coals. For example, with
a 90 percent sulfur removal standard, by 1990 Northern
Great Plains coal production could drop to about half of
what it would be with previous New Source Performance
Standards. However, even with the BACT requirement,
Northern Great Plains coal production will grow, and
in 1990 can be expected to be at least four times greater
than it was in 1975.
• The large number of mandated and potential Class I PSD
areas in some parts of the eight-state study area and
the complexities of the PSD regulations could block or
225
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slow western energy devel-
opment activities.
^CLASSIFICATION CONFLICT
• Emissions offset policy
allows development in
areas already violating
NAAQS while PSD policies
could significantly con-
strain economic develop-
ment in the West.
• Conflicts over air quality
policies have affected re-
lations between the West
and other coal producing
regions, and among western
states, the federal gov-
ernment, and Indian tribes
(see box).
Policy Alternatives
In dealing with air qual-
ity problems and issues, pol-
icymakers will have to attempt
to reconcile both energy and
environmental policy objec-
tives; that is, the overall
policy objective is to pro-
tect air quality in the West
while proceeding with the de-
velopment of western energy
resources. A variety of al-
ternative policy responses
are available for attempting
to achieve this objective. Four specific alternatives within three
categories are listed in Table 6ES-1. These categories suggest
that policymakers can take an approach which emphasizes standards
and regulations, technology and siting choices, and/or institu-
tions and procedures. Although many other alternatives can be
identified, the four listed in Table 6ES-1 were singled out to
represent a range of possible approaches.
Findings
While the net result of any one of the alternatives is uncer-
tain, each has the potential for contributing to the achievement
of the policy objective. The first of the: specific alternatives
would define the BACT standard for S02 from large coal burning fa-
cilities as requiring 90 percent sulfur reduction regardless of
coal characteristics and with an emission maximum of 1.2 pounds of
S02 per million British thermal unit input. At the present time,
226
The successful petition of the
Northern Cheyennes to redesignate
their reservation to Class I PSD
status generated considerable con-
troversy. According to the tribal
Chairman, Allan Rowland, the re-
designation does not mean the tribe
is against progress. "For us prog-
ress means developing our environ-
mental resources in renewable and
compatible manners such as timber
and agricultural products. They
are the cores of our value system
as people."
When the State of Wyoming ob-
jected to the redesignation citing
possible restrictions on develop-
ment in some parts cf the state,
Eric Metcalf, a Cheyenne spokesman,
replied, "They're saying: 'We
want to make decisions in our area,
but you can't make those decisions
for yours.'"
—"The Cheyennes Drive for Clean
Air Rights." Business Week ,
April 4, 1977, p. 29
-------
TABLE 6ES-1: AIR QUALITY POLICY ALTERNATIVES
CATEGORY OF ALTERNATIVES
Modify Standards
and Regulations
Alter Technological and
Siting Choices
Improve Procedural
Mechanisms for Approv-
ing New Facilities
SPECIFIC ALTERNATIVE
Define BACT for S0r emissions from
coal combustion as 90% removal.
Construct smaller, dispersed energy
conversion facilities. Increase
commercialization programs for new,
less polluting energy resource and
conversion technologies.
Establish a task force or other
mechanisms for identifying future
sites for energy facilities.
coal cleaning could be used to remove some sulfur prior to combus-
tion to help meet the 90 percent sulfur removal requirements; how-
ever, with currently available technology some flue gas desulfur-
ization (FGD) would still be necessary. The major conclusions
from the evaluation of this alternative are:
• By 1995, relative to a base case representing a continua-
tion of current standards, SOa emissions from power plants
are projected to drop about 50 percent in the western re-
gion. However, even 1995 baseline emissions are relatively
small (equal to 1976 levels despite a 132 percent increase
in electricity production) due to strict state emission
standards and PSD standards.
• The national policy objective of putting western, eastern,
and interior coals back on a more competitive basis is
achieved. One study projects almost a 50 percent drop
by 1990 in western coal production relative to the base
case; yet total western coal production is still pro-
jected to grow almost 175 percent from the 1975 level.
However, these projections are highly uncertain, espe-
cially due to the unreliability of supply from unionized
eastern mines, and the possibility of the increased costs
causing a substitution of nuclear power for coal.
227
-------
• By 1995, 90 percent sulfur control is projected to in-
crease electricity prices by 3.5 percent above the base
case in the western region. Due to "regulatory lag",
utility investors will bear a measurable amount of these
increased costs. The approach is inefficient in the sense
that the same emission levels could be achieved more eco-
nomically by giving incentives for using low sulfur coals.
• Implementation can be achieved directly under the 1977
CAA Amendments, but practical enforcement difficulties
are created for EPA. It requires measuring sulfur re-
moval percentages in addition to emission rates, and it
requires monitoring of coal cleaning plants in addition
to power plants.
Under the smaller, dispersed facilities option, instead of
building one 1,500 MWe power plant, for example, industry would
build three separate 500 MWe units sited far enough apart to
avoid significant air emission interactions. This approach has no
direct effect on emission levels, but by siting small facilities
over a wide area, ground level air pollution concentrations would
be lowered, thus hopefully reducing constraints on energy develop-
ment resulting from ambient air quality or PSD regulations.
• The net effects on energy development levels are uncer-
tain. By reducing the concentration of negative impacts
(air pollution concentration levels, water consumption,
and boomtown effects) more sites should be available and
less difficulties encountered in siting each one. Also,
lead times would be reduced from 9.5 - 12.0 years to 5.5 -
7.5 years. On the other hand, an increase in the number
of sitings could make it more difficult to achieve a
given energy goal.
• The net economic effects are uncertain but energy costs
are likely to be higher. Capital and operating costs
will be somewhat higher for smaller facilities; however,
shorter lead times will reduce the costs of demand, fore-
casting errors and the financial burden of "construction
work in progress". The effects on energy transportation
costs will depend on many site-specific factors.
• Land use for plants will increase by a factor of 2 to 3.
Transportation land use will be affected but, like eco-
nomic costs, the direction and magnitude depends on many
site-specific circumstances. Tax and other economic ben-
efits would-be distributed more evenly across the region.
• Because of uncertainties and the importance of site-specific
factors, mandatory requirements for smaller, dispersed fa-
cilities are too inflexible. However, the option could be
encouraged on a local basis by state utility commission's
228
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planning requirements or by federal agencies in environ-
mental impact statement requirements.
The third alternative aims at commercializing new, less pol-
luting technologies (e.g., coal gasification, in situ oil shale
production, geothermal power production, etc.) earlier than might
otherwise occur. This policy approach could be implemented by co-
operative federal/state/industry programs for those technologies
which appear most attractive for use in the West. Major points
concerning this option are:
• If a commercialization program is successful, greater
energy production could occur with less impact on air
quality than created by power plants. All of the new
energy technologies considered in this study produce
fewer overall emissions per unit of energy produced
than power plants.
• Economic costs are large: commercial scale synthetic fuel
plants can cost $0.5-1.0 billion; geothermal demonstrations
$50-100 million. Since the results could lead to a decision
not to utilize large-scale commercialization, the economic
risks are substantial.
• If successful, the benefits would accrue to the nation,
the western region, and industry. Thus, to be equitable,
costs would have to be shared among these groups.
• Implementation is likely to be difficult due to high eco-
nomic costs and the need for close cooperation among fed-
eral agencies, western state governments, and industry.
Under the fourth alternative, each state in the eight-state
study area would establish a task force which includes among its
members representatives from the federal government, the state
government, industry, and other interested parties (e.g., environ-
mental groups, farmers, and ranchers, etc.). The goal of the task
force would be to reach a consensus on future sites for major en-
ergy and other industrial facilities in order to eliminate or re-
duce siting delays. Such an approach has been undertaken in Utah
through a task force formed by the governor's office. The primary
conclusions for this alternative are:
• Although there will be no direct effect on emission rates,
areas would be identified where the environmental conse-
quences are less serious.
• By identifying and reaching a consensus on future sites
for energy facilities, siting delays should be reduced.
On the other hand, overall energy development levels
could be restricted by limiting the number of sites
available.
229
-------
• Net effects on energy production costs are uncertain;
they would be lowered by reducing siting delays but
possibly increased due to higher costs for the sites
agreed upon.
• Economic costs for the task force are generally small,
unless extensive environmental studies are undertaken.
It would be convened at the request of the governor or
other official, and all interested parties will be given
an opportunity to participate. No new institutions or
laws are required.
Of course, these four specific alternatives are not mutually
exclusive. Each (and/or others) could be implemented simulta-
neously with each making a contribution to the resolution of the
problems and issues surrounding western energy development and air
quality.
Conclusion
Along with water availability, air quality issues have a per-
vasive influence on western energy resource development. Air
quality concerns will continue to directly affect which resources
will be developed, the timing of that development, and the cost of
the energy product. Air quality is also similar to water avail-
ability regarding the complexity of the regulatory system, which
has attempted to reflect the multiple goals and values represented
in energy and air quality concerns. The complex and constantly
changing set of regulations and standards greatly increases the
risks to energy developers and makes planning at all levels highly
uncertain. A number of recent or potential legal changes, regula-
tory interpretations, or court decisions could substantially change
the future role of western coal and other energy resources. For
example, the BACT requirement in the 1977 CAA Amendments, in con-
junction with regulations required by the 1976 Resource Conserva-
tion and Recovery act which will likely classify FDG sludge as
hazardous waste, will put previously unforseen burdens on coal
users. It is generally recognized that more stringent environmen-
tal regulations will require improved technologies, which will in
turn increase the cost of energy. However, there is little evi-
dence that policymakers have recognized or attempted to deal with
problems created by the procedural requirements and uncertainties
that now characterize air quality policy.
230
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CHAPTER 6
AIR QUALITY
6.1 INTRODUCTION
Air quality regulations have and will continue to affect
western energy resource development, especially development of
the region's large coal and oil shale reserves.1 National concerns
about deteriorating air quality led to federal air quality regula-
tions which made western coal an attractive alternative for re-
ducing sulfur dioxide (SOa) emissions. Installing flue gas desul-
furization (FGD) units and using locally available higher sulfur
coals was considered by many utilities to be a higher risk, more
expensive way to meet federal SO2 emissions standards. Together,
these regulations and a national energy policy emphasizing in-
creased reliance on domestic energy resources, especially coal,
led to a boom for western coal and increased exports of both raw
coal and electricity generated by coal-fired power plants located
at or near western coal mines.
More recent changes in federal air quality regulations prom-
ise to dampen this coal boom as well as affect the development of
oil shale. For example, regulations to prevent significant deteri-
oration of air quality in areas where air quality is high can limit
the production of synfuels and electricity within the region. Pol-
icies requiring the use of the best available control technology
(BACT) on all new facilities and promoting the use of local coals,
even when they have a high sulfur content, can also lessen the de-
mand for western coal.
In large part the policy debate over air quality, both na-
tionally and regionally, revolves around a complex and constantly
changing set of federal and state regulations. Federal and cer-
tain more stringent state standards will play a key role in influ-
encing the rate, location, and type of technology used in producing
1 The other four resources addressed in this study (i.e., ura-
nium mining and milling, geothermal, oil, and natural gas) have
much less of an impact on air quality, and thus, their development
is not likely to be affected in any major way by air quality regula-
tions. For this reason, this chapter focuses on coal and oil shale,
231
-------
energy from western coal and oil shale. These regulations are a
vital concern to western interests, both those who favor accelera-
ted energy development and those who wish to see such development
blocked. »
The remainder of this chapter is divided into two major sec-
tions. The first of these (Section 6.2) identifies and discusses
major air quality problems and issues. This section includes a
summary description of the air quality impacts1 of western energy
resource development and a description of the social and political
context within which these problems and issues either have arisen
or can be expected to arise. The second major section (6.3)
focuses on alternative policies and strategies for achieving energy
and air quality policy objectives. This section includes the
identification of these objectives and the identification, evalua-
tion, and comparison of several alternative policies and implementa-
tion strategies for achieving these objectives
6.2 AIR QUALITY PROBLEMS AND ISSUES
6.2.1 Technological and Locational Factors Affecting Air Quality
Impacts
The extent and type of air quality impacts resulting from the
conversion of energy resources can vary significantly depending
upon which energy development technologies are used and where they
are sited. As indicated in our impact analysis reports,2 air
emissions, emissions controls, and labor requirements are techno-
logical factors which can cause the greatest variation in air
quality impacts. Resource characteristics (such as sulfur content
of coal), background levels of pollutants, terrain, dispersion
potential, and the proximity of energy facilities to pristine air
quality areas (such as national parks) are key locational factors.
The air quality impacts resulting from energy development will de-
pend very largely on how these technological and locational
1 See White, Irvin L. , et al. Energy From the West: A
Progress Report of a Technology Assessment of Western Energy
Re sour ce Deve lopmentT Washington, B.C. : U.S., Environmental Pro-
tection Agency, 1977; and White, Irvin L. ,. et al. Energy From the
West: Impact Analysis Report. Washington, D.C.: U.S. , Environ-
mental Protection Agency, forthcoming.
2
For a further discussion of these fetctors, see White
_
Progress Report, Vol. I, Chapter 3; and White, et al. Impact
Analysis Report. See the "Introduction" to this report for a de-
scription of the states, resources, and types of facilities con-
sidered in this study.
232
-------
factors are combined as western energy resource development
proceeds . a
A. Air Emissions and Emissions Controls
Coal-fired steam-electric power generating facilities emit
more S02 , particulates , oxides of nitrogen (NOX), and carbon mon-
oxide (CO) on a per Btu (British thermal unit) of energy product
basis than any of the other technologies considered in this study
(see Tables 6-1 and 6-2). These data are based on analyses which
assumed 80 percent SOa and 99 percent particulate removal for the
power plant. If no S02 controls were installed, power plant SO2
emissions would be about five times as large. Hydrocarbon (HC)
emissions from Synthoil coal liquefaction and TOSCO II oil shale
facilities are generally higher than those from power plants.
Conventional oil and gas extraction produces few residuals, al-
though HC emissions for natural gas production are relatively high.
Enhanced oil recovery using steam generated by burning high-sulfur
oil and geothermal electric power generation also emit relatively
high levels of sulfur, which in the case of geothermal is in the
form of hydrogen sulfide (H2S) . 2 Emissions levels from coal and
uranium mining are negligible, although blowing dust can be a
problem in some periods.
B. Labor Requirements
The relatively large labor requirements for constructing and
operating energy facilities will lead to large, rapid population
increases in nearby rural western communities.3 In some cases,
this increased population can result in peak ground level concen-
trations of particulates, SO2, and HC (primarily from automobiles
and home heating) that exceed those from the energy facilities
themselves. This can occur even though the total emissions from
an indication of how impacts can vary when the same tech-
nology is sited at different locations, see White, Irvin L. , et al .
Energy From the West: A Progress Report of a Technology Assessment
of Western Energy Resource Development. Washington, D.C.: U.S.,
Environmental Protection Agency, 1977, Vol. I, Chapter 3; and
White, Irvin L. , et al. Energy From the West: Impact Analysis
Report. Washington, D.C.: U.S., Environmental Protection Agency,
forthcoming .
2Neither enhanced oil or geothermal were analyzed on a site-
specific basis, primarily because available data are so limited.
The numbers reported in Table 6-1 are for a representative develop-
ment, and in the case of geothermal, include 90 percent efficient
H2S removal. Technologies with an efficiency of 99.9 percent are
available for removing H2S.
3 See Chapters 8 and 9 for a description of some of the major
population impacts resulting from energy development.
233
-------
TABLE 6-1: AIR EMISSIONS FOR STANDARD SIZE ENERGY FACILITIES'
(pounds per hour)
CONVERSION FACILITY
Coal
Power Plant
(3,000 MWe)c
Lurgi Gasification
(250 MMscfd)
Synthana Gasification
(250 MMscfd)
Synthoil Liquefaction
(100,000 bbl/day)c
Surface Mine
(12 MMtpy)
Oil Shale f .
TOSCO II Oil Shale
(50,000 bbl/day)
Underground Oil Shale
Mine (26 MMtpy)
Modified In Situ Oil
Shale Processing
(57,000 bbl/day)
Modified In Situ Oil
Shale Processing* with
Surface Retort
(57,000 bbl/day)
Crude Oil
Conventional Oil
Extraction
(50,000 bbl/day)
Enhanced Oil Extrac-
tion Steam Injection
(100,000 bbl/day)
Enhanced Oil Extrac-
tion COz Miscible
(100,000 bbl/day)
Natural Gas
Natural Gas Production/
Processing (250 MMscfd)
Uranium
Underground Mine
(1,100 mtpd ore)
Surface Mine
(1,100 mtpd ore)
Mill
(1,000 rat yellowcake
per year)
Solutional Mine-Mill
(250 tons, yellowcake
per year)
3eothermal (100 MWe)
PARTICULATES
1,110 - 5,020
Nd
8d
480 - 1,250*
13 - 24
' 860
125
74
362
0.3
358-1,187
120
2
0.16
361
40
N
NA
S02b
"5, 800-14, 000
520
3,520
940-1,170
8-16
350
N
174
343
21.7
ID, 125
3,420
468
0.36
3.9
1.03
N
2101
NOX
14,3;>0-35,140
650
5,050
4,620-5,770
0.5-210
1,900
270
583
1,777
17.6
308
1,340
655
5
123
0.3
N
NA
HC
400 - 650
47d
94d
1,350 - 1,690
17 - 130
1,020
54
120
130
4.3
108
35
1,000
0.5
0
0.05
N
MA
CO
1,330 - 2,180
N
180
180 - 230
13 - 87
80
480
84
0
1.3
208
70
2
3
93,4
a
N
NA
S02 » sulfur dioxide
NOX - oxides of nitrogen
HC » hydrocarbons
CO = carbon monoxide
MWe « megawatt-electric
MMscfd » million standard cubic feet per day
N » negligible
bbl/day = barrels per day
MMtpy » million tons per year
U » unknown
COz = carbon dioxide
mtpd » metric tons per day
mt * metric ton
NA » not applicable
234
-------
TABLE 6-1: (Continued)
afhese numbers represent the range of emissions found in the site-specific scenarios; and
facilities are assumed to be operating at a full load.
Had scrubbers not been hypothesized for the power plants, these numbers would be about
five times larger.
C99 percent particulate removal and 80 percent S02 removal.
These values do not include fugitive particulates or fugitive HC.
This value does not include fugitive particulates.
No range is available for oil shale because the processes were hypothesized at only one site.
^Assumes mined-out shale is processed by surface retorting facility.
Emissions from the solutional uranium mine mill consist of ammonium, ammonium chloride, and
uranium oxide.
This number is for hydrogen sulfide (H2S) and assumes 90 percent HaS removal.
235
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urban sources are usually only about ten percent of these produced
by the energy facility, because the urban emissions are released
close to the ground where little mixing or dilution takes place.
C. Resource Characteristics
As shown in Table 6-3 the heat and sulfur content of western
coals varies considerably with location. Although all of the coals
have a "low" sulfur content on a percent weight basis, on a Btu
basis, the S02 emissions from coals which have low heating values
are not necessarily low. For the six cases in Table 6-3 only three
would meet existing federal new source performance standards (NSPS)
of 1.2 pounds (Ibs) of S02 per million Btu input if 20 percent of
the sulfur were retained in the ash.l Thus, some type of sulfur
control system would be required on some power plants burning
western coals even if it were not for the fact that many western
states have 862 emissions lower than the federal standard or for
the BACT requirement of the 1977 Clean Air Act (CAA) Amendments.
In addition, the low heating values of many western coals would
require larger volumes of coal to be burned and could increase
plant costs by as much as $49-74 per kilowatt hour (kWh)(1976
dollars).2
D. Background Pollutant Levels
In some areas of the West, background levels of total sus-
pended particulates (TSP), HC, and ozone, which apparently are
a product of natural sources, have been measured at or above
federal ambient standards. TSP are largely due to windblown
dust composed of large particle-sized inorganic materials not
considered a health hazard by the Environmental Protection
Agency (EPA).3 Background concentrations of HC, apparently from
the site-specific impact analyses, it was assumed that
none of the sulfur was retained in the ash.
2Crenshaw, John, et al. Alternatives for Revising the S02 New
Source Performance Standard for Coal-Fired Steam Generators, Staff
Study. Research Triangle Park, N.C.: U.S., Environmental Protec-
tion Agency, Office of Air Quality Planning & Standards, Strategies
& Air Standards Division, Energy Strategies Branch, 1976.
3U.S., Department of the Interior, National Park Service, Den-
ver Service Center. Analysis of Kaiparowits: Powerplant Impacts
on National Recreation Resources. Denver, Colo.: Denver Service
Center, 1976, p. 44; and "EPA Reports Progress in Controlling Air
Pollution." Journal of the Air Pollution Control Association, Vol.
27 (November 1977), p. 1129.
238
-------
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trees and bushes, have sometimes exceeded federal ambient standards
in northwestern Colorado.l Energy development in the eight-state
study area may be restricted by these high background levels un-
less regulations take these conditions into account. Apparently,
EPA and some states are moving in this direction, particularly in
the case of particulates, ozone, and HC.
E. Terrain Characteristics and Meteorological Conditions
In some areas of the West, terrain characteristics and meteo-
rological conditions may limit energy development by contributing
to high ground-level concentrations of pollutants. Plume impac-
tions occur when stack plumes flow into elevated terrain such as
is found in southern Utah and western Colorado. This is most
likely to occur when atmospheric mixing- is low (wind speeds of
less than 5 to 10 miles per hour, clear sky, and in the predawn
hours). Temperature inversions occur when air temperature in-
creases with altitude, thereby inhibiting vertical mixing and the
dispersion of air pollutants. The frequency of inversions varies
both seasonally and geographically throughout the eight-state
study area. When plume impaction or temperature inversions occur,
ground-level concentrations of pollutants can quickly exceed am-
bient air quality or Prevention of Significant Deterioration (PSD)
Standards.
F. Proximity to Pristine Areas
A policy to prevent significant deterioration of air quality
in pristine areas (such as national parks) may prevent conversion
facilities from being sited close to these areas and may limit the
size of facilities that can be sited. This can limit development,
especially if pristine areas are widespread or occupy large
amounts of land (as in southern Utah). Our air quality modeling
results indicate that coal-fired power plants of 3,000 megawatt-
electric (MWe) would have to be sited up to 75 miles from Class I
^asmussen, Reinhold A. "What Do the Hydrocarbons From Trees
Contribute to Air Pollution?" Journal of the Air Pollution Con-
trol Association, Vol. 22 (July 1972), pp. 537-543"The high
background levels of ozone found in some parts of the West have
not been explained. See, for example, Berry, W.T.. , and R.E. Amber.
"Report on the Fifth APCA Government Affairs Seminar: "A New
Look at the Old Clean Air Act.'" Journal of the Air Pollution
Control Association, Vol. 27 (June 19771, p. 529.
240
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areas in order not to exceed PSD increments specified in the 1977
CAA Amendments.1
6.2.2 Site-Specific and Regional Air Quality Impacts
As noted earlier, the air quality impacts of western energy
resource development can vary considerably depending upon how the
technological and locational characteristics discussed above are
combined. To analyze these combinations, we considered six site-
specific scenarios chosen to be representative of the combination
of these factors which can be expected when western energy re-
sources are developed. Table 6-4 lists the percentage of sulfur
removal which would be required and identifies the limiting stan-
dard for coal-fired power plants to meet all federal and state
standards at each of the six scenario sites. These results suggest
that facilities in Wyoming, New Mexico, and possibly Montana are
likely to have the fewest air quality problems since applicable
federal and state standards can be met in these three states with
the least percentage removal of S02. But in none of the six cases
can all federal and state standards be met without the use of some
S02 emission control with an overall removal efficiency of around
80 percent.
Locating facilities in southern Utah and western Colorado
will present the greatest problems unless removal percentages are
quite high. In Colorado, this is largely due to state S02 stan-
dards and, to some extent, the nature of the terrain in western
Colorado. A combination of factors affect air quality in southern
Utah where poor dispersion potential and complex terrain could
result in violation of Class II PSD increments as well as the vio-
lation of Class I PSD areas close to the development site.
Visibility in the vicinity of development facilities will also
be affected. Table 6-5 shows the worst-case, short-term visibility
effects that would result from a conversion rate of S02 to sulfates
of 1 percent per hour for the six site specific scenarios consid-
ered. As the data show, these reductions can be quite high (80 to
90 percent) in many cases. These worst-case meteorological condi-
tions can be expected to occur a few times each year. An analy-
sis of average visibility reduction for the six site-specific
scenarios shows about an 8 percent drop; that is, on an average
day, visibility will be reduced 8 percent.
'Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
685. The distance of a facility must be sited from a pristine
area varies with the type of facility and locational factors.
Distances range from 5-75 miles for the facilities studied and are
largest for coal-fired power plants. For more details, see White,
Irvin L., et al. Energy From the West: Impact Analysis Report.
Washington, D.C.: U.S.,Environmental Protection Agency,forth-
coming.
241
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TABLE 6-4: SULFUR REMOVAL EFFICIENCIES REQUIRED FOR
COAL-FIRED POWER PLANTS TO MEET ALL FEDERAL
AND STATE SULFUR DIOXIDE STANDARDS
STATE
SULFUR REMOVAL
REQUIRED (%)
GOVERNING REGULATION
Colorado
Rifle 1,000 MW
and mine
96.2
State Category II Ambient
Montana
Colstrip 3,000 MW
and mine
Maximum control capabil-
ity State NSPS techni-
cally practicable and
economically feasible as
determined by Air Quality
Bureau
80
Federal 24 hr. Class II PSD
North Dakota
Beulah 3,000 MW
and mine
85
Federal 24 hr. Class II PSD
New Mexico
Farmington 3,000
MW and mine
78
Federal 24 hr. Class II PSD
Utah
Escalante 3,000 MW
and mine
94
Federal 24 hr. Class II PSD
Wyoming
Gillette 3,000 MW
and mine
82
State NSPS
MW = megawatt
NSPS = New Source Performance Standards
hr. = hour
PSD = prevention of significant deterioration
On a region-wide basis, emissions and air quality problems
will depend not only on the scale and character of energy develop-
ment, but also on the level of development and level of pollution
control for other major emission sources, e.g., smelters and re-
fineries. Figure 6-1 shows projected levels of S02 emissions na-
tionally and in the eight-state study area through the year 2000
for the highest level of coal and oil shale development considered in
242
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TABLE 6-5: WORST-CASE, SHORT-TERM VISIBILITY IMPACTS
FACILITY3
Coal-fired power plant
Coal-fired power plant
and mine
Lurgi gasification and
mine
Synthane gasification
and mine
Synthoil liquefaction
and mine
TOSCO II oil shale
Lurgi and Synthane
gasification, coal-fired
power plants , and mines
Coal-fired power plants,
Lurgi gasification, and
mines
Lurgi and Synthane gas-
ification, Synthoil
liquefaction, coal-fired
power plant and mines
Lurgi gasification and
mine (2 plants)
Synthane gasification
and mine (2 plants)
SITE
Kaiparowits
Rifle
Gillette
Beulah
Farmington
Gillette
Gillette
Colstrip
Gillette
Rifle
Farmington
Colstrip
Colstrip
Farmington
Beulah
Beulah
BACKGROUND
VISIBILITY
(miles)
70
60
70
60
60
70
70
60
70
60
60
60
60
60
60
60
WORST-CASE
SHORT-TERM
VISIBILITY11
(miles)
8.6
43.6
9.6
4.8
41.6
48.4
59.5
48.9
48.8
44.4
9.3
8.1
8.7
8.2
37.4
29.4
PERCENT
VISIBILITY
REDUCTION
87.7
27.3
86.3
92.0
30.7
30.9
15.0
18.5
30.3
26.0
84.5
86.5
85.5
86.3
37.7
51.0
Source: White, Irvin L., et al. Energy From the West: Impact Analysis Report.
Washington, D.C.: U.S., Environmenta1 Protection Agency, forthcoming.
Facilities modeled are 3,000 megawatt-electric (MWe) coal-fired power.plants,
(except for Rifle, where a 1,000 MWe plant was modeled), 250 million cubic feet
per day (MMcfd) Lurgi gasification, 250 MMcfd Synthane gasification, 100,000
barrels per day (bbl/day) Synthoil liquefaction, 50,000 bbl/day TOSCO II oil
shale and the associated mine. The power plants were modeled with 99 percent
removal of particulates and 80 percent removal of sulfur dioxide (SO2).
Short-term visibility impacts were investigated using a "box-type" dispersion
model. This particular model assumes all emissions occuring during a specified
time interval are uniformly mixed and confined in a box capped by a lid or stable
layer aloft. A lid of 500 meters has been used through the analyses. The conver-
sion rate of S02 to sulfur was assumed to be 1 percent per hour.
243
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900
II
100
1975 1980 1985 1990 1995 2000
(Base)
FIGURE 6-1:
GROWTH OF SULFUR DIOXIDE EMISSIONS IN THE
NOMINAL DIRTY SCENARIO1"
a!975 base sulfur dioxides were as follows: Nation, 28.17 million
tons per year; Subregion I (Montana, North Dakota, and South
Dakota), 379.7 thousand tons per year (Mtpy); Subregion II (Colo-
rado and Wyoming), 154.1 Mtpy; and Subregion III (New Mexico,
Arizona, and Utah), 2,883.0 Mtpy.
bThe Nominal Dirty scenario assumed 4.2 million bbl/day of shale
oil by the year 2000 rather than the 2.5 million bbl/day assumed
in the SRI Nominal scenario. Emission factors were then collected
for SEAS; emission control assumptions correspond to pre-1977
State Implementation Plans, with NSPS becoming effective in 1979,
except Arizona, Colorado, New Mexico, Utah and Wyoming, where
stricter state standards apply after 1979.
244
-------
this study1 (see the footnotes for Figure 6-1) . While emissions
of S02 through the year 2000 are projected to increase nine-fold
in the Central Mountain region and 149 percent in the Northern
Great Plains, they grow only by 18 percent for the nation as a
whole and are cut in half in the Southwestern states. The S02
emissions in Colorado grow substantially due to development of
coal and oil shale. In Arizona, however, increased emissions from
coal-fired electrical generation are more than offset by tightened
controls on copper smelting, the source of 93 percent of 1980 SO2
emissions. Although not shown in Figure 6-1, of the five air
pollutants studies, NOX emissions are projected to have the
greatest relative increase in the eight-state study area, reaching
450 percent of the 1975 level by the year 2000.
Long-range transport of sulfates and fine particulates could
extend pollution problems over considerable distances from energy
facilities, and air quality outside the eight-state study area
could be adversely affected. Although the extent to which long-
range transport will occur is not known, regulations to resolve
air pollution problems across political jurisdictions will almost
certainly add to intergovernmental conflicts over air quality con-
trol.
Changes in precipitation due to local weather modification
caused by energy facilities may occur, particularly if several
facilities are sited close together. However, current knowledge
is inadequate to support conclusions about the probability and
extent of this impact.
6.2.3 The Social and Political Context of Air Quality Issues in
the West
As indicated in Chapter 1, public concern about air quality
problems changed significantly in the 1960 's. By 1970 a majority
of Americans considered air pollution to be one of our two most
important domestic problems.2 Public concern largely resulted
from a growing awareness of the effects of air pollution on human
health, property, and the natural environment. This concern
data were developed using EPA's Strategic Environmen-
tal Assessment System (SEAS) Model. See Ball, Richard H., Project
Officer. A Description of the SEAS Model. Washington, D.C.: U.S.,
Environmental Protection Agency, October 1977. Also see White,
Irvin L. , et al. Energy From the West: Impact Analysis Report.
Washington, D.C.: U.S., Environmental Protection Agency, forth-
coming, Chapter 11, Regional Impacts, for a more extended discus-
sion of this analysis.
2 See Jones, Charles O. Clean Air: The Policies and Politics
of Pollution Control. Pittsburgh , Pa. : University of PittsburglT"
Press, 1975, pp. 144-45.
245
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increased public support for greater governmental control of air
pollutant emissions and protection of ambient air quality. This
has led to a still evolving web of laws, regulations, and court
interpretations which is at once complex and controversial. And
in no area of the country is the controversy greater than in the
West.
At the outset, it is important to note that current knowledge
of the relationship between given levels of air emissions and the
resulting impacts on human health, property, and the natural en-
vironment is limited. The lack of scientific agreement on accept-
able levels of pollution or even on which pollutants should be
regulated has resulted in a continuing debate among industry, en-
vironmental interest groups, and policymakers.
In the absence of a complete understanding of the relationship
of air pollutant emissions and air quality impacts, the debate over
air quality policy tends to polarize. On the one hand, there are
those who argue that the prudent thing to do given this uncertainty
is to set very strict standards which ensure that we do not do
irreversible damage to human health and the environment. On the
other hand, there are those who argue that we should not pay the
high economic and regulatory costs resulting from strict regula-
tion until we know that they are, in fact, needed. In short,
positions in the debate over air quality are based as much on
value positions and perspectives as on knowledge.
As the following description indicates, the policy system has
responded to these conflicting pressures incrementally by modify-
ing existing regulations and periodically adding new ones. This
has produced a complex of overlapping, sometimes contradictory
regulations which makes it possible for some elected officials in
the West to view the existing regulatory system as a barrier to
the region's economic development while others believe that the
same system provides inadequate protection. And it; is clear that
this complex system of air quality regulations offers a convenient
vehicle for those who wish to challenge western energy resource
development—even when their challenge zeros in on air quality
regulations as a convenient surrogate for some other concern.
The remainder of this section will briefly describe how the
current regulatory system has evolved, identify and describe cur-
rent regulations, and identify some of the major problems and
issues which arise because of conflicts between air quality and
western energy resource development.
A. Historical Development of Air Quality Regulations
The existing federal air quality regulatory system was ini-
tiated in 1955 when the Congress authorized the expenditure of
$5 million annually for 5 years to support federal air quality
research and provide assistance to the states and educational
246
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institutions for research, demonstrations, and training1 (see Table
6-6). While providing limited federal support, the 1955 legislation
was essentially a problem-defining mechanism in that it "...provided
assistance in determining the nature of the problem to be regultited
by state and local agencies."2 Prior to 1955, governmental respon-
sibility for controlling air pollution had been assumed by a number
of state and local governments. An ordinance adopted by the Chicago
City Council in 1881 was the first air pollution law in the U.S.3
Other examples of local and state government action are establish-
ment of the Los Angeles County Air Pollution Control Agency in 1948
and passage of the first state air pollution legislation by Oregon
in 1952.
The 1955 federal act must be considered in the context of some
state and local governments already having acted to combat and con-
trol air pollution. This act was considered necessary, however,
since state, local, and regional variations made it difficult to
develop and enforce standards, and because air pollutants do not
honor political boundaries.
The next major federal law was the CAA of 1963, which provided
"...that the prevention and control of air pollution at its source
is the primary responsibility of states and local governments...".
However, this act also noted "...that federal financial assistance
and leadership is essential for the development of cooperative Fed-
eral, State, regional, and local programs to prevent and control
air pollution. " "*
It was this new policy statement which laid the basis for
federal initiative in air pollution control. The Secretary of
Health, Education, and Welfare (HEW) was authorized to act when air
pollution that originated or was discharged in one state affected
the health or welfare of persons in another state. Federal inter-
state abatement actions were provided for, provisions which
"...were only opening wedges for the federal government."5 The
1963 CAA continued grants to state and local control agencies, but,
JAir Pollution Control Act, Pub. L. 84-159, 69 Stat. 322 (1955)
2Jones, Charles 0. "Federal-State-Local Sharing in Air Pollu-
tion Control." Publius, Vol. 4 (Winter 1974), p. 73.
3Davis, J. Clarence, III. The Politics of Pollution. New
York, N.Y.: Pegasus, 1970, p. 33.
^Clean Air Act of 1963, Pub. L. 88-206, 77 Stat. 392.
5Jones, Charles 0. Clean Air: The Policies and Politics of
Pollution Control. Pittsburgh, Pa.: University of Pittsburgh
Press, 1975, p. 76.
247
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for the first time, the federal government was empowered to take
legal action in its attempt to terminate air pollution.
The Air Quality Act of 1967l expanded federal authority and
called for both emissions and ambient air quality standards to be
established and air pollution control regions to be designated. As
provided for in the 1967 legislation, both the state and the federal
government were responsible for setting standards. The Secretary of
HEW was directed to identify and define "air quality control regions"
on the basis of meteorological and urban factors. Within these air
quality regions, states were to adopt and implement ambient air qual-
ity standards subject to approval on the basis of federally-
established criteria. Both the standards and the state implementa-
tion plans (SIP's) were subject to federal approval. Following the
approval of its standards and SIP, a state was to assure the federal
government that the standards and implementation plan would be ad-
hered to. If the state's program was found to be inadequate, the
Secretary of HEW was empowered to establish new standards and a new
SIP to be followed by the states. Whereas the 1963 act "...had en-
couraged and invited the development of regionally based air pollu-
tion control programs, the 1967 Act insisted on it."2
The authorization for the 1967 Air Quality Act expired in 1970.
To remedy this situation and to correct many deficiencies in the
1967 law, Congress legislated an additional set of CAA Amendments.3
A fundamental reason for the additional legislation was the weak im-
plementation mechanisms under the Air Quality Act of 1967. By 1970,
no state had successfully completed all the requirements necessary
for the enactment of a federally-approved air pollution control
program.u
The CAA Amendments of 1970 established a comprehensive air
quality regulatory program. Under these amendments, the Administra-
tor of the EPA was to establish national primary and secondary am-
bient air quality standards. States were to carry out federally-
approved implementation plans for achieving these standards. The
EPA Administrator was also given authority to set performance stan-
dards for new stationary sources, as well as national emission
standards for hazardous air pollutants.
:Air Quality Act of 1967, Pub. L. 90-148, 81 Stat. 485.
2Jones, Charles 0. Clean Air; Policies and Politics of Pol-
lution Control. Pittsburgh^Pa.:University of Pittsburgh Press,
1975, p. 84.
3Clean Air Act Amendments of 1970, Pub. L. 91-104, 84 Stat.
1676.
4Jones, Charles 0. "Speculative Augmentation in Federal Air
Pollution Policy Making." Journal of Politics, Vol. 36 (May 1974),
p. 447.
249
-------
The 1970 Amendments also provided for extended state involve-
ment in and supervision of local programs by granting the states
comprehensive responsibility for developing adequate SIP's. A
cooperative program was thus established on two levels: one be-
tween the federal and state governments and a second among the
various states and local governments. The 1970 Amendments require
an active state and local role in defining state regions , coor-
dinating among regions, developing statewide standards, defining
interstate problems, and developing the statewide implementation
plan.1 In this respect federal air pollution law as evidenced in
the 1970 bill defined a major coordinating role for the states.
There was no provision for a similar role for local governments.2
New CAA Amendments were passed by Congress in 1977. 3 While
the 1977 Amendments represent a continuation of the basic air pollu-
tion control philosophy established by the 1970 Amendments,1* they
contain a number of important new provisions which affect western
energy development. These provisions will be discussed in the next
section which describes the current status of the air quality reg-
ulatory system and the problems and issues that exist relative to
western energy development.
B. Current Air Quality Regulations and Conflicts
The previous section briefly reviewed how the air quality
regulatory system has evolved incrementally, primarily during the
past fifteen years. A brief description of the current status of
air quality regulations follow together with an identification of
some of the major problems and issues that exist, especially as
they pertain to western energy development. While we have at-
tempted to put some logic and order into the descriptions, in fact
the regulatory system is a maze. If the reader comes away with
the feeling that he understands the air pollution regulatory sys-
tem, we have failed since we will have created the illusion of
order where there is chaos.
The existing air quality regulatory system consists of two
types of standards: emission standards which limit the amount of
, Charles 0. "Federal-State-Local Sharing in Air
Pollution Control." Publius, Vol. 4 (Winter 1974), p. 83.
2Magida, Arthur J. "New Clean Air Provisions Respond to Local
Complaints." National Journal, Vol. 7 (November 22, 1975), p. 1589.
3Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat. 685.
^Easton, Eric B. , and Francis J. O'Donnell. "The Clean Air
Act Amendments of 1977--Ref ining the National Air Pollution Control
Strategy." Journal of the Air Pollution Control Association, Vol.
27 (October T977) , pp. 943-47.
250
-------
pollution that can be emitted by any source (usually expressed in
Ibs per unit of energy input) ; and air quality standards which limit
the maximum concentration of certain pollutants that can exist at
ground level (usually expressed in micrograms per cubic meter) .
Each kind of standard is identified and briefly described here, the
emphasis being on those which are most important for western energy
development areas.
Emission Limits
• Federal NSPS: These standards set the maximum allowable emis-
sion rates (lbs/106 Btu's fuel input) for certain pollutants
for each specific type of facility (e.g., coal-fired power
plants and coal preparation plants) . The 1977 CAA Amendments
will require the best system of continuous emission reduction
on new facilities regardless of fuel quality (i.e., BACT) . l
• SIP Limits: These plans require that emission standards be set
for various categories of sources. The state standards for new
or modified sources must be at least as strict as the federal
NSPS.2 Table 6-7 lists the S02 emissions limits for coal-fired
boilers for the eight states. As indicated, five of the states
have standards for new plants more strict than the existing
federal NSPS of 1.2 Ibs of S02 per million Btu's of input.3
• Offsets in Nonattainment Areas: An "offset policy" exists
in order not to preclude economic development in areas that do
not meet federal ambient air quality standards (i.e., nonattain-
ment areas) . Briefly, the requirements of this policy include
the use of the "lowest achievable emission rate" (LAER) on new
sources and emission reductions from other sources such that the
reductions more than offset the emissions of the new source.4
• Hazardous Air Pollutants: These regulations establish emission
standards for exceptionally toxic pollutants such as asbestos,
beryllium, mercury, and vinyl chloride. The 1977 amendments5
Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
697-703, § 109.
2For a description of these state standards, see White,
Irvin L. , et al . Energy From the West; Energy Resource Development
Systems Re.port. Washington, D.C.: U.S., Environmental Protection
Agency, forthcoming, Chapter 2.
3This assumes that the 65 percent S02 control standard in New
Mexico is more strict than the NSPS of 1.2 Ibs of SOa per million
Btu's fuel input.
4Clean Air Act Amendments of 1977, § 129.
5 Ibid. , § 110.
251
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allow EPA to set a design, equipment, work practice, or opera-
tional standard for hazardous materials when an emission stan-
dard is not feasible.
• Mobile Emission Standards: These standards establish maximum
emission rates for motor vehicles ( Ibs/vehicle-mile) for CO,
HC, and N0x .
Air Quality Limits
• National Ambient Air Quality Standards (NAAQS) : Two categories
(primary and secondary) of maximum permissible ground-level
concentrations of pollutants are established by the NAAQS. At
the present time, there are standards for six pollutants: sus-
pended particulates , S02 , CO, photochemical oxidants, HC (non-
methane) , and NOx • The current NAAQS are listed in Table 6-8.
Primary standards are defined as having the goal of protecting
public health, while secondary standards are defined as having
the goal of protecting public welfare (i.e., property, crops,
wildlife, livestock, aesthetics, etc.) .
• State Ambient Air Quality Standards: As part of the SIP re-
quirement, each state sets ambient air quality standards that
must be at least as strict as NAAQS. Each of the eight states
in our study area has complied with this requirement, and some
have set standards for pollutants other than the six criteria
pollutants. Seven of the states (all except Utah) have set SO2
air quality standards below the federal primary standards for
annual arithmetic mean and maximum 24-hour concentration.
• PSD Standards:1 Three land classifications for allowable in-
creases in particulates and S02 in areas where existing air
quality is cleaner than required by NAAQS are established by
PSD standards. Class I areas would be allowed the smallest '
increases. Some areas such as national parks larger than 6,000
acres and national wilderness areas are mandatory Class I areas.
Figure 6-2 shows the mandatory Class I areas in the eight-state
study area. All other areas are initially designated Class II.
These areas can be redesignated to either Class I or the less
restrictive Class III by the states or Indian tribes, except
that certain areas, such as national monuments, national pre-
serves, and national wilderness areas, can not be redesignated
Class III if the area in question is larger than 10,000 acres.
Within two years of the passage of the 1977 CAA Amendments,
EPA must submit plans for PSD from NOX , HC, CO, and oxidants.
Table 6-9 gives the specific allowable PSD increments for par-
ticulates and SO2 for each of the three calssif ications. Ex-
cept for the Class I 18-day variance case, the increments may
Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
731 § 127.
253
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TABLE 6-8: NATIONAL AMBIENT AIR QUALITY STANDARDS'
POLLUTANT
Sulfur Dioxide
Particulate Matter
Carbon Monoxide
Photochemical
Oxidants
Hydrocarbons
(nonmethane)
Nitrogen Dioxide
AVERAGING
INTERVAL
Annually
24-hr
3-hr
Annually
24-hr
8-hr
1-hr
1-hr
3-hr (6-9 a.m.)
Annually
PRIMARY
STANDARD
yg/m3 (ppm)
80 (0.03)b
365 (0.14)C
75d
260°
10,000 (9)°
40,000 (35)°
160 (0.08)C
160 (0,24)C'f
100 (0.05)b
SECONDARY
STANDARD
yg/m3 (ppm)
1,300 (0.5)C
60d'e
150°
10,000 (9)°
40,000 (35)°
160 (0,08)C
160 (0.24)C'f
100 (0.05)b
yg/m3 = micrograms per cubic meter
ppm = parts per million
hr = hour
a40 C.F.R. 50(1976). Environmental Protection Agency (EPA) has also pro-
posed a primary and secondary national ambient air quality standard for
air borne lead of 1.5 yg/m3, monthly arithmetic mean. 42 Fed. Reg. 63,076-
83 (December 14, 1977). The Clean Air Act Amendments of 1977 (Pub. L. 95-95,
91 Stat. 720, § 122) direct EPA to study radioactive pollutants, cadmium,
aresnic, and polycyclic organic matter for possible inclusion as criteria
pollutants.
Arithmetic mean.
concentration not to be exceeded more than once per year.
Geometric mean.
g
For use as a guide to assess implementation plant to achieve the 24-hr
standard.
For use as a guide in devising implementation plant to achieve oxidant
standards.
254
-------
NATIONAL MONUMENT
FIGURE 6-2:
MANDATORY CLASS I AREAS UNDER THE 1977
CLEAN AIR ACT AMMENDMENTS3
255
-------
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20,
21.
22.
23,
24.
25.
26,
27.
28.
29.
Cabinet Mountains WLD
Glacier NP
Mission Mountains WLD
Bob Marshall and
Scapegoat WLD
Selway-Bitterroot WLD
Anaconda-Pintlar WLD
Gates of the Mountain WLD
U L Bend WLD
Medicine Lake WLD
Red Rock Lakes WLD
Yellowstone NP
Northern Cheyenne Indian
Reservation
Theodore Roosevelt
Lostwood WLD
N. Absaroka WLD
Washakie WLD
Teton WLD
Grand Teton NP
Bridger WLD
Fitzpatrick WLD
Wind Cave NP
Badlands WLD
Zion NP
Bryce Canyon NP
Capitol Reef NP
Canyonlands NP
Arches NP
Mount Zirkel WLD
Rawah WLD
NP
30. Flattops WLD
31. Rocky Mountain NP
32. Eagles Nest WLD
33. Maroon Bells/Snowmass WLD
34. West Elk WLD
35. Black Canyon of the
Gunnison WLD
36. Mesa Verde NP
37. Weminuche WLD
38. La Garita WLD
39. Great Sand Dunes WLD
40. Grand Canyon NP
41. Sycamore Canyon WLD
42. Petrified Forest NP
43. Pine Mountain WLD
44. Mazatzal WLD
45. Sierra Ancha WLD
46. Mount Baldy WLD
47. Superstition WLD
48. Saguaro WLD
49. Galiuro WLD
50. Chiricahua NM
51. Chiricahua WLD
52. Wheeler Peak WLD
53. San Pedro Parks WLD
54. Bandelier WLD
55. Pecos WLD
56. Gila WLD
57. Bisque del Apache WLD
58. White Mountains WLD
59. Salt Creek WLD
60. Carlsbad Caverns NP
WLD = wilderness area
NP = national park
NM = national monument
256
-------
TABLE 6-9:
PREVENTION OF SIGNIFICANT DETERIORATION
ALLOWABLE INCREMENTS3
(micrograms per cubic meter)
TOTAL SUSPENDED PARTICULATES
Class I
Class I "relief"
Class I 18-day
variance :
low terrain
high terrain
Class II
Class III
ANNUAL
5
19
-
-
19
37
24-HOUR
10
37
-
-
37
75
SULFUR DIOXIDE
ANNUAL
2
20
-
-
20
40
24-HOUR
5
91
36
62
91
182
3-HOUR
25
325
130
221
512
700
Source: Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat,
732-38, as cited in Garvey, Doris B., et al. The Prevention of
Significant Deterioration: Implications for Energy Research and
Development. Argonne, 111.: Argonne National Laboratory, Office
of Environmental Policy Analysis, 1978.
o
Except for the Class I 18-day variance case, the increments are
allowed to be exceeded only one time per year.
only be exceeded one day per year. The Class I "relief"
and 18-day variance cases are allowed only after a review
and approval process specified in the legislation.
o Visibility Protection for PSD Mandatory Class I Areas:
Under 1977 CAA Amendments, EPA has two years within which
to develop regulations for remedying or preventing impair-
ment of visibility in mandatory Class I areas as a result
of man-made air pollution.
It should be noted that the above categories of standards are
not independent; the applicable or limiting standard for any facil-
ity will vary from case to case depending on the characteristics
of the technology, the type of fuel, the date the plant is con- •
structed or modified, and the facility's specific location. For
example, the emissions for a coal-fired power plant may be con-
strained in one site by SIP emission limits and in another site by
PSD regulations. The regulations are made even more difficult to
understand and implement because they are continually being re-
vised and being reinterpreted by either EPA or the courts.
257
-------
As indicated in the introduction to this section, these vari-
ous air quality regulations are controversial. In large part,
this is due to the inadequacy of the scientific knowledge base
linking air pollution concentration levels to effects on human
health, property, and the environment. For example, the NAAQS for
S02 and particulates established by EPA were based on the results
of statistical studies that compared S02 and particulate concentra-
tion levels to community health data (e..g., the so-called CHESS
study).1 However, a number of subsequent analyses have questioned
the scientific validity of these findings.2 Recent evaluations in-
dicate that although SO2 and particulate:s are related to health
problems, their presence may simply indicate the existence of the
true culprit--sulfates. As a result of these findings, EPA is in
the process of evaluating a regulatory program for sulfates. How-
ever, at the present time there are insufficient data and knowledge
concerning the atmospheric formation of sulfates to establish such
a program. Other areas where there is still great uncertainty in-
clude the impacts of air pollution on weather patterns and the pos-
sible long-term climatic changes caused by the build-up of carbon
dioxide in the atmosphere (the so-callec "greenhouse effect").
The important point is that in the near future we are not
iikeiy to have complete scientific information about the precise
impacts of air pollution. Thus, regulations will continue to be
set in a condition of uncertainty. This creates a fundamental
problem: how to reach political consensus regarding the appro-
priate national strategy for balancing energy and economic with
health and environmental goals.
In summary, the air quality regulatory system is very complex
and controversial. Especially since the 1973 Organization of
Petroleum Exporting Countries (OPEC) embargo, there has been in-
tense public debate over the conflicts between increased domestic
energy production and the goal of maintaining and enhancing air
quality (and other environmental values). While many of the issues
are national in scope, some are especially important to the West.
In the following pages, four major areas of conflict involving
western energy development and air quality will be described.
These four problem/issue areas are: PSD and visibility standards;
emissions offset policies; BACT requirements; and the role of var-
ious levels of government in air quality regulation.
1 Community Health and Environmental Surveillance System
.(CHESS) Study, sponsored by the EPA.
2For a review of some of these criticisms see, for example,
"Air Quality and Health." Electric Power Research Institute Jour-
nal , Vol. 2 (September 1977), pp. 6-11; and U.S., Council on Envi-
ronmental Quality. Environmental Quality, Seventh Annual Report.
Washington, B.C.: Government Printing Office, 1976, pp~2~13-47.
258
-------
(1) PSD and Visibility Standards
The concept of PSD was first included in the Air Quality Act
of 1967,l supported by the 1969 Guidelines for the Development of
Air Quality Standards and Implementation Plans issued by HEW1s
National Air Pollution Control Administration,2 and continued by
Congress in the CAA Amendments of 1970.3 However, the Administra-
tor of EPA did not include PSD in his 1971 implementation plan
guidelines. His failure to do so was successfully challenged by
the Sierra Club on the basis that the 1967 Act, the 1970 Amendments,
and the legislative history of air quality control required a policy
of PSD of air of better quality than that required by NAAQS.'* PSD
regulations were established by EPA in December 1974 and were im-
mediately challenged by both industry and environmental groups.5
Congress actively considered PSD amendments to the CAA
beginning in 1975, but it was not until 1977 that PSD requirements
!Air Quality Act of 1967, Pub. L. 90-148, 81 Stat. 485, stated
that a purpose of the act was to "protect and enhance the quality
of the nation's air resources."
2Those guidelines state that "Air quality standards which,
even if fully implemented, would result in significant deterioria-
tion in air quality... clearly would conflict with the expressed
purpose of the law." See U.S., Department of Health, Education,
and Welfare, Public Health Service, National Air Pollution Control
Administration, Consumer Protection and Environmental Health Ser-
vice. Guidelines for Development of Air Quality Standards and Imple-
mentation Plans. Washington, D.C.: Public Health Service, 1969.
3The first stated purpose of the Clean Air Act of 1970, Pub.
L. 91-604, 84 Stat. 1976, was "to protect and enhance the quality
of the nation's air resources so as to promote the public health
and welfare and the productive capacity of its 'population'."
^Sierra Club v. Ruckelshaus, 334 F. Supp. 253 (D.D.C. 1972),
affirmed, 4 ERG 1815 (D.C. Cir. 1972), affirmed sub nom., Fri v.
Sierra Club, 412 U.S. 541 (1973). The ruling of the district court
was upheld by the Circuit Court of Appeals and affirmed by a divided
(4-4) Supreme Court.
5See "Clean Air Act Amendments of 1977: Legislative History."
U.S. Code Congressional and Administrative News, Vol. 2: Legisla-
tive History. St7~Paul, Minn.: West, 1978, p. 1183. And Ayers,
Richard E. "Enforcement of Air Pollution Controls on Stationary
Sources Under the Clean Air Amendments of 1970." Ecology Law
Quarterly, Vol. 4 (No. 3, 1975), pp. 460-63. ~
259
-------
were actually legislated.1 EPA issued proposed PSD regulations in
late 1977r2 but, as of June 1978, the final regulations have not
been promulgated. The Congress stated that the purpose of this
legislative requirements was to protect public health and welfare;
to preserve, protect, and enhance air quality in unique national
lands; to ensure that emissions in one state will not interfere
with another state's SIP; and to ensure that decisions to permit
increased air pollution are made only after careful evaluation and
informed public participation.3
However, the PSD regulations may also have a number of other
influences as well. The National League of Cities and the National
Association of Counties argued that without PSD, regions with
dirtier air would be at a competitive disadvantage in attracting
industry. Further, states wanting to maintain areas of pristine
air quality would have greater difficulty doing so without a PSD
policy.1* This is especially important for states whose economy
depends on tourism related to scenic beauty—for example, Colorado
and New Mexico, both of which have actively supported PSD.'S
The House Health and Environment Subcommittee found that the
transport of pollutants from one state to another and pressure for
industrial growth would make it difficult for states to decide to
maintain air quality better than that required by minimum federal
standards and that a state's freedom to set standards more restric-
tive than the federal standards would effectively be limited.b
They also found that, without PSD regulations, air quality in
unique national lands (such as the Grand Canyon) could decline
significantly. For example, the normal 70-100 miles visibility in
the Grand Canyon could be reduced to 15 or so miles as a conse-
quence of ambient concentrations of S02 at the level of the secon-
dary ambient air quality standard. Under worst-case weather con-
ditions (which occur about once a year), visibility could be re-
duced to as little as 3 or 4 miles.7
'Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat. 731
§ 127.
242 Fed. Reg. 57,471-88 (November 3, 1977); and 42 Fed. Reg.
62,020-21 (December 8, 1977).
3Clean Air Act Amendments of 1977.
"* "Clean Air Act Amendments of 1977: Legislative History."
U.S. Code Congressional and Administrative News, Vol. 2; Legisla-
tive History. St. Paul, Minn.: West, 1978, pp. 1211-13.
5 Ibid., pp. 1214-15.
6 Ibid., p. 1215.
71bid., p. 1216.
260
-------
The PSD requirements of the 1977 Amendments create a number
of problems and questions that could significantly affect western
energy development. Under PSD regulations, a facility is given
a permit to begin construction if predictions from an atmospheric
diffusion model1 indicate that the facility will not violate the
PSD standard. This raises concerns because current air quality
models can generally only estimate impacts to within a factor of
two of the actual impacts which will occur, although in areas of
complex terrain or unusual meteorology these models are even less
accurate.2
Because of this modeling limitation, the 1977 Amendments re-
quire EPA to hold a conference on air dispersion modeling within
six months of passage of the amendments and at least every three
years thereafter.3 In addition, as noted previously, the amend-
ments call for EPA to study the other criteria pollutants not now
covered by PSD and to set PSD regulations for these pollutants
within two years. However, the interrelationships among the six
criteria pollutants and deterioration of air quality (for example,
the formation of oxidants) are not well understood and cannot be
determined accurately. EPA has contended that it does not have
the technology or modeling capability to regulate these pollutants
on a case-by-case basis.1* In summary, the net effect of these
modeling inadequacies is to increase uncertainty about future
regulations and to delay and perhaps constrain some energy devel-
opment.
Another potential problem area has to do with the process of
reclassifying PSD areas as specified in the 1977 Amendments. The
process, which can be initiated by governors or Indian tribal
councils, requires a public hearing in the locale affected, approval
1 These models are usually computer simulations which predict
changes in ambient air quality from a facility based on the volume ,
rate of discharge, and temperature of emissions from the facility,
the stack height, and the meteorology and terrain of the nearby
area.
2White, Irvin L., et al. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Vol. IV, Appendix A, pp. 12-13.
3The first such conference was held in March 1978.
k"Clean Air Act Amendments of 1977: Legislative History."
U.S. Code Congressional and Administrative News, Vol. 2; Legisla-
tive History. St. Paul, Minn.: West, 1978, pp. 1485-86.
261
-------
by the state, and when federal
lands are affected, consulta-
tion with the appropriate fed-
eral land manager.l
The attempt of Dunn
County, North Dakota, to be re-
designated Class I, illustrates
some of the problems in this
process. A petition requesting
the required local government
approval was circulated, the
petition was signed by a large
number of people, and the
county government passed an
appropriate resolution. But
the process then stalled for
the required environmental
assessment. Requests to the
state and to EPA for funds were
unsuccessful, so no further
action has been taken.2
Another example of the
reclassification process in
action is the redesignation of
the Northern Cheyenne Indian
Reservation in Eastern Montana to Class I3 (see box). According
to the Northern Cheyenne, the request was made to protect their
values and lifestyle and to prevent further degradation in air
quality.1* On the other hand, the tribal chairman of' the adjacent
Crow Reservation, Patrick Stands Over Bull, has written to EPA
that the Northern Cheyenne's request for redesignation as Class I
status "...has serious ramifications on coal development on the
Crow Reservation."5 The State of Wyoming also filed an objection
to the redesignation request by the Cheyenne Indians on the grounds
RECLASSIFICATION CONFLICT
The Northern Cheyenne tribal
chairman, Allan Rowland, has stated
that "we are not requesting this re-
designation because we are against
progress. For us progress means de-
veloping our environmental resources
in renewable and compatible manners
such as timber and agricultural pro-
ducts. They are the cores of our
value systems as people."
When the State of Wyoming ob-
jected to the redesignation citing
possible restrictions on development
in some parts of the state, Eric
Metcalf, a Cheyenne spokesman,
replied, "They're saying: 'We want
to make decisions in our area, but
you can't make those decisions for
yours.'"
— "The Che3rennes Drive for Clean Air
Rights." Business Week, April 4,
1977, p. 29.
'Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
733-35.
2Metzger, Dr. Charles, Energy Coordinator, North Dakota Gov-
ernor's Office. Personal communication, December 9, 1977.
3Old West Regional Commission Bulletin, Vol. 4 (September 1,
1977), p. 4.
4" Current s. " Environmental Science and Technology, Vol.. 2
(October 1977), p. 946.
5 "The Cheyennes Drive for Clean Air Rights." Business Weejc.
April 4, 1977, p. 29.
262
-------
that it could limit energy development in northern Wyoming.1
Another objection over redesignation came from Montana Power Com-
pany concerning construction of Colstrip 3 and 4 near the reserva-
tion. EPA attempted to require a PSD permit for the facilities,
but Montana Power Company successfully sued EPA on the grounds
that these units were already under construction when the classi-
fication rules were passed and, therefore, exempt. The case is
currently under appeal. Montana Power attempted to begin site
preparation in late 1977 but were blocked by EPA since they did
not have a permit, even though the court had ruled they did not
need one. In order to possibly save time while the case was under
appeal, Montana Power Company filed for a PSD permit even though
they believed that one was not required. On June 12, 1978, EPA
issued a final decision not to grant a construction permit for
Colstrip 3 and 4 because the plant would violate the Class I PSD
Standard. Before taking any further action, the five companies
involved in the project are awaiting a decision of the appeals
court on the earlier court ruling that since the construction
application was filed on June 6, 1973, the units are not subject
to PSD regulations.2
Another important issue concerning PSD regulation and western
energy development has to do with how the "baseline" air quality
level should be determined and what emissions should be included
in the allowable increment. The 1977 Amendments state that at the
time of the first PSD permit application in any area, the ambient
pollution level will be measured and designated the "baseline
concentration" by EPA.3 To be included in this baseline is the
projected emissions from facilities on which construction commenced
before January 6, 1975, but which are not yet in operation. In
the proposed PSD regulations, EPA also plans to include well-
defined secondary emissions associated with the major emitting
facility in the increment. '* This could be especially important
for plants which will result in relatively large population growth
in the rural West. These urban emissions could reduce the avail-
able increment for the energy facility, a consequence over which
industry would have no direct control. In fact, local and state
officials have only limited control since the control of auto
emissions is almost entirely preempted by the federal government.
(This point is discussed in more detail later in this section.)
1 "The Cheyenries Drive for Clean Air Rights." Business Week,
April 4r 1977, p. 29.
2Schmechel, Warren, Western Energy Company. Personal communi-
cation, June 1978.
3Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
731, § 127.
"42 Fed. Reg. 57,480 .(November 3, 1977).
263
-------
Another potential problem occurs because if wind blown dust
from surface mining operations is included in the increment, it
is likely to cause the particulate PSD Standard to be exceeded in
a great many cases. Currently, EPA is planning to exclude these
fugitive dust emissions in the PSD increment but this policy could
possibly be challenged in the courts by environmental interest
groups.
Another major point of conflict occurs because there are
numerous mandatory Class I areas in the eight-state study area,
especially in southern Utah and western Colorado (see Figure 6-2
given previously). This could limit economic development in the
region. The situation with the Intermountain Power Plant in Utah
is an example of this concern. This facility will utilize water
from the Fremont River which is too low in quality to be suitable
for any other beneficial use. However, the site is only eight
miles from a mandatory Class I area, Capitol Reef National Park,
and would probably violate Class I standards in the park. State
Senator Ernest H. Dean has pointed out that this is very frustrating
for the people of Utah, largely because the public facilities are
of poor quality and the park is seldom used. On this basis,
Senator Dean says that the concern about its air quality does not
seem to be justified.l
The U.S. Chamber of Commerce has attacked PSD as a "...no
growth federal land use control based on one criterion--degradation
of air." The Chamber argues that 70 to 80 percent of the land
area in some states would be off limits to any new development
since areas from 50 to 60 miles around Class I areas would be
excluded.2
EPA believes that the availability of effective emissions
controls and alternative sites will mean that PSD regulations will
not seriously restrict energy development. There have been several
analyses based on air diffusion models that have estimated the re-
quired separation distance between major emitting facilities and
Class I areas.3 For example, Table 6-10 lists the separation
distance that would be required for power plants under the
!Dean, Ernest H., Utah, State Senator. Comments at National
Conference of State Legislators, Energy Policy Planning Workshop,
Denver, Colorado, December 9, 1977.
2"Clean Air Act Amendments of 1977: Legislative History."
U.S. Code Congressional and Administrative News, Vol. 2, Legisla-
tive History. St. Paul, Minn.: West, 1978, pp. 1236-37.
3For a review of some of these studies, see Garvey, Doris B.,
et al. The Prevention of Significant Deterioration: Implications
for Energy Research and Development. Argonne, 111.: Argonne
National Laboratory, Office of Environmental Policy Analysis, 1978.
264
-------
TABLE 6-10:
SEPARATION DISTANCES FROM CLASS I AREAS REQUIRED TO
MEET PREVENTION OF SIGNIFICANT DETERIORATION REGU-
LATIONS FOR SULFUR DIOXIDE: 80 PERCENT SULFUR
DIOXIDE CONTROL
••-- -'
POWER PLANT
Escalante
Kaiparowits (Nipple Bench)
Rifle
Farmington
Beulah
Gillette
Colstrip
SIZE
(MWe)
3,000
3,000
1,000
3,000
3,000
3,000
3,000
REQUIRED
SEPARATION
DISTANCE
>25.0a
>25.0a
13.6
58.0
75.0
44.0
75.0
MWe = megawatt-electric
> = greater than
Class I buffer zone size cannot be established due to the complex
terrain in the Kaiparowits/Escalante area.
meteorological and terrain conditions at each of the six scenario
sites used in this study.1 It should be noted that, except for the
1,000 MWe plant at Rifle, these figures are based on 3,000 MWe power
plants, 80 percent SO2 removal, a requirement that increments be ex-
ceeded no more than one day per year, and the assumption that only
the emissions from this single plant would be counted in the incre-
ment. Of course, all of these factors can vary from case to case,
making it very difficult to make generalizations about required
separation distances. Also, the calculations underlying Table 6-10f
do not include possible visibility effects and possible future reg-
ulations covering other pollutants. Given these factors, the fact
that additional areas can be redesignated Class I, and the current
inadequacy of air diffusion models used to predict PSD violation,
it becomes clear that it is not possible at this time to make a re-
liable assessment of the extent to which PSD regulations could con-
strain energy development in the West.
(2!
Emissions Offset Policies
An emission offset policy to permit new polluting industry in
areas where national air quality standards have not been met (non-
attainment areas) was formulated by EPA in 1976 and was included
in the CAA Amendments of 1977.2 This policy was intended to permit
White, Irvin L. , e t a 1 . Energy From the West: Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protection
Agency, forthcoming, Chapters 4 through 9.
2Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat. 685.
265
-------
the growth of clean industry in polluted areas. The alternative
seemed to be to prohibit industrial development in the nonattain-
ment areas until air quality standards were met.1 As described
previously, under the offset policy, new air emission sources are
permitted if existing sources reduce their emissions enough to
more than compensate for emissions from the new facility. The
new facility (or major addition to an existing facility) must also
meet a LAER requirement.2
Many state and local governments and industry officials
(mainly oil, chemical, and steel companies) opposed the offset
olan on the basis that it would be unworkable and would constitute
a defacto no growth policy. While environmentalists were not en-
thusiastic about the plan, they generally preferred it to a less
stringent alternative considered by EPA under the 1970 act.3
In the eight-state study area (and in other areas as well),
the emissions offset policy generates controversy because it is
perceived as having inequitable effects on different regions of
the country.1* There are several reasons for this feeling. One
reason that is important for the West is due to the high levels
of some pollutants, especially particulates and HC, that occur
naturally in some areas. If these "naturally occuring" levels are
included in ambient air quality .measurements and NAAQS are exceeded,
there would be no sources to use as an "offset" for new emission
sources. Thus, economic development in these areas would effec-
tively be blocked, while development could be allowed in industri-
alized, nonattainment areas. The key issue revolves around uncer-
tainty as to how emissions from naturally occurring sources will
be counted when measuring ambient air quality standards5 (see box
"Colorado Particulate Study").
Congressional Quarterly, Inc. Congress and the Nation, Vol.
IV: 1973-1976. Washington, D.C.: Congressional "Quarterly, 1977,
p. 304.
2Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
745, § 129.
Congressional Quarterly. Congress and the Nation: 1973-197_6_.
p. 304. "
4 See McKee, Herbert C. "The Problem of Equity in Emissions
Offset." Journal of Air Pollution Control Association, Vol. 28,
(June 1978) , pp. 60T-3.
5See the comments of Joseph Palomba, Jr., Colorado Air Pollu-
tion Control Commission in, "Report on Sixth APCA Government Affairs
Seminar." Journal of the Air Pollution Control Association, Vol.
28 (June 197~8) , p. 575.
266
-------
Another reason for the
controversy is that the emis-
sions offset policy is viewed
by some westerners as favoring
economic growth in already
highly polluted areas over
"cleaner" areas in the West.
In areas with large numbers of
"dirty" sources, a considerable
amount of economic growth could
be allowed by reducing emis-
sions from existing sources.
In clean areas of the West,
some believe that economic
growth will be more highly con-
strained by Class I or Class II
PSD increments.
(3) BACT Requirements
The NSPS for S02 of 1.2
Ib. per 106 Btu promulgated by
EPA for large, coal-burning
facilities was the major con-
tributor to the boom in demand
for western coal. The reason
was that much western coal has
a sulfur content so low that it
can be used without or with
only limited sulfur controls
and still meet the NSPS (see
Table 6-3 given previously).
Therefore, many utilities in the Midwest and Southwest made long-
term contracts for western coal (primarily Northern Great Plains
coal). They calculated that it was cheaper to buy this inexpen-
sively mined coal and ship it very,long distances than to buy
higher sulfur local coal and install FGD units.
In the 1977 Amendments, Congress decided that this unintended
side effect of the NSPS was undesirable and has developed two
policies (one direct and one indirect) that are intended to pro-
duce a more balanced demand for western, interior, and eastern
coals. These policies are the NSPS requirement for some degree
of active emission control regardless of the original sulfur con-
tent of the coal (i.e., BACT) and a provision that allows the gov-
ernor of a state to require a utility to use locally mined coals
rather than importing coal from another state or region.L The
COLORADO PARTICULATE STUDY
The Colorado Senate Committee
on Health, Environment, Welfare and
Institutions passed a resolution
(subject to Senate approval) asking
the Colorado Air Pollution Commission
to study the health effects of air
borne particles and suggest air qual-
ity standards. The goal is to find a
way in which large dust particles
that naturally occur could be dis-
counted when air quality is measured
and perhaps allow more 'industrial
development in the southern part of
the state.
State Senator Harvey Phelps
argued that if naturally occurring
dust particles, common to an arid
climate, are included in the measure-
ment of air quality, some areas of
the state will always exceed air pol-
lution standards. "Then we always
come out high and aren't allowed to
grow, while growth goes on in dan-
gerously polluted areas."
—"Study May Suggest New Air Stan-
dards." Denver Post, January 19,
1978, p. 45.
1 Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat. 722
§ 122.
267
-------
major points of the 1977 Amendments concerning NSPS are summarized
below.l
EPA is to review and revise NSPS every four years (the first.
to be completed August 7, 1978). The law requires substantial im-
provement in the standards of performance for major sources through
mandatory use of the "best technological system of continuous
emission reduction" (i.e., BACT), which—taking into consideration
costs, nonair quality health ,and environmental impacts, and energy
requirements--is defined as a process which is inherently low-
polluting or nonpolluting, or a system for continuous reduction
of pollution before pollutants are emitted, including precombus-
tion treatment. EPA may not require any particular technological
system of control such as FGD. However, the use of untreated,
low-sulfur fuel and certain other strategies, such as intermittent
control systems, are precluded as means of compliance. The stan-
dards are required to include both an emission limitation and a
percentage reduction of S02, particulates, and NO. . Congress left
the explicit quantitative expression of these standards to EPA.
Although several potential emission control processes under
development may be used to burn coal cleanly, FGD is the most
fully developed technology, and these scrubbers are now capable of
removing up to 95 percent of the sulfur emissions. However, these
scrubbers produce an inert sludge that must be disposed of, usually
in on-site evaporative holding ponds.
The electric utility industry has argued that S02 scrubbers
aren't reliable,2 are too expensive, and produce a significant
solid waste disposal problem. One projection indicates that FGD
units on coal-fired boilers could produce 55 million metric tons
(dry basis) of sludge annually by the year 1995.3 EPA, on the
other hand, argues that FGD units have been proven reliable, that
their costs are justified in order to protect human health and
the environment, and that strict standards will encourage the
development of improved sulfur control technologies (e.g., fluid-
ized bed boilers or regenerable FGD processes that will virtually
eliminate the solid waste disposal problem).
1Krohm, G.C., C.D. Dux, and J.C. Vein Kuiken. Effects on
Regional Coal Markets of the "Best Available Control Technology"
Policy for Sulfur Emissions, National Coal Utilization Assessment.
Argonne, 111.: Argonne National Laboratory, 1977..
2For example, the American Electric Power Company waged an
intensive advertising campaign in the fall of 1974 arguing that
scrubbers don't work. See, for example, New York Times, May 30,
1974.
3Teknekron, Inc. Review of New Source Performance Standards
for Coal-Fired Utility Boilers, Vol. I: Emissions and Non-Air
Quality Environmental Impacts. Berkeley, Calif.: Teknekron, 1978.
268
-------
EPA has not yet established the precise definition of the
BACT standard for SC-2• EPA is expected to propose such standards
in July 1978, and, after review and comment, promulgate the final
standard (i.e., final for at least the next 4 years).
Several possible definitions of the BACT requirement for SO2
have been discussed and evaluated by EPA, including:1 (1) an
across-the-board 90 percent reduction regardless of the original
sulfur content of the fuel, but with a maximum of 1.2 Ibs. of
S02/106 Btu's; (2) a tightening of the current NSPS to 0.6 lbs/106
Btu's; and (3) a maximum limit of 1.20 Ibs/ 106 Btu's, combined
with either a 90 percent sulfur reduction or a floor of 0.2 lbs/106
Btu's, whichever can be achieved first.
Several studies have evaluated alternative NSPS definitions
and have concluded that the percentage reduction requirement of
the 1977 amendments will achieve the objective of reducing the
demand in other regions for low sulfur westarn coal. For example,
one study2 estimates that in 1990 the production of coal in the
Northern Great Plains under an across-the-board 90 percent sulfur
reduction requirement will only be 52 percent of the level that
would occur under a continuation of the current NSPS—a drop from
388 million tons per year (MMtpy) to 202 MMtpy. This compares to
a 1973 production level of 46 MMtpy. Most of the drop occurs in
shipments from the Northern Great Plains to the east central region
of the county.
Of course supply/demand projections based on econometric models
are laced with uncertainties (e.g., future mining costs in different
regions and future coal transportation costs), and at least one
factor that may tend to reduce the magnitude of this shift in coal
supply markets is impossible to quantify. This is the apparent
higher supply reliability associated with mainly nonunionized
surface mines in the West compared to the mainly unionized, under-
ground mines in the central and eastern coal producing regions.
This is of special concern now due to the protracted 1977-78 coal
miners strike.
(
-------
-1
but rather the more pervasive
problem of the appropriate role
of various levels of federal
versus state/local control in
the West because of the unique
political status of Indian
tribes.
The key issue centers on
whether federally established
regulations allow for enough
flexibility to account for
regional differences in the
natural environment and the
goals of citizens in that area.
As noted previously, the states
are given primary responsibil-
ity in monitoring and enforcing
air quality regulations, but
generally within fairly nar-
rowly defined bounds set by the
federal government. The states
may set their own emission and
air quality standards but only
if they are at least as strict
as federal standards. Given
the relatively strict federal
standards, such as PSD and BACT
regulations, this results in
very little real state control.
It should be noted that repre-
sentatives of states are not
always on the same side of the
argument; for example, Senator
Jake Garn (R-Utah) feels feder-
al regulations have unduly
restricted growth in energy
production in his state, while
Senator Gary Hart (D-Colorado)
believes there needs to be
greater federal leadership in
pollution control (see box).
As noted earlier, the 1977
Amendments give Indian tribes
the right to redesignate their reservations as Class I PSD areas.
Thus far only one tribe, the Northern Cheyenne, has opted for this
classification, and we have discussed the conflicts this action
has created. On the other hand, to date there is no case on record
where an Indian tribe has formally participated in the formulation
or revision of a SIP. Given the legal status of the state-Indian
AIR OF A DIFFERENT QUALITY
Senator Jake Garn feels that
Utah is ideal for the development of
huge "mine-mouth" generating plants at
underground mines for the export of
electricity to the growing southwest.
He feels that using Utah's low sulfur
coal and modern control equipment
would essentially make such plants
nonpollutors and that these develop-
ments (namely the $3.5 billion genera-
ting complex at Kaiparowits) would
have created a new city of 15,000
residents and a 10 percent increase in
Utah's tax base. The Senator states,
"...we should...leave it up to the
states to meet federal ambient air
standards as they see fit. If we
don't meet them then the feds can step
in and enforce them.,"
Senator Gary Hart is particular-
ly concerned about the health hazards
of increased levels of nitrogen oxides
(18 percent by 1985) that would result-
even with maximum use of scrubbers to
reduce sulfur oxide emissions. He
does not want Colorado to supply ener-
gy for people outside the state while
people in his state will be exposed to
the public health consequences. Sen-
ator Hart feels "...the leadership
should come from the White House.
They've got to evaluate pollution con-
trol to the same level of seriousness
as the supply side issues...California
can figure out how to generate its own
electricity."
—Kirschten, J. Dicken. "Converting
to Coal—Can it be Done Cleanly?"
National Journal, Vol. 9 (May 21,
1977), pp. 783-84.
270
-------
relationship it is doubtful that existing SIP's can be applied to
new or existing air pollution sources on trust lands.
The issue is also of substantive importance as regards auto
emission regulations. The federal government has maintained con-
trol over emission standards for mobile sources.1 While the 1977
Amendments gave states increased authority to inspect mobile
sources as part of their SIP's,2 automobile emissions standards
were postponed. This has made it more difficult for states to
attain ambient standards. Because the ground level concentration
of air pollutants from urban sources may be greater than those from
energy facilities in the West, the standards established for
mobile sources are crucial in determining the overall impact of
western energy development. Also, since each state must deter-
mine what measures to include in its implementation plan to meet
national ambient standards, it is important that the state know
when and by how much ambient pollution concentrations will be
reduced by new automobile standards.3
State governments continue to try to increase their control
over mobile sources of pollution. This is evidenced in the West
by Colorado Governor Lamm's listing of state control of auto pol-
lution as the top priority of the 1978 legislative session.1*
6.2.4 Summary of Air Quality Problems and Issues
Impacts on air quality due to energy conversion facilities
depend on several critical technological and locational factors:
type of energy facility and the levels of pollution control, labor
requirements, resource characteristics, background levels of pol-
lutants, terrain, proximity to pristine air quality areas, and
meterological conditions. In general, coal-fired power plants
emit more pollutants than any other energy conversion technology
and thus give rise to more air quality problems and issues. Within
the eight-state study area, facilities located in the Rocky Moun-
tains area are expected to have the most site-specific problems,
JFor a review of recent issues facing the automakers and Con-
gress and a brief history of auto emission controls, see Kirschten,
J. Dicken. "It's Washington Taking on Detroit in the Auto Pollu-
tion Game." National Journal, Vol. 9 (January 1, 1977), pp. 9-15.
2Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
689, § 105; and 91 Stat. 751-69, §§ 201-16.
3 See Connor, J.T. "The Automobile Controversy—Federal
Control of Vehicular Emissions." Ecology Law Quarterly, Vol. 4
(No. 3, 1975), pp. 661-92. ~
^Engdahl, T. "Politicos Jockey for Position." Denver Post,
January 27, 1978, p. 16.
271
-------
especially when they are sited in complex terrain and close to
Class I PSD areas.
Air quality regulation has undergone several changes since it
became a matter of public concern. Prior to 1955, government regu-
lation of air quality was limited, being the responsibility pri-
marily of a relatively few state and local governments. Because of
public concern over increased levels of air pollution and a wide-
spread perception among policymakers that state and local govern-
ment action had been insufficient, federal authority for air quality
was increased throughout the decade of the 1960's over both station-
ary and mobile sources. Congress mandated a major federal role in
air quality control in the CAA Amendments of 1970. The Amendments
required EPA to establish NAAQS but gave the states the major role
in implementing and enforcing plans to meet these national standards.
The 1977 Amendments to the CAA direct states to implement PSD regu-
lations and emissions offset policies according to federal guide-
lines; however, they leave primary control over NSPS (including
BACT), hazardous pollutants, and mobile sources with the federal
government.
Air quality problems and issues are potentially one of the most
limiting factors on western energy resource development. The na-
tional goal to protect and enhance air quality conflicts in a vari-
ety of ways with the goal of increased domestic energy production
and continued economic growth. Such conflicts have become especially
prevalent in the western U.S., where vast, readily accessible energy
resources can support large-scale energy development. However, the
development of these resources can also pose a threat to the region's
scenic beauty, particularly its pristine air quality. Specific
problems and issues which appear more critical in the western
states are:
• BACT requirements could sharply reduce the short- and midterm
demand for western coal, especially in the central region of
the country. With a 90 percent sulfur removal standard, by
1990 Northern Great Plains coal production could drop to about
half of what it would otherwise be with existing NSPS. How-
ever, even with the BACT requirement, western coal production
will grow and in 1990 can be expecte:d to be at least five
times greater than it was in 1975.
• The large' number of Class I PSD arecis in some parts of the
eight-state study area and the complexity of the PSD regula-
tions could block or slow western energy development activities.
• Some westerners resent the fact that, the emissions offset
policy allows development in areas already violating NAAQS
while its PSD policies could constrain development in areas
where air quality is better than is required by NAAQS.
272
-------
• Intergovernmental conflicts over air quality control already
have affected relations among the West and other coal pro-
ducing regions, and among western states, the federal govern-
ment, and Indian tribes.
The following section identifies and evaluates policy alter-
natives for dealing with some of these problems and issues.
6.3 ALTERNATIVE POLICIES FOR AIR QUALITY
6.3.1 Introduction
The discussion in the previous two sections makes it clear
that western energy development will both affect air quality and
be affected by air quality regulations. And, as the preceding
discussion indicates, both give rise to problems and issues which
policymakers must attempt to resolve. In dealing with these prob-
lems and issues, policymakers will have to attempt to reconcile
both energy and environmental policy objectives; that is, the
operative overall policy objective is to protect air quality in
the West while proceeding with the development of western energy
resources.
A variety of alternative policy responses are available to
policymakers for attempting to achieve this objective. Several
possible categories and specific alternatives are listed in Table
6-11. These categories suggest that policymakers can take an
approach which emphasizes standards and regulations, technology
and siting choices, and/or institutions and procedures. These
approaches or categories and specific alternatives associated with
each will be described briefly in the following section. Since it
is not feasible to evaluate and compare all nine of the specific
policy alternatives identified and briefly described in Section
6.3.2, four which appear to be especially important are singled
out for more detailed treatment in Section 6.3.3 and 6.3.4.
6.3.2 Description of the Alternatives
Three specific alternatives for modifying standards and regu-
lations are:
• Define BACT for SO2 emissions from coal combustion as 90
percent sulfur removal;
• Make PSD standards more flexible; and/or
• Reserve portions of PSD increments for energy production.
Table 6-12 summarizes the implementation strategies and constraints
for each of these three policy options.
273
-------
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The first of these specific alternatives would define the
BACT standard for S02 from large coal burning facilities mandated
by the 1977 CAA Amendments as requiring 90 percent reduction with
an emission maximum of 1.2 pounds of S02 per million Btu's input.
This definition meets the legislative requirement and is mentioned
frequently as a definition being considered by EPA.
At the present time, coal cleaning could be used to remove
some sulfur prior to combustion to help meet the 90 percent sulfur
removal requirement; however, with currently available technology,
some FGD would still be required. It is possible, however, that
either coal cleaning or fluidized bed combustion could be utilized
to achieve a 90 percent sulfur emissions reduction in the future.
As indicated in Table 6-12, something similar to this alterna-
tive is required under the 1977 Amendments. However, because of
economic costs and the lack of an incentive for using low sulfur
coals, this alternative might well be opposed by industrial and
utility coal users.
The other two specific alternatives described in this category
are aimed at resolving some of the problems and issues created by
current PSD regulations. The first would allow higher levels of
energy development by relaxing PSD standards somewhat. As described
in a previous section, the 1977 Amendments specify increments for
particulates and SC>2 , which, with a single exception, can be ex-
ceeded only once each year. These increments are set for annual,
24-hour, and 3-hour averages (see Table 6-9).
The 1977 Amendments also require EPA to set PSD standards for
other pollutants within the next few years. Modifying the PSD
regulations to allow a greater number of times that the 3-hour and
24-hour increments can be exceeded in a year (say 4-6 times) would
lessen the possible constraint of PSD regulations on energy facil-
ities. To implement this policy alternative would require amending
the CAA, and it is likely that this alternative would be opposed
by environmental groups which pressed for stricter PSD standards
to begin with.
The second PSD related alternative would reserve a set per-
centage of allowable PSD increments for energy conversion facil-
ities. This alternative would ensure that energy development is
not blocked but would not relax current PSD standards. Since the
need for such "reserved increments" will vary considerably from
region to region, percentage levels to be reserved for energy
development could be set by states, possibly as part of their SIP.
This alternative would probably require EPA approval and possibly
congressional action. Such an approach is likely to be opposed
by other industries, and would probably be difficult to administer.
The second category of alternatives listed in Table 6-11
includes policies which would alter choices of technologies and/or
276
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sites. Three specific alternatives in this category are listed
in Table 6-13 along with possible implementating strategies and
constraints. The three are to:
•Construct smaller, dispersed energy conversion facilities;
•Concentrate facilities in energy parks; and/or
• Increase commercialization programs for new, less polluting
energy resources and conversion technologies.
Under the smaller, dispersed energy facilities option, in-
stead of building one 1,500 MWe power plant, for example, industry
would build three separate 500 MWe power plants sited far enough
apart to avoid significant air emission interactions.
Current ambient air quality regulations (e.g., NAAQS and PSD)
can indirectly constrain siting large plants. By siting smaller
facilities over a wide area, ground-level air pollution concentra-
tions would be reduced, thus helping to reduce any constraint on
energy development resulting from ambient air quality regulations.
This kind of alternative could be implemented in several ways.
The most straightforward way would be for industry to choose this
approach in response to existing economic and regulatory condi-
tions. In addition, utility commissions could encourage this op-
tion by requiring utilities to examine the approach in their
planning. Or, incentives (e.g., emission taxes that increase with
total-emission levels from a plant) or sanctions (e.g., prohibi-
tions on plants beyond a certain size) could be established by
government to force this alternative.
An opposite approach would be to concentrate energy facilities
in "energy parks." This alternative would almost certainly sac-
rifice air quality locally, but such parks could be located away
from major population centers and Class I PSD areas so as to mini-
mize adverse environmental and health effects. Implementing the
energy park concept would probably require either federal or state
action. Federal legislation might be necessary in order to relax
current PSD regulations for these areas, and states would have to
include provisions for energy parks in their SIP's. In the ab-
sence of federal action, the states could implement this alter-
native on a limited scale by redesignating some areas to a PSD
Class III. It may be difficult to site such energy parks in the
West because of the large water requirements.
Another specific alternative for altering technological or
siting choices would be to increase commercialization programs for
new, less polluting energy resources (e.g., geothermal) or conver-
sion technologies (e.g., coal synthetic fuels). As indicated
previously in Tables 6-1 and 6-2, some of the energy resource
277
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development systems have fewer air pollution problems chan others.
Currently, most of these less polluting energy alternatives are
new and are either still in the research and development stage
or are considered too economically risky by industry for commer-
cialization. The aim of this alternative policy is to commer-
cialize these newer, less polluting technologies earlier than
might otherwise occur. This could be implemented by cooperative
federal/state/industry commercialization programs for those tech-
nologies which appear r.iost at-1 ractive for use in the West. The
most significant obstacle to Liuch an approach is the large economic
cost involved.
The third category of policy alternatives for resolving the
conflicts between air quality and energy development focuses on
the procedural mechanisms by which approval is give" to the con-
struction of new facilities. As noted in the description of pro-
blems and issues in Section 6,2, air quality regulations and the
permitting process for assuring compliance with these regulations
is very complex and can often lead to long delays in siting.
Table 6-14 lists three specific policy alternatives and implemen-
tation strategies aimed at alleviating some of these difficulties:
• Establish a task force for identifying future sites for
energy facilities;
• Increase assistance to state and local government planners
and other parties-at-interest; and/or
• Establish a regional air quality council.
Under the first of these alternatives, each state in the
eight-state study area would establish a task force which includes
among its members representatives from the federal government,
the state, industry, and other interested parties (e.g., environ-
mental groups, farmers and ranchers, etc.). This task force
would be charged with identifying, areas which could be used in the
future as sites for energy and other industrial facilities. The
objective would b^ that all interests are represented and nave a
chance to participate in identifying the best or most acceptable
areas for siting these facilities. These sites would then be
available when needed, hopefully eliminating or lessening siting
delays. (For a more general discussion of these types of siting
strategies, see Chapter 12 on siting in this report.)
Because of the complexity of the air quality regulatory
system, many affected parties often lack adequate technical and
financial resources to participate in air quality policymaking on
an equal footing with energy industries and the federal government,
For example, as indicated earlier, Dunn County, North Dakota, has
been unable to fund the environmental assessment required for the
county to be reclassifieo as ":±ass I. Although the 1977
279
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amendments provide some assistance to states, these funds are
primarily intended to support the preparation of SIP's. This
alternative would increase financial and technical support for
interested groups, primarily using federal government resources.
For example, technical experts could be provided by EPA regional
offices to serve as consultants to state and local governments
and to public interest groups. Or financial support could be
provided to these groups so that they could hire their own expert
consultants. This kind of activity has already begun to some
limited extent. For example, EPA jointly planned and sponsored
a series of meetings in the West with the Friends of the Earth.
These meetings were intended to provide technical assistance,
disseminate information on the 1977 Amendments, and give EPA
back on the proposed regulations. The major constraints to such
an approach are the increased governmental expenditures required
and the opposition by some to the concept of government support
of special interest groups. This alternative is similar to the
participation process support alternative discussed and evaluated
in Chapter 12.
A third alternative in this category would be to establish
a regional air quality council to support interstate planning
agreements. Federal and state funding could be provided for a
"Western Interstate Air Quality Board" for the eight states in
our study area. Such a board could be patterned on major existing
western multistate organizations such as the Western States' Water
Council or the Western Interstate Energy Board. This council
would provide advice on air quality to federal, state, and local
governments and would help to coordinate multistate air quality
planning and impact assessment. Implementing this policy would
be difficult due to increased government expenditures and the pro-
blems associated with establishing any type of cooperative program
among several states.
6.3.3 Evaluation of Alternatives
A. Introduction
Four of the nine specific policy alternatives discussed above
will be evaluated and compared in this section. These are:
• Define BACT for SO2 emissions from coal combustion as 90
percent sulfur removal;
• Construct smaller, dispersed energy conversion facilities;
• Increase commercialization programs for new energy resources
and conversion technologies;
• Establish a task force for identifying future sites for energy
facilities.
281
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Each of these alternatives will be assessed in terms of the
five basic criteria identified and defined in Chapter 3: effec-
tiveness, efficiency, equity, flexibility, and implementability.
Table 6-15 shows how these criteria have been defined as they
apply to air quality and identifies the quantitative and qualita-
tive measures used in evaluating and comparing the four specific
alternatives listed above.
B. Evaluation of BACT Definition
The purpose of this section is to identify the effects of one
particular specification of BACT for large, coal combustion facil-
ities, as required by the 1977 CAA Amendments. This specification
is for a standard requiring 90 percent sulfur removal and a maximum
emission rate of 1.2 Ibs. of SO2 per million Btu's of fuel input.1
The following evaluation will examine the incremental effects
of the 90 percent sulfur control requirement relative to what the
situation would be without it (i.e., the "baseline"). One of the
difficult aspects of this evaluation is determining what the
"baseline" should be. There are numerous state and federal emis-
sion and air quality standards, and the controlling standard can
vary from case to case. For example, Colorado currently has a
stringent S02 emission limit for new plants of 0.2 lbs/106 Btu's,
but whether this or the 90 percent reduction requirement would be
the limiting standard depends on the sulfur content of the coal.
In other cases, the emission limits required to meet Class I PSD
increments may be the controlling factor. An attempt is made to
clarify what the "baseline" assumptions are, but in several of
the studies cited in making this evaluation the baseline conditions
are not always completely compatible.
Another general point concerning this specific alternative is
that the BACT standard will only be applied to plants whose con-
struction commences after publication of the proposed BACT defini-
tion (which will be sometime in the summer of 1978), and, there-
fore, it will usually only apply to plants coming on-line sometime
during or after the 1983-85 time period.
(1) How Will Demand for Western Coal be Affected?
The Regional Studies Program at Argonne National Laboratory
has analyzed the impact of this policy alternative on western
!Any number of other alternative definitions of BACT for S02
could, of course, be considered but it is not feasible to evaluate
all of these in this report.
282
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283
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coal demand.1 Some of the results of this study are summarized
in Table 6-16.
The base case used by Argonne assumes a continuation of the
current NSPS for S02 of 1.2 lbs/106 Btu's. As indicated in the
table, a requirement for a 90 percent sulfur reduction would cause
demand for Northern Great Plains coal to drop sharply to about
52 percent of the base case by 1990.2 Almost all of this drop
occurs in the shipments from the Northern Great Plains to the
East Central demand region (Ohio, Michigan, Indiana, Illinois,
and Wisconsin); in 1990 there is a drop in these shipments from
180 million tons per year in the base case to 40 million tons
per year in the 90 percent sulfur removal case. This shift is
attributable to the fact that once scrubbers are required, it
would be less expensive for utilities and industry in the East
Central demand region to use local coal. In fact, coal flows
from the Northern Great Plains to the East Central region after
1985 are largely the result of contractual supply agreements made
before the BACT policy was assumed to take effect. In sum, the
Argonne study indicates that BACT will dramatically shift new
contracts for the East Central region from western to local coals.
Although the 90 percent sulfur control requirement would ap-
parently result in a dramatic shift in regional coal supply/demand
patterns, it should be noted that the data in Table 6-16 indicate
a large growth in western coal demand even in the 90 percent sulfur
control case. Total western coal demand is projected to be 418.5
million tons per year in 1990 in the 90 percent sulfur removal case
(a 294 percent increase above the 1975 level) whereas it would be
592.5 million tons per year in 1990 in the base case (a 458 percent
increase above 1975 levels). The effects on demand for western
coal in other regions is not likely to be affected significantly
according to the Argonne study; Table 6-16 indicates a slight in-
crease in "other western" coal production under the BACT scenario.
^rohm, G.C., C.D. Dux, and J.C. Van Kuiken. Effect on
Regional Coal Markets of the "Best Available Control Technology"
Policy for Sulfur Emission, National Coal Utilization Assessment.
Argonne, 111.: Argonne National Laboratory, 1977. The Argonne
study examined the effects on regional coal markets of alternative
BACT definitions (including the 90 percent sulfur reduction re-
quirement) . Argonne utilized a model which simulates the behavior
of competitive coal markets and allocates coal from each supply
area to each demand area (utility and industrial) in such a way to
minimize total market costs. The model, considers such factors as
coal availability; coal quality (Btu and sulfur content); region-
ally disaggregated coal supply and demand; mining, transportation,
and pollution control costs; etc.
2The Argonne analysis showed very similar effects for all of
the BACT alternative definitions examined.
284
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Two factors could reduce this dramatic shift from western
to east central coal. First, the coal industry may not be able
to shift production capacity this rapidly from western mining
areas back to the Midwest and Applachian areas. And, second, most
western coal is currently produced from nonunionized suface mines;
on the other hand, most midwestern and eastern coal is produced
by unionized miners. The protracted coal strike of 1977-78 has
heightened the concern industrial and utility coal users have
about the reliability of coal supplies from unionized mines.
This concern may result in a greater demand for western coal than
would be expected on the basis of economic cost alone.
Another important factor which makes.these calculations un-
certain is the degree to which increased pollution control costs
for coal-fired power plants will lead utilities to choose nuclear
power over coal. As indicated in Table 6-16, the difference in
total national coal demand between the base case and the 90 per-
cent sulfur removal case is not very large- However, recent
studies1 have reaffirmed the economic attractiveness of nuclear
power for baseload generation; and since the BACT requirement
should enhance the nuclear cost advantage, it could lead to sub-
stantial overall reduction in coal demand.2
(2) What Will be the Effect on SO 2 Emissions?
The other aspect of effectiveness important for this alter-
native is the impact it would have on air pollution levels both
within and outside the eight-state study area. This question has
been examined in a contract study of alternative NSPS definitions
performed for EPA.3 Table 6-17 presents some of the results of
this study which was based on a "moderate" energy demand growth
rate (5.8 percent annually through 1985 arid 3.4 percent annually
thereafter). The regions used in this report do not correspond
precisely with our eight-state study area, but the findings of
1 See for example, Rudasill, Charles L. "Comparing Coal and
Nuclear Generating Costs." EPRI Journal, Vol. 2 (October 1977),
pp. 14-17.
2Krohm, G.C., C.D. Dux, and J.C. Van Kuiken. Effect on
Regional Markets of the "Best Available Control Technology" Policy
for Sulfur Emission, National Coal Utilization Assessment.
Argonne,111.:Argonne National Laboratory, 1977, p. 49-51.
3Teknekron, Inc. Review of New Source Performance Standards
for Coal-Fired Utility Boilers, Volume I: Emissions and Non-Air
Quality Environmental Impacts. Berkeley, Calif.: Teknekron, 1978,
For this analysis Teknekron utilized their Utility Simulation
Model, a computer model which simulates the response of the poli-
cies and regulatory constraints.
286
-------
TABLE 6-17:
REGIONAL SULFUR DIOXIDE EMISSION
ESTIMATES FROM POWER PLANTS3
(million metric tons per year)
REGION
North Mountain
South Mountain0
U.S. Total
1976
0.12
0.34
13.6
1985
BASELINE
0.09
0.23
15.2
90% SULFUR
CONTROL
0.06
0.19
15.2
1995
BASELINE
0.18
0.28
15.8
90% SULFUR
CONTROL
0.06
0.16
13.6
Source: Teknekron, Inc. Review of New Source Performance Stan-
dards for Coal-Fired Utility Boilers, Volume I: Emissions and Non-
Air Quality Environmental Impacts. Berkeley, Calif.: Teknekron,
1978, pp. 3-12 through 3-15.
aBased on "moderate" electricity demand growth: 5.8 percent per
year through 1985 and 3.4 percent per year between 1985-2000.
Consists of Idaho, Wyoming, and Montana.
Consists of Nevada, Utah, Colorado, Arizona, and New Mexico.
this study do suggest what the impact of the 90 percent SC 2
control requirement might be on this area.
As indicated in Table 6-17, Teknekron's study shows that a 90
percent SO2 control requirement would have a large relative effect
on the emission levels in the mountain regions; e.g., emission
levels are reduced 43 percent and 67 percent by 1995 in the South
Mountain and the North Mountain regions respectively. However,
equally important are the low emissions for the Mountain regions
in the baseline case as compared to the U.S. total. For example,
the Mountain regions in the baseline case for 1995 account for
only about 3 percent of the total U.S. S02 emissions, and yet the
capacity of coal-fired power plants for the Mountain region is
7.7 percent of the U.S. total. The reasons for this low baseline
emissions rate for 'the Mountain region are the availability of
low-sulfur coal, the already strict state emissions standards, and
federal ambient air quality standards (e.g., PSD) that result in
relatively tight S02 controls for many plants even in the baseline
case. The strict controls required without BACT were indicated
previously in Table 6-4. The reason for the large percentage
difference between the baseline and 90 percent control cases for
the Mountain region is that given stringent controls, tightening
287
-------
them even slightly results in a relatively large percentage
reduction in emissions; for example, a tightening of SO2 percentage
removal rates from 80 to 90 percent means a 50 percent reduction
in emissions. In sum, the 90 percent S02 control alternative
shows a large relative drop in total S02 emissions in the West,
but in fact the standard would not, in general, be significantly
more strict than emission limits already imposed by many western
states or emission limits likely to be required on many plants in
order to meet PSD or new visibility standards.
In terms of national emissions, the data in Table 6-17 show
emissions reductions by 1995 of 2.2 million metric tons per year
relative to the baseline (a 14 percent drop).
One important disadvantage of this alternative may not be fully
accounted for in the above calculations. The 90 percent sulfur
control requirement provides no incentive whatsoever for utilities
to burn coals with a low or moderate sulfur content. Under this
alternative, they will be encouraged to seek the lowest priced
coal as long as 90 percent sulfur control will keep S02 emissions
below 1.2 lbs/106 Btu's.
(3) How Will Electricity Prices Be Affected?
The Teknekron study cited earlier also examined the effects
of this alternative on electricity prices;.1 Table 6-18 presents
projected real prices (1975 dollars) for the "baseline" and "90
percent S02 control" cases. Tighter S02 and particulate controls
are expected to increase electricity prices 0.05 cents/kWh na-
tionally (a 1.7 percent increase) in 1995. For the two Mountain
regions, the real price increases in 1995 are slightly larger--
0.07 cents/kWh for the North Mountain region (a 3.5 percent in-
crease) and 0.1 cents/kWh for the South Mountain region (a 3.75
percent increase).
As noted above, the 90 percent sulfur reduction requirement
provides no incentive for seeking low sulfur coals. Therefore,
this approach is inefficient since the same emissions levels could
be achieved at a lower economic cost by utilizing low sulfur coals
in conjunction with a lower percentage removal standard.
(4) Are There Other Costs or Benefits?
An across-the-board 90 percent sulfur control requirement
could have an adverse "efficiency" impact by limiting new, inno-
vative approaches for S02 control. The only demonstrated
Teknekron, Inc. Review of New Source Performance Standards
for Coal-Fired Utility Boilers, Volume II: Economic and Financial
Impacts. Berkeley, Calif.: Teknekron, 1978.
"> Q Q
ZOO
-------
TABLE 6-18:
ELECTRICITY PRICE IMPACTS OF 90 PERCENT SULFUR
DIOXIDE CONTROL: MODERATE GROWTH SCENARIO3
(cents per kilowatt hours: 1975 dollars)
REGION
North Mountain
South Mountain
United States
1985
BASELINE
2.30
2.67
2.81
90% CONTROLb
2.31
2.82
2.85
1995
BASELINE
2.02
2.67
2.93
90% CONTROLb
2.09
2.77
2.98
Source: Teknekron, Inc. Review of New Source Performance Stan-
dards for Coal-Fired Utility Boilers, Volume II: Economic and
Financial Impacts. Berkeley, Calif.: Teknekron, 1978, p. 3-20.
aThe "moderate electricity demand growth scenario" assumes a 5.8
percent annual increase through 1985 and 3.4 percent annually
between 1985 and 2000.
The 90 percent sulfur dioxide control scenario also includes a
tigntening of the particulate standard from 0.1 pounds per 106
British thermal units (lbs/106 Btu) to 0.03 lbs/106 Btu's. The
tighter particulate standard also contributes to the price in-
creases shown in this table, but the great bulk is due to the
sulfur dioxide removal requirement.
technology for achieving 90 percent reduction is throwaway FGD,l
either alone or in combination with some physical coal cleaning.
Other sulfur control technologies being developed include regener-
able FGD, chemical coal cleaning, fluidized bed combustion, and
low-Btu gasification/combined-cycle power plants. It is not cer-
tain that these new technologies can achieve a 90 percent reduc-
tion standard; thus industry may be reluctant to take the risk of
failure. EPA may need to develop some special procedures that
would not penalize industry for attempting innovative solutions
to the S02 control problem.
The use of currently available throwaway FGD processes also
creates a number of other environmental problems, including the
disposal of large amounts of sludge wastes, increased water
throwaway FGD, the used scrubbing material (a wet sludge)
must be disposed of. In contrast, with regenerable FGD the scrubbing
material is recycled, reducing a much smaller amount of waste and
some useful byproducts (e.g., elemental sulfur or sulfuric acid).
289
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TABLE 6-19: PROJECTIONS OF SLUDGE PRODUCED AND WATER CONSUMED
BY FLUE GAS DESULFURIZATION SYSTEMS:
DEMAND SCENARIO3
1995, HIGH
REGION
North Mountain
South Mountain
Nation
SLUDGE PRODUCED
(millions metric
tons per year, dry
basis)
BASELINE
.18
.76
12.0
90% CONTROL
1.3
1.8
55.0
WATER CONSUMED
(acre-feet
per year)
BASELINE
5,430
18,300
89,100
90% CONTROL
25,800
37,600
491,000
Source: Teknekron, Inc. Review of New Source Performance Stan-
dards for Coal-Fired Utility Boilers, Volume I:" Emissions "and '
Non-Air Quality Environmental Impacts. Berkeley, Calif.:
Teknekron, 1978, pp. 3-2TTFrough 3-T8.
aHigh demand growth scenario assumed 5.8 percent per year through
1985 and 5.5 percent per year thereafter.
This Is the make-up water (or the flue gas desulfurization sys-
tem) . It does not include increased water consumption for
cooling due to lowered efficiencies.
consumption, and lowered energy efficiencies due to the energy re-
quirements of the scrubbers. Table 6-19 gives estimates of the
sludge that will be produced and the water that will be required
in 1995 for the base case and the 90 percent sulfur removal
requirement.1 These data show large relative increases in solid
waste disposal and water consumption under the 90 percent sulfur
control option, both for the West and nationally. The land re-
quirements for sludge disposal should not be a significant problem
for the West, but they do create the threat of water pollution,
as discussed in Chapter 5. While the water consumption increases
are relatively large, these amounts represent only a small frac-
tion (around '5 percent) of that required for cooling.
In terms of energy efficiency, Teknekron estimates that, in
the 90 percent control case, 3.8 percent of the coal energy
Teknekron, Inc. Review of New Source Performance Standards
for Coal-Fired Utility Boilers, Volume I: Emissions and Non-Air
Quality Environmental Impacts. Berkeley, Calif.:Teknekron,~
1978, pp. 3-23 through 3-28.
290
-------
consumed will go to operate the FGD systems. This compares with
a 0.71 percent figure for the baseline case.1
(5) How Are Costs and Benefits Distributed Regionally?
The legislative history of the 1977 Amendments makes it clear
that one of the purposes of the BACT requirement was to redress
an inequity caused by the existing NSPS which gave low-sulfur
western coal a competitive advantage. That is, the intent was to
put western coal on a more equal footing with midwestern and
eastern coal. As indicated previously, this alternative does this
by substantially shifting the demand from western to east central
coal. The incremental electricity price increases due to this
requirement have been shown to be about twice as high in the west-
ern region as nationally—about 3.5 percent in the West compared
to 1.7 percent nationally.
In looking at the distribution of impacts among the states
in the eight-state study area, the equity question needs to be
looked at in both environmental and economic terms. Some states
in the West have much stricter emission and ambient air quality
standards than do others. Since air pollutants do not respect
state borders, this can become the basis for conflict. The states
with less stringent standards have some economic advantage in
attracting industry and yet the "clean-air state" could suffer air
degredation from energy facilities near their border or via the
long range transport of pollutants. The mandatory 90 percent SO2
removal requirement would remove the environmental and economic
inequities by requiring all states ~to control S02 to approximately
the same degree. Of course, it does this by taking away from
states the right to set emission standards as they wish and on the
basis of what they consider to be in their own best interest.
(6) Are Utilities or Investors Affected Financially?
Another aspect of "equity" to, be considered is the economic
impact of the 90 percent SC>2 control requirement on the utility
industry. In principle, regulators allow utilities to set prices
just high enough so that revenue collected will equal the costs
of providing service (including an appropriate return on invest-
ment) . In practice, ratemaking is subject to "regulatory lag,"
i.e., rates are adjusted to current circumstances only once every
few years. And although the full cost of such equipment as FGD
units is supposed to be borne by the utility customers, regulatory
lag often results in utility investors receiving less than the
allowed rate of return as long as intensive construction schedules
persist.
1Teknekron, Inc. Review of New Source Performance Standards
for Coal-Fired Utility Boilers, Volume I: Emissions and Non-Air
Quality Environmental Impacts. Berkeley, Calif.: Teknekron,
1978, pp. 3-30 and 3-31.
291
-------
TABLE 6-20:
RETURN ON EQUITY FOR ELECTRIC UTILITIES UNDER
ALTERNATIVE SCENARIOS, 1985-1995
(percent) (moderate electricity demand growth rate)
Baseline
90% standard
Difference.
NATION
12.4
11.9
.5
NORTH
MOUNTAIN
16.5
13.9
2.6
SOUTH
MOUNTAIN
13.2
12.7
.5
Source: Teknekron, Inc. Review of New
Source Performance Standards for Coal-Fired
Utility Boilers, Volume II:Economic and
Financial Impacts.
Teknekron, 1978, p,
Berkeley, Calif.:
3-37.
Teknekron has estimated the investor-borne costs associated
with a 90 percent sulfur removal standard.1 Two measures employed,
both considered important by participants in capital markets, are
summarized in Tables 6-20 and 6-21. It was assumed that return on
equity—the annual profit per dollar investment of the shareholder--
is targeted at 13 percent by the regulatory authorities. As can
be seen in Table 6-20, the average utility in the nation will
probably not achieve the allowed rate of return even in the base-
line scenario. Imposition of the 90 percent sulfur removal
TABLE 6-21:
INTEREST COVERAGE RATIOS FOR ELECTRIC UTILITIES
UNDER ALTERNATIVE SCENARIOS, 1985-1995
(moderate electricity demand growth rate)
Baseline
90% standard
Difference
NATION
3.14
3.14
0
NORTH
MOUNTAIN
4.38
4.36
.02
SOUTH
MOUNTAIN
3.42
3.31
.11
Source: Teknekron, Inc. Review of New
Source Performance Standards for Coal-Fired
Utility Boilers, Volume II: Economic and
Financial Impacts. Berkeley, Calif.:Tek-
nekron, 1978, p. 3-39.
Teknekron, Inc. Review of New Source Performance Standards
for Coal-Fired Utility Boilers, Volume I: Economic and Financial
Impacts. Berkeley, Calif.:Teknekron, 1978, p. 3-39.
292
-------
standard would double that discrepancy for the nation as a whole
(1.1 percentage points versus 0.6). The North Mountain states
would experience a much larger effect from the sulfur standard,
but these utilities would still end up with a higher-than-allowed
rate of return.
Table 6-21 expresses the returns to capital in terms which
highlight risks to lenders. The interest coverage ratio,
earnings + interest payments
interest payments
shows the safety margin which protects lenders in the face of the
utility's unpredictable earnings. Utilities often enter into
agreements with bond buyers not to extend their debt any further
if the interest coverage ratio falls below 2.0 to 1.75 range.
Table 6-21 shows that the proposed sulfur standard does not move
utilities very far toward ratios which would be considered finan-
cially risky., There is essentially no effect nationally or in the
North Mountain region.
In sum, Teknekron's modeling results indicate that, in a con-
text of regulatory lag, utility shareholders will bear a measurable
amount of costs due to implementing a sulfur control standard.
The actual effect on shareholders will probably exceed that indi-
cated by this model, since it assumes annual ratemaking reviews,
whereas in practice comprehensive reviews and adjustments normally
occur only once every two or three years. Nevertheless, the extra
cost borne by investors will not be large enough to have much
affect on the credit rating of the average utility.
(7) Is the Alternative Flexible and Easy to Implement?
The 90 percent SO 2 control requirement would not satisfy a
flexibility criterion since it sets an across-the-board requirement
and does not allow for setting S02 emissions limitations based on
the circumstances unique to different regions.
In a procedural sense, this alternative would be easy to im-
plement under the provisions of the 1977 CAA Amendments. However,
the standard could result in some very practical difficulties for
EPA monitoring activities. It would require EPA to monitor both
emission rates and effectiveness of sulfur removal systems. In
measuring the percentage of sulfur removal, EPA would have to
monitor both coal cleaning plants and FGD systems. No information
was available on the economic costs of these increased monitoring
tasks.
(8) Summary of BACT Alternative
Table 6-22 summarizes the findings just presented -for the
policy alternative of requiring 90 percent sulfur control on all
new, large coal burning facilities. Very briefly, on the positive
293
-------
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side this alternative will contribute to a reduction in SO2 emis-
sion rates, although in the West strict state standards and PSD
regulations mean that relatively strict controls would be required
anyway. It will also help achieve the national goal of shifting
demand from western coal back to eastern and interior coals, while
allowing for an almost 300 percent growth in western coal produc-
tion between 1975 and 1990. Emission rates among the states will
be equalized, thus reducing the potential conflicts between "clean-
air" states and "prodevelopment" states. Implementation of this
alternative could be achieved directly under the requirements of
the 1977 CAA Amendments.
On the negative side, electricity prices are projected to in-
crease 1.7 percent nationally and about 3.5 percent for the West;
the approach is inefficient since the same emission levels could
be achieved with lower costs by giving credit for the use of low
sulfur coals. Due to regulatory lags some measurable proportion
of these increased costs will be borne by utility investors rather
than by consumers. There are a number of environmental costs
with currently available throwaway FGD processes: large amounts
of sludge wastes, some increase in water consumption, and a lowered
power plant efficiency of almost 4 percent. The alternative would
also present some enforcement difficulties for EPA; it would re-
quire monitoring coal cleaning plants and measuring both emission
rates and overall sulfur removal percentages.
C. Evaluation of the Smaller, Dispersed Energy Facilities Alter-
native
In evaluating this specific alternative, it will be assumed
that the basic hardware will be the same in the single, large plant
case and the dispersed, smaller plant case. For example, with
coal-fired power plants a single large plant of say 1,500 MWe
capacity might consist of three 500 MWe units, with each unit made
up of a boiler, turbine, generator, and cooling tower.1 Under the
smaller, dispersed facilities alternative, the basic units would
simply be dispersed rather than being built side by side.
It is interesting to note that the general approach suggested
by this specific alternative is receiving considerable attention
from both utilities and government. For example, the New York
Public Service Commission has required a utility to examine the
pros and cons of building 300 to 600 MWe facilities instead of
the more conventional strategy of relying on 900 to 1,200 MWe
plants. The commission stated: "It has been conventional system
planning wisdom for a long time that construction of plants of ever
increasing capacity is desirable (1) to achieve scale economies,
*With other types of cooling systems, such as once-through
cooling or cooling ponds, the three units might actually share the
same cooling systems rather than having three distinct systems.
296
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and (2) to reduce the environmental impact associated with siting
a number of smaller generating plants. We believe these arguments
must now be reexamined in light of current conditions and future
prospects."1 There are also two major research projects currently
underway which are comparing the environmental and economic trade-
offs between large versus small power plants, one at Los Alamos
Scientific Laboratory (sponsored by EPA), and one at the Electric
Power Research Institute.2 When the results of these studies are
completed, considerably better information will be available than
now exists.
(1) Will Increased Western Energy Development Be Allowed?
As was indicated previously in Section 6.2.1.A., only coal
conversion facilities (especially power plants) and oil shale plants
face serious size restrictions due to ambient air quality standards.
However, there is little flexibility in siting oil shale facili-
ties due to the concentration of the resources in a relatively
small geographical area and the impracticality of shipping the
raw shale for retorting at a distant location. Therefore, the
smaller, dispersed facilities option is primarily of interest for
coal. Because coal resources are widely distributed throughout
the eight-state study area and because it. is economically feasible
to ship coal some distance from the mine for conversion, there is
considerable flexibility in coal conversion facilities siting.
Even if plants meet strict BACT emission restrictions, air
quality regulations (i.e., NAAQS, PSD, or state standards), can
restrict the siting of large energy facilities. As indicated
previously in Section 6.2.2, the maximum size allowed will depend
on such factors as the emission rates of the various air pollut--
ants, terrain, meteorological conditions in the vicinity of the
site, and proximity to PSD Class I areas. Where large facilities
are prohibited because of air quality regulations, the approach
suggested by this alternative is to build the same desired total
capacity in smaller units dispersed, over a large enough area so
as to minimize significant air pollution interactions. This would
reduce air pollution concentration levels thus helping to avoid
energy growth restrictions.
Because it is assumed that the same basic hardware is being
used in both cases, the total emissions will be the same regardless
JNew York Public Service Commission. Opinion Analyzing Plans
Pursuant to Section 149-b of the Public Service Law and Order
Directing Additional Studies, Opinion No. 78-3, Case 27154--Long
Range Electric Plans. Albany, N.Y.: Public Service Commission,
March 6, 1978.
2Ford, Andrew, Los Alamos Scientific Laboratory, and Wyzga,
Ronald E., Electric Power Research Institute. Personal communi-
cations, May 1978.
297
-------
of the plant siting strategy. Thus, region-wide air impacts or
impacts from the long-range transport of pollutants would not be
significantly different under this alternative.
In addition to air quality considerations, the smaller facil-
ities approach could also alleviate siting difficulties caused by
limited water resources since the smaller plants will consume pro-
portionately less water than large facilities. For example,
smaller facilities could be sited near small rivers where it might
not be feasible to site a plant three or four times larger.
One potential drawback of this alternative in terms of its
effect on levels of energy development has to do with the siting
process. As discussed in Chapter 12, obtaining permits and meeting
other regulatory requirements can be a very time consuming, expen-
sive, and frustrating process. The smaller facilities alternative
increases the number of siting applications a developer would have
to make, including acquiring more sites, possibly preparing more
environmental impact statements, and obtaining more permits. This
could potentially "clog" the system, thereby slowing energy devel-
opment activities. However, this consequence might be avoided,
particularly since the concentration of negative environmental
impacts would generally be far less for the smaller facilities.
For this reason, they might face less opposition, thereby easing
the siting process for each small facility compared to a much lar-
ger one.
(2) Are There Economic Costs or Benefits Associated with this
Option?
The economic trade-offs between the large vs. smaller facil-
ities strategy depends on a large number of factors which can be
dealt with in detail only in a specific case-by-case basis. For
power plants, it is clear that utilities came to believe that very
large facilities offered an economy of scale advantage. However,
this thinking has begun to be questioned for a variety of reasons,
some of which will be discussed in this section. The general
trade-offs involved for electric power plants will be highlighted.
Similar considerations apply to other types of energy conversion
facilities although the specifics would, of course, vary.
There is little question that the large power plant strategy
offers capital cost advantages on a dollar per kilowatt-hour (kw)
capacity basis. Assuming that the basic hardware (i.e., boilers,
turbines, and generators) are the same regardless of facility
size, the capital costs for these items would be approximately the
same (the labor costs for construction might be lower for the large
plant option). However, the smaller facilities option would have
some diseconomies associated with coal handling equipment and land.
For example, three separate facilities would require from 2 to 2.5
times as much land (depending on the type of cooling system) as a
298
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large facility.1 The results of one study indicate that overall
three separate 700 MWe units would have a 20 percent higher capi-
tal cost than a single 2,100 MWe plant.2
The smaller, dispersed facilities option would also have some
operating cost disadvantages since single, large plants require
fewer operations personnel on a per kw basis. Coal supply costs
(including transportation) could also be higher with the smaller
facilities option, although this would depend on many site speci-
fic factors-, such as the location of potential coal supply sources
relative to the plant sites and the availability of existing rail
lines.
Another possible diseconomy associated with the smaller, dis-
persed facilities option would be the energy delivery system (e.g.,
electric transmission lines or gas pipelines). These energy
transportation systems offer significant economies of scale. For
example, an electric transmission line capable of handling 500 MWe
would cost approximately 30-40 percent more on a per kWh per mile
basis than a line capable of handling 1,500 MWe.3 The net effect
on energy delivery costs would depend on a variety of considerations
such as the location of a site in relation to the demand center
and the availability of transportation rights-of-way. If the
smaller facilities option allowed the plants to be located closer
to the demand centers, this option might well have the lowest
energy delivery costs.
Depending on how the construction of units is timed, the
smaller facilities option could offer certain economic advantages
which would outweigh the higher capital and operating costs. If
the large plant is constructed in such a way as to bring all of its
units on line simultaneously, the total elapsed time from the deci-
sion to proceed to commercial power production may range from
about 9.5 to 12 years. The equivalent time period for a small
plant would be from 5.5 to 7.5 years. The shorter planning
:Wyzga, Ronald E. "Concentrated vs. Large Dispersed vs. Dis-
persed vs. Atomized Power Plants-Overview." Paper presented at
Engineering Foundation Conference on Non-conventional Siting of
Power Plants, Henniker, New Hampshire, July 10-15, 1977.
2 Ibid.
Calculated from U.S., Federal Power Commission. 1970 National
Power Survey. Washington, D.C.: Government Printing Office, 1971,
Vol. I, p. 13-9, as cited in U.S., Congress, Senate, Committee on
Energy and Natural Resources and Committee on Commerce, Science,
and Transportation. National Energy Transportation, Vol. I:
Current Systems and Movements, Committee Print, by the Congressional
Research Service. Washington, D.C.: Government Printing Office,
1977, p. 357.
299
-------
period for small plants reduces the uncertainty of forecasting
electricity demand and thus reduces the likelihood that a utility
will be caught with capacity excesses or shortages. Also, the
shorter lead time for smaller facilities means that the financial
burden of carrying a large amount of "construction work in prog-
ress" would be reduced. 1
In sum, it is not possible to state categorically that the
smaller, dispersed facilities option is either more or less eco-
nomically attractive than building a single large plant. The
economic trade-offs would depend on many factors that could only
be evaluated precisely on a case-by-case basis.
(3) Are There Other Environmental or Social Effects?
The construction of smaller, dispersed energy facilities
could have an important effect on the level of social and economic
impacts. Small facilities will generally have a larger peak labor
force on a per unit of energy basis than a larger facility. For
example, one estimate is that a 500 MWe power plant would have a
peak construction requirement of 650 persons (1.3 persons per MWe)
while a 3,000 MWe plant would only have a peak construction force
of 2,850 (.95 persons per MWe).2 However, if the smaller facili-
ties are built sequentially or are separated enough so that popula-
tion impacts fall on different communities, the "boomtown" effects
discussed in our impact analysis report3 and chapters 8 and 9 of
this report could be reduced significantly.
Two potential negative environmental impacts of the smaller
facilities option are difficult to quantify. First, the smaller
facilities approach will require more Icind for the facilities them-
selves (as indicated previously, on the order of 2 to 2.5 times as
for the same total capacity in 700 MWe power plant units as opposed
to a single 2,100 MWe facility) . However, given the vast land re-
sources in the eight-state study area, this is not necessarily a
significant factor. The second area of concern is that the smaller
facilities could possibly lead to a greater proliferation of power
lines which not only require more land for rights-of-way but also
have negative aesthetic impacts. However as mentioned earlier in
connection with transportation economics, it is not possible to
Andrew. "Expanding Generating Capacity for an Uncer-
tain Future: The Advantage of Small Power Plants." Paper pre-
sented at the Conference on Simulation, Modeling, and Decision in
Energy Systems, Montreal, Canada, June 1, 1978.
2Ford, Andrew, Los Alamos Scientific Laboratory. Personal
communication, May 1978.
3White, Irvin L., e t al . Energy From the West; Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, forthcoming.
300
-------
generalize these factors since they will depend upon so many
case-specific variables.
(4) Are There Equity Considerations?
One disadvantage of the very large energy facilities approach
is that such facilities concentrate most of the associated adverse
environmental and social impacts in a very small area. In addi-
tion, once the facility is on-line and population levels stabi-
lized, overall tax benefits, particularly benefits for counties,
will often greatly exceed that governmental unit's needs. For
example, in Rosebud County, Montana, the school districts are ex-
pected to enjoy substantial financial surpluses if current tax
rates are maintained.1 This can create serious equity problems
if many of the energy facility employees live in other counties
or in municipalities which do not receive these tax benefits.2
The smaller, dispersed energy facilities alternative could
alleviate some of these inequities. Impacts would be distributed
more widely and, as noted previously, the undesirable social and
economic effects caused by "boomtown" conditions would be reduced.
Also, if the smaller facilities are sited in different towns or
counties the tax benefits would be more evenly ditributed over the
region.
(5) Is the Alternative Flexible?
The flexibility of this policy alternative depends on the spe-
cific implementation strategy followed. As indicated above, the
pros and cons of the smaller facilities alternative are not clear-
cut and can vary significantly from case to case. For this reason,
any implementation strategy for this approach should be flexible
enough to allow the alternative to be considered on a case-by-cas>e
basis.
One implementation strategy which gives flexibility without
ignoring possible benefits would be for state utility commissions
to require industry to evaluate the smaller, dispersed facilities
1White, Irvin L. , et al. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource Devel-
opment. Washington, B.C.: U.S., Environmental Protection Agency,
1977, Section 10.4.6.
2As noted in Chapters 8 and 9, the revenues problem has two
elements, timing and distribution. First, early in a development,
all affected governmental units experience a revenue shortfall un-
less special programs have been initiated to prevent this from oc-
curring; and second, some governmental units, particularly munici-
palities, usually have to meet the major services and facilities
needs but do not receive a very large share of the revenue benefits
associated with development.
301
-------
approach explicitly in their planning. (This is the tack taken by
the New York Public Service Commission.)l Alternatively, federal
agencies could require that this option be considered explicitly
in the alternatives section of environmental impact statements for
new energy facilities. These approaches would not necessarily
force industry to choose the option, but they would force them to
look at it. In the process, more information would be made pub-
licly available about possible costs and benefits of smaller, dis-
persed facilities.
(6) Would the Option Be Easy to Implement?
One implementation strategy suggested above was to require in-
dustry to consider the smaller, dispersed facilities approach in
its planning and environmental impact statements. This would be
easy for utility commissions and federal agencies to implement if
they were convinced that the ideas warranted serious consideration.
Of course, this approach is based on being flexible and not neces-
sarily "forcing" the developer to choose the smaller facilities
approach; and, therefore, this approach would not ensure that the
small facilities alternative is ever implemented.
More covert actions would be taken to force the construction
of smaller, dispersed facilities through such means as a graduated
emissions tax or a government prohibition on facilities above a
certain size. However, these implementation strategies would re-
quire new laws and would likely be strongly resisted by industry.
(7) Summary of Evaluation for Smaller Facilities Alternative
Table 6-23 summarizes the findings for the policy alternative
of constructing smaller, dispersed energy facilities. This ap-
proach offers the potential for contributing to the achievement of
the stated policy objective, but it also has several possible draw-
backs. The net effect will depend on a variety of case specific
factors so that generalizations are not possible. By reducing
plant size, negative impacts are diluted: peak air pollution con-
centration levels, water requirements, and "boomtown" impacts are
all reduced. Lead times for construction could also be reduced by
as much as 50 percent. For these reasons, siting a small facility
should be easier, thus possible allowing for more rapid energy
development. Also, tax and other economic benefits would be more
uniformly distributed in the region.
On the other hand, capital and operating costs will be some-
what higher for small facilities, although these possibly could be
*New York Public Service Commission. Opinion Analyzing Plans
Pursuant to Section 149-b of the Public Service Law and Order"
Directing Additional Studies, Opinion No. 78-3,,Case 27154--Long
Range Electric Plans. Albany, N.Y.: Public Service Commission,
March 6, 1978.
302
-------
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offset by reducing the costs of excess or inadequate capacity due
to demand forecasting errors and by reducing the financial costs
of carrying large amounts of "construction work in progress."
Also, the larger number of plant siting procedures could possibly
slow energy development. Land requirements for the smaller plants
will be 2 to 3 times larger, while land use for energy transporta-
tion systems will depend on the relative location of raw energy
production sites, the plant sites, and the energy demand points.
Since the net balance of the various pros and cons will vary
on a case-by-case basis, it is not advisable to force this policy
alternative across-the-board. However, state utility commissions
or the federal government could encourage this alternative by
requiring that industry consider it in their planning, and in the
process much more detailed information would be generated about
the costs and benefits of this approach.
D. Evaluation of Commercialization Programs
The threat to western air quality from large scale energy
development could be significantly reduced if cleaner production
technologies presently being developed prove out and become avail-
able to be utilized commercially. Thus, there are advantages for
the West in a policy alternative which rapidly moves new, clean
technologies through the research, development, and demonstration
(RD&D) phases to a point where they are commercially available in
the short term, that is, within the next 10 years. This means
efforts should focus on processes currently ready or which will
soon be ready for construction of commercial-scale demonstration
plants .
Commercial-scale demonstrations represent the final stage in
a scaling-up process and should take place only after the tech-
nology is well understood. Such demonstrations serve to determine
what the performance characteristics will be with scale-up (e.g.,
air emissions and efficiency) as well as to help identify market
demand and other important factors which need to be known to in-
form decisions on whether to adopt the; technology.1 Impacts of
particular concern in the West should be air quality, water con-
sumption, and labor (population) impacts.
Given the high cost of commercial demonstration projects
(as much as $1 billion for coal synthetic projects) , major federal
funding might be essential. At the same time, the need to demon-
strate the air quality advantages to western states and interest
groups requires that they be included in the planning and execution
Walter S.r Leland L. Johnson, and Edward W. Merrow.
Analysis of Federally Funded Demonstration Projects: Final Report ,
for U.S. , Department of Commerce, Experimental Technology Incentive
Program. Santa Monica, Calif. : Rand Corporation, 1976.
304
-------
of a demonstration program focused on the West. Thus, such a
demonstration program must involve at least four different cate-
gories of participants: the federal government, the western
states, western energy resource developers, and other affected
interest groups such as environmentalists, consumers, and agri-
culturalists .
Several possible strategies can be used to implement such a
program. It might be accomplished either by having the Department
of Energy establish a continuing committee or commission which in-
volves these interests, or by establishing a program within an
organization of the western states such as the Western Governors'
Policy Office. The committee approach would likely be easier to
manage, but would not be as likely to build a regional base of
support for the commercialization program as the link with the
regional organization.
(1) Is the Alternative Effective?
Tables 6-1 and 6-2 in this chapter listed the air emission
rates for the various technologies considered in this study. As
was discussed, many of these energy resource development systems
have fewer air emissions per unit of energy produced than conven-
tional coal-fired power plants. In addition, other new energy
conversion technologies which offer the potential for low air
emissions are not considered in this study. These include fluid-
ized bed combustion, low-Btu gasification/combined cycle power
plants, and solvent refined coal plants.
Of course, technologies cannot be ranked solely on the basis
of air emissions and air quality impacts. Economic costs are
crucial in any situation, while water consumption and labor re-
quirements are especially important in the West. A broad compari-
son of the energy resource development systems considered in this
study is given in Chapter 13. Since considerable uncertainty sur-
rounds the cost and impact characteristics of any new technology,
no options are clearly superior to conventional coal-fired power
plants in all respects. However, several offer potential advan-
tages for the West; for example, coal synthetic fuel processes
generally emit fewer air pollutants and require less water than
coal-fired power plants. The major current uncertainty with re-
gard to these technologies is their economics. A demonstration/
commercialization effort which will improve the available data on
these newer technologies and, thereby, possibly insure or speed
their commercialization would be an effective policy alternative
for protecting western air quality while still allowing western
energy resources to be developed.
However, there remains the question of just how effective an
expanded RD&D program would be in insuring or speeding 'the devel-
opment of these new technologies. Of course, such a question can
305
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not be answered precisely since the uncertainty surrounding the
technologies is what leads to the demonstration requirement.
Some of the potentially attractive processes are currently consid-
ered to be technically available but they are not being commer-
cially developed in the United States. For example, the Lurgi and
Koppers-Totzek coal gasification processes are being utilized
commercially in other countries, but their commercial development
has been slow in this country. Several commercial-scale coal
liquefaction, coal gasification, arid oil shale projects have been
in the discussion stage for at least the past five to ten years,
but few are currently being constructed and none are yet in opera-
tion. The reasons for this are primarily due to uncertainties in
production costs, future market prices for oil and gas which are
largely controlled by OPEC,, and environmental impacts and regula-
tions. Many of these synthetic fuel processes are ready now for
commercial-scale demonstration. For other technologies, such as
liquid-dominated geothermal, there is also the possibility of
demonstration plants in the near future, although some further
development work may be needed to test out alternative process
designs. In short, while the effectiveness of a well-designed
RD&D program cannot be predicted with certainty, it is probably
safe to state that without such a program these newer technologies
will not be rapidly developed and commercialized.
(2) What Are the Economic Costs and Risks?
The economic costs of energy RD&D, especially at the demon-
stration stage, are quite expensive. For example, a commercial-
scale coal gasification plant (250 million cubic feet per day)
would cost on the order of one billion dollars. In addition to
the cost of the plant, total costs would include the research
needed to determine the environmental and socioeconomic impacts
of the facility. Costs of a similar magnitude would apply for
coal liquefaction plants producing 50,GOD barrels per day (bbl/day)
while oil shale plants producing 50,000 bbl/day would cost or the
order of $0.6 billion.1 Commercial-scale geothermal demonstration
plants can be much smaller (say 25-50 MWe) and thus less costly.
Two demonstration power plants for liquid-dominated resources
would cost on the order of one hundred nillion dollars.
The costs of these facilities would presumably be divided
between the public sector (both federal and state governments) and
industry. The proportion of costs assumed by each party and the
future revenues (if any) would depend on the particular implemen-
tation strategy. Public sector front-end costs and economic risk
could be minimized by offering certain incentives to industry
(e.g., guaranteed prices for production) to construct and operate
the demonstration plant. However, the associated impact research
must be paid for by the public sector to insure credibility, and
JSee Chapter 10 on Capital Availability.
306
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the demonstration program must be organized so that there is a
viable option of shutting down the demonstration plant or at least
preventing further development if the impacts are found to be
unacceptable.1
Since the results of RD&D projects can never be guaranteed
ahead of time, it is not possible to quantify costs versus bene-
fits. However, as mentioned earlier, at the demonstration stage,
the technology is usually reasonably well in hand. Due to the
large costs involved, commercial-scale demonstrations would not
usually be undertaken if there is a high probability of failure.
If the RD&D program does lead to large-scale commercial develop-
ment, the demonstration costs would represent a small proportion
of the economic value of all future production.
(3) How Are Costs and Benefits Distributed?
If an RD&D program were successful in developing new techno-
logies for producing western energy resources while minimizing
air quality impacts, several sectors or groups would benefit: the
nation as a whole would presumably benefit from the increased
domestic production of energy; the western states would enjoy the
economic benefits that such development would bring while still
maintaining a high standard of air quality; and industry would
obtain the profits from undertaking the commercial development
activities. Thus, to be most equitable the demonstration/commer-
cialization program should be organized so as to share the costs
and risks among these sectors.
There has been considerable opposition to federal support of
some synthetic fuel demonstration plants. The issue is basically
one of equity. On one side, the argument is that these technolo-
gies are being utilized at a commercial-scale in other countries;
and, therefore, there is no need for government to spend public
money to support industry in these endeavors. On the other hand,
it is pointed out that the commercial-scale plants in other
countries do not operate in the same economic, environmental, and
social setting as exists in this country and, therefore, the risks
are not the same. The fact is that no large-scale synthetic fuel
plants (either coal gasification, coal liquefaction, or oil shale)
have been built in the U.S. although the technologies are
:See Kash, Don E., et al. Our Energy Future: The Role of
Research, Development, and Demonstration in Reaching a National
Concensus on Energy. Supply. Norman, Ok la. : University of Okla-
homa Press, 1976; and Baer, Walter S., Leland L. Johnson, and
Edward W. Merrow. Analysis of Federally Funded Demonstration
Projects: Final Report, for U.S., Department of Commerce, Experi-
mental Technology Incentive Program. Santa Monica, Calif.: Rand
Corporation, 1976, for a discussion of strategies for energy RD&D
programs.
307
-------
"available" in a strict engineering sense. It appears at the
present time that some form of public sector support will be re-
quired if commercial-scale synthetic fuel plants are to be built.
Given the distribution of benefits if this alternative is success-
ful, this seems to be an equitable policy. In any case, it is
necessary for credibility reasons for the public sector to fully
fund the impact assessments studies that should be performed be-
fore a full-scale synthetic fuel industry is developed.
(4) Is the Policy Flexible?
To be most flexible, the demonstration programs should pursue
a variety of technologies, subject, of course, to budget con-
straints, and the best option should then be chosen for large-
scale commercialization. Pursuing the fullest set of technologies
that funding allows will insure that potentially attractive op-
tions are not prematurely dropped. Each project should be fully
evaluated along the way using a broad set. of criteria including
technical and economic feasibility, environmental impacts, socio-
economic impacts, and institutional constraints. Both the plan-
ning and evaluation procedures should be open and allow for mean-
ingful public participation, in order to insure that legitimate
concerns are addressed in the demonstration program and to help
build public confidence in the decisionmaking process.
(5) Does the Alternative Face Implementation Constraints?
This alternative would rank low in terms of ease of implemen-
tation. There are several fundamental problems. Perhaps the most
important is that it requires large amounts of money from both the
public and private sectors. It also requires a considerable amount
of cooperation and coordination among industry, the federal govern-
ment, and western state governments; and depending on the imple-
mentation strategy pursued, it could require the creation of a new
institutional arrangement among the western states for the joint
demonstration program. The history of the COALCON demonstration
plant in Illinois points out the kinds of problems that such a
program can face.
(6) Summary of Evaluation of Commercialization Alternative
Table 6-24 summarizes the findings for the alternative aimed
at bringing new, cleaner energy conversion technologies into com-
mercial use in the West. The option is inherently attractive
since it offers the possibility for large levels of energy produc-
tion and conversion with much Lower levels of air pollution than
emitted by electric power plants, the predominant energy conver-
sion technology currently being used. However, the policy faces
several major hurdles, the most important being the large economic
costs involved and the required cooperation among the federal gov-
ernment, western state governments, and industry.
308
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E. Evaluation of Siting Task Force Option
This policy alternative aims at creating an overtly political
process for reaching an accommodation between the conflicting
interests of energy/economic development and air quality protec-
tion. The specific goal of the task force would be to reach a
consensus on future sites for major energy conversion facilities,
and thus avoid the expensive and time-consuming delays often en-
countered in energy facilities siting. This approach has been
undertaken in Utah, where the governor's office formed a task force
composed of representatives from federal land management agencies,
state and local governments, environmental groups, consumers, and
industry.1 Although the Utah "Interagency Task Force on Power
Plant Siting" was initially formed to resolve siting conflicts
with the Intermountain Power Project near Capitol Reef National
Park, utilities now have consistently sought the advice of the
task force, nominating six to twelve sites for task force evalua-
tion. The result has been an agreement to avoid power plant siting
in Utah's scenic and national park-filled southeast quadrant, with
eight sites in the central part of Utah identified for future
development.
(1) Is the Alternative Effective?
This policy alternative will do nothing directly to reduce
air emissions from energy development. What it will do, however,
is site power plants in locations where a consensus has been
reached that the air emissions will have the fewest adverse impacts.
In terms of levels of energy development, this policy would
produce two countervailing forces the net effect of which is dif-
ficult to predict. On the one hand, the process could help to
eliminate or significantly reduce the debilitating delays that
often accompany the siting of large energy facilities. For this
reason, it could help to increase energy development. On the
other hand, although industry would not be legally bound by the
consensus of the task force, they would probably find it difficult
to gain permission to site conversion facilities in areas found by
the group to be unacceptable. Thus, the conversion of substantial
energy resources in some areas could be foregone or delayed. This
type of effect has already been noted in the Utah experience, where
energy export schemes may be constrained. The head of Utah's
Energy Office stated that the Intermountain Power Project, backed
by the Los Angeles city utility, may be the last export project in
Utah "at least for a long time, since we can't afford to use up
any of those other seven sites for outsiders until we're sure we
won't need them for Utah's own future power."2
:Utah Energy Office, Staff. Personal communication, June 1978
2Gill, Douglas. "Deal Spares Utah Parks Area." Denver Post,
May 28, 1978, p. 35.
310
-------
(2) What Are the Economic Costs?
The administrative cost of the program would be relatively
low. Costs would include travel expenses, report preparation, and
possible per diem expenses or subsidies for some participants.
Costs would increase if research tasks or environmental studies
became a major element of task force activities. In the Utah ex-
perience many of these ~osts have been absorbed by partiHpating
agencies or groups.1
The program could have an effect on energy development costs.
By avoiding lengthy delays in the siting process, energy production
costs would be reduced. On the other hand, the task force consen-
sus could lead to site choices which are more expensive than would
otherwise be chosen by industry including such item? as land cost,
cooling system costs, coal transportation costs, etc.
(3) Are There Equity Issues?
While some groups may not agree with the final decisions of
the task force, the whole concept of this policy alternative is to
find an equitable way to reach an accommodation among conflicting
interests. If the task force is properly structured so as to per-
mit participation by any potentially impacted group, then the
approach should rate high on an equity criterion.
(4) Is the Alternative Flexible and Implementable?
Flexibility of the task force alternative is high, as it is
convened at the request of a governor or agency head. Its deci-
sions are an attempt to introduce flexibility into a system that
is often characterized by bureaucratic, industrial, and environ-
mental intransigence.
Implementability should also be relatively easy as advisory
functions are usually attractive to most participants and costs
are low. However, because the effectiveness of the task force
requires a specific response on the part of industry, some resis-
tance to implementation could occur. In the case of Utah though,
industry has been a very willing participant.2
(5) Summary of Evaluation of Siting Task Force Alternative
The conclusions for the evaluation of the siting task force
alternative are summarized in Table 6-25. This policy option and
the findings are based largely on the experience with the Utah
"Interagency Task Force on Power Plant Siting." If the task force
JUtah Energy Office, SteTi. Personal communication, June 1978
2Utah Energy Office, Staff. ^Personal communication, June 1978,
311
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is successful in reaching a consensus on future sites, siting
delays and air pollution impacts would be reduced. This approach
is attractive since administrative costs are low and flexibility
is high; the goal is to avoid the bureaucratic and legalistic
conflicts that often surround energy facility siting decisions.
However, success of the approach will depend on a spirit of cooper-
ation and an ability to reach a consensus where there are often
fundamental value differences among interested parties. The
limited experience in Utah indicates that such an agreement is
possible, but this may not be the case in other states. Also,
energy development could be constrained due to a limited number
of sites agreed upon.
F. Summary and Comparison of Air Quality Policy Alternatives
Three categories of alternatives and nine specific alterna-
tives for protecting western air quality while proceeding with
western energy resource development have been identified and de-
scribed. Four of the specific alternatives were evaluated using
five criteria: effectiveness, efficiency, equity, flexibility,
and implementability. Table 6-26 provides a brief summary and
comparison of these four alternatives. While the net effect of
any one alternative is uncertain, each has the potential for con-
tributing to the achievement of the policy objective but in dif-
ferent ways and with different levels of efficiency, equity, etc.
The BACT definition of 90 percent sulfur removal is a regulatory
program aimed at limiting S02 emissions for large coal burning
facilities, especially power plants. This standard is not expected
to have a major effect on the number of power plants constructed
in the western region but it will dampen the demand for raw western
coal. A complimentary approach is offered by the commercializa-
tion program alternative, the goal of which is to bring into prac-
tical use new energy conversion technologies which are inherently
less polluting than conventional coal-fired power plants. This
could allow larger levels of western energy development while still
protecting air quality. Unlike these previous two policies the
smaller dispersed facilities alternative and the siting task force
alternative do nothing directly to reduce emission rates. Rather,
the smaller, dispersed facilities approach attempts to minimize
adverse air impacts by reducing the peak air pollution concentra-
tion levels that would otherwise occur. Its effect on overall
energy development levels is uncertain. The siting task force
option primarily aims at eliminating some of the procedural pro-
blems which constrain western energy development; it contributes
to the protection of air quality by identifying those areas where
it is agreed the air emissions would have the fewest adverse con-
sequences.
The other four criteria (efficiency, equity, flexibility,
and implementability) reflect other pros and cons of the policies
which can be measured against their effectiveness. Since, as just
313
-------
described, the goals of each policy vary widely and the net effects
are uncertain, it is difficult to make direct comparisons among
the alternatives. Nevertheless, in the preceeding evaluations
certain important conclusions stand out. The BACT option could
be easily implemented under the provisions of the 1977 CAA and
it would achieve certain equity goals. However, it is not very
flexible since locational variables are not taken into account
and it is not very efficient because there are no incentives
for using low sulfur coals. In some instances, lower or equal
S02 emission rates could be achieved by requiring a smaller
sulfur removal percentage in conjunction with the use of a lower
sulfur coal. This would also lessen the sludge disposal, water
consumption, and energy efficiency problems associated with cur-
rently available FGD processes.
While the smaller, dispersed facilities option offers some
potentially attractive features, as indicated in Table 6-26 the
pros and cons can vary greatly on a case-by-case basis. Given
the uncertainty, an attractive implementation strategy would be
for utility commissions and federal agencies to require industry
to consider this approach in its planning activities. This would
give recognition to the idea and generate better information on
its possible benefits, but it would not force an across-the-board
adoption of the alternative.
Over the long term, the commercialization program offers the
greatest possible benefits of the four specific alternatives con-
sidered. However, there are a number of major obstacles to this
approach. Economic costs for demonstration plants are high. Even
though these costs would be small relative to the value of future
energy production, the possibility of a negative decision on a
large-scale commercialization resulting from the demonstration
makes the economic risks substantial. These high initial costs
combined with the need for cooperation arid cost sharing among the
federal government, western state governments, and industry make
implementation difficult.
The siting task force alternative represents an attractive
option for policymakers. Economic costs for task force operation
are low, flexibility is high, and the alternative should be rela-
tively easy to implement. Thus, although the effectiveness is
uncertain, it does offer potential benefits with very little cost
or risk.
In conclusion, the systematic evaluation procedure followed
not only helps identify the particular strengths, weaknesses, and
uncertainties for each specific alternative but in some cases it
also suggests appropriate implementation strategies and/or modi-
fications to the policies which might correct some of the major
deficiencies. For example, with regard to the BACT alternative,
some of the negative aspects could be eliminated by an approach
which sets percentage sulfur removal requirements as a function
314
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of the sulfur content of the coal. Finally, it should be noted
that the four specific alternatives chosen for evaluation are not
mutually exclusive. These four (and others) could be implemented
simultaneously, with each making a different contribution to the
resolution of the problems and issues surrounding western energy
development and air quality.
317
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CHAPTER 7
LAND USE AND RECLAMATION
EXECUTIVE SUMMARY
Energy resource development can lead to three kinds of land-
use and reclamation problems arid issues in the West. First, energy
development will often produce or intensify conflicts between en-
ergy developers and farmers, ranchers, environmentalists, recre-
ationists and other land users. Second, £ilthough only a small per-
centage of lands will be affected region-wide, the percentage of
land affected in some locations within the region can be extensive.
Third, it is not clear that lands disturbed by energy resource de-
velopment can be successfully reclaimed in all parts of the region.
Dealing with these land-use and reclamation issues will challenge
the planning, monitoring, and enforcement capabilities of all lev-
els of government.
Impacts
Energy development will disturb lands used for mines, access
roads, support and conversion facilities, waste disposal, and
population uses for housing and recreation. Results of our anal-
ysis of land-use and reclamation impacts suggest, that:
• Direct land use by coal surface mines can be about 10
times greater than for underground mines and coal con-
version facilities (Figure 7ES-1).
• Compared on a thermal energy equivalent basis, oil
shale retorts require at least twice as much land
as any other conversion facility. About 70 percent
of the land required for an oil shale retort is for
spent shale disposal. Compared on a typical facil-
ity size basis, electric power generation requires
more land than any other conversion facility.
• Siting choices affect land requirements for coal
mining because of the heating value (British ther-
mal unit content) of the resource and its seam
thickness. For example, the number of acres dis-
turbed at Beulah, North Dakota, and at Farmington,
318
-------
•C
O
C CJ
10 <
'''*t
1.2 .
1.0 .
0.8 .
0.6.
0.4 .
0.2 .
4. 4
Mm.
Max.
0 --H
d. 0,
C 0
a o
3 0)
0 t-l
UJ
•a -•
3110
' Lc
ol
-H
nlo
Conversion Facilities Mines
F'igare 7ES-1: Land Use by Technology
aThe range of values is the range found in the four sites utilizing
surface coal mining and calculated based on 12 MMtpy production rates.
Ranges are attributable to variations in coal seam thicknesses and
heating value.
New Mexico, could be more than twice that disturbed at
Gillette, Wyoming, or Colstrip, Montana, for the same
size power plant (Table 7ES-1).
• Land use to meet the needs of energy-related popula-
tion growth generally produces more significant eco-
logical impacts than land used directly by the energy
facilities. Public lands (national parks, forests,
recreation, and wilderness areas), particularly those
in a natural state, are likely to experience the great-
est changes, primarily as a result of increased use
due to population growth.
319
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TABLE 7ES-1: LAND USE FOR MINES FOR SIX SPECIFIC LOCATIONS3
TYPE/SITE
Surface Coal
Navajo/Farminqton
Gillette
Colstrip
Beulah
Underground Coal
Kaiparowits
Underground Oil
Shale
Rifle
TYPICAL SIZE MINE
(acres over 30 years)
4,000 - 27,820
4,030
9,680
24,210
1,700
4,200
EQUIVALENT ENERGY
(acres per 10 Btu)
.5 - 3.2
0.5
1.2
3.0
0.2
0.5
Btu = British thermal unit
aAverage includes all surface lands disturbed, including disposal
of wastes such as spent oil shale.
• By the year 2000, large-scale land use associated with
energy development could disturb and fragment wildlife
habitat to the point of eliminating some local mammal
and bird populations.
• The long-term potential for reclaiming mined lands, de-
pends on important locatiorial features, including cli-
mate (especially annual rainfall and its seasonal dis-
tribution) , soil composition, topography of the land,
and existing biological communities. For example, the
arid climate and poor topsoil characteristics of the
Southwest region provide for an ecosystem that is more
difficult to restore than in the Northern Great Plains.
• On a region-wide basis, population increases are ex-
pected to double or triple recreation demands in the
areas of the Upper Colorado and Missouri River Basins.
These demands will stress surrounding natural resources,
especially national parks and wilderness areas.
The Policy Context
In the western states, competing values and interests with
regard to land use and energy development have already produced
conflicts. Expanded energy development will heighten existing
conflicts and also result in new problems and issues. Social and
political considerations relevant to land use and reclamation con-
flicts include:
320
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• Demands for land by energy developers come at a time
when the public interest in land use is being redefined,
both in terms of broad environmental goals and the pol-
icies and institutions which control land use. For ex-
ample, the proposition that land, like air and water, is
a basic national resource in which the public has a broad
interest is gradually being accepted and codified.
• Public awareness of the direct and indirect adverse ef-
fects of mineral extraction and utilization on environ-
mental quality is growing.
• Reclaiming disturbed lands remains a critical policy
problem even though new coal surface mine regulations
have been developed as a result of the 1977 Surface
Mining Control and Reclamation Act.
• Comprehensive reclamation objectives and requirements
have not been formulated for oil shale and uranium.
• To the extent that it exists in the West, land-use
planning is characteristically fragmented among levels
of government and among agencies within each jurisdic-
tion. Land use and administrative priorities practices
vary greatly between private lands and public lands ad-
ministered by the Bureau of Land Management, National
Forest Service, Park Service, and Bureau of Sport Fish-
eries and Wildlife.
The potential impacts of energy resource development on land-
use requirements and the nature of the existing policy system sug-
gest why land-use and reclamation issues have become so important.
More specifically, the following conflicts over land-use and recla-
mation problems could increase:
• Most of the energy resources developed in the West will
be extracted by surface mining which not only disrupts
large land areas, but also produces more visible land
impacts than underground mining. Relatively little is
known about the long-term success of land reclamation
in the West, raising questions about the adequacy of
existing policies and institutional arrangements for
returning mined lands to their preexisting or some other
productive use.
• As shown in Figure 7ES-2, energy development must com-
pete with other economically productive land uses such
as grazing and row crops; and it must compete with pres-
ervation and conservation and leisure-time and recrea-
tional uses. Large-scale energy resource development
321
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Land Use_
Economically
Productive
Preservation
"and Conservation
Leisure-Time and
.Recreation
Urban development
Row crops
-Hayland or pasture
Grazing range
• Watershed or impoundments
- Forest
-Energy and nin.era]!
Crita ca; habilat
Wilderners
Scenic
Fragile, historic or o.jltjra'
i nil) e IT.'-J
and the associated large population increase that can be
expected will intensify this competition during the next
two decades or so, taxing the capabilities of all levels
of government.
• Activities associated with mining and conversion create
an influx of people. Long valued for scenic beauty, the
recreational areas of the region would undergo signifi-
cant transformation if a high percentage of energy re-
sources were developed rapidly and large numbers of peo-
ple moved into the region, Conflicts emerge among a
variety of constituents and among government agencies as
to how this increased use should be accommodated or con-
trolled (see box "New Recreation Demands").
Alternative Policies
Two general policy objectives for dealing with land-use and
reclamation issues associated with western energy resource devel-
opment have been identified:
322
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• Insure that the institutions
and processes for making
land-use and reclamation
policies give adequate con-
sideration to a range of in-
terests ;
• Provide for and protect a
diversity of present and
future land-use patterns.
These two objectives could
incorporate a broad range of pol-
icy alternatives. Thus this pol-
icy analysis has been narrowed to
focus on an objective more spe-
cifically related to western en-
ergy resource development:
• To meet the land-use needs
of energy development, in-
cluding the land require-
ments of energy-related pop-
ulation increases, while
providing for and protect-
ing a diversity of present
and future land uses.
NEW RECREATION DEMANDS
Grand Teton National Park is
located 100 miles north of energy
boom town Rock Springs, Wyoming.
Residents combined with out-of-
state tourists resulted in 3 mil-
lion visitors to the park in 1976.
"Wyoming is feeling the effects of
energy development," says Senator
John Turner. "It's doubled the
population in some communities,
brought in a rough crowd, caused
in increase in mental health prob-
lems, divorce, alcoholism, and
crime." Due to these increases
70 percent of the respondents in
a public opinion survey of resi-
dents of Jackson Hole (in the
park) favored strong land-use con-
trols and very limited growth.
—Leydet, Francois. "Jackson
Hole: Good-Bye to the Old Days."
National Geographic, Vol. 150
(December 1976), p. 771.
As shown in Table 7ES-2, establishing a better coordinated, compre-
hensive land-use planning and management system to control land use
is one way to try to achieve this objective. Specific alternatives
include designating permissible land uses, controlling access to
public and private lands, requiring reclamation, and requiring re-
development. These alternatives are not mutually exclusive and a
comprehensive land-use planning and management system would prob-
ably include both control and rehabilitation choices.1 Each alter-
native could be designed to achieve the objective of supporting en-
ergy development while providing for and protecting a diversity of
present and future uses. The two categories of alternatives differ
primarily in emphasis.
The first category of alternatives emphasizes a comprehensive
planning approach which attempts to insure the most appropriate or
least damaging combination of technologies and locations (see Chap-
ter 12 on Energy Facility Siting). Based on an understanding of
terminology in this problem area is not standardized. As
used here, rehabilitation means that disturbed lands will be re-
stored to some productive use; reclamation means restoring to
the predevelopment use; redevelopment means restoring to some
other productive use.
323
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TABLE 7ES-2: POLICY ALTERNATIVES FOR LAND-USE AND RECLAMATION
POLICY OBJECTIVE
Meet the land-use
needs of energy
resource devel-
opment, includ-
ing those asso-
ulation in-
creases, while
providing for
and protecting
a diversity of
present and
future land
uses
CATEGORY OF
ALTERNATIVE
Control land
use and
changes in
land use
Require re-
habilitation
of all lands
disturbed by
energy re-
source de-
velopment
SPECIFIC ALTERNATIVE
Designate permissible land
uses
Control, access to and ac-
tivi:ies on all public
and private lands
Require reclamation (return
to predevelopment use)
Require redevelopment (re-
turn to some other pro-
ductive use)
present and future land needs and the coripatability of specific
land areas and land uses, permissible land uses for these land ar-
eas are identified. This means, of course, that certain land uses
may be explicitly prohibited, for example, surface mining on prime
agricultural lands. And it may be considered desirable to control
access to and activities in designated permissible use areas. For
example, the number of people allowed in a recreation area at any
one time may be limited; and snowmobiles may be permitted but not
other kinds of off-road vehicles.
The second category of alternatives emphasizes returning lands
disturbed by energy resource development to a productive use.
Within the existing land-use and management system, lands would be
made available to meet energy needs with the stipulation that they
be rehabilitated. Specific alternatives would be to require either
reclamation or redevelopment (e.g., public parks and services).
Reclamation could be implemented by continuing existing requirements
or making the system more flexible. The redevelopment alternative
would Require changes in the regulatory structure, such as requir-
ing approval of a redevelopment plan. As with the first category
of alternatives, this approach, could give the lead planning and
management role to the federal government, to the states, or to a
multistate organization.
324
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Findings
Two specific alternatives for dealing with land-use issues re-
lated to western energy research development are considered in this
report: reclamation and revegetation. Findings of our evaluation
and comparison of these two alternatives include:
• Redevelopment of surface mined land appears more likely
to succeed than does reclamation, primarily because of
the uncertainty of reclamation success in arid and semi-
arid areas. In general, redevelopment can put lands back
to productive uses three to four years earlier than rec-
lamation, is much more adjustable to site-specific con-
ditions, and allows local officials much more discretion
in interpreting local needs.
• Economic costs for reclamation and redevelopment appear
to be about the same. Reclamation is estimated to cost
about $1,000 to $7,000 per acre; redevelopment will cost
about $1,000 to $6,000 per acre.
• Environmental costs appear substantially higher for re-
development than for reclamation, since reclamation is
more aesthetically beneficial and preserves a broader
range of future land uses. However, more environmental
risks are associated with reclamation since its poten-
tial success in many areas is uncertain.
Conclusion
One obvious conclusion which can be drawn from these findings
is that several trade-offs can be made by choosing one alternative ,
over another. For example, if getting lands back into production
as soon as possible is the value which ranks highest for policy-
makers, redevelopment is the better choice; but if maximizing po-
tential environmental benefits is most highly valued, reclamation
is the more appropriate choice.
It is also clear that this analysis is incomplete. This is
largely because of the lack of adequate information but also be-
cause it was not possible in this study to evaluate all potential
policy alternatives. What is reported can be interpreted to imply
that policymakers are faced with an either-or choice, either re-
claim to predevelopment use or redevelop for a recreational use.
Obviously, the choices are not this constrained. In fact, neither
reclamation nor redevelopment emerges as the "best" choice; recla-
mation because there are areas where it will probably be impracti-
cal if not impossible and and redevelopment because there are lim-
its as to how much and where there is an additional recreational
need and because it may also require some of the same things as
reclamation, for example, revegetation. But the point that the
325
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results of this analysis leads to, despite its limitations, is that
it is not at all obvious that the current policy of most states
and the federal government is as well-informed as it might be.
Given the high level of uncertainty about being able to reclaim
arid and semiarid lands successfully, present policies seem to be
an oversimplified response to a complex problem. A blanket policy
of returning disturbed lands to their predevelopment uses largely
ignores the possibility of land-use changes in the surrounding area
due both to energy and other developments. In particular, the es-
tablished need for expanded recreational opportunities for energy-
related population increases challenges the appropriateness of a
policy which emphasizes only reclamation. Further, current policy
can require large per acre reclamation expenditures that may be
ineffective regardless of how vigorous the reclamation attempt is,
and will almost certainly require the use of scarce water resources
for activities of uncertain environmental or economic value. A
more balanced policy would provide for determining local needs and
basing the choice between reclamation and redevelopment (and the
specific redevelopment use) on what the needs are determined to be.
Clearly there is a need for more knowledge in this problem
area and a need to review land use and reclamation policies on a
continuing basis. The experience gained from current developments
will help to provide the knowledge base needed for this review as
will the numerous research efforts currently under way.
Finally, current laws and regulations ignore surface mining
for other energy resources such as oil shale and uranium. Given
the quantity of those resources in the West, this omission can-
not continue unless we are prepared to have these lands withdrawn
from productive uses for an extended time period.
326
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CHAPTER 7
LAND USE AND RECLAMATION
7.1 INTRODUCTION
Energy resource development can lead to three kinds of
serious land-use and reclamation problems and issues .in the West.
First, energy development will often produce or intensify con-
flicts between energy developers and other land users such as
farmers, ranchers, environmentalists, and recreationists; second,
although only a small percentage of lands will be affected region-
wide, the percentage of land affected in some areas within the
region can be quite large; and third, it is not clear that lands
disturbed by energy resource development can be successfully re-
claimed in all parts of the region. Dealing with these land use
and reclamation issues will challenge the planning, monitoring,
and enforcement capabilities of all levels of government.
Energy development will disturb land in a variety of ways,
including the lands used for mines, access roads, support and con-
version facilities, waste disposal, and recreation. Demand for
land for energy development comes at a time when the public inter-
est in land use is being substantially redefined, both in terms of
broad environmental goals and the policies and institutions which
control land use. Increasingly, the proposition that land, like
air and water, is a basic national resource in which the public
has a substantial interest is being accepted and codified. 1
Historically, land use was discussed almost exclusively in
terms of the interests of the developer or land user. A major
reason that this has changed is a growing public awareness of
the direct and indirect adverse effects of minerals extraction
and utilization on environmental quality.
1For elaboration of this point, see Clawson, Marion, and
Burnell Head. The Federal Lands. Baltimore, Md.: published for
Resources for the Future by Johns Hopkins University Press, 1957;
Bosselman, Fred and David Callies. The Quiet Revolution in Land
Use Control. Washington, D.C.: Government Printing Office, 1972;
and Healy, Robert G. Land Use and the States. Baltimore, Md.:
published for Resources for the Future by Johns Hopkins University
Press, 1976.
327
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Recently passed national coal strip mine legislation under-
scores the current emphasis on regulating the use of public and
private lands in the interest of both mine operators and the gen-
eral public. In fact, land use as an issue category highlights
conflicts among energy and environmental values.
In the western states, competing values and interests with
regard to land use and energy development have already produced
significant conflicts. Findings reported in our Energy From the
West impact analysis reports1 suggest that projected energy devel-
opment in the West is not only likely to exacerbate existing con-
flicts but to result in new problems and issues as well.
These problems and issues are expected to be a consequence
of several closely related technological and social considerations
discussed below. First, as noted in Chapter 2, a majority of the
minerals in the western states are owned or administered by agen-
cies of the federal government or Indian tribes. A unilateral
decision by the federal government or an Indian tribe to develop
these resources will intensify tensions already existing among
the states, Indian tribes, and the federal government.
Second, many of the energy resources developed in the West
will be extracted by surface mining techniques which not only
disrupt large land areas, but also produce much more visible land
impacts than does underground mining. Moreover, energy resources
are frequently located in forest, range, or farm areas. Develop-
ment in these areas raises questions about appropriate land uses
and the long-term potential of postmining reclamation.
Third, regardless of the mining or conversion technology
used, energy development means an influx of people. Long valued
for its scenic beauty and pristine air quality, the region would
undergo significant transformation if a high percentage of its
energy resources were developed rapidly and large numbers of
people moved into the region.
As noted in Chapter 2, westerners' attitudes toward energy
resource development are mixed. While many view it in essentially
negative terms, many others consider it desirable. To those who
hold the latter view, development means more jobs, an expanded
economic and tax base, more and better public services, and a
1See White, Irvin L., et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977; and White, Irvin L., et al. Energy From the West;
Impact Analysis Report. Washington, D.C.: U.S., Environmental
Protection Agency, forthcoming.
328
-------
chance for new social and cultural experiences. This is especially
the case in areas which stand to benefit economically from growth.
In this light, land for energy development is given up or traded
for a variety of benefits. The extent to which social, economic,
and environmental costs and benefits can be equitably distributed
is an important policy consideration, especially when public lands
are involved. It is because this range of interests and values
is at stake, and competing claims to the benefits of finite land
resources have to be accommodated that land use and reclamation
is a significant category of policy problems and issues in west-
ern energy resource development.
In the following section, these land-use problems and issues
are discussed beginning with a summary of land-use and reclamation
impacts. The social and political context within which these im-
pacts will occur is then described, and the problems and issues
likely to arise when these impacts occur within this context are
identified and defined. Alternative policies and implementation
strategies for dealing with these problems and issues are then
identified, evaluated, and compared.
7.2 LAND-USE AND RECLAMATION PROBLEMS AND ISSUES
7.2.1 The Land-Use Impacts of Energy Resource Development
As described in our Energy From the West progress report, the
extent and type of land-use impacts can vary depending on the
choice of energy technology and location.1 Technological factors
which can significantly affect impacts include the method of min-
eral extraction, the type of conversion facility, and the labor
requirements of the technology. Critical locational factors in-
clude overburden characteristics, coal seam thickness, heat con-
tent of the resource, climatic and soil characteristics, the nature
of the terrain, and existing biological communities in an area.
A. Variations in Land Use by Technology
Variations in land use by technology are shown in Table 7-1
for the size facilities deployed in our scenarios and on an equiv-
alent energy basis. Compared on an equivalent energy basis, land
requirements for conversion facilities do not differ significantly,
and land requirements for an underground coal mine are similar to
that for conversion facilities. However, land disturbed by surface
White, Irvin L., et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977; and White, Irvin L., et al. Energy From 'the West:
Impact Analysis Report. Washington, D.C.: U.S., Environmental
Protection Agency, forthcoming.
329
-------
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coal mine can be ten times greater than for conversion facilities
or underground mining depending on the seam thickness and the heat-
ing value of the coal (see the discussion below of locational char-
acteristics) .
Depending on the level of development, between 1,000 and 1,500
square miles of land could be disturbed in the eight-state study
area by the year 2000 by coal mining alone. As shown in Table 7-2,
the magnitude of this surface land disturbance is projected to be
larger for the Northern Great Plains than for any other area. At
some locations up to 18 percent of entire counties could be dis-
rupted. Although impacts assessed for the eight states indicate
that coal mining will disturb the largest amount of land region-
ally, uranium, oil shale, oil and gas, and geothermal development
will also produce local land disruption.
Direct land use produces a range of impacts. The magnitude
of land disruption can be visually shocking. Protective vegeta-
tion is destroyed and soil and rock overlying the coal (or other
mineral deposit) are scraped away, resulting in a massive, visible
alteration of the surface. Such activities can also lead to water
pollution problems, disrupt normal surface and groundwater flows,1
cause soil erosion and related
ecological impacts, and, ulti-
mately, restrict future land
uses.
Ecological impacts may show
up in reductions in the overall
carrying capacity of an area
(see box). Generally, ecologi-
cal impacts will be local, al-
though if many facilities are
sited in an area, direct land
use can eliminate or reduce a
large percentage of habitat
types and result in significant
areawide reductions in carrying
capacity. Also, impacts from
erosion and water pollutants, as
well as air pollutants, from
both mines and power plants can
cause widespread ecological
effects.
ECOLOGICAL IMPACTS IN
RIFLE, COLORADO
Development of one oil shale re-
torting facility in the vicinity of
Rifle, Colorado disturbs less than
one percent of the land area in Gar-
field and Rio Blanco Counties. How-
ever, ecological impacts can increase
rapidly with expanded development;
for example, carrying capacity of
deer can decrease dramatically as an
area is developed.
—White, Irvin L., et al. Energy
From the West: A Progress Report of
a Technology Assessment of Western
Energy Resource Development. Wash-
ington, D.C.: U.S., Environmental
Protection Agency, 1977, p. 91.
1 For elaboration, see Chapters 4 and 5 on water availability
and quality.
331
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TABLE 7-2: ACREAGE DISTURBED BY COAL SURFACE MINING
AREA
Northern Great Plains
North Dakota Lignite
Powder River
Intermountain Area
Four Corners Areae
LOW DEMAND CASE
(thousands of acres!
447
396
39
69
Source: White, Irvin L., et al. Energy From the
West; A Progress Report of a Technology Assess-
ment of Western Energy Resource Development.
Washington, D.C.: U.S., Environmental Protection
Agency, 1977, p. 877.
aBased on energy demand for coal projected by Low
Demand level of development (124 quadrillion British
thermal units supply) by the year 2000.
Includes Billings, Bowman, Dunn, Hettinger,
McKenzie, McLean, Mercer, Oliver, Slope, Stark,
and .Williams Counties, North Dakota. Assumed
average seam thickness of 12.5 feet.
clncludes Powder River, Bighorn, and Rosebud
Counties, Montana, assumed average seam thick-
ness 27 feet; and Campbell, Johnson, and Sheridan
Counties, Wyoming. Assumed average seam thick-
ness is 64 feet.
Includes Rio Blanco, Garfield, and Huerfano
Counties, Colorado, assuming one-third of the
projected mines are underground, and an average
seam thickness of seven feet.
elncludes San Juan County, New Mexico, with an
assumed average seam thickness of 10.3 feet; and
Kane and Garfield Counties, Utah, assuming half
the projected mines are underground, and an
average seam thickness of 10 feet.
332
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SINKING HOMES IN ROCK SPRINGS
Subsidence has recently become
a serious problem in Rock Springs,
Wyoming. The town sits on a network
of mine tunnels created over the
last 100 years or so. Just within
the last several years, it has be-
come necessary to condemn and de-
stroy several houses which sank
into the ground as much as four
feet.
—Strabala, Bill. "Age Transforms
Subsurface Mines' Beauty Into
Beast." Denver Post, March 13, 1977,
p. 20.
Underground coal, oil
shale, and uranium mining poses
surface problems in preventing
and controlling land subsidence
(see box). Changes range from
surface impacts (uneven ground
and/or cracks) to drastic alter-
ations (gaping holes). Like
strip mining, underground mining
also can: lead to water pollu-
tion problems, intercept ground-
water aquifers, require mine de-
watering, deplete aquifers and,
ultimately, change land uses.
Other land-use problems
concern waste disposal (e.g., _
coal ash and toxic mine wastes),
such as the stabilization of
evaporative holding ponds for energy conversion facilities, mine
settling ponds, and tailing ponds for uranium mills. These ponds
continue to require maintenance, especially after sites and facil-
ities are abandoned.1 In the past, erosion has contributed to
atmospheric and water pollution, and uranium tailings have con-
tributed to public exposure to radiation.
Finally, a network of unpaved service and maintenance roads
contributes to area-wide water and air pollution and fragments
wildlife habitats. Wells in oil and gas fields are linked by a
web of eroding roads that reduce aesthetic and biological values.
Procedures to stabilize these various kinds of roads may not be
adequate and new roads may have to be added when washouts occur.2
B. Energy-Related Population Increases
Variations in the labor intensity of technologies can be an-
other important land-use factor. That is, some technologies re-
quire a larger work force to produce the same quantity of energy
than do others. This is significant for land use primarily in
terms of the overall population increases resulting from different
White, Irvin L., et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, pp. 55-57; and White, Irvin L., et al. Energy From
the West; Impact Analysis Report. Washington, D.C.: U.S. Envi-
ronmental Protection Agency, forthcoming.
2U.S. Geological Survey, staff.
Reston, Va., 1977.
Personal communication,
333
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levels of energy development.1 As illustrated in Table 7-3,
operation-related or permanent population increases alone for the
Low Demand Case (124 quadrillion British thermal units (Btu) sup-
ply) would result in 157,200 new people coming to the region by"
1990 and 456,600 by 2000.2 Most of these regional population in-
creases are projected to occur in rural locations. In some in-
stances these increases will occur in areas used extensively for
recreation in both summer and winter, such as in the mountains of
Colorado and Wyoming. Population increases are also projected
for areas where much of the land is used for grazing or agricul-
tural crops, such as in the Northern Great Plains.
TABLE 7-3:
PERMANENT POPULATION INCREASES AFTER 1975 DUE TO
ENERGY DEVELOPMENT IN EIGHT-STATE REGION
YEAR
1980
1985
1990
2000
LOW DEMAND CASE&
45,000
118,200
157,200
456,600
Source: The 1975 estimated population for the eight states
was 9,551,000. See U.S., Department of Commerce, Bureau of
Census. "Estimates of the Population of States, By Age:
July 1, 1974 and 1975 Advanced Reports." Current Population
Reports, Series P-25, No. 619, January 1976.
aBased on energy demand for coal projected by Low Demand
level. of development (124 quadrillion British thermal units
supply). See White, Irvin L. , et al . Energy From the West:
A Progress Report of a Technology Assessment of Western En-
ergy Resource Development. Washington, D.C.: U.S., Environ
mental Protection Agency, 1977, Chapter 12.
a more detailed breakdown of populations and levels of
development, see White, Irvin L. , et al . Energy From the West:
A Progress Report of a Technology Assessment of Western Energy Re-
source Development. Washington, D.-C. : U.S., Environmental Pro-
tection Agency, 1977, Chapter 12; and White, Irvin L. , et al .
Energy From the West; Impact Analysis Report. Washington, D.C.:
U.S., Environmental Protection Agency, forthcoming, Chapter 11.
2The large increase during the 1990 "s would primarily be due
to the large-scale development in Colorado and extensive coal pro-
duction in the Northern Great Plains. For a discussion of the Low
Demand Case energy forecast, see White et al . Energy From the
West; Progress Report; and White et al . Energy From the West :
Impact Analysis ReporT, Chapter 11.
334
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Ecological stresses brought on by energy development are
closely related to the size of human populations in the study area.
Anticipated population growth will occur disproportionately near
areas with high value for backcountry recreation. Estimates made
for the Missouri River Basin Comprehensive Framework Study1
indicate that it is reasonable to expect recreation demand to
double or triple by the year 2000. Since the early 1970's, back-
country recreational activities such as hiking, snowmobiling,2
jeeping, and backpacking or packing with horses have been rising
in popularity, accounting for 5-15 percent of the total use in
areas such as national forests. These activities are particularly
popular in the West.
Although the intensity of use is uncertain, the locations of
recreation activities generally fall into three categories: major
established tourist attractions (e.g., Yellowstone and Grand Teton
National Parks); areas near population centers (e.g., Grand Mesa
National Forest, near Grand Junction); isolated areas or areas
with limited recreation opportunities (e.g., Black Hills National
Forest in Wyoming and South Dakota). Figure 7-1 shows some major
areas likely to be used more intensively because of region-wide
energy development. If access to these areas is limited or con-
trolled, the bulk of the growing demand will fall on adjacent
nondesignated areas which have a strong aesthetic appeal.3
Missouri Basin Inter-Agency Committee. The Missouri River Ba-
sin Comprehensive Framework Study. Denver, Colo.: U.S., Department
of the Interior, Bureau of Land Management, 1971, Vol. 1, p. 137.
2In Hayden, Colorado (pop. 10,000), which is located in the
middle of the Yampa coal field, snowmobiling is the most popular
form of recreation. At least one, and often two snowmobiles can
be found in every yard: "At one residence, there were four, lined
up like bicycles." Gits, Victoria. "Boom Town on the Brink."
Colorado/Business, Vol. 5 (February 1978), p. 32.
3An important limitation in projecting recreational demands
is the difficulty of anticipating trends in recreational styles.
For example, such technological innovations as snowmobiling are
recent phenomena. Hydrofoil and shallow draft boats make many
western rivers available for recreational use. Similarly, uncer-
tainty exists in land management practices. Current trends are
to increase restrictions on wilderness and backcountry areas, but
economics encourages the Forest Service to promote dispersed rec-
reation activities by building trails and improving access. See
White, Irvin L., et al. Energy From the West; A Progress Report
of a Technology Assessment of Western Energy Resource Development.
Washington, D.C.: U.S., Environmental Protection Agency, 1977,
p. 872; and White, Irvin L., et al. Energy From the West; Impact
Analysis Report. Washington, D.C.: U.S.,Environmental Protection
Agency, forthcoming.
335
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if NATIONAL MONUMENT
O RECREATION AREA
POINT OF INTEREST
FIGURE 7-1: MAJOR BACK-COUNTRY AREAS LIKELY TO RECEIVE
INCREASED PRESSURE DUE TO ENERGY DEVELOPMENT
336
-------
FIGURE 7-1:
MAJOR BACK-COUNTRY AREAS LIKELY TO RECEIVE INCREASED
PRESSURE DUE TO ENERGY DEVELOPMENT3 (Continued)
1. Cabinet Mountains WA 39.
2. Glacier NP 40.
3. Theodore Roosevelt NP 41.
4. Yellowstone NP 42.
5. Bighorn Canyon RA 43.
6. N. Absaroka WA 44.
7. Bighorn NF 45.
8. Cloud Peak PA 46.
9. Washakie WA 47.
10. Shoshone NF 48.
11. Grand Teton NP 49.
12. Teton WA 50.
13. Bridger WA 51.
14. Popo Agie PA 52.
15. Medicine Bow NF 53.
16. Flaming Gorge RA 54.
17a. Wind Cave NP 55.
17b. Badlands NM 56.
18. High Unitas PA 57.
19. Ashley NF 58.
20. Fishlake NF 59.
21. Capitol Reef NP 60.
22. Dixie NF 61.
23. Zion NP 62.
24. Cedar Breaks NM 63.
25. Bryce Canyon RA 64.
26. Glen Canyon RA 65.
27. Canyonlands NP 66.
28. Arches NP 67.
29. Hovenweep NM 68.
30. Dinosaur NM 69.
31. Mt. Zirkel WA 70.
32. Routt NF 71.
33. Rawah WA 72.
34. White River NF 73.
35. Eagles Nest WA 74.
36. Grand Mesa NF 75.
37. Maroon Bells/Snowmass WA
38. Black Canyon of the
Gunnison WA
La Garita WA
Upper Rio Grande PA
San Juan WA
San Juan NF
Mesa Verde NP
Rio Grande NF
Carson NF
Chaco Canyon NM
San Pedro Parks WA
Santa Fe NF
Wheeler Peak WA
Gila WA
Gila PA
Gila NF
Black Range PA
Canyon de Chelly NM
Kaibab NF
Grand Canyon NP
Wupatki NM
Coconino NF
Sunset Crater NM
Sitgreaves NF
Petrified Forest NP
Apache NF
Blue Range PA
Mr. Baldy WA
Prescott NF
Pine Mountain WA
Mazatzal WA
Tonto NF
Superstition WA
Sierra Ancha WA
Saquaro NM
Galiuro WA
Chiricahua NM
Chiricahua WA
Four Corners Area
WA = wilderness area
NP = national park
RA = recreation area
NF = national forest
PA - primitive area
NM = national monument
337
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Other impacts resulting from population increases are similar
to those caused by facilities. Increased housing, roads, and ser-
vice activities fragment wildlife habitats into small parcels that
are less usable either by resident or migratory species, and can
cause some species to desert an area. Easier access to recre-
ational areas can lead to increasing erosion, vegetation damage,
damage to fish, birds, and other wildlife, and diminished enjoy-
ment of resources. Based on patterns identified in our Energy
From the West impact analysis reports, this is likely to occur in
four areas: western Colorado and eastern Utah, the coal regions
in Wyoming, the Four Corners area,1 and the coal fields of Montana
and North Dakota. In western Colorado, the large population in-
flux is expected to locate near
prime outdoor recreation areas
(including national forests,
parks, monuments, and wilder-
GOOD-BYE TO THE OLD DAYS
/ . . , . > 2 /-•, Grand Teton National Park is lo-
ness/primitive areas) . Conse- . , inr. . n , ,. ,
' i . -I j_ • • cated 100 miles north of energy boom-
quently, growing populations in 010- TT • ™L
this area will cause the most town Rock Springs, Wyoming Three
conflict with "national heri- mlllon residents and out-of-state
tourists visited the park in 1976.
North Dakota areas will also ex-
tage" lands. The Wyoming and „., ....... , ,,.
Wyoming is feeling the effects of
perience substantial population development says State Sen-
increases; however, in these at or John Turner. "It's doubled the
places, outdoor recreationists Population in some communities,
will be limited in their choice
of recreation areas. The three
closest such areas, Theodore divorce, alcoholism and crime. Due
Roosevelt National Memorial to thef increases 70 percent of the
Park, Black Hills National For- respondents in a public opinion sur-
est and Bighorn National Forest, !f °f ""dents of Jackson Hole (in
, ., , , . , the park; favored strong land-use
are likely to receive greater .. -, * ->••-,
„ . ., , controls and very limited growth.
use. Some evidence suggests * 5
that prime recreation areas are —Leydet, Francois. "Jackson Hole:
already becoming used inten- Good-Bye to the Old Days." National
sively as a result of recent Geographic, Vol. 150 (December 1976),
energy development (see box).
brought in a rough crowd, caused an
increase in mental health problems,
p. 771.
:The energy-related population growth in Utah and New Mexico
may affect such areas as San Juan National Forest (in Colorado),
Chaco Canyon National Monument (New Mexico), and the Dixie Na-
tional Forest and Glen Canyon National Recreation Area (Utah).
2For example, Rio Grande National Forest, San Juan National
Forest, Rio Grande National Wilderness Area, Upper Rio Grande
Primitive Area, Gore Range/Eagles Nest Wilderness Area, and
Mesa Verde National Park.
338
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C. Variations in Land-Use Impacts by Location
Land impacts may also vary according to several locational
factors. For example, in the case of coal, the amount of land
disturbed for each unit of energy extracted is highly dependent
on the Btu content of the coal and its seam thickness. Table
7-4 shows that land requirements for mines at different sites
vary considerably. Mining coal with a high Btu content and a
thick coal seam disturbs less land than will mining low-Btu coal
with a thin coal seam.
Climate, soil, topography, and existing biological communi-
ties at a site are also important locational features that affect
the extent and type of land impacts. These factors are signifi-
cant particularly because they affect the cost and potential suc-
cess of reclamation.
Rainfall, including its seasonal distribution, is one of the
most important climatic variables affecting the reclamation of
TABLE 7-4: LAND USE FOR MINES FOR SIX SPECIFIC LOCATIONS'
TYPE
Surface Coal
Surface Coal
Surface Coal
Surface Coal
Underground
Coal
Underground
Oil Shale
SITEb
Nava jo/Farming ton
Gillette
Colstrip
Beulah
Kaiparowits
Rifle
TYPICAL SIZE MINE0
(acres over 30 years)
4,000 - 27,820
4,030
9,680
24,210
1,700
' 4,200
EQUIVALENT ENERGY
(acres per 10 12 Btu)
.5 - 3.2
0.5
1.2
3
0.2
0.5
Btu = British thermal units
Average includes all surface lands disturbed, including disposal of wastes
such as spent oil shale.
Seam thickness and heating values assumed: Navajo/Farmington - 10.3 feet
between 1 and 7 multiple seams, 8,600 Btu per pound; Gillette - 64 feet,
8,000 Btu per pound; Colstrip - 28 feet, 8,600 Btu per pound; Beulah - 13
feet, 6,950 Btu per pound.
cln all cases the mine size assumed supports a 3,000 megawatts-electric
power plant.
339
-------
mined lands. Average rainfall and seasonal distribution data for
three areas in the region are given in Table 7-5. The Southwest
receives the least amount of rainfall overall; the Rocky Mountain
region and Northern Great Plains have similar total rainfall, but
during the summer growing season, rainfall in the Northern Great
Plains is twice that of the Rocky Mountains. A comparison of
Tables 7-4 and 7f-5 suggests an important land-use problem. For
a mine supplying a 3,000 megawatts-electric power conversion
facility, the amount of land requiring reclamation is generally
largest in the Southwest which also happens to be the area with
the least average annual rainfall.
TABLE 7-5: PRECIPITATION AVERAGES IN THE WEST
REGION
Northern Great Plains
Rocky Mountains
Southwest
PRECIPITATION
(inches)
WINTER SUMMER
<5 10-20
5-10 5-10
<5 <5
a
ANNUAL
10-20
10-20
<10
< = less than
Espenshade, Edward B., ed. Goode's World Atlas, 13th
ed. Chicago, 111.: Rand McNally, 1971. Winter corres-
ponds to November I/April 30; summer corresponds to
May I/October 31.
The semiarid climate and good topsoil of the Northern Great
Plains provide for an ecosystem that can be restored with less
difficulty than in the Southwest. Forest areas of the Rocky Moun-
tains are more difficult to restore due to difficult topography
and the long time required to establish a mature forest. In
deserts, infrequent rainfall and overgrazing by livestock limit
the success of reclamation efforts. For example, reclamation
success in the arid Black Mesa area that does not have a source
of irrigation is almost nonexistent.1 But through irrigation, the
Navajo and San Juan mines near Farmington in northwest New Mexico
have established vegetation in some areas with greater cover
Gordon, Suzanne. Black Mesa; The Angel of Death. New York,
N.Y.: John Day, 1973, p. 68; Goodman, Jim. The Navajo Nation and
Energy Development: A Study of the Cultural, Social, and Political
Environments, Draft, Sub-Contract Report to Science and Public
Policy Program. Norman, Okla.: University of Oklahoma, Science
and Public Policy Program, September 1977.
340
-------
than exists in adjadent unmined areas.1 Still unanswered, however,
is whether reclaimed areas will remain productive. In part, this
is because problems are unresolved concerning the effects of phas-
ing out water supplements on arid sites. Even in semiarid places,
such as the coal mining areas of Decker, Montana and Carbon County,
Wyoming, withdrawing irrigation and fertilizer supplements may be
difficult because of unfavorable spoil and soil properties. The
Bureau of Land Management (BLM), Bureau of Reclamation, and U.S.,
Geological Survey (USGS) recommend that supplemental irrigation
should not be used in the revegetation plan for land in the Hanna
Basin of Wyoming unless all other methods for establishing vegeta-
tion fail. This recommendation was based principally on an as-
sessment of the shock to established stands of vegetation cover
once irrigation and fertilizer were removed after a period of in-
tensive use (e.g., three years).3 Reclamation research at Forest
Service experiment stations and in agriculturally-oriented univer-
sity research centers is being conducted with regard to the poten-
tial of returning mined lands to productive uses.1*
In sum, using present reclamation techniques, areas with 6-10
inches of rainfall per year can generally support plant regrowth
without supplemental irrigation. Annual precipitation levels on
1 Annual precipitation rates at the Navajo mine of approxi-
mately six inches have called for the use of supplemental water for
at least 1.5 years. U.S., Environmental Protection Agency, Office
of Energy Activities, Region VIII, et al. Surface Coal Mining in
the Northern Great Plains of the Western United States; An Intro-
duction and Inventory Utilizing Aerial Photography Collected in
1974 and 1975. Denver, Colo.: U.S., Environmental Protection
Agency, 1976.
2See Farmer, E.E., et al. Revegetation Research on the
Decker Coal Mine in Southeastern Montana, Research Paper INT-162.
Ogden, Utah: U.S., Department of Agriculture, Forest Service,
Intermountain Forest and Range Experiment Station, 1974, p. 10.
3U.S., Department of the Interior, Bureau of Land Management.
Resource and Potential of Reclamation Evaluation: Hanna Basin
Study Site, EMRIA Report No. 2. Rawlins, Wyo.: Bureau of Land
Management, 1975, p. 172.
^Davis, Grant, Associate Program Manager for Research, Sur-
face Environment and Mining Program (SEAM), Forest Service, U.S.,
Department of Agriculture. Personal communication, 1977; McKell,
Cy, Utah State University. Personal communication, 1977; and
Grogan, Sterling, Utah International. Personal communication,
1977. All appear to be optimistic.
5National Academy of Sciences. Rehabilitation Potential of
Western Coal Lands, a report to the Energy Policy Project of the
Ford Foundation. Cambridge, Mass.: Ballinger, 1974, p. 2.
341
-------
strippable land in northeastern New Mexico, southwestern Wyoming,
and south-central Utah often fall below 10 inches. However, based
on the results of several years of investigating revegetating min-
ing spoils, the U.S. Forest Service has found that when "mined and
graded with care, and planted properly to suitable species, areas
receiving as little as 6 inches average annual precipitation have
been revegetated." However, the key words here are "with care,"
"properly," and "suitable species."1 Interpretation of each of
these requires consideration of site-specific characteristics.
The timing of the precipitation appears to be much more crit-
ical than the average annual precipitation.2 If most of the mois-
ture occurs during the winter and practically none occurs during
the growing season, reclamation practices may be further con-
strained by the need for and cost of irrigation, by wind erosion,
and by other factors.3 In addition, periodic dry periods lasting
up to several years curtail successful revegetation unless irriga-
tion can be provided. "*
1 Davis, Grant, Associate Program Manager for Research, Surface
Environment and Mining Program (SEAM), Forest Service, U.S. Depart-
ment of Agriculture. Personal communication, 1976.
2This is stated in the National Academy of Sciences (NAS)
study referred to earlier and is noted in Grant Davis's personal
communication. In his comments on the NAS report, Robert R. Curry,
Associate Professor of Environmental Geology from the University
of Montana, stated: "Both soil formation and plant growth rely
upon soil moisture, not rainfall, and in the arid west rainfall
bears relatively little relationship to soil moisture. In addi-
tion to summer rainfall, concomitant summer evaporation which re-
duces soil moisture must be considered." Reviewer comments in
National Academy of Sciences. Rehabilitation Potential of West-
ern Coal Lands, a report to the Energy Policy Project of the
Ford Foundation. Cambridge, Mass.: Ballinger, 1974, p. 168.
3The Forest Service has been working with supplementary irri-
gation and finds that such equipment should be available for use
as insurance against long dry periods regardless of average annual
precipitation in the West. Davis, Grant, Associate Program Manager
for Research, SEAM, Forest Service, U.S.. Department of Agriculture.
Personal communication, 1976.
4NAS. Rehabilitation Potential of Western Coal Lands;
Packer, Paul E. Rehabilitation Potentials and Limitations of
Surface-Mined Land in the Northern Great Plains, General Technical
Report INT-14. Ogden, Utah: U.S., Department of Agriculture,
Forest Service, Intermountain Forest and Range Experiment Station,
1974.
342
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7.2.2 The Context of Land-Use and Reclamation Issues in the West
Although the problems and issues addressed here are likely
to become more intense as western energy development proceeds,
they are by no means entirely new. In several instances, they
have been before the public for most of this century: for ex-
ample, the problems and issues related to developing appropriate
mining laws, or in making public lands available for other pri-
vate or public uses. In other instances, policy debates asso-
ciated with land use are relatively new, such as recent federal
regulations for developing and implementing state reclamation
programs.
Existing laws and regulations, institutions, and values and
interests of involved participants make up the context within which
energy-related land issues are evolving. This context affects how
conflicts are being dealt with and how new problems and issues will
be handled. Consequently, the discussion below summarizes key ele-
ments in the historical development of land-use policies and is-
sues. It is organized around three general themes: the role of
government in planning and controlling land use; the objectives
and requirements of postmining reclamation; and accommodating and
controlling recreational and agricultural uses of public lands.
A. Planning and Managing Land Use
Conflicts in planning and managing land use in development
areas have surfaced not only on the basis of findings in this tech-
nology assessment, but also on the basis of analyses conducted by
other policy research groups. For example, the Task Force Report
sponsored by the Rockefeller Brothers Fund found that a central
problem confronting both the entire U.S. and the West specifically,
was the unrestricted patchwork of urbanization and development
that sprawls across scenic hills, valleys, forests, and farms.1
Indeed, managing growth and planning land use have already become
major political issues in some western states, and account in part
for differences in public attitudes about potential energy devel-
opment in western states; between Colorado and Utah, for example.2
Furthermore, federal legislation to manage both state and federal
lands has been before Congress during three of the past four
legislative sessions.
JSee Reilly, William K., ed. The Use of Land; A Citizens'
Policy Guide to Urban Growth. New York, N.Y.: Thomas Y. Crowell,
1973.
2Gill, Douglas. "Utah Seeks Federal Okay to Set Own Pollu-
tion Level." Denver Post, December 19, 1976.
343
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(1) Multiple Interests in Land-Use Planning
Land-use policy has undergone.substantial change in the U.S.,
ranging from a trial and error approach during early colonization
and development, through periods when management and stewardship
were more important considerations, to recent periods where zoning
and planning have been emphasized. In each of these periods,
policymakers have responded to conflicts between divergent inter-
ests such as the needs of homesteaders, mining companies, conser-
vationists, and those interested in preservation of naturally
scenic or historically significant areas.1
Industry interests, including energy and mining companies,
have played a major role in affecting land-use policies. In the
eight western states, firms such as Kennecott Copper, Utah Inter-
national, Anaconda, and others have attempted to maintain unre-
stricted access to minerals on both public and private lands.
These companies typically work closely with western congressmen
to maintain or expand their interests.2 In general, mining indus-
tries have played a major role in either defeating or limiting
attempts at restrictive land-use planning, and have promoted
legislation which permit free access to federal lands.3
During the 19th century when environmental impacts on land
were for the most part ignored, the only government policy for
mineral lands was one of "noninterference." The Mining Act of
1866 ** legitimized this policy by declaring the public domain5 to
be "free and open" to exploration for minerals and mining. The
General Mining Law of 18726 clarified some procedural ambiguities
in the 1866 Act. It allowed a claim to be filed and a patent
granted for the use of feder£il lands irrespective of any consider-
ation of specific land use. Since stringent controls were not
Stairs, Gerald R. "Land-Use Planning: An Overview," in
Thames, John L., ed. Reclamation and Use of Disturbed Land in the
Southwest. Tucson, Ariz.: University of Arizona Press, 1977, p. 3,
2Peirce, Neal R. The Mountain States of America. New York,
N.Y.: Norton, 1972, p. 205.
3Jones, Douglas N., et al. The Energy Industry; Organiza-
tion and Public Policy. Washington, D.C.: Government Printing
Office, 1974.
^Mining Act of 1866, 14 Stat. 251.
5The public domain is lands, either acquired by the federal
government during the expansion of the West or purchased from
private owners.
6General Mining Law of 1872, 17 Stat. 91.
344
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placed on the use of public lands, mining industries enjoyed a
period of rapid growth. Once minimum and perfunctory criteria
were met, public lands passed into private ownership.
By the late 1890's and early 1900's, it was recognized that
the government's resource disposal policies were being abused.1
Reservation and withdrawals of public lands followed, beginning
the modern era of viewing these lands as a resource to be managed
and conserved. Congress also allowed nonmineral entries (such
as farming) on public lands, first on coal lands,2 then on lands
bearing all types of minerals.3 Between 1914 and 1920 Congress
was under increasing pressure to open public "withdrawn" lands
to mineral development. This six-year period of debate and rec-
ognition of the inequities of limited management made the need
for a comprehensive leasing system clear, leading to the passage
of the Mineral Leasing Act of 1920. ** This act established a sys-
tem for leasing "soft minerals" such as coal, oil, and gas on
public lands. A primary impetus behind this Act was the wish to
encourage competition and receive some compensation for the use
of federal coal lands.
Numerous congressional acts and executive policies have re-
stricted the availability of federal lands for minerals explor-
ation and development. The Department of the Interior (DOI) es-
timates that on about 40 percent of federal lands, energy devel-
opment activities have been prohibited.5 In addition, another
20 percent are restricted so that energy resource exploration
and development appears unlikely. Since 1968 the total for fed-
eral lands on which formal restrictions or prohibitions pertain
has increased from 20 percent to more than 50 percent of all fed-
eral lands.6 This increase is due primarily to the establishment
of wilderness areas and temporary land withdrawals in Alaska.
:Beard, Daniel P. "Public Policy Milestones in the Develop-
ment of the Oil Industry," in Jones, Douglas N., et al. The Energy
Industry: Organization and Public Policy. Washington, D.C.:
Government Printing Office, 1974.
235 Stat. 844 (1909), 36 Stat. 583 (1910), 37 Stat. 105 (1912).
338 Stat. 509 (1914).
"Mineral Leasing Act of 1920, 41 Stat. 437. Lands subject
to the Mineral Leasing Act for Acquired Lands of 1947, 61 Stat.
913, 30 U.S.C.A. 351-59 are also covered by the 1920 Act.
5U.S., Department of the Interior. Mining and Minerals Policy,
1976 Annual Report of the Secretary of the Interior. Washington,
D.C.: Government Printing Office, 1976, p. 27.
6 Ibid.
345
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In sum, there is currently less land available for the exploration
and development of domestic energy resources than has historically
been the case.
These restrictions raise a number of policy problems and
issues. In making decisions regarding development, policymakers
must weigh the advantages of energy production against disadvan-
tages to the public. However, such determinations are difficult
and most estimates are uncertain. Congress attempted to deal with
this problem by calling on the BLM and USGS to evaluate the min-
eral values in wilderness areas. These resource appraisals are
to assist policymakers in choosing among different land uses.
Recent initiatives for land-use legislation have come from
both the executive branch and from Congress. Members of Congress
from western states have been heavily involved in these actions.
For example, former Colorado
Representative Wayne Aspinall
was active as chairman of the
Public Land Law Review Commis-
sion, and author of the Na-
tional Land Policy, Planning
and Management Act (HR 7211)
proposed in 1972. Although no
action was taken on the bill,
the bill reflected recognition
of the need to coordinate ef-
forts between federal agencies,
other landowners, state and
local governments, and private
individuals.1
A number of public inter-
est groups support comprehen-
sive land-use legislation, in-
cluding the National Wildlife
Federation, National Audubon
Society, and Sierra Club (see
box). However, these groups,
the Isaac Walton League and
Friends of the Earth, have
opposed some of the land-use
bills that have been introduced
recently because they believe
that the proposed planning,
funding, and review procedures
IMPLEMENTING ENVIRONMENTAL
OBJECTIVES
Groups like the Sierra Club im-
plement their objectives through the
courts, by lobbying and through tech-
nical review. The Sierra Club Legal
Defense Fund has been instrumental
in delaying development for several
years of Northern Great Plains Coal
in Sierra Club v. Morton.. This case
called for the Department of the In-
terior to file an environmental im-
pact statement (EIS) for the re-
gional development of coal. Follow-
ing several years of litigation, the
Supreme Court ruled in 1976 that an
EIS was not required. The Department
of the Interior, however, is proceed-
ing on regional EIS's at this time.
—lierra Club v. Morton, 507 F. 2nd
533 (District Court D.C. 1975),
affirmed, 514 F. 2nd 856 (D.C. Cir.
1975).
Congressional Quarterly, Inc. Congress and the Nation,
Vol. Ill: 1969-1972. Washington, D.C.: Congressional Quarterly,
1973, 809-10.
346
-------
were oriented to commercial
exploitation of public lands
rather than to their preserva-
tion and conservation. In ad-
dition, many environmental orga-
nizations criticized the 1970
report of the Public Land Law
Review Commission as support-
ing land-use concepts that
would sacrifice soil, water,
wildlife, and aesthetic values
to mining, grazing, and logging
interests1 (see box).
Although land-use planning
on federal lands is obviously
a dominant issue in western en-
ergy development, states and
localities have traditionally
been the locus of land-use
control. Historically, wide
ranging authority has been
delegated by states to commu-
nities. Since energy develop-
ment will stress the capabil-
ities of existing institutional
arrangements at these levels as well as at the federal level, sev-
eral additional issues are outlined below.
Local governments typically have discretionary authority
that goes beyond mere zoning tools. They also may legislate
against public nuisances, adopt subdivision regulations and build-
ing codes, institute solid waste management plans and regulations,
require open space areas for parks and recreational facilities,
apply floodplain regulations and environmental controls, estab-
lish housing commissions or development authorities, and create
special purpose districts to attempt to deal more effectively
with development.2 Yet, local efforts are seldom adequate to cope
with regional (and ultimately statewide or national) impacts or
THE GOSPEL HUMP WILDERNESS
Although the federal bureaucracy
is often called upon to mediate con-
flicts between diverse interests, a
Sierra Club spokesman reported an op-
posite effect following meetings with
the timber industry. The limitations
of government were discovered during
negotiations over the boundaries of
the Gospel Hump wilderness in the
Northwest. Negotiations only proved
to be successful after the industry
and environmental participants agreed
to exclude representatives of the
Forest Service and a state fish and
game agency.
—Carter, Luther J. "Coal: Invoking
the Rule of Reason in an Energy-
Environment Conflict." Science, Vol.
198 (October 21, 1977), p. 279.
Congressional Quarterly, Inc. Congress and the Nation,
Vol. Ill; 1969-1972. Washington, D.C.: Congressional Quarterly,
1973, pp. 809-10.
2Council of State Governments, Task Force on Natural Re-
sources and Land Use Information and Technology. Land; State
Alternatives for Planning and Management. Lexington, Ky.:
Council of State Governments, 1975, pp. 4-6.
347
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planning needs. This is compounded by the fact that much of the
land in rural energy development areas is unincorporated.1
Many western states have established additional planning re-
quirements. For example, Wyoming and North Dakota now require
local governments to appoint planning commissions and engage in
comprehensive planning. Colorado and Wyoming have state land-use
commissions. Colorado has a permit system that requires a facil-
ity to be approved in accordance with a county land-use commis-
sion's guidelines or regulations. In 1975 Montana passed a law
that calls for subdivisions to be in "harmony" with their environ-
ment. Wyoming's state land-use planning act requires state and
local land-use plans and requires coordination with the Industrial
Siting Board via the State Land-Use Commission.2
A number of other state and local agencies affect land uses.
Attempts to coordinate programs at the state level are typically
through the Office of Management and Budget Circular A-95 process
established in the mid-1960's. Substate planning districts in
most states coordinate Environmental Protection Agency (EPA) pro-
grams in wastewater and drinking water treatment, and area-wide
wastewater management planning. Together with other federal pro-
grams, the intent of the substate planning districts is to estab-
lish an organized review process, although the planning has had
limited effectiveness, and has had only a minimal effect on
decisionmaking.3
(2) Diversity of Land Uses
Minerals that are frequently located in forest, range, or
farm areas raise concerns about the most appropriate of alternative
uses of the land. Although multiple uses'* may be encouraged, it is
!For more discussion of this point, see Chapter 9 on Growth
Management.
2Relevant state statutes for these examples are given in
White, Michael D. "Constitutional Derivation and Statutory
Exercise of Land Use Control Powers," in Rocky Mountain Miner£il
Law Foundation. Rocky Mountain Mineral Law Institute: Proceed-
ings of the Twenty First Annual Institute, July 17-39, 1975.
Albany, N.Y.: Matthew Bender, 1975, pp. 695-97.
3Council of State Governments, Task Force on Natural Re-
sources and Land Use Information and Technology. Land; State
Alternatives for Planning and Management. Lexington, Ky.:
Council of State Governments, 1975, p. 27.
^Multiple use refers to simultaneous utilization of the sur-
face or subsurface of a tract of land for more than one ongoing
productive purpose, including recreation, energy development,
timber harvesting, agriculture, and
348
-------
more typical that one use threatens another.' These conflicts are
usually expressed in terms of individual occupational interests.
Ranchers and farmers are troubled over competition for land and
water, about the loss of agricultural water to energy development,
and about the impact of increasing air pollution on grasslands,
crops, and other natural resources.1
Of special concern are prime farmlands and alluvial valleys
in the Northern Great Plains region. Together these lands are
usually the most productive, support local cattle ranches and
dairy farming, and help provide good hay crops. Agriculture in
Montana and Wyoming is particularly dependent on alluvial valley
floors.
Questions about appropriate land uses also include attempts
by conservationists to protect the natural beauty of the land-
scape and environment. Long valued for its aesthetics and pris-
tine condition, the region could undergo significant transforma-
tion if a high percentage of its energy resources were to be
utilized. Many environmentalists fear that ill-planned and unco-
ordinated development would threaten these aesthetic qualities.2
As shown in the previous section, although comprehensive
land-use control lav.s have been considered, only public land-use
planning has been initiated. Public planning has been undertaken
principally through the BLM within the DOI and the Forest Service
in the Department of Agriculture.
Bureau of Land Management
BLM has primary responsibility for administering resources
on public domain and acquired federal lands and is the surface
management agency for most federal lands (except National Forests;
Parks, and Indian Reservations). The Federal Land Policy and Man-
agement Act of 19763 requires BLM programs to provide for land
manac.eraerr. which promotes "multiple use and sustained yield" while
maini.ai uLng and enhancing the quality of the environment. It re-
quires the development of comprehensive land-use plans for BLM
lands and authorizes Congress to veto any decision to exclude
"from one or more principal uses a tract of 100,000 acres or more
''Grim, Elmore C. "Environmental Assessment of Western Coal
tJ-. • L,;,JO Mining," in Proceedings of National Conference on Health,
Environmental Effects, and Control of Energy Use. Washington,
D.C.: U.S., Environmental Protection Agency, 1976, pp. 177-78.
2See, as one example, Josephy, Alvin M., Jr. "Kaiparowits:
The Ultimate Obscenity." Audjubon, Vol. 78 (Spring 1976), pp. 64-90
3Federal Land Policy and Management Act of 1976, Pub. L. 94-
579, 90 Stat. 2743.
349
-------
for two years or longer."1 Principal uses are defined as domestic
livestock grazing, fish and wildlife development, mineral explor-
ation and production, rights-of-way, timber production, and
recreation.
BLM plans and makes available coal lands for development
through an industry and government nominating system that also
considers market interest for new coal production. A recent court
suit brought by the Natural Resources Defense Council caused a mor-
atorium on the sale of new coal leases by the government.2 The
Bureau's "Energy Minerals Allocation Resource System" (EMARS) is
currently under review, and the DOI is examining existing leases
and applications to determine if production is environmentally
acceptable.3 Based on these reviews, BLM is not likely to resume
coal leasing activities at least until 1980. ^ However, oil, gas,
and geothermal resource leasing programs are continuing, as is
the evaluation of uranium mining claims.
Forest Service
The Forest Service in the Department of Agriculture is a sur-
face management and research oriented agency. It manages surface
lands in close cooperation with developers. The National Forest
Management Act of 19765 established standards and guidelines for
Forest Service land-use plans and revised federal policy towards
managing national forest resources.
Both the Federal Land Policy and Management Act and the Forest
Management Act are intended to develop more comprehensive land-use
planning for federal lands. They both address the range of compet-
ing interests and conflicts that result in managing for multiple
uses. Even so, neither of these recent laws appears able to deal
with problems and issues relative to prospecting and claims
Congressional Quarterly, Inc. Congress and the Nation,
Vol. Ill; 1969-1972. Washington, D.C.: Congressional Quarterly,
1973, p. 314.
2For a discussion of the moratorium, see Chapter 2.
3"Interior May End EMARS Leasing." Old West Regional
Bulletin, Vol. 4 (August 1, 1977), p. 4.
"*Rattner, Steven. "Tough Task in Implementing Crippled
Energy Plan." New York Times National Economic Survey,
January 8, 1978, Section 12, p. 13. ~
5National Forest Management Act of 1976, Pub. L. 94-588,
90 Stat. 2949.
350
-------
procedures of the 1872 Mining Law.l For uranium, public domain
lands under jurisdiction of a surface management agency subse-
quently move from federal to private ownership. Under these cir-
cumstances almost all uranium lands are under state control.
The 1964 Wilderness Act, which established a national wilder-
ness preservation system, is also managed by the Forest Service.
This act will eventually close millions of acres of federal land
to energy resource development. On January 1, 1984, lands which
the Forest Service has designated as wilderness areas will be with-
drawn from mining and leasing laws. Although minerals exploration
and production is not now formally prohibited on these withdrawn
lands, the risk associated with attempts to bring development on-
line by 1984 has already severely restricted energy development
ventures for these areas.3 In addition, proposed wilderness areas
managed by the Forest Service, e.g., primitive and roadless areas,
have been identified for possible inclusion in the wilderness
system.
Evaluation of wilderness and roadless areas to be withdrawn
from development is the focus of the Forest Services ongoing Road-
less Area Review and Evaluation (RARE) program. "RARE II" which
delineates the most recent classification of these lands proposed
the addition of some 67 million acres (104,688 square miles) to
the wilderness/roadless system. "* Included in these lands are for-
est lands which had been classified as commercial timberland. Rep-
resentatives of the timber industry have questioned the single-use
wilderness designation in view of the historical multiple-use con-
cept whereby industry and recreationists shared use of the national
forests.
forest management provision's are generally considered to be
more favorable to the timber industry than to environmentalist.
See Congressional Quarterly, Inc. Congress and the Nation, Vol.
Ill: 1969-1972. Washington, D.C.: Congressional Quarterly,
1973, p. 313. This issue is discussed below in Subsection "B," on
land reclamation.
2Also, a number of uranium lands are on Indian Reservations
under Indian, Bureau of Indian Affairs, and USGS management.
3U.S., Department of the Interior. Mining and Minerals
Policy, 1976 Annual Report of the Secretary of the Interior.
Washington, D.C.: Government Printing Office, 1976, p. 90.
^Wilkinson, Bruce. "Timber Groups Decry Shrinkage in Product
Base." Denver Post, November 1, 1977
351
-------
National Park Service
The National Park Service, administering agency for the Na-
tional Park System, has an ongoing planning process to develop
"General Master Plans" for the various parks under its control.
The Resources Management Plan, one part of the General Plan,
deals specifically with mineral development activities. In gen-
eral, mining is prohibited in National Parks; however, the Sec-
retary of the Interior does have authority to allow utilization
of resources in certain recreation areas. For this to occur, it
must be demonstrated that energy development activities will not
"conflict or significantly impair recreation and the conservation
of the scenic, scientific, or other values of any park in the
National Park System."1
B. Objectives and Requirements of Land Reclamation
Questions of land reclamation are closely tied to issues of
planning and managing land uses. Given the competing uses and
need for large quantities of land, reclamation objectives and re-
quirements are probably among the most critical problems and is-
sues associated with western energy development. That is, if mined
lands can be "satisfactorily" restored, conflict presumably would
be reduced.
Public interest concerning the effects of mining, conversion,
and waste disposal on land is manifested in a number of general
and more specific concerns. A general concern is the "irrevers-
ibility" of mining decisions—the possibility that the land will
be modified in a way that will make the land be of irreversibly
lower value to society. As indicated in the description of im-
pacts earlier, it is possible that, without adequate reclamation,
future land-use alternatives will be lost and that severe ecologi-
cal damage will result.
A specific concern is the effect of mining on water. Coal
seams and oil shale deposits are major sources of groundwater for
a variety of domestic and livestock uses. Consequently, surface
mining-can affect the availability and quality of water for farms
and ranches. Mining interests may also conflict with other envi-
ronmental values if reclamation objectives are not carefully pre-
scribed and enforced. For example, improperly restored lands have
a lower aesthetic value to those who want to protect the natural
ecology and topography of an area.
All of these concerns are compounded by legal and admin-
istrative arrangements for land management and reclamation.
1Moore, Russell, and Thomas Mills. An Environmental Guide to
Western Surface Mining, Part One.; Federal Leasible and Locatable
Mineral Regulations. Washington, D.C.: Government Printing
Office, 1977, p. 64.
352
-------
Requirements for restoring lands affected by energy development
differ according to resource and jurisdiction. In the case of
surface coal mining, this issue has been on the public agenda for
decades, and more uniform regulations for coal mine reclamation
have recently been made (see below). However, reclamation objec-
tives and requirements vary widely for other minerals. Even with
coal, the limited knowledge of the probability of successfully
reclaiming, and the trade-offs associated with this diversion,
are perceived differently by various stakeholders.
Revegetation efforts have generally involved both "native"
and "introduced" species. Some reclamation policies call for the
use of native species because they are well adapted to the condi-
tions that exist at the reclamation site. But limited availa-
bility of seeds for native vegetation in arid and semiarid loca-
tions may limit the use of native species.1 Also, some reclama-
tion efforts use introduced species because they germinate and
grow more quickly. However, it is uncertain whether or not intro-
duced species will persist and become a component in the ecosystem.
Problem "weeds" frequently colonize and outcompete other species
used in revegetation and are not suitable as food for wildlife
or livestock.
(1) Policies for Reclaiming Disturbed Lands
From the beginning of mining activities in the 19th century,
western mining companies have done some reclaiming of mined lands,
but with few controls by government agencies. Until the early
1970's governments at all levels largely ignored reclamation prob-
lems. During the 1970's a majority of western states enacted leg-
islation to require reclamation provisions as summarized in
Table 7-6.
The most sweeping changes in reclamation law came in 1977
with the passage of the Surface Mining Control and Reclamation Act,2
which called for state implementation of surface mining standards
for coal extraction. The specific intent of the act is to provide
minimum uniform standards to regulate mining. Lobbying for this
type of surface mining law during the last several sessions of
Wyoming mine official. Personal communication, 1977. While
limited availability of seeds is often a problem for some species
needed for revegetation, not all native seeds are in short supply.
Instead the most significant problem is that wild seed must be
collected in the same general area where it will be planted.
Streeter, Robert G., Coal Research Manager, Fish and Wildlife Ser-
vice, U.S., Department of the Interior. Personal communication,
1977.
2Surface Mining Control and Reclamation Act of 1977, Pub. L.
95-87, 91 Stat. 445.
353
-------
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Congress by a coalition of environmentalists' groups was intense.
Opposition by the National Coal Association and other industry
groups was equally intense. Most minerals, including oil, gas,
oil shale, and uranium, are still not covered by a uniform rec-
lamation policy.
Strongly supported by Secretary of the Interior, Cecil Andrus,
the Surface Mining and Reclamation Act of 1977 substantially
changes the federal role in controlling coal surface mine recla-
mation. : The principal objective of the act, as indicated by
House Interior Committee Chairman Udall of Arizona, is to provide
a uniform system of restoring strip mined lands to approximately
original conditions. As shown in Table 7-7, the act established
an Office of Surface Mining Reclamation and Enforcement (OSM) in
the DOT, with responsibility for developing detailed reclamation
performance standards. It also establishes an Abandoned Mine
Reclamation Fund, requires reclamation plans to provide for pub-
lic hearings and citizens suits, and outlines procedures for des-
ignating lands unsuitable for mining.
Strip mining of highly productive farmland was a contro-
versial element of the new law. Environmentalists and some agri-
cultural interests had sought to prohibit any strip mining of
farmlands. Coal industry lobbyists argued that the land could
be restored and made even more useful after reclamation. As a
compromise, the act permits mining of "prime farmlands" and in
alluvial valleys when the developer can show that the proposed
mining operations would not preclude farming and not adversely
affect the quantity of water in the valley floor system.2 Sur-
face owner consent is required before mining can take place on
federal strippable lands beneath an owner's land. Finally, re-
vegetation and restoration to original topography is generally
required except in rare circumstances (see box "Modifying To-
pography" ) .
The act also provides uniform reclamation standards on all
lands whether federal or not, and assigns states management and
enforcement responsibility. Officials of the OSM are to inspect
periodically all mines and report on the: progress of reclamation
work. Regardless of where produced, a tax on mined coal is used to
Although its title does not indicate it, the legislation
covers both the adverse effects of surface mining and, to a lesser
extent, the surface impacts of underground coal mining operations.
But there is no broad legislation addressing subsidence in the way
surface mine reclamation is addressed.
2However, the law does not include grazing pasture or hay
meadows in its definition of "prime farmland" where special rec-
lamation provisions will apply. See "Farm Land Mining Standards
Studied." Denver Post, February 1, 1978.
356
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TABLE 7-7: SELECTED REQUIREMENTS OF THE SURFACE MINING
CONTROL AND RECLAMATION ACT OF 1977
Scope:
Institutions:
Abandoned Mine
Fund:
Implementation/
Monitoring:
Procedures:
Citizen
Participation:
Performance
Standards:
Designation of
Lands Unsuit-
able for
Mining:
Surface Owner
Consent:
Enforcement:
Coal resources that are surface mined (some coverage of
surface activities of underground mines), requires studies
of reclamation needs of other minerals, and provides method
of designating areas as unsuitable for mines over two acres.
Establishes an Office of Surface Mining Reclamation and
Enforcement (OSM) in the Department of the Interior
Establishes a fund based on a coal tax of 35 cents per ton
for surface mined coal, 15 cents/ton for underground coal,
and 10 cents/ton for lignite. Fifty percent of the fund
goes to states for their reclamation needs.
States implement the plan with approved programs. States
inspect and monitor. At least two Federal inspections at
each mine each year, plus inspections at certain inactive
mines.
All surface coal mines require a permit. The permit has
reclamation plan requirements, hearing, approval and denial
procedures, and provision for revised plans. Posting a
reclamation bond is required. Inspection is provided with
administrative and judicial review.
Provides for hearings on reclamation plans with participa-
tion by interested parties, provides for citizens' suits
against agencies and/or the Secretary of the Interior.
Provides detailed performance standards for stabilization,
restoration, revegetation, and postmining land use, and
prevention of water pollution or off-site effects.
Provides for protection of prime farmlands and alluvial
valley floors, and designation of other lands as unsuit-
able for mining by interested parties.
Requires surface owner written consent, and consultation
in development of a comprehensive land-use plan.
OSM enforces reclamation requirements at existing mines,
fines and civil penalties.
357
-------
reclaim abandoned lands, with
states sharing 50 percent of
the fee. The Administrator of
the EPA must concur with pub-
lished regulations, and must
also concur in approving
state programs.1
As shown in Table 7-8,
many other federal agencies
are now involved directly in
administering and managing
reclamation provisions for en-
ergy development. Except for
uranium (and other hard rock
minerals) this involves a sur-
face management agency that can
make stipulations in a lease if
the lands are publicly held.
These agencies are typically
BLM, Forest Service, or the
Bureau of Indian Affairs. In
the case of coal, extensive and
additional requirements have been
gated regulations.
MODIFYING TOPOGRAPHY
There is an opposite extreme to
the original contour concept, the
leveling of hills and mountains to
tabletop flatness. A recent EPA
study indicated that mine operators
in rough topography generally prefer
this approach, questioning the desir-
ability of reestablishing an original
contour. The new Strip Mine Act has
provisions for making possible use of
exceptionally flat tops for airports
or parking lots.
—Chironis, Nicholas P. "Imaginative
Plans Make Mined Land Better Than
Ever." Coal Age, Vol 82 (July 1977.),
p. 49.
specified in recently promul-
For oil, gas, oil shale, and ge^-herrnal resources, most re-
quirements are informal and have developed on the basis of
1 EPA has administrative and managerial interest in reclamation
particularly in its air, water, and research programs. Mine dust
measurements are a part of EPA's air monitoring programs, as is
measurement of mine runoff. For example, as of July 1, 1977, coal
mines that have discharges are required to comply with Final Efflu-
ent Limitations Guidelines promulgated by EPA. Heeman, Michael T.
"EPA Sets Water Pollution Limits." Coal Age, Vol. 82 (July 1977),
p. 141. Mine runoff, and other surface disturbances from energy
development are also supposed to be included in area-wide waste-
water management planning. See: Federal Water Pollution Control
Act Amendments of 1972, Pub. L. 92-500, § 208, 33 U.S.C.A. § 1288
(Supp, 1976).
2The Surface Mining Control and Reclamation Act of 1977 (Pub.
L. 95-87, 91 Stat. 445) requires the Secretary of Agriculture to
demonstrate that adverse effects from surface mining for coal will
not occur in national forests; the act does not contain a similar
provision for national grasslands. Development is therefore easier
on grasslands (which are lands acquired during the 1930fs). In
addition, fewer revenues from grasslands are distributed locally
than are revenues from lands in the public domain, e.g., national
forests.
358
-------
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cooperation between energy company personnel and field agency
management staff, whose development-oriented background usually
facilitates effective communication with energy company employees,
Specific reclamation re-
quirements for uranium mining
are largely nonexistent at both
the state and federal levels.
Since the early 1970's, envi-
ronmental groups (especially
the Sierra Club and Wilderness
Society) have fought to bring
land disturbances from uranium
development under closer fed-
eral control. Interior and
Forest Service personnel also
favor federal legislation and
regulations to ensure that min-
eral uses on public domain lands
are balanced and coordinated
with other surface uses. Most
of these groups and organiza-
tions favor the adoption of a
leasing system over the current
location-patent system.: They
contend that uniform federal
controls would lead to more
production from claims and
minimize abuses by claimants
who have no intention of mining
the claimed lands (see box).
Moreover, a leasing system
could contain provisions requir-
ing reclamation and assure a
"fair return" for "hard rock"
minerals extracted from public lands.
UNMINED CLAIMS
In 1974, officials from the Gen-
eral Accounting Office (GAO) visited
240 unpatented mining claims and 93
patented claims selected randomly
throughout the U.S. Of the 240 min-
ing claims, GAO found that "239 were
not being mined at the time of our
visit, and there was no evidence that
any mineral extraction had ever taken
place on 237 of the claims." The
agency reported that only seven of
the 93 patented claims were being
used for any apparent purpose, while
20 were being utilized for nonmining
purposes? for example, for residences
or grazing activities. Based on
these observations, GAO concluded
that the government had "no opportun-
ity to induce mining of these lands"
since the 1872 Mining Law does not
require that the holder of a claim
must mine the land.
—Choitz, Jackie. "Mining Law
Update." Colorado/Business, Vol. 5
(February 1978), p. 27.
At least two bills are now before Congressional committee
to modify existing controls over uranium mining.2 One bill,
Choitz, Jackie. "Mining Law Update."
Vol. 5 (February 1978), pp. 27-28.
Colorado/Business,
2See House of Representatives Bills 9292 and 5831. Several
committees of the Congress formulate reclamation policies. Two
of the most important are the House Interior and Insular Affairs
Committee, especially its Subcommittee on Mines and Mining, and
the Senate Interior and Insular Affairs Committee and its Sub-
committee on Energy and the Environment. The latter has juris-
diction over legislation on environmental impact of the produc-
tion of energy and energy conservation.
360
-------
supported by the Carter Administration, calls for a leasing sys-
tem as noted above. The bill would also impose uniform controls
to protect the environmental values of the land. However such
changes to the Mining Law of 1872 are being strongly opposed by
the American Mining Congress and state mining organizations.1
Another bill (H.R. 5831) seeks to preserve the present location-
patent system, keep the public domain open, and contains no pro-
visions for increased environmental protection, calling for mini-
mal change in the law to limit adverse economic consequences.2
The contrasting bills underscore the fundamental issues with re-
gard to "hard rock" mineral resources: what actions need to be
taken to provide for adequate exploration and development; how
much control should the federal government exercise; and what pri-
ority should energy development have over other public land uses.
(2) Reclamation and Waste Disposal
Major concerns with mine wastes have generally been over the
quality of wastes and the expectation that land used for disposal
is irreversibly committed, rather than with "quantities" of land
affected. Many mine wastes, especially uranium tailings, solid
wastes from coal, and flue gas desulfurization wastes can pose
threats to human health and the environment. And because of its
volume, spent shale can also pose environmental problems.3 The
seriousness of such threats depends on how the wastes are managed
and monitored, including where and how wastes are disposed of or
stored and how they are treated and transported.
Governmental regulation of mine wastes typically focus on
specific types of wastes or address selected impacts. Two of the
more important federal laws relevant to managing the impacts of
energy-related waste disposal are the Surface Mining and Reclama-
tion Act (discussed earlier) and the Resource Conservation and
Recovery Act of 1976.1*
, Jackie. "Mining Law Update." Colorado/Business ,
Vol. 5 (February 1978), p. 27.
2"Mineral Rights Raise New Dust." Business Week, October 3,
1977, p. 48.
3See White, Irvin L. , et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977; and White, Irvin L. , et al. Energy From the West;
Impact Analysis Report. Washington, D.C.: U.S., Environmental
Protection Agency, forthcoming.
^Resource Conservation and Recovery Act of 1976, Pub. L. 94-
580, 90 Stat. 2795.
361
-------
As discussed above, the 1977 Reclamation Act establishes fed-
eral control over the surface effects of mining. With regard to
wastes, the thrust of the act is to control water pollution. In
general, the accompanying regulations require burial of mine wastes.
However, the initial regulatory program still deals only with toxic-
forming and acid-forming wastes, and with proper reclamation of
wastes produced from coal preparation facilities where they are
used in backfilling or grading mined areas, placed in impoundments,
or used in construction of dams. Complete controls over waste
placement, tailings, coal processing wastes, and others are to be
addressed later. Sedimentation ponds are included, and inspection
by the Mining Enforcement and Safety Administration (MESA) of all
settling ponds regardless of embankment heights or volume is re-
quired. But the role of MESA regulations once complete controls
are developed remains open to question.1
The Resource Conservation and Recovery Act provides a frame-
work for dealing with all solid waste disposal. Under this act,
land, like air and water resources, is placed under strict federal
regulatory control. In attempting to conserve virgin resources,
the law seeks to develop a nationwide system for the management of
hazardous and solid wastes (regional solid waste plans) and for
the recovery of resources from these wastes. If some solid wastes
from the coal fuel cycle are classified as hazardous, this could
have far reaching effects on the way such wastes are presently
handled, and on the final regulations under the Surface Mine Act.
At the present time, regulations dealing with hazardous wastes
and regional solid waste plans are still being developed. EPA is
charged with establishing criteria for regional and solid waste
plans, including mine wastes, and conducting detailed studies of
mine wastes. Recognizing the close mandate between reclamation,
land use, and EPA's role in maintaining environmental quality, re-
organization studies in the Office of Management and Budget have
suggested incorporating EPA into the DOI or combining"them in a
new Department of Natural Resources and the Environment. In part,
such a reorganization may be due to the strong environmental ap-
proach in Interior by its current Secretary.2 Some westerners have
expressed concern that such a reorganization would "destroy local
autonomy, break down communication and cooperation among already
existing resource agencies" and could mean decisions affecting
western states would be made without sufficient regional repre-
sentation.^
lSee 42 Fed. Reg. 62,646 (December 13, 1977).
2Kirschten, J. Dicken. "Reorganizing Natural Resources May
be Tougher Than Carter Thought." National Journal, Vol. 9 (Oct-
ober 15, 1977), pp. 1613-18.
3Sibley, Whit. "Resources Shake-Up Idea Shakes Up Westerners.
Denver Post, February 8, 1978.
362
-------
C. Access to and Control of Recreational and Critical
Environmental Areas
The environmental quality of most western states has been
stereotyped: New Mexico is "The Land of Enchantment"; Wyoming is
"Sportsman's Paradise"; Montana is the "Big Sky" country; and
Arizona is a "Retirement Capitol."1 Yet, these areas are also
centers for mining and resource exploitation. Congressmen from
the western states are most active in committees that deal with
natural resources, and they represent industrial, recreational,
and environmental interests that frequently conflict.2 Providing
for wilderness recreational experiences,3 and for more intensive
use of national parks, is a continuing conflict for land managers
and policymakers. **
As land-use planning has developed during the past decade,
so has the government role in controlling individual uses of nat-
ural resources such as wildlife, and scenic or recreational areas.
These policies are a part of the government activities in planning
land use, but they deal more with managing and accommodating the
activities of individuals. Many of these controls have been in
response to sportsmen and environmental interest group demands to
sustain or improve the population status of endangered species and
wildlife. Interest groups such as Trout Unlimited, Ducks Unlimited,
and the National Wildlife Federation are especially active in the
West. The National Wildlife Federation, the Sierra Club, and the
National Audubon Society have been historically important groups,
and have lobbied for wilderness areas, wildlife areas, wildlife
refuges, and controls over endangered species, especially since
the 1950's. In response to these lobbying efforts, Congress passed
the Endangered Species Acts of 1968 and 1973, the Wilderness Act
of 1964, and has added significantly to wildlife refuges in the
western states.
, Neal R. The Mountain States of America. New York,
N.Y.: Norton, 1972, pp. 290-91.
2Wagner, James R. "Interior Subcommittees Move Slowly on
Legislation to Reform Public Lands Policy." National Journal,
Vol. 3 (August 21, 1971), pp. 1768-73.
3Wagner, James R. "Agencies Speed Up Review in Push to Ex-
pand Wilderness System." National Journal, Vol. 2 (1970) , pp.
2826-31; and U.S., President, Office of the White House Press
Secretary. "Message to the Congress from the President."
Mimeographed copy, Washington, D.C., May 23, 1977.
^Scher, Zeke. "The Great Canyonlands Double Cross." Denver
Post, Empire Magazine, August 21, 1977, p. 16.
363
-------
These same groups have been active; in promoting increased
recreational and scenic resources for tourists and westerners,
resulting in legislation1 establishing the Bureau of Outdoor Rec-
reation (now the Bureau of Heritage Corservation and Recreation)
to coordinate recreation planning, and a fund to acquire lands
for recreation.2
The Bureau is responsible for coordinating Wild and Scenic
Rivers, National Trails, and state and local recreation programs.
It also coordinates government policy restricting recreational
activities such as President Carter's recent Executive Order that
establishes federal policy to designate areas in which off-road-
vehicles (ORV) can be used and in which they are prohibited.3 In
the latter case, the effect of such a role has been to antagonize
a major sector of the recreational public which frequently uses
western lands.
The role of a number of federal agencies dealing with wild-
life and the quality of the ecosystem is indirect, such as the
Soil Conservation Service or the EPA. EPA has a direct research
mission in understanding the role of plants and animals in the
ecosystem and it regulates air emissions and water quality to min-
imize adverse effects on wildlife. Russell Train, a past Adminis-
trator of EPA, has been critical of agencies in the DOI, suggesting
that their guardianship of wildlife resources is too often governed
by narrow interests and near-term concerns of income-producing
sportsmen.^ Train cited a Council on Environment Quality estimate
that 97 percent of the funds on wildlife management go to three
percent of the species, the ones used for hunting, trapping, or
fishing.5
•In the past both individual energy development companies and
their lobbies, such as the American Petroleum Institute and the
American Mining Congress, have opposed restrictions on vehicle
use or setting aside large tracts of land for primitive areas or
Bureau of Outdoor Recreation Act of May 28, 1963, Pub. L. 88-
29, 77 Stat. 49, 16 U.S.C. 460.
2Land and Water Conservation Fund Act of 1965, Pub. L. 88-578,
78 Stat. 897, as amended by Federal Water Project Recreation Act,
Pub. L. 89-72, 79 Stat. 2.13.
3"Off-Road Vehicles on Public Lands," Executive Order 11989
(May 24, 1977)'. 42 Fed. Reg. pp. 26959-60 (May 25, 1977).
4"Interests Governing Wildlife Too Narrow, Train Says."
Environment News . (Boston, Mass.: U.S., Environmental Protection
Agency,Region I, New England Regional Office), November 1976.
5Ib_id.
364
-------
national parks (see box).J
These groups have been active
in commenting on management pro-
posals such as restrictions on
vehicle use that may be impor-
tant in gaining access to or ex-
ploring for energy resources.2
State government control
over recreational activities
is diffuse. Programs exist
in a number of administrative
agencies, including surface
management agencies and those
involved in managing natural
resources. Most states pro-
vide for a park and recreation
department or commission that
manages parks, campgrounds, or
recreational areas. A separate
department of fish and game
typically controls access and
catch of game or fish resources,
and a state department of for-
estry controls use of state
forests (see Table 7-9).
7.2.3 Summary
As the above discussion demonstrates, the land-use impacts of
energy resource development occur as a consequence of two kinds of
land-use requirements: first, the land requirements of the energy
development itself such as for mines, conversion and support facil-
ities, and waste disposal; and second, land required to meet the
needs of energy-related population increases, such as housing and
recreation. Both kinds of land-use requirements affect competition
for public and private lands and environmental quality and aes-
thetics .
On the basis of the above discussion, land uses can be di-
vided into the three categories shown in Figure 7-2: economic/
production, preservation/conservation, and leisure-time/recreation.
ACCESS TO RECREATION
There has been considerable op-
position to designating lands as na-
tional parks. In the case of Canyon-
lands National Park at the confluence
of the Green and Colorado Rivers in
Utah, oil, uranium, and other mineral
interests as well as stockmen and
businessmen opposed creation of the
park in the early 1960's. The idea
of the park was sold through Park Ser-
vice films and documents which showed
that opening the park to tourists
would bring prosperity to Utah resi-
dents. In 1977, the National Park
Service established the policy that
Canyonlands would not be developed
for vehicle access, and that it would
largely remain a wilderness park. It
is now one of the least used national
parks, with 79,100 visitors in 1976.
—Scher, Zeke. "The Great Canyon-
lands Double Cross." Denver Post,
Empire Magazine, August 21, 1977,
p. 10.
1Scher, Zeke. "The Great Canyonlands Double Cross."
Post, Empire Magazine, August 21, 1977, p. 10.
Denver
2U.S., Department of the Interior, Bureau of Outdoor Recre-
ation. Draft Environmental Impact Statement: Departmental Imple-
mentation of Executive Order 11644 Pertaining to the Use of Off-
Road Vehicles on the Public Lands. Washington, D.C.: Bureau of
Outdoor Recreation, July 1976.
365
-------
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Energy resource development must compete for land with other eco-
nomically productive land uses such as grazing and row crops; and
it must compete with preservation and conservation, and leisure-
time and recreational uses. Competition already exists within and
among these three categories of land use in the West. Large-scale
energy resource development and the associated large population
increase that can be expected will intensify this competition
during the next two decades or so, taxing the conflict resolution
and problem-solving capabilities of all levels of government.
The major environmental and aesthetic impacts of energy de-
velopment will occur as a consequence of surface lands being dis-
turbed, both by the construction and operation of energy facil-
ities and by the leisure-time and recreational activities of an
enlarged population. Surface mining, site preparation, road
building, and other energy development activities will disturb
surface lands, usually in relatively small amounts for any single
facility, but in large amounts in areas of concentrated, large-
scale development. Whether these lands can be successfully re-
claimed and returned to their original or some other economically
productive use is still problematic; and, as in dealing with
increased competition for land, successfully reclJiimirig these
lands will challenge the planning, monitoring, and enforcement
capabilities of all levels of government.
Leisure-time and recreational environmental and aesthetic
impacts may be more lasting and may prove to be more difficult to
deal with successfully. The increased, easier access needed for
energy development will open up more lands for leisure-time and
recreational activities. The use of ORV and other vehicles will
be greatly increased and, unless adequately controlled, will de-
face and scar the land. Hunting will also increase, stepping up
the pressure on game animals in the vicinity of energy develop-
ments. Population encroachments will cause certain species of
animals to retreat from their present habitat; and, in some
cases, habitat fragmentation and encroachment together with the
land disturbed directly by energy development activities may con-
sume a significant proportion of certain types of habitat.
As noted above, all of these land-use and reclamation impacts
and problems and issues will challenge n;he planning, monitoring,
and enforcement capabilities of all levels of government. It is
riot clear that the existing institutional mechanisms described
above will be adequate to meet the challenge. This problem is com-
plicated by the fact that the federal government and Indian tribes
are major landowners in the eight-state study area. Several fed-
eral agencies have a management role and responsibility for these
lands, including Indian lands. Coordinated, cooperative planning
and management among these several agencies is limited, but the
major problem appears to be coordination and cooperation among
levels of government. For example, state governments cannot be
certain that they will be able to participate and have a decisive
368
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role in decisions concerning energy developments within their own
boundaries. As the analyses in other chapters in this report
demonstrate, this is but one area in which serious intergovern-
mental problems and issues are being raised in connection with
western energy resource development.
Given both the range of interests and values at stake in
land use in the West and the pluralistic nature and federal struc-
ture of our political system, it is unlikely that any one land
use or one level of government will prevail over all others. It
is much more likely that some lands will be allocated for all
three land-use categories identified earlier in Figure 7-2; and
that an effort will be made to insure that land-use policymaking
institutions and processes are adequate to deal effectively with
both present and future land-use and reclamation problems. It
can also be expected that an effort will be made to accommodate
the multiplicity of interests and various governments involved.
Therefore, the overall public policy problems and issues in this
category involve both substantive and procedural concerns: Which
lands will be allocated for which use in what quantity? Can lands
disturbed by energy development be returned to their original state
or to some economically productive state? How and by whom will
allocations be made, access and activities controlled, and recla-
mation insured? In the following section, alternative policies
and implementation strategies for dealing with these problems and
issues are identified, evaluated, and compared.
7.3 ALTERNATIVE POLICIES FOR LAND USE AND RECLAMATION
7.3.1 Introduction
The above discussion led to the conclusion that land-use and
reclamation problems and issues likely to arise as a consequence
of western energy resource development reflect two kinds of con-
cerns: procedural and substantive. Procedural concerns focus on
how policies are made; for example, on whether state and local
governments are given adequate opportunities to protect their in-
terests when decisions about the development of federal lands are
made. Substantive concerns focus on the content and anticipated
consequences of land-use and reclamation policies; for example,
on which lands are to be allocated for surface mining and what
the effects of those allocations will be.
Based on the extended discussion in the preceding section, it
appears that land-use and reclamation policies relating to western
energy resource development must address two closely related, over-
lapping general policy objectives, one primarily procedural, the
other primarily substantive. These two general policy objectives
are:
• To insure that the institutions and processes for making
land-use and reclamation policies and decisions give
369
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adequate consideration to all current and future
uses;
• To provide for and protect a diversity of present and
future land uses.
7.3.2 Description of Alternatives
To achieve either or both of these objectives, a more com-
prehensive and better coordinated land-use planning and manage-
ment system will be required which provides participation oppor-
tunities for a broad range of parties-at-interest, coordinates
cooperative planning -and management among agencies and levels of
governments, and specifies what lands can be used for what pur-
poses. Specific alternatives for creating such a system differ
primarily in terms of the extent to which the system would be
centralized, how comprehensive it would be, and the degree of
control over land uses that would be exercised. The possible
range of specific alternatives is from establishing a central-
ized federally coordinated comprehensive land-use planning and
management system to incrementally improving the decentralized
fragmented system described above; and from making case by case
decisions for selected kinds of land uses (such as energy facil-
ity siting) to preparing a comprehensive land-use plan which des-
ignates permissible land uses and requires all lands disturbed
by energy development either to be reclaimed to their predevelop-
ment condition or redeveloped for some productive use.
A. What Are the Alternatives?
It is not feasible to deal here with the entire range of pol-
icy alternatives for achieving the two general objectives stated
above. The scope of the analysis can be narrowed considerably by
focusing on a more specifically western energy objective drawn
from the two objectives described in Section 7.3.1:
• To meet the land-use needs of energy development,
including the land requirements of energy-related
population increases, while providing for and pro-
tecting a diversity of present and future land uses.
As shown in Table 7-10, establishing a better coordinated, more
comprehensive land-use planning and management system to control
land use and changes in land use is one way to go about attempt-
ing to achieve this objective. Specifically, to achieve this
objective, land use and changes in land use would have to be con-
trolled and all lands disturbed by energy resource development
would have to be either reclaimed or redeveloped. The alterna-
tives are not mutually exclusive and a comprehensive land-use
370
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TABLE 7-10:
LAND-USE AND RECLAMATION OBJECTIVES
AND POLICY ALTERNATIVES
OBJECTIVE
CATEGORY
OF
ALTERNATIVES
SPECIFIC
ALTERNATIVES
Meet the land-use
needs of energy
resource develop-
ment, including
those associated
with population
increases, while
providing for and
protecting a di-
versity of pres-
ent and future
land uses
Control land use
and changes in
land use
Designate permis-
sible land uses
Control access to
and activities on
all public and
private lands
Require rehabili-
tation of all
lands disturbed by
energy resource
development
Require reclama-
tion (return to
predevelopment use)
Require redevelop-
ment (return to
some other pro-
ductive use)
planning and management system would probably include both.1 Each
alternative could be designed to achieve the stated objective of
supporting energy development while providing for and protecting a
diversity of present and future uses. The two alternatives differ
primarily in terms of emphasis.
B. How Can the Alternatives Be Implemented?
The first category of alternatives emphasizes a comprehensive
planning approach which attempts to insure "appropriate" or "best"
fit of land and land-use activities (see Chapter 12 on Energy Facil-
ity Siting). Based on an understanding of present and future land
needs and the compatibility of specific land areas and land uses,
permissible land uses for these land areas would be identified.
This means, of course, that certain land uses may be^ explicitly
prohibited; for example, surface mining on prime agricultural
lands. And it may be considered desirable to control access to
and activities in designated permissible use areas. For example,
Terminology in this problem area is not standardized. As
used here, rehabilitation means that disturbed lands will be re-
stored to some productive use; reclamation means restoring to the
predevelopment use; redevelopment means restoring to some other
productive use.
371
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the number of people allowed in a recreation area at any one time
may be limited; and snowmobiles may be permitted but not other
kinds of ORV's.
This comprehensive planning approach could be centralized with
the federal government formulating the goals and the states imple-
menting them. (This is the pattern in waiter and air quality, see
Chapters 5 and 6.) Or the federal role could be limited to provid-
ing financial and technical assistance. However, because of the
large amount of federal land in the West, it is unlikely that a
state system could deal effectively with the land-use problems and
issues discussed earlier unless the federal government were to co-
operate with the states to coordinate planning for federal lands
with state planning for state and private lands. An intermediate
alternative that would address this federal-state problem, would
be to establish a multistate land-use planning organization as a
forum for cooperative, coordinated land-use planning and management
in the region.
The second category of alternatives emphasizes returning lands
disturbed by energy resource development to a productive use. With-
in the current land-use and management system, lands would be made
available to meet energy needs with the stipulation that they be re-
habilitated. Specific alternatives would be to require either rec-
lamation or redevelopment. As with the first category of alterna-
tives, this approach could give the lead planning and management
role to the federal government, to the states, or to a multistate
organization.
In the following section, only reclamation and redevelopment
alternatives are evaluated and compared. This narrower focus is
necessary because of the scope of this topic, but it also seems
appropriate because of the importance of the reclamation issue for
western energy resources development.
7.3.3 Evaluation of Alternatives
In general, energy resource development can be viewed as a
temporary or "interim" land use. With some possible exceptions,
lands withdrawn for energy resource development will be available
for other uses after development is completed. The basic question
is whether these lands will be returned to their predevelopment use
or to some other productive use. That is, will they be reclaimed
so they can be used as they were before energy development, or re-
developed so they can be used for some other productive use. Cur-
rent state and federal laws and regulations generally require that
lands disturbed by surface mining be reclaimed. In the West, this
usually means returning them to an agricultural use.
Comparable requirements have not been established for other
surface-mined resources such as oil shale and uranium.
372
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Current regulations permit some variation in meeting these
objectives depending on site-specific conditions. However, the
clear preference articulated in both state and federal require-
ments is for reclamation rather than redevelopment. It is not
obvious that this is always the "best" policy alternative; and it
is not clear that reclamation is possible in all parts of the West.
What follows is an analysis of the reclamation and redevelopment
alternatives. To the extent possible given the limited informa-
tion available, these two alternatives are evaluated and compared.
Information is limited in large part because experience in the
West with both reclamation and redevelopment is limited.
A. Evaluation Criteria
The five basic evaluation criteria identified and defined in
Chapter 3 will be used in this analysis: definitions of these cri-
teria as they apply to reclamation and redevelopment are presented
in Table 7-11 together with appropriate quantitative and qualita-
tive measures. As Table 7-11 illustrates, applying these criteria
raises both substantive and procedural questions. Although there
is some overlap, questions about achieving objectives, costs, risks,
and benefits and the distribution of costs, risks, and benefits are
primarily substantive while questions about flexibility and imple-
mentability are primarily procedural. This is appropriate since,
as noted above, the overall policy objectives for land use and re-
clamation are also substantive and procedural.
B. Evaluation of the Reclamation Alternative
Almost all energy resource development in the eight-state
study area will take place in rural settings where the most com-
mon current land uses are agricultural, primarily ranching, graz'-
ing, and farming. As noted earlier, reclamation in this setting
means returning the lands disturbed by energy development to these
predevelopment agricultural uses. Two strategies for implementing
this alternative are identified in Table 7-12: continue current
requirements or make the system more flexible. As the evaluation
in this section will show, the major reasons for considering an
alternative to the current requirements is that their dollar costs
are generally high and the probability of successful reclamation
in all parts of the study area is uncertain.
At the present time, reclaiming surface-mined coal lands goes
on simultaneously with mining and, in this area, usually involves
backfilling, grading, replacing topsoil (which is now often sepa-
rated and stockpiled during mining), and establishing a vegetation
cover. Revegetating requires soil preparation, seeding and/or
planting, and perhaps fertilizing and irrigating. At most west-
ern mine sites, seeding can be accomplished by either broadcasting
or drilling. If trees and shrubs are planted, they are usually
planted by hand.
373
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A wide variety of seeds, shrubs , and trees are being used.
Native seeds and seedlings are usually required unless it can be
shown that an "introduced" species will have "equal or superior
utility for the approved postmining land use, or are necessary to
achieve a quick, temporary, and stabilizing cover."1 However, no
concensus exists among state reclamation authorities and mining
companies as to which varieties are preferable. Sweet clover,
crested wheatgrass, smooth broomgrass, and alfalfa are relatively
quick and easy to get started; and cattle do well on these vari-
eties. However, there is some question about their long-term
survival and, in some instances, state authorities have refused
to release the reclamation bonds of coal companies which have used
only these varieties in their reclamation program.2 Most of the
states in the study area now call for the use of native seeds to
produce a native vegetation cover even though it takes longer to
establish.
As shown in Table 7-11, five criteria can be used to evaluate
the reclamation alternative. These five criteria raise five basic
questions: How effective will reclamation be? What costs, risks,
and benefits does it involve? How will these costs, risks, and
benefits be distributed? Can the alternative be used at a variety
of sites under a range of conditions? And, how difficult will the
alternative be to implement?
(1) How Effective Will Reclamation Be?
The effectiveness of reclamation can be evaluated in terms of;
What is the probability of success? How long will the disturbed
lands be withdrawn from productive agricultural uses? How compat-
ible will agricultural uses of the reclaimed lands be with other
land uses and environmental plans and programs in the area? And,
to what extent will reclamation requirements constrain energy re-
source development?
As noted earlier, current practice is for reclamation to be
an integral part of the mining activity itself. The time required
to return surface-mined lands to productive uses depends on site-
specific factors such as climate and soil characteristics. Long-
term success in reclaiming land, especially in arid and semiarid
areas, is uncertain, but will depend largely on the management
*42 Fed. Reg. 62691 (December 13, 1977).
2Thoem, Terry, Environmental Protection Agency, Region VIII.
Personal Communication.
377
-------
commitment made by the landowners and/or the mining company,
including controlling grazing and other potentially damaging
activities.J
Assuming success in reclaiming to predevelopment agricultural
uses, some lands will be withdrawn from use from the time of the
initiation of mining site preparation until some five to seven
years after the mining operation is terminated. However, because
reclamation and mining go on simultaneously, blocks of land would
be returned to productive agricultural uses thoughout the lifetime
of the mine.
In terms of the other measures of effectiveness in achieving
land-use objectives, reclamation ranks high on compatibility with
other land uses, particularly if the implementation strategy is
designed to meet current requirements with regard to contours and
seeding. However, unless proper preventive steps are taken, re-
claimed lands can be a nonpoint source of water pollutants, partic-
ularly if fertilizers are used and if erosion and leaching occur.
Sedimentation in local streams can also be a problem. And the re-
claimed area is a potential source of particulates that can con-
tribute to air quality problems. If these kinds of problems are
not controlled, reclamation may well conflict with environmental
plans and programs in the area.
(2) What Costs, Risks, and Benefits Are Involved in Reclamation?
Economic costs and benefits are an important measure of the
efficiency of reclamation. Clearly the economic costs of regrading
and revegetation alternatives are high. As shown in Table 7-13,
these costs vary from site to site. Currently, predictions of rec-
lamation costs are uncertain. In part, this is because of differ-
ences in the accounting procedures used by mining companies to
calculate reclamation and related costs. In part it is because
many locational factors cause costs to vary from one site to an-
other. These factors include such things as terrain, soil, vege-
tation, type and thickness of overburden, seam thickness, ground
and surface water, climate, type and size of equipment used, mining
technique, applicable reclamation laws and regulations, and the
mining companies' land reclamation methods.2 On the basis of pub-
lished reports, the range for total reclamation costs in the
xSee Hodder, Richard L. "Surface Mined Land Reclamation Re-
search in Eastern Montana," in National Coal Association. Papers
Presented Before Research and Applied Technology Symposium on Mined-
Land Reclamation. Monroeville, Pa.: Bituminous Coal Research, Inc.,
1973, p. 85.
2U.S., Department of the Interior, Bureau of Mines. Coal Sur-
face Mining Reclamation Costs in the Western United States"Wash-
ington, D.C.: Government Printing Office, 1977, p. 6.
378
-------
TABLE 7-13: ESTIMATES OF RECLAMATION COSTS IN THE WEST, 1977
COST ITEM
Design, engineering
and overhead:1
Range, per acre
Range, per ton
Bond and permit fees"
Range, per acre
Range , per ton
Backfilling and
grading: '
Range, per acre
Range , per ton
Revegetation : -1
Range, per acre
Range, per con
Total reclamation:
Range, per acre
Range, per ton
HIGH DESERT AREA
(Sites 1 & 2) a
$480-1,070
0.04-0.06
0-80
0.0-<0.01
l,250i-3,420
0.08i-0.18
110-470
0.01-0.02
1,840-5,040
0.12-0.26
MOUNTAIN, AREA
SITEb
$650-750
0.06-0.08
25-45
<0.01-<0.01
990-1,970
0.10-0.20
30-45
<0.01-<0.01
1,670-2.810
0.16-0.28
NORTHERN GREAT PLAINS
SITE 1C
$350-730
0.01-0.02
50-70
<0.01-<0.01
3,700-6,200
0.12-0.20
100-200
<0.01-<0.01
4,200-7.200
0.13-0.23
SITE 2d
$350-650
0.04-0.07
20-40
<0.01-<0.01
2,200-5,500
0.24-0.61
100-150
0.01-0.02
2,670-6,340
0.29-0.70
SITE 3e
$200-400
<0. 01-0. 01
60-100
<0.01-<0.01
1,800-2,900
0.05-0.09
140-200
<0.01-<0.01
2,200-3,600
0.06-0.10
' = less than
Source: Adapted from U.S., Department of the Interior, Bureau of Mines. Coal Surface Mining
Reclamation Costs in the Western United States. Washington, D.C.: Government Printing Office,
1977, p. T~.
Sites 1 and 2 were selected from five surface mines operating in the Four Corners area of
Arizona and New Mexico.
Site is representative of four low-sulfur bituminous coal operations in Yampa coal field, Routt
County, Colorado.
Site 1 is a single bed area stripping operation like those in Montana and Wyoming (25 foot seam)/
Site 2 is an area strip mine producing lignite (North Dakota).
Site 3, an area stripping operation like those in Montana and Wyoming (40 foot seam).
Includes reclamation plan development, preparation of periodic environmental reports, supervision
of reclamation work, engineering and surveying for environmental protection, water quality protec-
tion and monitoring, overhead of environmental activities, outside environmental consultants, some
surveying and mapping, dust control associated with reclamation, miscellaneous expense.
O
Estimated using annual charge divided by the number of acres disturbed each year.
'Includes removal of vegetative cover where topsoil must be salvaged, removing and stockpiling top-
soil, backfilling troughs, ramps, and final cuts, rough and fine grading of spoil, replacing topsoil.
Where available topsoil is removed and replaced, which more than doubles costs for backfilling and
regrading compared to areas with no topsoil.
Soil preparation, seeding and/or planting, reseeding and/or replanting if required, and irrigation.
379
-------
West appears to be from less than $1,000 per acre to $6,000 or
$7,000 per acre (see Table 7-13).
The Surface Mining Act of 1977 is expected to add to these
costs since it requires more extensive and detailed surveys and
monitoring as part of the requirement for obtaining a lease or
permit. For example, the act requires monitoring climate and air
quality, and a detailed survey of previous and current land use
and soil and water characteristics, as well as improved sedimenta-
tion control. However, an analysis of the potential energy and
economic impacts of the Surface Mining Act as proposed in 1976 sug-
gests that the cost impacts associated with the new legislation
will not be great.1 The report does point out that several provi-
sions with regard to alluvial valley floors and other lands de-
clared unsuitable for mining are subject to varying interpreta-
tions. However, strict interpretation of these provisions will
affect production more than cost.2
If an evaluation of the economic costs of reclamation is to
be meaningful, these costs must be weighed against the potential
return to the energy developer, landowner, and the public-at-1arge.
In other words, the question in monetary terms is: Can the invest-
ment be justified in cost-effective terms? Based on cost estimates
representing the range of land areas likely to be disturbed and av-
erage reclamation costs, reclamation of western surface mined lands
can require an investment of from $600 million to $5 billion (1976
dollars). Although additional work is needed to quantify this (to
the extent that it can be quantified), it has not been generally
shown that reclamation is cost-effective.3
Efficiency considerations also include an evaluation of the
social benefits gained (or costs deferred) as well as dollar costs
incurred by developers. Since current laws and regulations require
reclamation, they imply that as a society, we are willing to pay
the price for land restoration (e.g., in higher energy prices and
higher costs for administering reclamation programs) and/or are un-
willing to accept the social costs associated with "sacrificed" or
abandoned lands.
1ICF, Inc. Energy and Economic Impacts of H.R. 13950 (Surface
Mining Control and Reclamation Act of 1976, 94th Congress), Draft
Final Report. Washington, D.C.: ICF, Inc., 1977, p. 2.
2Ibid.
«
3For example, see LaFevers, James T., Donald 0. Johnson, and
Anthony J. Dvorak. Extraction of North Dakota Lignite; Environ-
mental and Reclamation Issues. Argonne, 111.: Argonne National
Laboratory, 1976, p. 177.
380
-------
Recontour-revegetation alternatives appear to be highly effi-
cient in mitigating indirect impacts, such as those of an aesthe-
tic nature.1 These alternatives include maintaining the natural
topography of the landscape and protecting farmlands and other
agricultural lands.
Environmental or social costs are more difficult to deal with.
For example, regrading and soil compaction may cause higher erosion
rates which will result in increased stream sedimentation and some
loss of agricultural productivity. Other direct impacts may stem
from the intensive use of fertilizer to stimulate rapid revegeta-
tion. Over the long term, the extensive use of fertilizer may have
an adverse cumulative effect on surrounding or adjacent lands,2
but it is often needed to reestablish vegetation. It does seem,
however, that these impacts are primarily short-term trade-offs
which are required if sites are to be returned to their previous
use.3 For example, if revegetation is rapid, fertilizer runoff
will be a short-term problem.
Longer-term trade-offs that affect the efficiency of recla-
mation decisions are foregone opportunity costs, such as the loss
of public and private benefits that might be gained from the land
if it were returned to some other use. For example, marginal agri-
cultural lands in some western states may be of such low economic
value that the several thousand dollars per acre investment needed
to return the land to its former use cannot be justified on the
basis of economic efficiency alone.
(3) How VCiii These Costs, Risks, and Benefits Be Distributed?
Overall, reclamation costs will result in increased coal
prices, Long-term contracts for western coal now set a per ton at-
the-mine price of between $2.50 and $7.50.4 If reclamation costs
are between 1.2 and 70 cents per ton, reclamation costs will range
from 2 to 2^ percent of the price of coal. In terms of equity,
th<=> f' J str i but Ion of these costs can be an important factor
'King. David A. "Recreational Opportunity Costs," in Thames,
John, j",, , ed. Reclamation and Use of Disturbed Land in the South-
west-. Tuscon, Ariz.: University of Arizona Press, 1977, p. 174.
;jFevers, James R. , Donald O. Johnson, and Anthony J. Dvorak.
'l-'-l J- ^i°n °f North Dakota Lignite; Environmental and Reclamation
I_ss!aes_. Argonne, 111.: Argonne National Laboratory, 1976, pp.
175-76.
3 Ibid.
4Asbury, J.G., H.T. Kim, and A. Kouvalis. Survey of Electric
Utility Demandfor Western Coal. Argonne, 111.: Argonne National
Laboratory, 1977, pp. 45-61.
381
-------
influencing the profit margin of a mining company. In the short
term, most of these costs are borne almost exclusively by devel-
opers. And where the landowner is someone other than the energy
company, the benefits of the investment go largely to the owner.
As shown above, reclamation costs may often exceed what is consid-
ered to be the potential value of the land after restoration, thus
raising an equity issue. Mining companies may believe they are
being asked to bear an unreasonable share of the financial costs.
Of course, in the long term, these costs will be passed on to the
energy consumer. If reclamation becomes too costly, monetarily,
it could eventually constrain production at some locations, or
could increase demands by developers for financial assistance.
In sum, however, the basic equity question is whether it is fair
for future generations to be left with unreclaimed mined lands.
As addressed by the 1977 Reclamation Act, the public policy re-
sponse has been to define this as an unacceptable alternative.
Cost-effectiveness issues and equity considerations concern-
ing who bears the reclamation burden may be two reasons why indus-
try has been willing to accept uniform reclamation standards. Al-
though this often entails the acceptance of somewhat arbitrary cri-
teria for land rehabilitation, regrading peaks and ridges to the
original or approximate contour and revegetation to an extent at
least equal to natural cover is generally preferred by mine oper-
ators. 1
(4) Can Reclamation Be Used at a Variety of Sites Under a
Range of Conditions?
Decisions concerning reclamation are generally negotiated
among the surface owner, energy company, and the state reclamation
authorities before development begins. Depending on the discre-
tionary authority granted the state agency, these decisions may or
may not accommodate site-specific factors.2 As a rule, the more
specific the state requirements in terms of criteria, the less
flexible they are. However, the reclamation alternative does keep
many other land-use options open should adjacent or surrounding
uses change. This is in contrast to development for residential
^hironis, Nicholas P. "Imaginative Plans Make Mined Land
Better Than Ever." Coal Age, Vol. 82 (July 1977), p. 48.
2In August 1976 Colorado's Mined Land Reclamation Board was
confronted with the question of how much discretion should be given
to its staff to approve changes in reclamation plans once the Board
has issued a permit. Colorado's 1976 law appears to require public
hearings for any change in mining plans, but the agency seemed to
be pushing for authority to make changes so that mining companies
would not be inconvenienced by delays. See Wynkoop, Steve. "Rec-
lamation Board Ponders Authority." Denver Post, August 20, 1976.
382
-------
uses, industrial uses, and other redevelopment options which are
generally less reversible.
(5) How Difficult Will It Be to Implement Reclamation?
The reclamation alternative should be straightforward and
easy to implement. Reclamation appears to be preferred by both
developers and environmentalists. The uniformity of requirements
for reclamation should make administration easy if the rules are
closely followed. Costs of administration are likely to be low
but will increase if the time period is very long, if success is
elusive, and/or if administration becomes more flexible.
The results of this evaluation of the reclamation alternative
are summarized in Table 7-14. Briefly, what the table shows is
that reclamation may not be successful, will take at least five to
seven years to accomplish if it is successful, is expensive, has
not been demonstrated to be cost-effective, and may not return the
land to its most productive use. The major beneficiaries of rec-
lamation will be future generations and landowners. Current re-
quirements do not cover oil shale and uranium surface mining and
do not adequately accommodate site-specific differences between
coal mines. The table also shows that reclamation is generally
the rehabilitation option preferred by both developers and envi-
ronmentalists .
C. Evaluation of the Redevelopment Alternative
As noted earlier, in addition to the alternative of returning
disturbed lands to their predevelopm.ent use, they can be redevel-
oped for some other productive use such as residential subdivisions,
new towns, industrial parks, wildlife refuges, public parks, and
waste disposal facilities, among others. Table 7-15 shows that
two general implementation strategies can be followed: the first
is to change current state and federal laws and regulations and
require approval of a redevelopment plan similar to the current
reclamation plan; and the second is to include plans for redevel-
opment when land-use plans are prepared, including specifying
which redevelopment uses are preferred.
Because of the pressures that energy-related population
growth will place on outdoor recreational facilities, redevelop-
ment for recreational use is given special attention here. Since
experience with the redevelopment alternative has been limited in
the West, information for a detailed evaluation of this option is
not available. As a result, this evaluation is based on general-
izations from the experience with several redevelopment efforts
in other parts of the country.
383
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Federal agencies (especially the Bureau of Mines),1 develop-
ment companies, arid mining companies2 are actively investigating al-
ternative concepts for redeveloping energy resource lands. Most of
their studies are based on actual demonstration projects to rede-
velop "abandoned" lands where strip, open-pit, or underground mining
occurred sometime in the recent past; and they provide useful infor-
mation for policymakers who wish to consider a productive land use
other than reclamation. As noted in one of these studies, "Possible
uses for surface-mined lands have been scarcely 'scratched.'"3
One of the redevelopment alternatives which has been discussed
in a number of studies'* is the establishment of public parks with
recreational facilities as postmining land-use options. In general,
redevelopment of energy lands for use as public parks with recrea-
tional facilities takes place in several sequential stages: plan-
ning; site preparation; and additional project work. The planning
phase is critical because it involves the cooperation and assis-
tance of numerous parties-at-interest. For example, in a project
to develop a state park on 117 acres of abandoned lands conducted
in Butler County, Pennsylvania, the Bureau of Mines, several agen-
cies of the state of Pennsylvania, the county, and private contrac-
tors were involved in the project.5 Where resource development
fowler, Dale K., and Charles H. Perry III. "Three Years De-
velopment of a Public Use Wildlife Area on a Mountain Coal Surface
Mine in Southwest Virginia," in Bituminous Coal Research, Inc., ed.
Research and Applied Technology Symposium on Mined-Land Reclamation.
MonroeVilie, Pa.: Bituminous Coal Research, Inc., 1973, p. 319.
2For examples, see Camin, Kathleen 0., et al. Mined-Land Re-
development. Lawrence, Kan.: University of Kansas, State Geologi-
cal Survey, 1972; National Academy of Sciences. Rehabilitation Po-
tential of Western Coal Lands. Cambridge, Mass.: Ballinger Pub-
lishing Co., 1974; Carter, Ralph P., et al. Surface Mined Land in
the Midwest; A Regional Perspective for Reclamation Planning.
Springfield, Va.:National Technical Information Service, 1974;
and Matter, Fred S., et al. A Balanced Approach to Resource Ex-
traction and Creative Land Development. Tuscon, Ariz.: University
of Arizona, College of Architecture and College of Mines, 1974.
3 See, for example, Andreuzzi, Frank C. Reclaiming Strip-Mined
Land for Recreational Use in Lackawanna County, P'a.; A Demonstra-
tion Project. Washington, D.C.: U.S., Department of the Interior,
Bureau of Mines, 1976.
"For example, see "Concept of Mining as 'Interim Land Use' Keys
Amax's Coal Policies." Coal Age, Vol. 79 (October 1974), pp. 131-38
5McNay, Lewis M. Surface Mine Reclamation, Moraine State Park,
Pennsylvania. Washington, D.C.: U.S., Department of the Interior,
Bureau of Mines, 1970.
387
-------
has not yet begun, the planning phase would undoubtedly include
input from citizens and local governments to assist in determining
the need for and type of second use for the disturbed lands. Co-
operative agreements must be worked out between federal and state
agencies where the land is owned by the federal government, and
similar ownership arrangements must be made between state and/or
county governments to acquire lands held in private ownership.
Friendship Park, a multiple recreational use facility in Jefferson
County, Ohio, was developed on 1,100 acres of strip-mined land do-
nated to the County by Hanna Coal Company (a division of Consoli-
dated Coal) of Cadiz, Ohio.1
In addition to planning requirements and acquiring the land,
state and federal reclamation laws and regulations must be fol-
lowed. For example, regardless of the postmining land use, mini-
mum recontour and revegetation requirements have to be met (where
applicable), or variances obtained. As noted earlier, in the rec-
lamation discussion, states generally prefer reclamation to pre-
development uses, thus, efforts to create a new second use may re-
quire even closer cooperation among all participants to ensure
adherence to reclamation standards.
Finally, the planning phase includes activities to identify
funds available from both public and private sector sources. In
the Appalachian region, the Regional Commission has in the past
been a major financial source for states and counties interested
in pursuing redevelopment options. Support has also come from
agencies of the federal government with substantive programs re-
lated to the redevelopment alternative chosen, for example, from
the Bureau of Outdoor Recreation to develop picnic areas, from the
Corps of Engineers to develop reservoirs.
Site preparation is not easily generalized, largely because it
depends on numerous locational factors; for example, the type of
energy resource development which disturbs the land, the intended
redevelopment use, geography of the area, and climate. However,
work accomplished in this phase typically entails backfilling,
grading and terracing, compacting, reapplication of topsoils, and
construction of parking lots, reservoirs or ponds, and secondary
roads. Except where variances are obtained, restored areas will
have to be compacted and graded to conform and blend with the sur-
rounding areas. Soil characteristics of an area determine the kind
of preparation needed if lakes or ponds are to be included in the
park. Topsoil requirements and topsoil amendments will also vary
xZande, Richard D. "Friendship Park: One Use of Reclaimed
Strip Mine Land," in Bituminous Coal Research, Inc., ed. Research
and Applied Technology Symposium on Mined-Land Reclamation. Monroe-
vllie,Pa. : Bituminous Coal Research, Inc. , 1973, p~. 294.
388
-------
depending on the particular activity.1 Land development companies
and state and mining company reclamation officials need to co-
operate closely in this phase to ensure that activities which can
be incorporated into the ongoing mining plan are carried out si-
multaneously with energy development.
Additional project work represents the last step in the re-
development activity. Site preparation is completed by revegeta-
ting open areas that were not previously stabilized, planting trees
where required, and constructing park and recreational facilities.
Facilities and attractions to make a public park operational have
typically been provided by government agencies. These have in-
cluded park facilities for outdoor recreational activities, pic-
nic grounds, children's play areas, overnight camping facilities,
and even museums. Indeed, a major attraction at Keyser Park, de-
veloped on .strip-mined land in Lackawanna County, Pennsylvania,
is the Anthracite Museum constructed by the Pennsylvania Historical
and Museum Commission. This Museum presents a comprehensive de-
scription of anthracite from the mine to the consumer. Besides
the 27,000 square feet of exhibit area, facilities include an
auditorium, library, conference rooms, and staff offices.
The need to consider the public parks redevelopment alterna-
tive for some sites in the West appears justified given the antic-
ipated pressure of energy-related population on recreational fa-
cilities in the region. This is particularly the case where en-
ergy development is taking place, or projected to occur, close to
growing rural communities where few parks or related amenities
presently exist. Of course, the costs and benefits of this alter-
native must ultimately be weighed against other types of reclama-
tion and redevelopment.
(1) How Effective Will Redevelopment Be?
The effectiveness of redeveloping some lands to public parks
with receational facilities can be evaluated in terms of: the
probability of success; the time lands will be out of productive
uses; compatibility with existing surrounding land uses; and the
extent to which the redevelopment alternative might constrain west-
ern energy resource development. A primary reason for considering
site-specific redevelopment is that the probability of success is
high and the time out of productive use appears to be minimized.
For example, Keyser Park (Pennsylvania) required three years to re-
develop 125 acres of abandoned strip-mine land. This was viewed
as an "extended period," necessary to allow for seeding, planting,
and seasonal construction. The implication is that this time
;Andreuzzi, Frank C. Reclaiming Strip-Mined Land for Recrea-
tional Use in Lackawanna County, Pa.; "A Demonstration Project.
Washington, B.C.: U.S., Department of the Interior, Bureau of
Mines, 1976, pp. 9-14.
389
-------
could be shortened if redevelopment took place simultaneously with
extraction processes. That is, site preparation activities could
proceed as in the case of reclamation so that minimal seeding and
planting would be required prior to actual construction and devel-
opment of facilities.1
Redevelopment alternatives, however, may be constrained by
recent federal regulations regarding postmining uses. These reg-
ulations require that a postmining use which is not the same as
the preexisting use be approved by the state after consultation
with the landowner or the appropriate state or federal land man-
agement agency. In addition, the proposed use must be compatible
with adjacent and surrounding uses and in compliance with existing
land-use policies and plans. 2 Thus, it appears that some public
uses and facilities could not be deemed compatible with present
uses which are predominantly agricultural. This determination
would have to be based on site-specific conditions and needs and
projections of land-use trends in an area. In addition to limit-
ing redevelopment options, such planning requirements could delay
the processing of premining reclamation plans, thereby constraining
resource development.
(2) What Costs, Risks, and Benefits Are Involved in Redevelopment?
Economic costs and benefits are an important measure of the
efficiency of the redevelopment alternative. However, because of
a lack of western experience with redevelopment, these costs and
benefits are not known at this time. In two of the abandoned land
projects cited above, Keyser and Moraine Parks, development costs
ranged from $1,100 to $6,000 per acre. The high figure is proba-
bly more representative since it includes construction of a pond
within the park area, a facility that would likely be included in
many redevelopment plans. Based on the review of studies cited
earlier, the only generalizations that can be made are that costs
vary according to the type and variety of planned facilities and
that they seem to parallel reclamation costs. Clearly, economic
costs would be higher if the redevelopment included a large num-
ber of recreational attractions. Also, as in reclamation costs,
total costs will depend on how much earth moving is involved.
These costs vary depending on the contour of the land, quantity of
spoils, and distance spoils and topsoil must be moved. In one
project the average cost was 16 cents per cubic yard (based on
Moraine State Park, which included redevelopment of 117 acres
of abandoned mine lands, took about two years of time for revegeta-
tion and adequate survival rates of vegetation is included. The
time frame for Friendship Park in Ohio was comparable.
2These requirements are stipulated in 42 Fed. Reg. 62,681
(December 13, 1977).
390
-------
equipment operating time and not including repair and maintenance
costs) . l
Benefits to states, counties, and individuals in the form of
receipts or income will, like costs, vary according to the kind,
number, and quality of facilities which involve the payment of
usage fees by visitors (e.g., utility hookups, campsites, and cab-
ins) . Reservoirs or lakes could be stocked with sport fish to
produce license fee income to states and income to private entre-
prenuers from retail sales of supplies and equipment to visitors,
to cite but two examples. Other benefits could accrue to the com-
munities through jobs created and gross receipts from year-round
use of the park facilities. For example, operation of Friendship
Park (Ohio) requires a park commissioner and 30 to 50 employees
with a yearly payroll of almost $200,000. Receipts from the park
were estimated to be in the range of $500,000 per year.2
Viewing these facilities as a source of income for counties
and states must be put in a context of risk; for example, the fa-
cilities will require careful planning to anticipate and provide
for recreational needs. The risk involved here is the assessment
of the "market" potential for usage fee facilities.3 As discussed
earlier, the population fluctuations associated with energy devel-
opment may lead to "overbuilding" of facilities or unused facil-
ities, adversely affecting the potential income from the parks.
(3) How Will the Costs, Risks, and Benefits Be Distributed?
A fundamental question concerning how these costs and benefits
will be distributed is: what is the ratio of public and private
funding to redevelop lands for public benefit? In other words,
how much does the energy developer contribute towards developing
the park and related amenities? Beyond basic requirements for re-
grading and revegetation , the developer, the landowner (if other
than the developer) , and related government agencies will have to
determine who pays for what. Aside from the obvious benefits which
will accrue to the persons who live in the area and to visitors
from outside the area, the energy company could benefit from this
alternative through reduced reclamation costs. For example, as
:McNay, Lewis M. Surface Mine Reclamation, Moraine State
Park, Pennsylvania. Washington, D.C.: U.S., Department of the
Interior, Bureau of Mines, 1970, p. 23.
2Zande, Richard D. "Friendship Park: One Use of Reclaimed
Strip Mine Land," in Bituminous Coal Research, Inc., ed. Research
and Applied Technology Symposium on Mined-Land Reclamation. Monroe-
ville, Pa.: Bituminous Coal Research, Inc., 1973, p. 294.
3Camin, Kathleen 0., et al . Mined-Land Redevelopment. Law-
rence, Kan.: University of Kansas, State Geological Survey, 1972.
391
-------
noted above and in the reclamation discussion, a significant part
of reclamation costs stem from earth moving (backfilling, terrac-
ing, and topsoil regrading). Some park facilities, such as ponds
and motorcycle or ORV trails, could require that some part of the
park lands be left unreclaimed to enhance the ruggedness of the
terrain. Thus, companies would have to do only minimal regrading
and terracing, thereby reducing the total earth moving costs. The
risks, especially of environmental degradation and for wildlife
habitat, will depend on careful site selection for such activities.
Public sector economic costs, although uncertain, will prob-
ably be higher due to the cost of acquiring the land from the land-
owner, lost real estate taxes, and administrative costs to main-
tain and protect the park and the facilities in the park. But a
long-term benefit can be identified with regard to future gener-
ations. New public parks in energy development areas should re-
lieve a part of the pressure that increased populations in the
West will place on "national heritage lands." On the other hand,
committing lands to recreational uses means forgoing future oppor-
tunities since most of these commitments will be, for all practi-
cal purposes, irreversible.
(4) Can Redevelopment Be Used at a Variety of Sites Under a
Range of Conditions?
It appears that redevelopment is best implemented on a site-
specific, case-by-case basis and therefore can be applied under a
variety of conditions and over time. Redevelopment requires the
close cooperation of interest groups in the planning for each site,
and thereby increases local and regional control of land use.
(5) How Difficult Will It Be to Implement a Redevelopment
Alternative?
Implementing this alternative will require changing existing
state and federal laws and requirements. Consequently, its inno-
vation requirements are high. In addition, it increases the need
for early planning and public involvement to determine what kind
of facilities are needed; it demands closer cooperation among all
public and private parties-at-interest; and introduces additional
participants into the decision process (siuch as land developers) .
Because of these requirements, the level of uncertainty with
regard to administering and monitoring redevelopment is also high,
but this is the case for all rehabilitation activities. Although
administrative costs cannot be estimated from existing studies, it
seems that they might be higher than for some other alternatives
simply because of the cost of being flexible (it generally takes
more people and time to deal with individual cases) and the ex-
tensive planning needed for the alternative to be implemented.
392
-------
If cooperative agreements are reached between participants,
the redevelopment to parks alternative could reduce energy-
environmental conflicts, especially since it can provide an out-
let for perceived recreational needs in the West. However, as
stated at the beginning of this discussion, the evaluation must
be viewed as exploratory since experience with this option is
limited to areas outside the West. Yet, as summarized in Table
7-16, the evaluation does provide at least a general characteri-
zation of costs and benefits. Based on these findings, redevelop-
ment of lands for public parks with recreational facilities appears
to pose few problems regarding its potential success, except where
states and counties view the parks as income sources; redevelop-
ment allows lands to be returned to productive uses within a rel-
atively short time period (2-3 years). Although economic costs
have not been pinpointed, they seem to parallel those for recla-
mation. Beneficiaries include the public-at-large, and possibly
energy companies when basic site preparation costs can be mini-
mized as a part of the redevelopment plan. Implementation will
require responsible public officials to be innovative in develop-
ing an institutional capability to administer the redevelopment
flexibly and responsibly.
D. A Comparison of the Reclamation and Redevelopment Alternatives
Table 7-17 summarizes the results of a comparison of the two
alternatives evaluated in this section. Several findings stand
out. First, there are some obvious trade-offs that can be made by
choosing one alternative rather than the other. Policymakers have
to decide which values and interests they want to promote. For
example, if getting lands back into production as soon as possible
is the value which ranks highest, redevelopment appears to offer a
significant advantage; and if minimizing cost of administration is
highly valued, reclamation appears to be the most appealing choice.
The analysis of these two alternatives and the findings summa-
rized in Table 7-17 also demonstrates that this analysis is incom-
plete, in part because of a lack of adequate information and re-
source limitations, but also because only one type of redevelopment
alternative was considered. What is reported can be interpreted to
imply that policymakers are faced with an either-or choice, either
reclaim to predevelopment use or redevelop for a recreational use.
Obviously, the choices are not this constrained. In fact, neither
reclamation nor redevelopment emerges as the "best" choice: rec-
lamation because there are areas where it will probably be imprac-
tical if not impossible; and redevelopment because there are lim-
its as to how much and where there is an additional recreational
need, and because it may also require some of the same things as
reclamation, for example, revegetation. But the point that the
results of our analysis leads us to make despite its limitations
is that it is not at all obvious that the current policy of most
states and the federal government is as well-informed a policy
choice as it might be. Given the high level of uncertainty about
393
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being able to reclaim arid and semiarid lands successfully,
present policies seem to be an oversimplified policy response to
a complex problem. A blanket policy of returning disturbed lands
to their predevelopment uses largely ignores both the possibility
of land-use changes in the surrounding area due to energy and
other developments, and the possibility that large per-acre recla-
mation expenditures may be ineffective. In particular, the estab-
lished need for expanded recreational opportunities for energy-
related population increases challenges of the appropriateness of
a policy which emphasizes only reclamation. A more balanced pol-
icy would provide for determining local needs and basing the
choice between reclamation and redevelopment (and the specific
redevelopment use) on what the needs are determined to be.
Clearly there is a need for more knowledge in this problem
area and a need to review land-use and reclamation policies on a
continuing basis. The experience gained from current developments
will help to provide the knowledge base needed for this review as
will the numerous research efforts currently under way.
Finally, as noted above, current laws and regulations pretty
much ignore surface mining for other energy resources such as oil
shale and uranium. Given the quantity of those resources in the
West, this omission cannot continue unless we are prepared to have
these lands withdrawn from productive uses for an extended time
period.
398
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CHAPTER 8
HOUSING
EXECUTIVE SUMMARY
Population growth associated with western energy resource de-
velopment can have serious impacts on housing supply and quality
in nearby communities. The majority of growth-related housing
problems result because energy communities experience a rapid and
large population increase which quickly declines from the peak con-
struction level but remains higher than the predevelopment popula-
tion. The private housing market does not respond adequately to
meet the new housing needs created by energy development, and fed-
eral programs are not designed to deal with housing shortages in
rapid-growth areas. As a result, few new homes are built, avail-
able housing is very expensive, and the use of mobile homes usually
increases dramatically.
Impacts
The construction of energy facilities, especially large con-
version facilities, is a major cause of population changes. Both
the number of people required to construct and operate a facility
and the ratio of construction to operation workers are critical
causes of population-related impacts. Table 8ES-1 summarizes pop-
ulation changes associated with construction and operation of sev-
en conversion facilities. These changes contribute to several im-
pacts :
• Coal liquefaction and gasification facilities have the
largest peak population increases during construction,
resulting in about 14,000 to 15,500 new people in the
area of typical-sized facilities. These peak population
increases are nearly twice as much as those for power
plants and oil shale retorts.
• Construction booms can be large but are usually short-
lived, lasting from 3 years (uranium milling) to 8
years (power plants).
• The boom and bust cycle will be most dramatic for coal
gasification, power plants, and oil shale retorts, since
399
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TABLE 8ES-1: POPULATION INCREASES FROC ENERGY FACILITIES
FACILITY
Coal Gasification
(250 MMcfd)
Power Plant
(3,000 MWe)
Oil Shale Retort
(100,000 bbl/day)
Natural Gas Production
(250 MMcfd)
Coal Liquefaction
(100,000 bbl/day)
Crude Oil Production
(100,000 bbl/day)
Uranium Milling
(1,200 tpd)
PEAK POPULATIONS
CONSTRUCTION
14,040
7,620
8,040
5,100
15,660
11,760
270
OPERATION
2,360
1,760
2,600
3,160
12,240
12,200
440
RATIO OF
CONSTRUCTION
TO(~lDT^IJa^pT nw
U±rlj.KAJ. -L UW
POPULATIONS
6.0
4. 3
3..L
1. 6
1.3
1.0
0.6
MMcfd = million cubic feet per day bbl/day = barrels pc=r day
MWe = megawatt-electric tpd = tons per day
each of these facilities has a high ratio of construc-
tion to operation populations (Table 8ES-1). In con-
trast, coal liquefaction, crude oil production, and
uranium milling have relatively stable populations.
Western towns facing this rapid and fluctuating population
growth because of energy development are likely to experience
severe housing problems. Few homes are built and few, if any,
apartments or other housing types are avciilable in most energy-
impacted communities. Consequently, mobile homes are usually the
only alternative available to residents (see box, "Boomtown Hous-
ing") .
The Policy Context
Two critical factors combine with the impacts of energy re-
source developments to create these housing problems:
• Risks of housing construction in boomtowns are apparently
too great for lenders, developers, emd energy firms to
invest in these towns. Housing is traditionally a private
market service, and without direct financing of home con-
struction and mortgages by local financial institutions,
few new homes can be built.
400
-------
• Public sector programs have
not dealt effectively with
the housing problem and no
federal programs are di-
rected toward the specific
housing shortages in energy
related, rapid-growth situ-
ations. Although several
western states have estab-
lished housing finance pro-
grams designed to overcome
the lack of mortgage money
and federal assistance,
these actions have had lit-
tle effect on housing mar-
kets.
The reluctance of local
lenders and the resultant low
level of homebuilding activity
have had a dramatic effect on
housing prices, causing -further
housing shortages. The 1977
average price of new homes in
western energy-impacted commu-
nities was about 30 percent
higher than the national average
for nonmetropolitan areas, while
apartment rents (in towns where
they are available) were nearly
double the national median.
BOOMTOWN HOUSING
"During the Sweetwater County,
Wyoming boom's early stages, the
housing stock of the county was ap-
proximately doubled with 6,000 new
units. Fifty-five hundred of these
were mobile homes... The housing
market demand drove prices and rents
up, yet investors and developers
were skeptical of putting money in-
to boom-town housing. Even if they
had been willing, mortgage money
was not available for the typical
miner wishing to buy a home. This
same pattern is reproduced in most
boom-towns. Even when mining or
utility companies bring housing
into being, little or no provision
is made for the local service work-
ers who must also be accommodated
in a fast growing community."
—Gilmore, John S. Prepared state-
ment in U.S., Congress, Senate,
Committee on Environment and Public
Works. Inland Energy Development
Impact Assistance Act of 1977.
Hearings before the Subcommittee
on Regional and Community Develop-
ment, 95th Congress, 1st session,
August 2 and 27, 1977, pp. 266-67.
Energy developers have tried to alleviate housing shortages
for their employees by supporting mobile home parks (see box "Wright
Again"), single- and multifamily developments, and developing com-
pany towns such as Colstrip, Montana. Single-family subdivisions
are becoming more common, largely because of the overwhelming pref-
erence of families for such homes. Energy firms typically give
preference to their employees in allocating such housing, so out-
side contractors and service workers in nearby towns seldom benefit
from these actions.
Because of the failure of lenders, developers, and the public
sector to successfully address housing problems, several issues re-
lated to the overuse of mobile homes are likely to intensify as en-
ergy resource development increases:
• Dissatisfaction with mobile home parks will increase because
the homes are usually very close together, paved streets are
rare, park maintenance is often inadequate, and parks are
generally clustered outside of towns.
401
-------
• Mobile home ownership has
few of the financial advan-
tages of a conventional
single-family home. Except
in Wyoming, mobile homes
are considered personal
rather than real property,
and interest on personal
property loans tend to be
2 to 3 percent higher than
on mortgage loans. Also,
the value of mobile homes
often depreciates rapidly,
in contrast to single-
family homes which usually
increase in value.
• Mobile homes designated as
personal property contrib-
ute little to local govern-
ment tax roles. Thus,
housing problems are re-
lated to the inability of
local governments to pro-
vide adequate services and
facilities to expanding
populations.
Alternative Policies
WRIGHT AGAIN
Wright, Wyoming, has reap-
peared on the map after a 40-year
absence. A ranch house post of-
fice closed its doors during the
Depression, but the name has been
given to a mobile home park for
employees of ARCO's Black Thunder
Mine 40 miles south of Gillette.
By liviag closer to the mine than
they would have in Gillette, the
only town in Campbell County,
workers will commute shorter dis-
tances. But this alternative has
been at considerable cost to ARCO.
The telephone system which cost
$600,000 would have cost ARCO
nothing in Gillette. Families
still must drive to Gillette for
shopping and other services.
—"Town Revived in Coal Boom."
Denver Post, July 13, 1976; and
Enzi, Michael, Mayor of Gillette,
Wyoming. Personal communication.
Three overall objectives can be identified for improving hous-
ing in energy-impacted communities: (1) reduce the peak demand for
temporary housing; (2) use the existing housing market to increase
the quantity of housing financing and construction; and (3) improve
the quality of housing. General categories of alternatives and
specific alternatives for achieving these objectives are listed in
Table 8ES-2.
Policymakers can reduce housing demand by decreasing the size
of the labor force living on-site. Specific policy responses are
to adjust project schedules, encourage long-distance commuting, or
encourage facility siting choices which consider the impacts of
various technological and locational factors. These alternatives
generally add costs and delays to energy development; for example,
adjusting project schedules can add 5 percent to the annual con-
struction costs. Thus, energy firms are not likely to initiate
them without inducements, such as financial incentives or state
siting requirements. If construction workers commute to the site
from metropolitan areas, peak demands for temporary housing will
spread over a wider area and risks of overbuilding in any nearby
community is reduced.
402
-------
TABLE 8ES-2: POLICY OBJECTIVES AND ALTERNATIVES FOR HOUSING
POLICY OBJECTIVE
Reduce the peak de-
mand for tempo-
rary housing
Increase the quantity
of housing financ-
ing and construc-
tion through the
private market
Improve housing
qua] i ty
CATEGORY OF
ALTERNATIVES
Decrease the num-
ber of workers
living on-site
Increase the
quantity of
housing con-
struction
Diversify housing
mix
Improve mobile
home situ-
ation
SPECIFIC ALTERNATIVE
Adjust project schedules
Long distance commoting
Siting based on technological/locational
factors
Make state siting permits conditional on
housing
Stimulate industry investment in housing
Tax incentives for rental housing
Financial assistance for lenders and de-
velopers of apartments, condominiums,
and town houses
Change financial and tax structure for
mobile homes
Develop quality mobile home parks
Institute local land-use controls for all
areas of a county
To increase homebuilding activity, policymakers can make sit-
ing permits conditional on provision of adequate housing, stimulate
industry investment in housing, increase guarantees in the second-
ary mortgage market, and provide grants and loans to developers.
States can become involved in these actions, particularly through
siting procedures. However, siting permit requirements could in-
crease the costs and risks of development, unless all western
states adopted similar, requirements, thereby discouraging energy
developers from making investments only in some states.
Policymakers may also choose to improve housing quality by
diversifying the housing mix or improving the mobile home situa-
tion. Incentives can be given to local lenders, developers, and
renters to encourage the construction and purchase of alternative
housing types. Even if policymakers can successfully diversify
the housing choices available in western boomtowns, mobile homes
will still remain the predominant housing type in the immediate
future. Thus, a third category of alternatives is to improve the
quality of mobile homes. One specific alternative would change
the tax classification from personal to real property, making them
eligible for lower interest loans and slowing their depreciation
rate. Two other alternatives to improve the quality of mobile
homes are the development of quality mobile home parks, and the
extension of land-use controls to all areas of the county to facil-
itate control of mobile home parks.
403
-------
Findings
Three categories of alternatives to improve the housing situ-
ation have been evaluated in this policy analysis: decrease the
number of workers living on-site, increase the quantity of housing
construction, and increase the financing available for new home
construction. The results of our analysis suggest that if policy-
makers choose to reduce the number of workers living on-site, the
following results can be anticipated.
• Each of the specific alternatives—Long distance commuting,
adjusting project schedules, and siting considerations—
can effectively reduce the number of temporary workers
living on-site. As shown in Figure 8ES-1, if construction
schedules for coal gasification plants are extended from
five to eight years, peak employment and associated tem-
porary housing demand could be reduced by about one-third
during the construction phase. If workers were encouraged
to commute long distances, the reduction in local peak de-
mand for temporary housing would correspond to the propor-
tion of the work force commuting. Consideration of siting
8-Year
Construction ,.—,
Schedule E3
5-Year
Construction _
Schedule I I
1000 .
Years
Figure 8ES-1: Personnel Requirements For Coal
Gasification Plant Construction
Source: Carasso, M., et a1. The Energy Supply Planning
Model, Vol. 1. San Francisco, CaliFTi Bechtel Corporation,
1975, pp. 6-30 to 6-31.
404
-------
choices to match technologies and locations could avoid
many housing problems if the most labor-intensive tech-
nologies were prohibited in areas least capable of han-
dling population increases.
• Adjusting project schedules will have the highest eco-
nomic costs among these three alternatives. They include
increased interest costs for financing as well as infla-
tion of construction costs and consequent increases in
energy prices paid by consumers. The costs and risks of
the commuter and siting alternatives appear lower, since
neither would delay the start of energy production and
communities would face less risk of overbuilding for a
boom that failed to materialize.
• Adjusting project schedules raises questions about the
distribution of costs, risks, and benefits. Industry
would presumably pass increased construction and finan-
cing costs on to consumers. These consumers, especially
those outside the West, will likely resent having to pay
higher prices for energy. This situation is not neces-
sarily inequitable, since many westerners feel ultimate
energy users should pay the "full costs" of producing
the energy. However, the perceived inequities in cost-
sharing will probably increase interregional conflicts.
Second, increased construction times could delay goals
of the national energy plan to convert from oil and gas
to coal.
• The amount of new housing generated by these alternatives
is uncertain. Based on limited experience with housing
programs in the West, the alternative to siting permits
contingent upon industry agreement to provide additional
housing appears to be more effective than stimulating in-
vestment or providing guarantees.
• The costs of housing construction programs can range from
$5,000 per unit for site development alone, to more than
$30,000 per unit for house construction. On the other
hand, firms face the risk of holding unsold homes if en-
ergy development plans are delayed or cancelled.
• Siting permits conditional on industry provision of hous-
ing are especially flexible in dealing with energy devel-
opment impact needs of specific communities. Industry's
willingness to provide housing for its workers will de-
pend both on the advantages of the siting procedure and
on the incentives offered by the states and federal gov-
ernments. Generally, permit application procedures that
result in time and cost savings will be more acceptable
to industry.
405
-------
Conclusion
Many housing problems associated with western energy resource
development can be avoided if policymakers locate fewer workers in
small western communities. Long-distance commuting, adjustment of
project schedules, and discouraging the most labor-intxensive tech-
nologies in some areas could significantly redupe housing demands.
Housing shortages, and to a lesser extent, poor housing quality
could be mitigated by policies to increctse financing and construc-
tion funds.
•
This analysis also suggests that federal programs will be
more difficult to enact and implement than state or private sec-
tor responses. This is in part because federal programs charac-
teristically apply uniform policies, whereas the housing needs of
western boomtowns vary considerably by area and type of develop-
ment. It is also because interregional disputes, likely to be
worsened by housing issues, may make it more difficult to apply
federal programs to meet the needs of one region. This suggests
that western areas facing large population changes will increas- -
ingly need the assistance of state governments, energy developers,,
and private investors.
406
-------
CHAPTER 8
HOUSING
8 .1 INTRODUCTION
Energy resource development will create a housing shortage in
most energy-impacted communities. Housing will be inadequate,
both in quantity and quality; and housing costs will be greatly
inflated. These problems are a consequence of the population
growth associated with energy development. When energy develop-
ment begins, a large, rapid population increase occurs. This in-
crease, which often exceeds the predevelopment population of the
community, is usually larger during construction than during opera-
tion. This fluctuation exacerbates the housing problem.
In communities that have experienced these impacts, the pri-
vate market has not met the new needs created by energy develop-
ment, and current federal programs are not designed to deal with
housing shortages in rapid-growth areas. As a consequence, con-
ventional housing is expensive and difficult to obtain and mobile
homes provide a high percentage of the housing for newcomers.
Housing is but one component of the planning and growth man-
agement problems experienced when energy resources are developed
in the West.1 Other aspects of the growth management problem area
are discussed in Chapter 9. Most of these problems are a conse-
quence of population growth associated with energy development.
Consequently, a general overview of the growth phenomenon provides
a framework for both chapters.2
identification of local services, planning, and housing
as major problem areas is similar to those identified in Bolt,
R.M., et al. Boom Town Financing Study. Denver, Colo.: Colorado
Department of Local Affairs, 1976, Vol. 1, p. 36. See also U.S.,
Congress, Senate, Committee on Environment and Public Works. In-
land E'nergy Development Impact Assistance Act of 1977. Hearings
before the Subcommittee on Regional and Community Development,
95th Congress, 1st session, August 2 and 21, 1977.
2Related topics, such as energy transportation and energy
facility siting, are discussed in greater depth in Chapters 11 and
12.
407
-------
Most growth-related problems which communities in energy re-
source areas have to deal with result either from large and rapid
population increases or population fluctuations which result from
differences in the work force required during construction and op-
eration. Siting energy conversion facilities near mines results
in the greatest local impacts on western towns.1
The magnitude or rate of population growth that begins to af-
fect communities seriously is not easy to identify, even though
recent rapid growth in many western towns has been well documented.
An annual growth rate of five percent (which will double the popu-
lation in 14 years) tends to produce serious impacts for a commu-
nity.2 Rock Springs, Wyoming, for example, grew at an annual rate
of 19 percent from 1970 to 1974, and rapid growth has been a seri-
ous problem in many western towns (Table 8-1). Reipid growth is a
greater problem for small communities than for large towns, as
discussed in Section 8.I.I.C.
Private sector services such as housing and retailing tend
to lag behind local needs in rapid growth situations. Since tem-
porary, short-term construction activity does not provide a stable
market or tax base, it is difficult to associate energy develop-
ment with long-term urban and economic growth in western towns.
As a result, private sector parties to western energy development
have not responded to many of the needs of western communities and
their residents.
Housing is a particularly severe problem in western towns
affected by energy development. It has long been a private market
service, rather than one provided by government, but the usual
market forces are not providing the quantity or quality of housing
needed in many western communities. Home construction is going on
only in the larger towns, and mobile homes "are everywhere."3
*Energy facility locations outside the West, even when using
western resources, are not the focus of this problem area. These
broader issues are discussed in the analysis of energy facility
siting found in Chapter 12.
2Gilmore, J.S., and M.K. Duff. Boom Town Growth Management.
Boulder, Colo.: Westview Press, 1975, p. 2. See also U.S., Fed-
eral Energy Administration, Region VIII, Socioeconomic Program
Data Collection Office. Regional Profile: Energy Impacted Com-
munities. Lakewood, Colo.: Federal Energy Administration, 1977,
p. 20, for alternative criteria.
3Federal Interagency Team. The Energy Boom in Southwest Wyo-
ming. Washington, D.C.: U.S., Department of Housing and Urban
Development, 1976; U.S., Congress, Senate, Committee on Environment
and Public Works. Inland Energy Development Impact Assistance Act
of 1977. Hearings before the Subcommittee on Regional and Commu-
nity Development, 95th Congress, 1st session, August 2 and 27, 1977,
408
-------
TABLE 8-1:
POPULATION GROWTH IN SELECTED WESTERN
COMMUNITIES, 1970-1977
TOWN
Colorado
Carbondale
Craig
Grand Valley
Rifle
Montana
Hardin
North Dakota
Washburn
Utah
Cedar City
Huntington
Vernal
Wyoming
Douglas
Gillette
Moorcrof t
Rock Springs
Wheatland
ENERGY
RESOURCE IMPACT
Coal
Coal
Oil Shale
Oil Shale
Coal
Coal
Coal
Coal
Oil Shale
Coal, Uranium, Oil, Gas
Coal, Oil, Gas, Uranium
Coal, Gas, Oil, Uranium
Coal, Gas, Oil
Coal
POPULATION
1970
726
4,205
270
2,150
2,733
805
8,946
857
3,908
2,677
7,192
981
10,500
2,500
1977
1,600
6,657
500
3,500
3,637
1,400
12,000
1,700
5,200
7,200
10,20Qa
2,000
23,250
4,500
AVERAGE
ANNUAL INCREASE
PERCENT
17
8
12
9
5
10
5
14
5
25
6
15
17
11
Source: U.S., Federal Energy Administration, Region VIII, Socioeconomic
Program Data Collection Office. Regional Profile: Energy Impacted Commu-
nities. Lakewood, Colo.: Federal Energy Administration, 1977.
aThis estimate of Gillette's population is probably low. Other estimates
for 1977 put the city's population at 12,500-14,000, a growth rate since
1970 of 10-13 percent. See Campbell County Chamber of Commerce. Economic
Impact of Anticipated Growth: City of Gillette and Campbell County,
Wyoming. Gillette, Wyo.: Campbell County Chamber of Commerce, 1976.
Too-rapid population growth, local financial market conditions,
and uncertainty about the future of energy development all con-
tribute to a shortage of housing in all energy impact towns. The
national system of housing financing and construction is not work-
ing effectively in towns affected by western energy development.
409
-------
8.1.1 The Population Growth Impacts of Energy Resource Development
In attempting to identify combinations of energy technologies
and locations that would minimize or avoid impacts, several criti-
cal factors were identified as significantly affecting energy
development impacts,1 The factors that affect growth management
related impacts can be divided into technological and locational
factors. Critical technological factors include labor requirements
and scheduling; locational factors include community characteris-
tics such as size and location and the jurisdictional distribution
of revenues.
A. Labor Requirements
Many energy facilities require far more personnel during con-
struction than during operation. This is particularly true for
coal conversion and oil shale processing technologies whose opera-
tion is capital rather than labor intensive, and for which con-
struction requires over four times more personnel than operation
(Table 8-2). Larger numbers of workers, over half of whom bring
their families to construction jobs, rec[uire a range of local ser-
vices and facilities, including housing. In addition to the per-
sons directly employed in energy development, there is an indirect
population increase due to service and support personnel in nearby
towns. This further increases the need for housing and services.
As shown in Table 8-2, direct population impacts, as measured
by person-years, are generally greater for conversion than for
mining. In addition, there are large differences in the labor
intensity of conversion technologies, as indicated by the peak
construction employment and operation employment columns in Table
8-2. The construction/operation employment ratio also indicates
the boom-bust cycle associated with large construction projects.
More capital-intensive facilities involve larger booms in local
employment, but they also result in greater employment declines
when construction work is completed.
B. Scheduling
Scheduling can play a major role in determining the actual
magnitude of population impacts. For example, construction of a
coal gasification facility normally takes about five years. The
population impacts during construction are typical of large-scale
energy projects; thousands of people are needed for only a short
time (Figure 8-1-A). Simultaneous construction of two facilities
xWhite, Irvin L., et al. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977.
410
-------
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411
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Person-Years
5000 -
4000 —
3000 —
2000 -
1000 —
Person-Years
5000 —i
4000
3000 —
2000
1000 —
Years
8-1-A: Normal 5-Year Construction
Schedule - One Facility
567 Years
8-1-3: Two Facilities - Second facility
started two years after first
compounds impacts
Person-Years
5000 -I
4000
3000 —
2000 -
1000 —
m
Tj il/
?£
Person-Years
5000 —i
4000
3000 —
#$p
im
2000 —
1000
73 1 10 Years
8
Years
8-1-C: Two Facilities - Second
facility started when
first is completed makes
severe peaks and falls
in impacts
-1--D: One Facility - Lengthening
construction schedule to 8
years reduces peak labor
requirements and impact
FIGURE 8-1: PERSONNEL REQUIREMENTS FOR COAL GASIFICATION PLANT
CONSTRUCTION AND IMPACTS FROM VARIOUS SCHEDULES
(Populations associated with each year would be
about 3.0 times greater than employment.)
So >-ce: Carasso, M. , et al. The Energy Supply Planning Model,
Vol. 1. San Francisco, Calif.: Bechtel Corporation, 1975,pp.
6-30 to 6-31.
412
-------
brings larger numbers of people to an area, increasing the needs
for all services. If a second gasification facility were con-
structed two years after the first, a longer period of temporary
impact occurs (Figure 8-1-B). In this situation, there is a risk
that the impacts and needs during a seven-year construction period
can be expected to continue over the long term.l Consecutive con-
struction projects cause a smaller absolute impact, but can result
in more severe peaks and drops in population impacts (Figure 8-1-
C). If construction of the second facility is delayed, planning
for impacts on the basis of an uncertain schedule may be more dif-
ficult. By extending the construction phase of a single project,
the cyclical pattern can be smoothed out, thereby reducing the
need for temporary facilities (Figure 8-1-D).2 Smaller size facil-
ities would somewhat reduce labor needs but, because of economies
of scale, the impact from a facility one-half the typical size
would tend to be greater than half the full-scale impact.3
C. Community Size and Location
The most important factor influencing the extent of popula-
tion impact is the size of a community before energy development
begins. Larger cities (over 10,000 population) generally serve
as major market centers for a v/ide area and, therefore, have more
diversity and capacity for growth in both the public and private
sectors.
In addition to size, the isolation of a town and the number
of communities in the vicinity of an energy development will affect
the relative impacts on each town. An isolated town where nearly
all workers and their families will live will be impacted more
severely than will any one town in an area where the new population
is distributed among several towns. For example, Gillette, an
isolated community in northeastern Wyoming, has been impacted more
severely by energy development than have either Rifle, Grand Val-
ley, Meeker, or Rangely in western Colorado. In the latter case,
sever-al towns have shared the impacts.
'This occurred in several places along the route of the Alas-
kan pipeline. See Gilmore, J.S., and M.K. Duff. Boom Town Growth
Boulder, Colo.: Westview Press, 1975.
schedule in Figure 8-1-D extends any yearly labor re-
•;>:.i repent above 2000 man-years over a two-year period. Thus, the
requirements of the middle three years in 8-1-A are reduced by
half and the construction period is extended from five to eight
years. The implications of such a schedule are discussed in Sec-
tion 8.4.
3U.S., Federal Energy Administration. Project Independence
Blueprint Final Task Force Report—Synthetic Fuels from Coal.
Washington, D~.C.: Government Printing Office, 1974, p. 38.
413
-------
8.1.2 Effects on the Quality-of-Life
Energy development can seriously affect the everyday lives
of residents of impacted communities. Quality-of-life in part
consists of individuals' reactions to the adequacy of public and
private services. Inadequacies in these services translate di-
rectly into a perceived adverse quality-of-life for residents.
It is easier to document the inadequacies of public and pri-
vate services in small energy-impacted towns than it is less tan-
gible effects such as social stress. Long-time residents, in par-
ticular, are often affected simply because they were against
change. As a result, an animosity between newcomers (who personify
that growth) and long-time residents can easily develop.1 However,
there is some evidence that this ill will is more perceived than
real.2 The conventional wisdom is that newcomers are kept out of
long-time residents' society, a social distance that particularly
affects women and school children.3
The most comprehensive survey of residents' satisfaction with
local services was done as part of the Construction Worker Profile. *
*Fradkin, P.L. "Craig, Colorado: Population Unknown, Eleva-
tion 6,185." Audubon, Vol. 79 (July 1977), pp. 118-27; University
of Montana, Institute for Social Science Research. A Comparative
Case Study of the Impact of Coal Development on the Way of Life
of People in the Coal Areas of Eastern 'Montana and Northeastern
Wyoming. Missoula, Mont.: University of Montana, Institute of
Social Science Research, 1974.
2Newcomers in two Wyoming towns believe old-timers see them
much more negatively than the old-timers actually do. See Uhlmann,
J.M., R. Kimble, and D. Throgmorton. A Study of Two Wyoming Com-
munities Undergoing the Initial Effects of Energy Resource Devel-
opment in the Powder River Basin: Buffalo and Douglas~7~ Wyoming -
1975.Cheyenne,Wyo.:University of Wyoming, Department of
Anthropology, 1976, pp. 56-67.
3Kneese, Allan V. "Mitigating the Undesirable Aspects of Boom
Town Development," in Federation of Rocky Mountain States. Energy
Development in the Rocky Mountain Region: Goals and Concerns.
Denver, Colo. : Federation of Rocky Mountain States, 1975, pp~. 74-
76.
^Mountain West Research. Construction Worker Profile, Final
Report and Community Reports. Washington, D.C.: Old West Regional
Commission, 1976. This study included a Project Survey, concerning
the location, origin, and family characteristics of 3,168 energy
construction workers on 14 projects; and Household Survey of 1,432
households in nine western communities (five currently affected by
construction, two postimpact towns, and two preimpact towns), and
a Community Survey utilizing participant observation in three com-
munities.
414
-------
The composite results from the nine communities surveyed reveal
that long-time residents tend to be more satisfied with local
services than are newcomers, and that college-educated and high-
income households are more dissatisfied with local services.1
Long-time residents seem to see a need for improvement in such
services as streets, water supply, and housing; newcomers also
tend to prefer an improved range of shopping, entertainment, and
other private businesses.2 Both groups, however, agree that im-
provement is needed in impacted communities.
8.1.3 Organization of the Paper
This chapter deals with housing, a need traditionally met by
the private sector. Section 8.2 discusses the context of housing
problems and issues in the West. Policy alternatives and imple-
mentation strategies for these problems and issues are described
and evaluated in Section 8.3 and a summary and comparison of al-
ternatives is presented in Section 8.4
8.2 THE CONTEXT OF HOUSING ISSUES IN THE WEST
Housing in this country has traditionally been provided by
the private sector. In most circumstances, the private market
operates satisfactorily, although some governmental programs have
been established to help meet the needs of low- and moderate-
income families. In virtually all cases of government action,
however, public sector programs have worked through the private
housing market mechanisms. In situations involving rapid or large
population changes, such as occur in communities located near en-
ergy resource developments in the West, the private housing market
does not respond adequately. The lack of programs capable of deal-
ing with housing shortages in small towns experiencing rapid growth
has forced the market to rely on mobile homes as the principal
housing type for both temporary (construction phase) and permanent
residents. This reliance on mobile homes is contrary to both the
preferences and abilities of many families whose incomes are above
the average national level.
1 Mountain West Research. Construction Worker Profile, Final
Report. Washington, D.C.: Old West Regional Commission, 1976,
pp. 57-58.
2
Mountain West Research, Construction Worker Profile, Commu-
nity Reports. Washington, D.C.: Old West Regional Commission,
1976. This was the same trend found in the study by Uhlmann, J.M.,
R. Kimble, and D. Throgmorton. A Study of Two Wyoming Communities
Undergoing the Initial Effects of Energy Resource Development in
the Powder River Basin: Buffalo and Douglas, Wyoming - 1975.
Cheyenne, Wyo.: University of Wyoming, Department of Anthropology,
1976.
415
-------
This section presents the background for the current housing
situation in western towns affected by population growth from
energy development. Two housing issues prevalent in western towns
are discussed below: financing and construction, and housing
quality. A separate section on Indian housing is also included.
These provide the context for housing problems and the policy
alternatives in the following section.
8.2.1 Housing Financing and Construction
The private housing market involves a number of mechanisms
that seem to work inadequately in communities experiencing energy
development impacts. The population influx associated with energy
facilities (Section 8.1.1 above) generates a demand for housing
that typically is met by mobile homes rather than conventional
housing.l Constraints in financing provide bottlenecks in the
usually smooth operation of the housing demand (Figure 8-2, Step
1) .
A. Uncertainty and Risk
The market for new housing is almost completely dependent on
the employment prospects in energy development. Projects involv-
ing advanced technologies may be cancelled, mines may be shut down
before mortgages would be paid off, or projects may be delayed for
up to several years, all of which make the risk of being left with
unsold homes too great.2 Although secondary development associ-
ated with energy facilities usually will increase the market for
housing, existing capabilities for predicting the size of the
secondary population are imprecise at best.3
The uncertainty involved in western boomtown housing pervades
the entire area of housing financing. Lenders, housing developers,
and builders cannot afford to rely on the announced schedules for
advanced energy technologies, which leave them holding unsold
:There is some demand for mobile homes in affected communi-
ties, but preferences for single-family housing far outnumber
those for mobile homes. See Mountain West Research. Construction
Worker Profile, Final Report. Washington, D.C.: Old West Regional
Commission,1916, p. 103. The subject of housing mix is consid-
ered in Section 8.2.2 below.
2University of Denver, Research Institute, Industrial Eco-
nomics Division. Methodology Papers: Housing. Denver, Colo.:
Denver Research Institute,1977.
3See White, Irvin L., et al. Energy From the West: Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protec-
tion Agency,forthcoming.
416
-------
ITEMS CONSIDERED
1. Market Research
2. Land Acquisition
demand for housing
location, area, drainage, zoning,
utilities, and other considerations
3. Subdivision and Development
4. Building Permit
streets and utilities put in
according to local laws and regula-
tions
generally local loans watched
closely by local lenders
5. Construction Loan
6. Construction
often involving a surety bond to
guarantee completion
7. City Certification of Occupancy
local building standards have been
met
mortgagee gets local long-term
loan
Sale of Home and Permanent
Financing
Sale of Mortgage to Government
or Private Investors
secondary mortgage market
FIGURE 8-2: TYPICAL SEQUENCE OF HOUSING DEVELOPMENT
Source: Adapted from Nelson, G.S., and D.A. Whitman. Cases and Materials
on Real Estate Finance and Development. St. Paul, Minn.: West, 1976.
(The length of time necessary for each step in the sequence varies consid-
erably from community to community and situation to situation.)
homes when projects are delayed. The private secondary mortgage
market (Figure 8-2, Step 9), made up principally of linkages be-
tween savings and loan associations and government agencies and
insurance companies, may be unwilling to back investments that
are not in low-risk categories. Even when permanent financing
is available, construction financing is often difficult to obtain
(Figure 8-2, Step 5). For example, a mine, projected to be active
for 20-25 years, provides an employment base for a town shorter
than the life of a typical (30-year) mortgage on a new home.
The potential demand for new homes is somewhat more certain
in larger towns, such as Gillette and Farmington, where large
numbers of energy development executives or administrative person-
nel live. For energy facility construction personnel, however,
their temporary stay in the community and uncertainty about future
energy development result in a fear of overbuilding for the long
term. This is particularly true of towns that have had previous
booms followed by busts; these events have made some local finan-
cial institutions very cautious about current energy development.
417
-------
If homes might not be needed for some future period, it is diffi-
cult to obtain financing for home construction even though housing
shortages occur. Jack Presnell of Phillips Petroleum Company
summarizes the view of lenders in northwestern New Mexico: "There
is a natural reluctance on the part of the traditional private
lending agencies to lend mortgage money in situations like this
until they can see more what the future holds."1
The reluctance of local lenders arid the low level of home-
building activity which results has had a dramatic effect on home
prices (Table 8-3). The average price of new homes (around
$50,000) is about 30 percent higher than the national average for
nonmetropolitan areas, and apartment rents are nearly double the
national figure of $120 per month.
The reluctance of local lenders is attributable in part to
the funds available at the national level. Local financial mar-
kets in the West are unable to accommodate the demand for new
mortgages in rapidly growing small communities. External financ-
ing is constrained by the absence of financial relationships with
out-of-state institutions and the inability of local financial
institutions to accumulate sufficiently large blocks of mortgages
to sell in secondary mortgage markets.2 These shortcomings of
the mortgage market in the rural West have intensified in recent
years as the secondary mortgage market tripled in volume from
1970 to 1976.3 The importance of these connections applies both
to the federal agencies involved and to private sector institu-
tions.
Presnell, Jack. Testimony in U.S., Congress, Senate, Com-
mittee on Environment and Public Works. Inland Energy Develop-
ment Impact Assistance Act of 1977. Hearings before the Sub-
committee on Regional and Community Development, 95th Congress,
1st session, August 2 and 27, 1977.
2Carlisle, N. "Boomtown Housing: The Problems and Possible
Solution," in Bronder, L., N. Carlisle, and M. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, p. 492; Wyoming, Department of Economic
Planning and Development, Office of the Chief of State Planning.
Housing Finance: Implications for the State of Wyoming. Cheyenne,
Wyo.: Department of Economic Planning and Development, 1977.
3Brockschmidt, P. "The Secondary Market for Home Mortgages."
Monthly Review, Federal Reserve Bank of Kansas City, September-
October 1977, pp. 11-20.
418
-------
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419
-------
B. Government Activities in Housing Financing
The federal government's major role in the housing market is
through federally-chartered agencies that purchase mortgages ini-
tiated by local institutions. This secondary mortgage market thus
makes more funds available to mortgage lenders, and is intended
to balance out the supply and demand of mortgage funds. The Fed-
eral National Mortgage Association (FNMA or Fannie Mae), the
Governmental National Mortgage Association (GNMA or Ginnie Mae),
and the Federal Home Loan Mortgage Corporation (FHLMC or Freddie
Mac) all purchase mortgages, often for resale. Although the three
institutions are able to purchase conventional mortgages, they
have tended to concentrate on loans insured by the Federal Housing
Administration (FHA) or guaranteed by the Veterans Administration.
FHLMC is specifically intended to operate in the conventional
mortgage sector and is moving in that direction. In addition,
the Federal Home Loan Bank Board extends credit in the form of
advances to its member institutions (mainly savings and loan asso-
ciations) . :
While the above institutions reduce the risk to lenders asso-
ciated with home mortgages, they only indirectly affect the avail-
ability of money. As home prices and interest rates rise,
federally-insured loans at reduced interest rates become poten-
tially more important. The FHA places limits on house prices and
buyer incomes for reduced-rate loans under some programs. Nation-
wide, FHA loans have accounted for 15 to 30 percent of the home
mortgage market, and the percentage has been declining in the
1970's, largely because FHA interest rates are substantially lower
(as much as one and one-fourth percent) than market rates.2 The
use of FHA loans is low for several reasons: periodic construc-
tion inspections, slow processing times, low administered inter-
est rates, heavy documentation requirements, and "red tape."
Builders must pay closing costs (points) to bring the interest
rate up to market rates. The scarcity of mortgage bankers and
savings and loan associations (which tend to be linked to the
i
Nelson, G.S., and D.A. Whitman. Cases and Materials on
Real Estate Finance and Development. St. Paul, Minn.: West,
1976, pp. 483-87. For additional information on the activities
of each agency, see Brockschmidt, P. "Secondary Market for Home
Mortgages." Monthly Review, Federal Reserve Bank of Kansas City,
September-October 1977, pp. 11-20.
2Nelson and Whitman. Cases and Materials.
420
-------
secondary mortgage market) in rural areas further decreases the
use of FHA programs.l
Retirees and others on fixed incomes are especially hard-hit
by the increase in housing costs and rents during energy develop-
ment. Low-income housing programs of the Department of Housing
and Urban Development (HUD), such as the Section 235 Program,
limit loans to $32,000 for a three-bedroom home ($38,000 in high-
cost areas) for families earning below the median income in the
area.2 Since average house prices are well above these limits in
the West, as seen in Table 8-3, the program is of little benefit
in energy-impacted areas.
In general, HUD is not oriented toward small towns. HUD's
Community Development Block Grant Program, for example, is in-
tended to develop housing and public facilities and services in
neighborhoods and communities. However, the program is designed
to commit 75-80 percent of its funding to cities over 50/000 popu-
lation, and the remaining 20 percent tends to be obtained by
places surrounding metropolitan areas. The program places little
emphasis on the needs of rapid-growth areas,3 and is receiving
considerable political pressure to distribute an even greater pro-
portion of funds to large, older cities, especially in the North-
east.1* On the whole, congressional attention to housing has been
oriented toward large cities (Senate) and national financial mar-
kets (House) due to committee structure (see box "The Housing
Committees System").
This is borne out by the relatively low usage of HUD programs
in energy impacted areas in the West. Only one program was used
Carlisle, N. "Boomtown Housing: The Problems and Possible
Solution," in Bronder, L., N. Carlisle, and M. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, p. 492. See also Schafer, R. "Housing in
America." Technology Review, Vol. 80 (October/November 1977),
P. 10.
2These are 1978 limits; they are raised periodically to meet
rising housing costs.
^Carlisle. "Boomtown Housing."
""House Seeks $14.5 Billion in Urban Aid." Denver Post,
May 13, 1977, p. 5.
421
-------
in Fiscal Year 1976, a loan pro-
gram for the development of low-
and moderate-income housing pro-
jects; and this program was used
in only 7 of 75 impacted coun-
ties in the West. On a state-
by-state basis, HUD funding in
the West was below the regional
share of federal aid for all
programs (3.02 percent). Only
Colorado received more than 3.02
percent, largely for the Denver
area.l
The Farmers' Home Adminis-
tration (FmHA) in the Department
of Agriculture, on the other
hand, is intended to deal with
small towns and rural areas.
Even though severe income limits
are imposed on qualifications ,
FmHA programs are used in 71 im-
pacted counties in the West.2
Families with income not exceed-
ing $15,600 can obtain a maxi-
mum loan of $33,000.3 Most fam-
ily incomes in energy-impacted
communities are above the income
THE HOUSING COMMITTEES SYSTEM
Housing in rural areas and small
towns is not a major focus of the ex-
isting congressional committees and
subcommittees. In the Senate, hous-
ing is dealt with primarily by the
Urban Affairs and the Subcommittee on
Housing and Urban Affairs, which has
no representatives from the eight
western states. In the House of Rep-
resentatives, the Committee on Bank-
ing, Currency, and Housing looks pri-
marily at large-scale financial mat-
ters and the Subcommittee on Housing
and Urban Development is oriented to-
ward urban problems. Housing in
small towns tends to be dealt with
by committees responsible for agri-
culture or Indian affairs.
—Congressional Quarterly, Inc.
Washington Information Directory
1977-78. Washington, D.C.: Congres-
sional Quarterly, Inc., 1977.
limit, but the programs do assist
families on fixed incomes in these communities.
The western states have been fairly active in attempting
to provide conventional housing, but state housing financing
^.S., Department of Energy, Socioeconomic Program and Data
Collection Office, Region VIII. Federal Aid Programs in Region
VII for Fiscal Year 1976: Programs Available in Areas of Con cern
and the Usage of Such Programs by Energy Impacted Counties in
Denver, Colo.: U.S., Department of Energy, 1977.
3Carlisle, N. "Boomtown Housing: The Problems and Possible
Solution," in Bronder, L. , N. Carlisle, and M. Savage. Financial
Strategies^ for Alleviation of Socioeconomic Impacts in Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, p. 489-90.
422
-------
authority is restricted to low or moderate income groups in all
states.1 Only Colorado has actually generated money through a
sale of $50 million of bonds to be passed through lending insti-
tutions in rural areas. An additional $34 million of bonds have
been sold to finance construction loans.2 Montana's Board of
Housing permits financing of low-income family housing only, but
also takes into account "the ability of persons and families to
compete successfully in the normal housing market," as well as the
availability and cost of housing in particular areas.3
The Board put its first bond issue on the market in March of
1977. Thus, housing in impacted communities may be financed by
the Board in the near future. New Mexico also has a state housing
agency, but without special provisions for rural areas and small
towns.4 The state-owned Bank of North Dakota holds nearly $52
million in housing loans in a secondary mortgage market role, all
under federal guarantee programs rather than conventional loans.5
C. Homebuilders and Developers
Considerations other than financing also are involved in
housing market inadequacies in the West. Housing developers and
Carlisle, N. "Boomtown Housing: The Problems and Possible
Solutions," in Bronder, L., N. Carlisle, and M. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, pp. 494-505. Wyoming's widely publicized at-
tempt to be involved in the secondary mortgage market, the Wyoming
Community Development Authority (WCDA), has been declared unconsti-
tutional by the Wyoming State Supreme Court. See Wyoming State
Supreme Court Docket Number 4788, February 13, 1978. "Edwin J.
Witzenburger, State Treasurer of the State of Wyoming, Appellant
Defendant Below v. State of Wyoming, ex rel. Wyoming Community
Development Authority, Appellee Below v. State of Wyoming (Inter-
venor Below)." 575 P. 2nd 1100.
2Carlisle. "Boomtown Housing."
3Montana Revised Codes Annotated § 35-503(8) (Cumulative
Supplement 1975); Daley, J.B. "Financing Housing and Public Facil-
ities in Energy Boom Towns," in Rocky Mountain Mineral Law Foun-
dation. Rocky Mountain Mineral Law Institute: Proceedings of
the 22nd Annual Institute, July 22-24, 1976. New York, N.Y.:
Matthew Bender, 1976, pp. 119-20.
^Carlisle. "Boomtown Housing."
5North Dakota's Citizens Rely on State's Bank." Washington
Post, January 8, 1978.
423
-------
Housing construction also
is difficult to maintain when
inflated wages (from competi-
tion with energy firms which
offer higher pay) make re-
cruiting or keeping a skilled
construction labor pool diffi-
cult and costly. The diffi-
culty of hiring and the cost
in wages constrain local firms
from expanding. It also can
cause out-of-town firms to
stay away from energy-impacted
communities where costs are
higher than in major urban
areas.1
builders have not been adequately meeting the needs of impacted
towns for several reasons. Local builders frequently lack exper-
ience with large-scale devel-
opments and are not organized
to manage them. Outside devel-
opers often reject smaller
cities and towns as unsafe
risks or as inadequate markets
for large-scale projects (see
box) .
SMALL CITY HOUSING DEVELOPMENT
Large housing development firms
have tended to stay away from such
towns as Rock Springs and Gillette,
preferring towns the size of Casper,
(pop. 40,000) or larger. Large-city
based housing developers may simply
have inadequate information about
smaller towns and may see the expense
of moving into a new market, becoming
familiar with local conditions and
recruiting local labor as too expen-
sive. Once again, larger towns have
the advantages of being somewhat
better known and with greater local
market potential.
—University of Denver, Research
Institute, Industrial Economics Divi-
sion. Methodology Papers: Housing.
Denver, Colo.: Denver Research In-
stitute, 1977.
The homebuilding industry consists largely of small firms
that build homes primarily in their local area. A few large home-
builders account for about one-third of all new homes, but these
are almost exclusively located in large metropolitan areas. Out-
side major urban areas, builders tend to operate within a fairly
small area, such as part of a state. Local building codes, zoning
regulations, labor markets, and union work rules frequently vary
from area to area. More importantly, construction financing is
usually obtained in the local area, and builders often have trouble
obtaining loans outside their usual locus of operation.2
Housing developers also range in size with the largest oper-
ating in the large metropolitan areas. Developers generally cen-
tralize housing production on several sites. A developer, with
1University of Denver, Research Institute, Industrial Eco-
nomics Division. Methodology Papers; Housing. Denver, Colo.:
Denver Research Institute, 1977.
2This discussion of the homebuilding industry in general is
taken from a paper prepared for this study by Arn Henderson and
Daniel B. Kohlhepp of the University of Oklahoma.
424
-------
the help of substantial financial backing, obtains land, subdivides
it, paves streets, and installs utilities in preparation for build-
ing (Figure 8-2, Steps 2 and 3). The actual construction is then
done by the developer, a single builder, or more commonly, by sev-
eral local builders. Large-scale housing developments are still
uncommon in western energy areas, remaining instead in the more
profitable suburban areas of major cities. Large developers tend
to be more connected to sources of financing in major cities, add-
ing to the amount of financing available to developers. These
large developers and their investors have not been operating in
small towns, and small developers and builders have been unable
or unwilling to take risks on speculative (as opposed to custom-
built) homes.
D. Energy Industry
Several energy developers have taken actions to provide hous-
ing (primarily mobile homes) for construction worker families be-
cause of evidence of lower productivity, worker (or spouse) dis-
satisfaction, and increased labor turnover.1 Firms tend to resist
housing commitments in principle, generally on the grounds of cost
and the fact that housing historically has not been their respon-
sibility,2 but the trend toward industry housing activity is clear.
Much of the housing provided has been planned mobile home
developments, either on a temporary basis in a permanent subdivi-
sion removed from other towns (Atlantic Richfield's development
of a mobile home park at Wright, 40 miles from Gillette, Wyoming)
(see box "Wright Again"). Some commercial, social, and recrea-
tional amenities are included in such developments, but often not
while construction workers' families are the only residents.3
Largely because of the preference of families for single-
family housing,'* permanent housing projects financed and planned
JMetz, W.C. "Residential Aspects of Coal Development."
Paper presented cit the Conference of the American Institute of
Planners, Kansas City, Missouri, October 1977; Jacobsen, J.
"Coping with Growth in the Modern Boomtown." Personnel Journal,
Vol. 55 (June 1976), pp. 288-89, 303.
2Arthur Young and Company. Problems of Financing Services
and Facilities in Communities Impacted by Energy Resource Develop-
ment.' Washington, D.C.: Arthur Young, 1976.
3Mobile homes are discussed at greater length in Section
8.3.2 below.
^Mountain West Research. Construction Worker Profile, Final
Report. Washington, D.C.: Old West Regional Commission, 1976,
p. 103.
425
-------
by energy development compa-
nies are becoming more common
in the West. The most compre-
hensive example is the new
town of Colstrip, a company
town owned by Montana Power
Company. Older homes were
modernized, and both single-
family and multifamily units
have been built, in addition
to permanent mobile home
spaces. A wide variety of
urban amenities (recreation
areas, commercial development,
etc.) is also part of the
"modern company town."1 The
company town approach is in
some ways the ideal solution
to housing shortages as well
as to local impacts. The
cost of building and operat-
ing such a town, however, is
prohibitive for most firms,
and there is little senti-
ment for repeating the Col-
strip development in other areas.2 Other firms have become in-
volved in providing housing for their employees, especially in
isolated, small towns in Utah and Wyoming. The common approach
is to provide a guarantee to private developers for a certain num-
ber of homes. However, these developments typically include a
preference for company employees.3 As a result, construction
WRIGHT AGAIN
Wright, Wyoming, has reappeared
on the nap after a 40-year absence.
A ranch house post office closed its
doors during the Depression, but the
name has been given to a mobile home
park for employees of ARCO's Black
Thunder Mine 40 miles south of Gil-
lette. By living closer to the mine
than they would have in Gillette, the
only town in Campbell County, workers
will commute shorter distances. But
this alternative has been at consider-
able cost to ARCO. The telephone sys-
tem which cost $600,000 would have
cost ARCO nothing in Gillette. Fami-
lies still must drive to Gillette for
shopping and other services.
—"Town Revived in Coal Boom." Den-
ver Post, July 13, 1976; and Enzi,
Michael., Mayor of Gillette. Personal
communication.
xMyhra, David. "Colstrip, Montana—The Modern Company Town."
Coal Age, Vol. 80 (May 1975), pp. 54-57; Schmechel, W.P. "Devel-
opments at Western Energy Company's Rosebud Mine," in Clark, W.F.,
ed. Proceedings of the Fort Union Coal Field Symposium. Billings,
Mont.: Eastern Montana College, Montana Academy of Sciences, 1975,
Vol. 1, pp. 60-66; White, M. "Colstrip Power Project—Its Moni-
toring and Mitigation Programs." Paper presented at the Symposium
on State-of-the-Art Survey of Socioeconomic Impacts Associated
with Construction/Operation of Energy Facilities, St. Louis, Mis-
souri, January 1977.
2Arthur Young and Company. Problems of Financing Services
and Facilities in Communities Impacted by Energy Resource Devel-
opment. Washington, D.C.: Arthur Young, 1976.
3Metz, W.C. "Residential Aspects of Coal Development."
Paper presented at the Conference of the American Institute of
Planners, Kansas City, Missouri, October 1977.
426
-------
workers, who are usually employed by a construction contractor,
and service workers in nearby towns are not aided by these actions,
Finally, some state actions involve working with private in-
dustry to alleviate energy development impacts. The Wyoming In-
dustrial Siting Administration (WISA) issues a siting permit for
major facilities only after studies and hearings with state agen-
cies and the local community provide information on the conditions
to be placed on the permit. In the only permit processed by late
1977, Basin Electric Power Cooperative agreed to provide approxi-
mately 1,900 housing units and other services in connection with
its power plant near Wheatland.2 This may not be a precedent-
setting case, however, because Basin Electric, as a co-op, is able
to include impact mitigation costs in its rate base, something
investor-owned utilities typically cannot do.3
In summary, the private housing market is not working well
in the West; and current government programs are not having a
significant effect. Industry is beginning to take a role in pro-
viding housing for their employees, but housing demands of other
workers remain unmet. The usual solution is mobile homes (see
box "Boomtown Housing"), which are discussed in the next section.
8.2.2 Housing Quality
Concern about housing quality in western towns affected by
energy development centers on mobile homes. The lack of single-
family homes and multifamily units in most towns has forced the
majority of new families to live in mobile homes. This is true
even where energy firms have provided some housing for their
employees. In such cases, local service workers such as
Industrial Development Information and Siting Act of 1975,
Wyoming Statutes §§ 35-502.75 et seq. (Cumulated Supplement 1975),
2Wyoming Industrial Siting Administration, Docket Number
WISA-75-3. See also Valeu, R.L. "Financial and Fiscal Aspects
of Monitoring and Mitigation." Paper presented at the Symposium,
on State-of-the-Art Survey of Socioeconomic Impacts Associated
with Construction/Operation of Energy Facilities, St. Louis, Mis-
souri, January 1977.
3Since the WISA has no jurisdiction over facilities valued
at less than $50 million, nearly all coal mining operations have
typically not been subject to the Act's provisions. However,
local governments have recently succeeded in having surface facili-
ties associated with coal mines included in the valuation, thereby
raising the value of facilities to at least $100 million and
bringing them within the Siting Authority's jurisdiction. Enzi,
Michael. Personal communication, April 24, 1978.
427
-------
local government and retail
employees, do not have an
alternative to mobile homes.
In other cases, where mobile
homes are provided for con-
struction workers, there is
little choice of other housing
for those who want it. This
trend runs counter to the pref-
erences of the families both
of new construction workers
and other newcomers to the
West. In addition, although
rising home prices have con-
strained preferences in most
parts of the country, incomes
in western towns are well
above the national average,1
suggesting that income is not
the reason for poor housing
conditions. Overall, resi-
dents of western towns in
energy-impact areas have less
choice in housing than resi-
dents elsewhere in the nation.
This section outlines
several aspects of the housing
quality problem. The first
part deals with mobile homes
and their role in present
western housing. The second
topic discussed is that of
other housing choices available to families in impact communities.
The last part of this section discusses housing on Indian reser-
vations in the West.
A. Mobile Homes
Mobile homes are a common solution for problems of inadequate
housing supply in the West.2 Mobile homes fill a useful need for
JSee Mountain West; Research. Construction Worker Profile,
Final Report. Washington, D.C.: Old West Regional Commission,
1976, pp. 46-51 and 103.
BOOMTOWN HOUSING
"During the Sweetwater County,
Wyoming, boom's early stages, the
housing stock of the county was ap-
proximately doubled with 6,000 nev;
units. Fifty-five hundred of these
were mobile homes... The housing
market demand drove prices and rents
up, yet investors and developers were
skeptical of putting money into boom-
town housing. Even if they had been
willing, mortgage money was not avail-
able for the typical miner wishing to
buy a home. This same pattern is re-
produced in most boomtowns. Even
when mining or utility companies
bring housing into being, little or
no provision is made for the local
service workers who must also be
accommodated in a fast growing com-
munity. "
—Gilmore, John S. Prepared State-
ment in U.S., Congress, Senate, Com-
mittee on Environment and Public
Works. Inland Energy Development
Impact Assistance Act of 1977,
Hearings before the Subcommittee on
Regional and Community Development,
95th Congress, 1st session, August 2
and 27, 1977, pp. 266-67.
2Zelenski, C., and J. Cummings.
ing Need in the State of Wyoming. Cheyenne, Wyo.:
Low to Moderate Income Hous-
Wyoming Depart-
ment~of Economic Planning ahcT Development, 1977; U.S. , Federal
Energy Administration, Region VIII, Socioeconomic Program Data
Collection Office, Regional Profile: Energy Impacted Communities.
Lakewood, Colo.: Federal Energy Administration, 1977.
428
-------
temporary residents during energy facility construction periods.
Construction always requires some short-term workforce; the fact
that residents who are not involved in construction also have no
alternative to mobile homes attests to overreliance on this
housing type.
The overuse of mobile homes has been generally unsatisfactory
to both residents and local governments. In many cases, the homes
in a development are placed very close together, yards are small
or nonexistent, and paved streets are rare. Those living in mo-
bile homes often find them small, poorly constructed, depreciating
in value, or simply possessing an aura of shabbiness.1 In the
words of a Gillette, Wyoming, resident: "Mobile home parks can
be nice places to live unlike the slums ours have turned out to
be."2 In compdiny-provided, employee-only mobile home develop-
ments, the social segregation from other townspeople also creates
dissatisfaction. 3
Mobile home development takes place in a manner similar to
the single-family home development process outlined in Figure 8-2.
A developer still must go through the required development steps,
but the only construction usually required is a concrete pad and
utilities for each mobile home. Mobile home park developers fre-
quently retain ownership of the park, and lease individual lots
to mobile home owners. It is uncommon for mobile home residents
to own the lot they occupy, although some mobile home owners buy
small rural lots on which to put their mobile homes.
The method of financing mobile homes contributes to residents '
dissatisfaction with this housing type. Except in Wyoming, the
customary loan practice is to finance them as personal property
(like automobiles), rather than real property. Interest rates,
C. "Personal and Social Acceptance of Manufactured
Homes and Other Innovations," in Quality Housing Environment for
Rural Low-Income Families, Bulletin Y-102. Muscle Shoals, Ala.:
Tennessee Valley Authority, National Fertilizer Development Cen-
ter, 1976, pp. 75-77; Luxenberg , S. "Mobile Homes Growing Up."
New York Times , May 22, 1977, pp. 1, 9.
2Pernula, Dale. City of Gillette/Campbell County: 1977
Citizen Policy Survey. Gillette, Wyo.: Gillette/Campbell County
Department of Planning and Development, 1977, p. 34.
3Fradkin, P.L. "Craig, Colorado: Population Unknown, Ele-
vation 6,185." Audubon , Vol. 79 (July 1977), pp. 118-27; Univer-
sity of Montana, Institute for Social Science Research. A Com-
parative Case Study of the Impact of Coal Development on the Way
of Life of People in the Coal Areas of Eastern Montana and North-
eastern Wyoming. Missoula, Mont.: University of Montana, Insti-
tute for Social Science Research, 1974.
429
-------
therefore, are substantially higher (by 2 to 3 percent) for mobile
homes than for home mortgages, which currently average around 9 to
9 1/2 percent. Down payments range from 10 to 40 percent, which
still requires a large initial sum on a $15,000 unit.
Designating mobile homes as personal property and separating
them from the land has two other important effects. First, mobile
homes tend to depreciate rather than increase in value over time
as conventional home/lot combinations do. Second, they are not
taxed as real property, and local governments can tax only the
value of the land. The tax revenue, therefore, is well below that
for a home-lot combination. Further, the property owner is the
legal landowner, and residents pay no property tax directly. l
These legal and financial aspects of mobile homes often lower
their desirability in the eyes of local governments. Little reve-
nue is added to the tax rolls and the high density of mobile home
parks also conflicts with aesthetic values. As a result, they are
usually restricted by zoning to less desirable areas of towns or
banned entirely.2 Housing demand, however, still tends to be met
by mobile homes. Although municipal zoning often is not very
stringent, in some states there is a little or no land-use and
zoning control in unincorporated county areas.3 Mobile home parks
clustered near a town's edge and along highways have become a com-
mon sight in much of the West since energy development began on a
large scale in the early 1970's.k
Other local government actions can affect the location of
housing. In an attempt to get some much-needed revenue and to
make new developments self-supporting, many towns have instituted
large utility tap fees and donation of park land and other facili-
ties on new housing development. Water and sewer tap or hookup
fees run as high as $2,000 per unit in Gillette, Wyoming. Devel-
opers who want to avoid these costs need only develop land outside
1 In some retirement-type mobile home parks, this legal sep-
aration of home from land does not take place. However, in the
West and much of the rest of the country, the situation is as
described here. See, for example, Luxenberg, S. "Mobile Homes
Growing Up." New York Times, May 22, 1977, pp. 1, 9.
2Ibid.
3The question of zoning and land use control is discussed at
greater length in Chapter 9.
^Federal Interagency Team. The Energy Boom in Southwest
Wyoming. Washington, D.C.: U.S., Department of Housing and
Urban Development, 1976.
430
-------
of town, as ARCO and Kerr-McGee have chosen to do in the Campbell
County area of Wyoming.1
Federal government programs concerning mobile homes have
little positive effect on the housing situation in western towns.
Mobile home construction and safety standards have upgraded the
quality of the units in the manufacturing stage.2 The quality
issues that remain are those of mobile home park design. Spacing,
distance from street, and utility hookups are specified criteria
for FHA insured loans.3 Conventional loans are usually used to
develop mobile home parks in the West; therefore, the federal
standards are meaningless in practice.
State standards are able to supplement the lack of other
regulations. Of the eight states in this study, only Montana and
North Dakota have guidelines for mobile home park design, and only
Montana has a mobile home park code that is enforced at the local
level by a representative of the state government.'* In the other
western states, mobile home park regulation is left to local gov-
ernments, as discussed above.
B. Housing Choices
The ability to choose among a variety of housing alternatives
is one measure of housing quality. The lack of choices in the
West results in part from the financing conditions that constrain
single-family housing (described in Section 8.2.1 above) and the
:Metz, W.C. "Residential Aspects of Coal Development."
Paper presented cit the Conference of the American Institute of
Planners, Kansas City, Missouri, October 1977.
2The regulations include standards on lighting, interior
space, bathroom locks, plumbing, electrical systems, among other
items. See 40 Fed. Reg 40260-303 (September 2, 1975); 41 Fed.
Reg. 48752-92 (December 18, 1975); 42 Fed. Reg. 960-66 (January 4,
1977).
3U.S., Department of Housing and Urban Development, Office
of Community Planning and Development. Rapid Growth from Energy
Projects: Ideas for State and Local Action, A Program Guide.
Washington, D.C.: Government Printing Office, 1976.
^Rapp, Donald A. Western Boomtowns, Part I, Amended: A
Comparative Analysis of State Actions, Special Report to the Gov-
ernors. Denver, Colo.: Western Governors' Regional Energy Policy
Office, 1976, p. 19. The existence of state guidelines is no
guarantee that they are even publicized at the local level. For
example, local officials in Mercer County, North Dakota, have no
record of the North Dakota guidelines (personal communication,
May 1977).
431
-------
resultant heavy reliance on mobile homes. Choices other than
those two, such as apartments, townhouses, condominiums, and vari-
ous modular designs are discussed briefly here.
Apartment developments are not yet common in energy-impact
communities for two principal reasons. First, they involve a
sizable investment (about $30,000 per two to three bedroom unit)
that would be difficult to obtain construction financing for in
small towns. In larger towns, the larger population, including
many residents from large cities where apartments are common,
attract some investment in apartments. For example, some apart-
ment development is being financed or guaranteed by energy com-
panies but, as with single-family housing, priority is given to
company employees.1 Second, typical monthly rents for apartments,
where they are available, are rather high (Table 8-3), especially
in comparison with mobile homes. Apartments are being built in
larger towns, such as Gillette and Farmington where the population
meets conventional market thresholds. In smaller towns, (under
15,000 population) multifamily housing is scarce if not impossible
to find.
Modular or factory-built wood-frame housing, is becoming a
major source of single- and multifamily housing in the West, par-
ticularly in larger towns. Relatively little labor is needed to
set modular homes on their foundations, which reduces, but does
not eliminate, the need for skilled workers to finish them on-
site. In most towns, the cost of modular housing is about the
same as the cost of houses constructed on-site (about $55,000 in
1976 for a 1,100 square-foot house in Gillette). Land costs,
local wage levels, subdivision and development costs (such as
utility connections), and financing are the same for both types.2
Much of the cost advantage of modular units is lost in trans-
portation costs, which average $4.50 to $5.00 per mile for each
unit.3 Cities and rural areas not on a rail line or an interstate
highway (such as Farmington, New Mexico and southern Utah) face
even higher delivery cost and delays in delivery over inadequate
roads.
*Metz, W.C. "Residential Aspects of Coal Development."
Paper presented at the Conference of the American Institute of
Planners, Kansas City, Missouri, October 1977.
2Federal Interagency Team. The Energy Boom in Southwest
Wyoming. Washington, D.C.: U.S., Department of Housing and
Urban Development, 1976, p. A.
3Kaiser Engineers. Kaiser Coal Project, Interim Report
June 30, 1975, Vol. 6: Community and Public Relations (Area D)
Oakland, Calif.: Kaiser Engineers, 1975, Section X.
432
-------
Employee barracks are another housing option that is being
used in the West, principally for construction workers who do not
have their families with them. For example, the Wyodak power
plant project being built by Pacific Power and Light near Gillette
uses prefab quarters for unmarried workers. Many men work a five
day week and drive hundreds of miles to their homes and back each
weekend.1 Living conditions in such quarters, however, can be
unsatisfactory to some workers.2
C. Indian Housing
Housing on Indian reservations raises several problems that
are somewhat different from those discussed above. In addition
to a housing shortage, the principal problem is one of quality;
for example, the lack of plumbing and crowding large families in
small quarters.3 Table 8-4 presents some indication of the Indian
housing situation in the West, including the Navajo Reservation,
where housing needs are most severe. As energy development pro-
ceeds on and near Indian lands, developers will be under pressure
both to employ Indians and to contribute to improvements in the
Indian housing situation. A Navajo "New Town" proposal related
to energy developments on the Navajo Reservation was, to some
degree, a response to this pressure by firms proposing coal gasi-
fication projects, but most of the financing arrangements were
left to the Navajo Tribe.u
Mobile homes are becoming common on Indian reservations,
even in areas where water is not available, and this trend is
likely to continue. Few houses in the Four Corners area,
•'"Wyoming Grassland Transformed to Coal Mining Center."
Civil Engineering - ASCE, September 1977, pp. 50-56.
2"Public Utility's Work Barracks Criticized," Denver Post,
November 1, 1976.
3Navajo Tribe, Office of Program Development. The Navajo
Nation Overall Economic Development Plan. Window Rock, Ariz.:
The Navajo Tribe, Office of Program Development, 1974, pp. 48-49;
U.S., Department of the Interior, Bureau of Indian Affairs, Bil-
lings Area Office. Final Environmental Statement: Crow Ceded
Area Coal Lease, Tracts II and III, Westmoreland Resources.
Billings, Mont.: Bureau of Indian Affairs, 1976, pp. 11-131 to
11-134.
^Morrison-Knudsen Company. Navajo New Town Feasibility
Overview. Boise, Idaho: Morrison-Knudsen, 1975.
433
-------
TABLE 8-4:
HOUSING CONDITIONS OF INDIANS IN THREE WESTERN
REGIONAL BUREAU OF INDIAN AFFAIRS AREAS, 1973
CONDITION
Total Number of Families3
Number of Standard Units
Number of Substandard Units
Families Doubled Up
Total Need as Percent of
Families
New Units Needed
Rehabilitations Needed
BIA AREA OFFICE
BILLINGS
6,071
3,335
2,269
467
45.1
1,861
875
NAVAJO
23,801
3,126
19,242
1,433
86.9
7,324
13,351
ALBUQUERQUE
8,349
3,180
2,841
2,328
61.9
3,332
1,837
BIA = Bureau of Indian Affairs
Source: U.S., Congress, Senate, Committee on Interior and In-
sular Affairs. Indian Housing in the United States, A Staff
Report on the Indian Housing Effort in the United States with
Selected Appendices. Washington, D.C.: Government Printing
Office, 1975, p. 3.
Indian families only.
particularly on the Navajo Reservation, have running water,1 and
few towns have sewer systems. Tribal housing developments with
running water will probably be able to provide only a small frac-
tion of new homes for Indians.
A further energy development problem concerns employing both
Indians and non-Indians. Individual land ownership is commonly
prohibited on reservations. This is the case, for example, on
the Navajo Reservation, the largest Indian reservation in the
West. Therefore, conventional residential and commercial devel-
opments are not possible.2 Thus, non-Indians tend to settle in
^.S., Department of the Interior, Bureau of Indian Affairs,
Planning Support Group. Draft Environmental Impact Statement:
Navajo-Exxon Uranium Development. Billings, Mont.: Bureau of
Indian Affairs, 1976, pp. 11-89 to 11-93,.
2U.S., Commission on Civil Rights. The Navajo Nation: An
American Colony. Washington, D.C.: Commission on Civil Rights,
1975, p. 19.
434
-------
nearby towns, while Indians tend to live in mobile homes and sub-
standard housing scattered throughout the reservation.
Partly because of the land ownership situation and partly
because of low incomes among Indians, nonsubsidized housing pro-
jects are rare. Even though all western Indian reservations would
meet the criteria for FmHA programs, Indians account for less than
one percent of all FmHA loans. According to the Housing Assis-
tance Council, this is largely due to a lack of knowledge about
the programs, even though they may be more flexible and poten-
tially helpful to Indians than are HUD and Bureau of Indian Af-
fairs (BIA) programs.2
Other federal programs pertaining specifically to Indian
housing are divided primarily among three agencies (HUD, BIA,
and Indian Health Service), all of which play some part in any
federally-funded housing project. Several tri-agency "Memoranda
of Understanding" were signed during the 1960"s to coordinate
interagency efforts in Indian housing.3 However, these Memoranda
"have never been entirely successful because they lack any means
of enforcement."^ Another view cites "the near total lack of
interagency coordination."5 Since these complaints were noted,
an Indian Desk has been established within HUD to consolidate
agency efforts with respect to Indians. However, delays often
result because Indian tribes have to deal with three federal
agencies for a single project, whereas non-Indian local govern-
ments need only work with HUD. Among them, the three agencies
have provided a number of water supply and sewer improvements
and extensions on the Navajo reservation.6
^.S., Congress, Senate, Committee on Interior and Insular
Affairs. Indian Housing in the United States, A Staff Report on
the Indian Housing Effort in the United States with Selected
Appendices. Washington, D.C.: Government Printing Office, 1975.
2Housing Assistance Council. A Guide to Indian Use^of Far-
mers Home Administration Housing Program. Washington, D.C.:
Housing Assistance Council, 1976.
3 These memoranda are reprinted in Senate Committee on In-
terior and Insular Affairs. Indian Housing.
14Ibid. , p. 12
5Ibid. , pp. 169-78 (quote on p. 173) .
6Navajo Tribe, Office of Program Development. TheNavajo
Nation Overall Economic Development Program, 1976 Annual Progress
Report. Window Rock, Ariz.: The Navajo Tribe, Office of Program
Development, 1976, pp. 46-48.
435
-------
8.2.3 Summary
The housing problem in western communities with new energy
development is one of both quantity and quality. The quantity of
housing is in short supply because of the constraints in financing
in the private housing market. Energy development involves uncer-
tainties about long-term housing demand, and these uncertainties
have resulted in a very low level of local construction lending.
Local lending institutions in the West generally are not linked
effectively to the national housing financing system, the secon-
dary mortgage market. Energy developers have provided some hous-
ing in larger towns for their employees, but a shortage of home
construction prevails throughout the areas affected by energy de-
velopment.
No federal programs are specifically designed to deal with
housing shortages in rapid-growth areas such as the West. State
actions, like federal programs, have little effect in energy areas,
because of an orientation toward low-income families in urban
areas. Federal actions have been more effective at improving the
quality of housing on Indian reservations in the West. However,
a lack of coordination of Indian housing programs is blamed for
slow progress in improving the Indian housing situation.
In the absence of adequate public or private market response
to housing demand, mobile homes have become the housing type for
the majority of newcomers to energy-impacted western towns. These
provide little property tax benefit to local governments because
the homes are bought and owned as personal property. Partly as a
result of this, mobile homes are often restricted by local zoning
regulations to less desirable parts of town. In most areas, mo-
bile home developers can avoid zoning restrictions completely on
unincorporated land outside of municipal boundaries, and mobile
home parks that cluster on town edges are generally low in quality.
Few towns have any other housing choices, such as apartments and
townhouses.
8.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES FOR
HOUSING
8.3.1 Introduction
Discussion in the two preceding sections led to the conclu-
sion that the shortage and quality of housing, particularly in
small, isolated western communities, is a major problem affecting
energy resource development in the West. Policies for dealing
with this problem can attempt to achieve one or more of the three
objectives listed in Table 8-5, to:
• Reduce the peak demand for temporary housing;
436
-------
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• Utilize the existing private housing market to increase
the availability of housing financing and the numbers
of houses being constructed;
• Improve the quality of housing.
These three objectives are not necessarily mutually exclusive;
for example, decreasing demand for temporary housing and increas-
ing the amount of new housing available would presumably contrib-
ute to an overall improvement in housing quality in energy-impacted
communities.
This section identifies several possible alternative policies
and implementation strategies for achieving these three policy ob-
jectives. An underlying assumption is that, although federal and
state programs may provide secondary mortgage market support, the
private mortgage market will continue to be the principal mecha-
nism for financing both construction and home mortgages. We also
assume that the preference of most families for single-family
homes will continue to be a major consideration in dealing with
the housing problems which arise in energy-impacted western towns.
A. What Are the Alternatives?
The categories of alternatives to be considered to achieve
each objective are shown in Table 8-5. For example, the first
objective, to reduce the peak demand for temporary housing, is
addressed by policy alternatives that would decrease the number
of workers living at or near energy development sites in the West.
Two categories of alternatives responsive to the second objective,
increasing the quantity of housing financing and construction
available through the private market are: to: (1) increase housing
construction, and (2) increase the availability of financing for
construction and home mortgages. For the third objective, improv-
ing housing quality, two categories of policy alternatives could
contribute to achieving the objective: (1) diversifying the hous-
ing mix, and (2) improving the mobile home situation. Specific
alternatives within each of these categories are listed in Table
8-5. The five categories of alternatives and the specific alter-
natives within each category are briefly described in the follow-
ing section.
(1) Decrease the Number of Workers Living On-Site
This category of alternatives is intended to reduce the num-
ber of temporary workers who would otherwise move into the local
community from outside the impact area and require housing. Ad-
justing project schedules will reduce the size of the temporary
population living in an energy development area at any given time.
438
-------
For example, the construction of a coal gasification facility
usually takes about five years and requires more than 4,600 work-
ers during peak construction activity, and the impacts are com-
pounded when two or more facilities are constructed simulta-
neously.1 Peak construction labor requirements could be reduced
to about 2,600 workers if the construction schedule were length-
ened to eight years.2 This would reduce the severity of the im-
pact of energy development on local housing.
Regardless of the construction schedule established for an
energy project, the peak demand for temporary housing in the local
area can be reduced if the number of workers who live near the
construction site is kept to a minimum. The second specific alter-
native suggests that workers be encouraged to live in larger popu-
lation centers in the region and commute to construction sites,
either individually, or in carpools and buses.
Since the peak employment during the construction phase de-
pends upon the technology of the facility, the third specific pol-
icy option focuses on achieving the best possible combination of
technologies and locations to reduce the peak demand for temporary
housing. For example, a coal gasification plant requires about
25 times as many workers during the peak employment period as does
a surface coal mine.3 This approach to resolving the housing
problem proposes that policymakers consider siting strategies
which place facilities requiring a large temporary labor force in
less isolated areas which have a large enough population base to
accommodate the population influx which energy resource develop-
ment will bring. This option could also lead to siting some
energy facilities near load centers outside of the western region. "*
(2) Increase the Quantity of Housing Construction
This is the first of two categories of policy alternatives
that respond to the second general objective of increasing the
number of houses being constructed. It includes specific options
^arasso, M., et al. The Energy Supply Planning Model, Vol.
I. San Francisco, Calif.: Bechtel Corporation, 1975, pp. 6-30
through 6-31.
2 Ibid.
3Ibid.
''Problems and issues of energy facility siting are discussed
in more detail in Chapter 12.
439
-------
involving industry or industry/government actions to increase the
level of private sector homebuilding activity in energy-impacted
communities, and assumes that energy industries should bear part
of the cost of providing housing for their workers.1
Facility siting legislation in some states stipulates that
siting permits may be made conditional on an industry's agreeing
to mitigate impacts likely to result from the construction and
operation of the proposed facility. However, state siting laws
have other objectives in addition to deeiling with socioeconomic
'or population growth-related impacts, such as balancing environ-
mental and energy development concerns. In some states with such
legislation, public sector impacts are addressed, but there is no
capability for avoiding private sector impacts such as housing.
In contrast, the alternative considered here is intended to deal
with housing impacts in the manner of the Wyoming Industrial Siting
Authority. For example, after studies and hearings, Basin Electric
Power Cooperative agreed to furnish 1,900 housing units and other
services to help mitigate the impacts of its proposed facility in
Wheatland.2 Similar requirements could be included in legislation
in other states, or could be included in federal siting legisla-
tion.
Whereas impact mitigation requirements in state siting legis-
lation could compel companies to provide housing for their workers,
the second alternative, stimulating industry investment in housing,
relies on industry to take the initiative by investing in housing
in the local communities that will be affected by the proposed
facility. In the past, companies taking this kind of initiative
provided mostly mobile homes; however, the company's activities
in providing housing could range from building and operating an
Providing ample quality housing may contribute to worker
satisfaction and help to stabilize the workforce. See Richards,
W. Robert. "Mining Industry Housing and Community Relations."
Paper presented at the American Mining Congress Coal Convention,
St. Louis, Missouri, April 1978.
2Wyoming Industrial Siting Administration, Docket Number
WISA-75-3. See also Valeu, R.V. "Financial and Fiscal Aspects
of Monitoring and Mitigation." Paper presented at the Symposium
on State-of-the-Art Survey of Socioeconomic Impacts Associated
with Construction/Operation of Energy Facilities, St. Louis,
Missouri, January 1977.
440
-------
entire town, as Montana Power did in Colstrip,1 to working with
private developers to guarantee financing for a specified number
of homes.
(3) Increasing the Availability of Construction and Home Mortgage
Financing
Although housing financing in the U.S. has traditionally been
the responsibility of the private sector, uncertainties associated
with energy development in the West have made savings and loan
associations and government agencies and insurance companies in
the secondary mortgage market unwilling to provide loans for hous-
ing development in boomtowns. Federal housing programs currently
available through the HUD are designed to deal primarily with
metropolitan problems. Many western states now have a state fi-
nancing authority; but, without exception, the authority's activ-
ity is restricted to low or moderate income groups. The housing
assistance programs considered in this alternative might overcome
the difficulties mentioned above by setting up state and/or fed-
eral housing financing guarantees in the secondary mortgage mar-
kets. This assistance, provided by federal funds or from state
land and mineral revenues, could be used to back local lending
institutions and finance construction loans.
(4) Diversify the Housing Mix
This is one of two categories of policy alternatives that
seek to improve the quality of housing in energy-impacted commu-
nities in the West. As mentioned in Section 8.2.2, both single-
family homes and multifamily units are in short supply in most
smaller western towns, and there are a disproportionate number of
mobile homes. The specific alternative in this category would
encourage the construction of alternative housing types, such as
apartments, condominiums, and townhouses, both by providing hous-
ing finance assistance to lenders and developers, and tax incen-
tives to both developers and renters to encourage a wider range
of choices.
(5) Improve the Mobile Home Situation
Even if policymakers are successful in diversifying the hous-
ing types available in western boomtowns, mobile homes will still
JMyhra, David. "Colstrip, Montana—The Modern Company Town."
Coal Age, Vol. 80 (May 1975), pp. 45-57; White, M. "Colstrip
Power Project—Its Monitoring and Mitigation Programs." Paper
presented at the Symposium on State-of-the-Art Survey of Socio-
economic Impacts Associated with Construction/Operation of Energy
Facilities, St. Louis, Missouri, January 1977.
441
-------
remain the predominant housing type in the short to midterm
future, especially for construction workers who live in the area
only temporarily. Therefore, this category of policy alterna-
tives is basically aimed at improving the quality of mobile home
housing.
The first specific policy alternative calls for improving
the quality of mobile home housing by changing their tax status,
and thereby, the way in which they are financed. Mobile homes
are generally not classified as real property in the western
states. This specific policy alternative calls for mobile homes
to be reclassified as real property. This would make them eligi-
ble for lower interest loans; it could also lower their deprecia-
tion rate over time (they might even appreciate in value) and
enable local governments to derive property tax revenues that
could be used to finance local services and facilities.
The general undesirability of mobile homes has restricted
their location to high-density developments in less desirable
parts of town or in fringe locations immediately outside of muni-
cipal jurisdictions. The last two specific policy alternatives
considered are designed to address these problems by controlling
the way in which mobile home parks are developed and by institut-
ing local land-use controls for all areas of the county to ensure
that they cannot escape this control. Mobile home parks could be
developed so that there is less congestion and more open areas,
and so that the parks have many of the amenities usually associ-
ated with residential lots, such as paved streets and neighborhood
parks. The same standards can be enforced in the surrounding
county by adopting a local land-use law that applies to all areas
of the county.
B. How Can the Alternatives Be Implemented?
Many of the policy alternatives briefly described above can
be implemented in several different ways. Implementation strate-
gies for each of the categories of housing alternatives are iden-
tified in Table 8-6. This table illustrates specific alternatives
available to the policymakers, shows the specific strategy that
can be used to implement the alternative, and calls attention to
political, economic, and social factors that are likely to con-
strain implementation. Each will be discussed in more detail in
the evaluation of alternatives in Section 8.3.2.
The alternative strategies presented here are intended to
preserve the private mortgage market as the major mechanism for
providing home mortgages and construction financing. Federal and
state involvement is designed to lend support to the private sec-
tor by loan guarantees in the secondary mortgage market. The role
of the private sector is also evident in those policy alternatives
which seek to reduce the peak demand for temporary housing by ex-
tending the construction schedule for an energy project over a
442
-------
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longer period of time or by encouraging workers to commute from
larger population centers. Energy developers can also provide
workers with incentives to commute, or they can organize mass
transportation (e.g., buses) between population centers and energy
development sites. Another facet of private sector involvement
in this area is to have developers provide housing for their work-
ers.
Facility siting laws would give the states a major role in
housing assistance. The permit approval process enables the state
to extract a promise of housing assistance from the developer to
mitigate the impacts of the proposed facility. The state also
plays a role by providing housing assistance in the secondary
mortgage market.
The role of local government is important in housing policy,
especially in achieving the third objective, "to improve the mobile
home situation." Municipal regulation of mobile home development
has often been ineffective because counties in the western states
generally do not regulate mobile home development. Thus, residents
are able to locate in crowded areas on the edges of towns or along
the roads leading into towns, since there are no land-use regula-
tions governing their activity. Cooperation between municipal and
county government will be important in order to enforce land-use
legislation, zoning laws, and mobile home codes.
8.3.2 Evaluation of Alternatives
A. Introduction
Since it is not possible to discuss all of the alternatives
described above, two categories of alternatives which address
particularly important aspects of the housing problem are evalu-
ated and compared: decrease the number of workers living on-site,
and increase the quantity of housing construction.
The five basic criteria identified and defined in Chapter 3
are used in this evaluation: effectiveness, efficiency, equity,
flexibility, and implementability. Table 8-7 defines each cri-
terion as it is applied specifically to housing problems and is-
sues, and based on the policy objectives defined above (Section
8.3.1). As applied to the issue of housing, the criteria listed
in Table 8-7 address two general questions. The first is whether
the demand for housing in the West can be reduced. The second
focuses on whether specific alternatives can be implemented and
whether they are adaptable to changing demands for housing.
B. Evaluation of Decreasing the Number of Workers Living On-Site
Three specific policy alternatives for decreasing the number
of workers living at energy development sites in the West are
evaluated and compared in this section:
444
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• Adjustment of project schedules;
• Long distance commuting;
• Consideration of technological/locational factors in siting.
The principal objective to be achieved by this category of
policy alternatives is to reduce the overall need for temporary
housing during energy facility construction. The strain on local
housing markets caused by short-term construction workers affects
all residents of a rapidly growing town, especially if some con-
struction workers choose to live in some of the town's permanent
housing. This may force a permanent resident to live in a mobile
home or similar housing. The alternatives discussed below attempt
to reduce the number of temporary workers from outside the impact
area who would otherwise move into the area and demand housing.
The principal responsibility for implementing these alterna-
tives would rest with private industry, acting in concert with
state and local officials. Implementation strategies considered
for this set of policies include:
• Enacting state siting laws with provisions that would make
siting permits conditional on industry providing adequate
housing for the workers it expects to employ in the new fa-
cility;
• Providing -incentives for employees to live in larger popula-
tion centers further away and commute to the energy construc-
tion site;
• Siting of labor-intensive energy facilities, such as conver-
sion plants in more densely populated areas, in order to
minimize or avoid the impact on small, isolated communities
in the West.
The success of each policy alternative will depend upon the
particular implementation strategy that a policymaker pursues.
The choices presented here do not exhaust the range of policies
that might be adopted to reduce the peak demand for temporary
housing. However, an evaluation of the three alternatives that
are presented here will inform policymakers about the trade-offs
that are associated with various specific policy alternatives.
(1) How Much New Housing Will Result?
The three policy alternatives appear to be equally effective
in reducing the pressures on the local housing market caused by
a large influx of temporary construction workers from outside the
area. If the first specific policy alternative requiring an
446
-------
adjustment in project schedules is selected, the constructed time
of a coal gasification plant, for example, would be extended from
5 to 8 years. By extending the schedule to prevent any labor re-
quirements exceeding 2,000 person-years annually, construction
peaks would be spead over 2 or more years (see Figure 8-1-D).
Thus, peak employment would be reduced by approximately one-third
over the eight-year construction phase and would lessen the impact
on housing demand by a similar amount.
The specific alternative calling for commuting to be encour-
aged would reduce the peak demand for temporary housing in the
local community in direct proportion to the number of workers en-
couraged to commute from larger population centers. If the siting
alternative is chosen, requirements could be established to keep
labor-intensive facilities out of isolated, sparsely populated
areas and placed in more densely populated communities where'more
housing might be available. Strictly speaking, this alternative
does not reduce the peak demand for local housing in the impacted
community, but it does reduce the strain of such demand by locating
facilities so as to minimize the housing demand as a proportion of
the total community housing demand.
(2) What Would It Cost?
Both labor and construction costs would likely increase if
the construction of ""an energy facility were extended from 5 to 8
years. Interest costs on a $50 million coal mine built over 8
years instead of 5 years would amount to $2.5 million per year or
$7.5 million for the three-year extension. Interest costs on a
coal-fired power plant with a $1 billion costs would increase by
$100 million if construction was lengthened from 8 to 10 years to
reduce peak construction employment.l The increased costs asso-
ciated with this policy alternative would also be reflected in
increased energy costs paid by consumers and in inflationary in-
creases in construction costs.
The second alternative, to increase long distance commuting,
could be accomplished with minimal costs either to government or
energy consumers. The costs of commuting would be assumed either
by the individual worker if they continue to drive their own vehi-
cles, or by the company if developers provide transportation for
workers. Even if industries establish fleets of mass transit ve-
hicles to transport up to 50 or 75 percent of the labor force from
outlying population centers, the cost of this alternative would
be lower than the expenditure required to meet the temporary peak
demand housing in the development area. The risks of delayed
}This is calculated as one-half of the number of years added
to construction times nominal project cost ($1 billion) times
interest rate (10 percent).
447
-------
energy production startup would also be minimal if this alterna-
tive were implemented, since new plant construction could proceed
on schedule. The effects on worker productivity also appear to
be positive because temporary construction employees and their
families could live in the larger cities in the area where they
would have access to a wider choice of housing, as well as a
broader range of services and amenities.
If technological criteria are utilized to determine the loca-
tion of energy facilities, small towns in the West can avoid many
of the costs and risks associated with rapid growth in temporary
construction population. The siting of labor-intensive facilities
in areas of higher population density would completely eliminate
the demand for temporary housing in isolated small towns. There
would be no upward pressure on housing prices, and local devel-
opers and financial institutions would not face the risk of build-
ing for an energy boom that failed to materialize. It should be
noted, however, that energy development also brings with it asso-
ciated benefits to the local economy, and these would not be real-
ized if facilities with high construction-phase labor requirements
are prohibited.
(3) How Are the Costs, Risks, and Benefits Distributed?
The adjustment of project schedules for constructing facili-
ties in impacted communities raises question^ concerning differ-
ences in the impacts of western energy development: on the West and
on other regions of the country. For example, as noted above, the
financial costs of energy facilities will increase when the con-
struction period is extended; this will increase costs for both
utilities and consumers, many of whom are outside the West. Con-
sequently, policymakers have to consider regional trade-offs be-
tween the costs of energy to consumers and the costs of mitigating
housing impacts in local areas of the West. If this policy alter-
native is implemented to reduce the peak demand for temporary hous-
ing, energy consumers in other parts of the country will likely pay
higher prices for energy, and there will be delays in converting
some utilities from gas and oil to coal. In this case, coal con-
version required by the Energy Supply and Environmental Coordina-
tion Act of 1974 : would conflict with the attempts of coal-
producing states to reduce housing impacts.
The long distance commuting and siting alternative would have
the effect of transferring impacts from a single community in the
vicinity of energy development sites to an area where the popula-
tion base is better able to absorb the peak demand for temporary
*Energy Supply and Environmental Coordination Act of 1974,
Pub. L. 93-319, 88 Stat. 246, 15 U.S.C. 792.
448
-------
housing. Thus, the costs associated with the construction of a
facility are spread among more communities. The risk of adverse
impacts is also reduced for any single community under these op-
tions, since the failure of energy development to materialize is
less likely to leave a community with a surplus of temporary hous-
ing when the construction workers have been housed within various
communities in an impact area.
(4) How Flexible Are the Alternatives?
The flexibility of adjustments in project schedules for a
single facility is generally unrestricted. However, if two or
more construction projects are proposed for the same area, coordi-
nation might be more difficult. The first firm to begin construc-
tion of an energy facility would be able to follow, to a large
degree, its own preferred project schedule. Other firms that en-
ter an energy resource area later would receive their siting per-
mits contingent upon schedule adjustment (in most cases delay) to
reduce local housing needs.
The commuter alternative is also very flexible, since no new
mechanisms are required, and housing impacts can be spread among
the available population centers. The voluntary nature of this
option allows companies to experiment with various transportation
modes to meet workers' needs. Plant shift schedules enabling
workers to set up carpools and other transportation arrangements
could be accommodated by this proposal.
The siting alternative is less flexible than those previously
discussed. Siting choices for energy facilities are somewhat con-
strained by the labor force requirements of some technologies and
the characteristics of particular sites. However, the basic dis-
tin
-------
difficult.l Individual projects must be assessed to determine
their impacts on communities, and the impacts of alternative sched-
ules need to be compared. State industrial siting agencies gener-
ally already have the authority to acquire information on schedul-
ing and to require some adjustments to schedules through condi-
tional siting permits.2 By tying compliance on schedules to a
state-issued construction permit, the construction schedule be-
comes part of the definition of the project from its very begin-
ning.
The initiative for implementing the? long distance commuting
option also rests with private industry, although state and local
governments may offer some assistance in the form of tax incentives
and informal cooperation. The primary constraint on the implemen-
tation of this alternative is likely to be the negative attitude
of workers toward any form of organized transportation; most pre-
fer to live in the vicinity of the development and drive their
own vehicle. Industry might make long distance commuting appealing
to workers by organizing company buses to and from major population
centers. These could be staffed by attendants who would serve
coffee, beer, and refreshments en route.
State governments would have responsibility for implementing
the technological/locational siting option, which may require new
legislation to carry out. The acceptability of these types of
siting policies are considered in some detail in Chapter 12.
(6) Summary of Alternatives to Decrease the Number of Workers
Living On-Site
Findings for the evaluation of each alternative for reducing
the peak demand for temporary housing are presented in Table 8-8.
Each of the alternatives analyzed—adjusting project schedules*
encouraging long distance commuting, and applying technological
and locational criteria in siting—would reduce the demand for
temporary housing in local communities during the construction
phase.
The evaluation discussion illustrates that the five criteria
can rarely, if ever, be met simultaneously. Therefore, when pol-
icymakers select a mix of policies and implementation strategies
!Without national energy facility siting legislation, fed-
eral control over project schedules would be unlikely. See Chap-
ter 12 "Energy Facility Siting," on this point.
2Industrial Development Information and Siting Act of 1975,
Wyoming Statutes §§ 35-502.75 et seg. (Cumulative Supplement
1975). See the discussion on state siting laws in Section 8.2.2
and in Chapter 12, "Energy Facility Siting."
450
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which reduce some of the peak demand for temporary construction
housing, they will also have to balance considerations of effec-
tiveness, efficiency, equity, flexibility, and implementability
contained in the various alternatives. For example, if the major
objective is to achieve the maximum reduction in housing demand,
technological and locational factors should be a requirement for
siting facilities, the requirement being to locate labor-intensive
plants near more densely-populated areas. This alternative would
also minimize the costs and risks of housing impacts for small,
isolated towns and spread housing demand over a broader area.
Siting criteria would be fairly easy to implement since many states
already have siting laws, but once facilities have been con-
structed, the siting decision becomes irreversible. The adjust-
ment of project schedules would increase both energy and construc-
tion costs, but would reduce peak temporary housing demand by
about a third.
C. Evaluation of Alternatives for Increasing Housing Construc-
tion and Financing
The goal of this category of policy alternatives is to in-
crease the level of private market homebuilding activity in energy
impacted communities through industry or industry/government ac-
tions. The specific alternatives included here assume that local
housing markets require commitments from the energy industry or
guarantees from government to increase housing availability.
This section evaluates and compares three specific policy
alternatives for preserving and strengthening the private housing
market role in the West:
• Make state energy facility siting permits conditional on in-
dustry agreement to provide housing for the workers it ex-
pects to employ;
• Provide incentives and inducements to stimulate energy in-
dustry investment in housing or guarantee of housing financ-
ing;
• Provide federal or state government guarantees of home loans
in the secondary mortgage market.
These alternatives can be implemented by employing a variety
of strategies. The following three strategies are somewhat repre-
sentative of the range of actions which might be adopted to imple-
ment various policy alternatives:
* Require developers to provide housing as a precondition for
obtaining siting permits;
* Provide tax incentives to spur housing investments;
453
-------
• Provide federal and state loan guarantees in the secondary
mortgage market and direct grants and loans to stimulate
construction.
None of these alternatives will satisfy all five criteria
simultaneously. Thus, policymakers will be required to choose
alternatives which make%trade~offs.
(1) How Much New Housing Financing and Construction Will Result?
It is impossible to generalize about the amount of new housing
that would be made available by these alternatives. Although many
states have siting laws, few have had any experience with condi-
tional siting based on impact mitigation.. Perhaps the best known
example of the use of siting legislation in the West to require
housing construction involves Basin Electric Power Cooperative in
Wheatland, Wyoming. As noted earlier, the utility agreed to pro-
vide 1,900 homes, together with other mitigation assistance, in
return for permission to site a power plant near the community.1
Generally, if policymakers choose to implement siting legislation
requiring industry to agree to provide housing for its employees
before receiving a permit, they can ensure that the housing will
at least be adequate to mitigate the impacts of the proposed fa-
cility.
The amount of new housing provided by the industry guarantees
alternatives will also vary on a case-by-case basis. Industries
in the West have been increasingly willing to provide guarantees
to private developers for a specified number of homes. Housing
built with developer backing has included both single- and multi-
family units and has involved assistance ranging from permanent
mobile home spaces to modernization of older homes. The quantity
of housing provided is likely to be adequate to meet the needs of
workers employed by the developer but typically will not be avail-
able to contract or service workers and their families.
Based on the assistance currently provided by state and
federal housing assistance programs,2 it is estimated that fed-
eral and state support for the secondary mortgage market could
potentially be doubled to provide loan guarantees for housing in
*See Valeu, R.L. "Financial and Fiscal Aspects of Monitoring
and Mitigation." Paper presented at the Symposium on State-of-
the-Art Survey of Socioeconomic Impacts Associated with Construc-
tion/Operation of Energy Facilities, St. Louis, Missouri, January
1977.
2U.S., Department of Energy, Energy Impact Assistance Steer-
ing Group. Report to the President on Energy Impact Assistance,
Draft Report. Washington, D.C.: U.S., Department of Energy, 1977
454
-------
energy-impacted communities. Grants and loans direct to builders
and developers could reduce the risk and difficulty of obtaining
financing for those firms and increase local housing supply.
(2) What Will It Cost?
The cost of housing measures can escalate quickly depending
on the policy alternative chosen. For example, costs can range
from about $5,000 per unit for site development, to more than
$30,000 per unit for house construction. Lot preparation and
development for 1,900 homes in Wheatland, Wyoming, cost about $10
million, or over $5,200 per unit.1 Thus, even 100 lots without
homes can cost as much as $500,000 to develop. Firms also face
the risk of holding unsold homes if energy development plans are
delayed or cancelled. However, if development does occur, most
if not all housing in western towns can be sold so long as financ-
ing is available.
The costs of state and federal assistance and guarantee pro-
grams are exemplified by Colorado's sale of $50 million in housing
financing bonds and $34 million of bonds to finance construction
loans.i
(3) How Will the Costs, Risks, and Benefits of these Alternatives
Be Distributed?
A question of equity which arises in siting legislation con-
cerns deciding to which facilities the law should apply. The po-
litical strength of mining companies in some states in our study
area may make it difficult for state legislatures to include this
requirement. While large energy conversion facilities are gener-
ally believed to be the cause of large-scale impacts, housing fa-
cilities provided by industry are typically available primarily
or exclusively for company employees. No provisions are made for
the needs of service workers who move to the development area to
meet the needs of construction workers. The risks and interest
charges on home construction financing provided by private firms
are generally carried by the energy developer in the short term
and later passed on to consumers.
TValeu, R.L. "Financial and Fiscal Aspects of Monitoring
and Mitigation." Paper presented at the Symposium on State-of-
the-Art Survey of Socioeconomic Impacts Associated with Construc-
tion/Operation of Energy Facilities, St. Louis, Missouri, January
1977.
2Carlisle, N. "Boomtown Housing: The Problems and Possible
Solutions," in Bronder, L., N. Carlisle, and M. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, p. 497.
455
-------
When state and federal programs are utilized to provide in-
creases in housing financing and construction, the taxpayer bears
the risks and costs. In the case of state programs financed by
severance taxes, utilities pay the increased costs when they buy
the fuel and pass it on to consumers by increasing their rate
base.
(4) How Flexible Are the Alternatives?
Conditional siting permits, industry investment in housing,
and state and federal housing assistance programs are generally
quite flexible in dealing with the housing needs specific to a
given locality and within states as a whole. Siting permits con-
ditioned on industry provision of housing are especially able to
meet the specific type and degree of impacts of energy develop-
ment in particular communities.
(5) Can the Alternatives Be Adopted?
Industry acceptance of housing construction requirements de-
pends to some extent on the advantages of the siting permit pro-
cedure. If the state permit substitutes for many or all current
state permits (one-stop siting), then the time and cost savings
in permit applications can be used to provide housing or other
community facilities. (If federal permits also could be consoli-
dated, the savings would be even greater.) On the other hand, an
additional permit requirement would find little industry support,
even without mitigation requirements.
(6) Summary of Alternatives to Increase the Quantity of Housing
Finance and Construction
Table 8-9 identifies the conclusions reached on each evalua-
tive criterion for alternatives that increase the quantity of
housing finance and construction. As indicated in the table,
there is no alternative that meets all of the criteria simulta-
neously, so policymakers will have to balance considerations of
effectiveness, efficiency, equity, flexibility, and implementa-
bility in choosing a combination of policies and implementation
strategies to increase the quantity and availability of housing
financing and construction.
8.4 SUMMARY AND COMPARISON OF HOUSING ALTERNATIVES
Population growth associated with energy resource development
in the West can seriously affect both the quantity and the quality
of housing available to energy and service workers and their fami-
lies in nearby communities. A variety of alternatives to avoid
or mitigate these impacts has been presented in this chapter.
Policymakers choosing any of these alternatives will find it nec-
essary to make trade-offs among costs, risks, and benefits. The
456
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trade-offs have been discussed in terms of five criteria for
evaluating various policy alternatives. The conclusions of this
analysis for two representative categories of alternatives are
presented in Table 8-10.
The categories of alternatives that were subjected to addi-
tional evaluation in this chapter respond to two different goals
of housing policy in the western United States.1 The first gen-
eral category of alternatives aims at avoiding the housing impacts
of energy development in western communities. In constast, the
second category of alternatives acknowledges that energy devel-
opment is now occurring in many western communities and is inevi-
table in others. Thus, this second set of alternatives is
designed to increase the amount of housing financing and construc-
tion that is available through the private market.
Some of the peak demand for temporary housing in energy
development communities could be avoided if policymakers locate
fewer workers in small western communities. All such options
would increase the cost of energy development in order to reduce
the housing impacts. Policies to increase the supply of housing,
by providing finance and construction funds, are less costly and
can easily be used in communities where impacts are already
occurring. The supply alternatives analyzed here also are more
flexible and can be tailored for the housing situation in
particular states and towns.
The role of energy developers in reducing boomtown-type im-
pacts will need to be increased, as discussed earlier in this
chapter. Particularly in housing, the private sector has ample
opportunity to alleviate impacts and, indeed, to make a sound in-
vestment. Federal programs are much more difficult to aim at the
specific needs of individual communities, although the cost can
be spread broadly to all taxpayers. Overall, no single policy
alternative can be the best; rather, several different options
will have to be implemented together to improve the housing sit-
uation in western energy towns.
Policy alternatives to meet the goal of improving housing
quality were described, but not evaluated, in this chapter.
459
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461
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CHAPTER 9
GROWTH MANAGEMENT
EXECUTIVE SUMMARY
Energy resource development in the West can seriously affect
quality-of-life, particularly in small, isolated communities for
energy workers and their families. In addition to being affected
by the housing problems discussed in the previous chapter, public
services and facilities in most energy-impacted communities will
almost certainly be inadequate to meet the needs of the greatly in-
creased population which energy development will bring. The prob-
lems which people and communities can expect to face are compounded
by fluctuations in population due to changes in the size of the
work force, a lack of adequate funds, especially for capital ex-
penditures, a general lack of a professional management and plan-
ning capability, and, often, the inadequacy or absence of impact
assistance programs.
Impacts
Growth management impacts will depend on characteristics of
the energy development technology and its location. The most im-
portant technological characteristics influencing growth manage-
ment problems are labor requirements and scheduling. Critical lo-
cational factors include size and location of the impacted commu-
nity and distribution of revenues among counties, school districts,
and municipalities.
Our analysis of growth management impacts resulting from west-
ern energy resource development suggest that:
• Communities close to coal gasification and liquefaction
facilities will face the largest immediate demand for
services and facilities, since peak construction popula-
tion increases for these facilities are considerably
larger than any other conversion facility.
• Communities near coal gasification plants and electric
power plants also will experience serious boom and bust
cycles, since these facilities have the largest ratio of
construction to operation employment. This means that
462
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these communities will not only have a very difficult
time in meeting immediate growth needs, but could also
have large excesses of services or facilities after the
construction stage.
• Smaller communities, generally those under 5,000, close
to energy facilities will have the most difficult time
managing growth, since population increases will repre-
sent large percentage changes and few professional plan-
ning capabilities exist in these towns (Table 9ES-1).
• Isolated towns impacted by energy development will be
harder hit than areas where several towns will share
population increases.
TABLE 9ES-1: POPULATION GROWTH IN SELECTED ENERGY-
IMPACTED WESTERN COMMUNITIES, 1970-1977
TOWN
Carbondale, CO
Grand Valley, CO
Craig, CO
Rifle, CO
Hardin, MT
Washburn, ND
Huntington, UT
Gillette, WY
Douglas, WY
Moorcroft, WY
Wheatland, WY
Rock Springs, WY
POPULATION
1970
726
270
4,205
2,150
2,733
805
857
7,192
2,677
981
2,500
10,500
1977
1,600
500
6,657
3,500
3,637
1,400
1,700
10,200
7,200
2,000
4,500
23,250
AVERAGE
ANNUAL INCREASE
PERCENT
17
12
8
9
5
10
14
6
25
15
11
17
The Policy Context
Several elements of the existing policy system influence the
seriousness of these impacts on energy-impacted areas of the West,
One of the most important of these is the relationship among mu-
nicipal governments, counties, and school districts. Benefits of
463
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increased revenues from energy facilities, largely from property
taxes, go to counties and school districts since the facilities
are usually located outside municipal boundaries. However, munic-
ipalities face the most serious growth management impacts because
most workers and their families live in or very close to towns.
Moreover, in the western states, counties typically have been re-
luctant to share responsibility for debt related to increased town
populations.
State laws and financial structures are also critical to local
growth management. States with severance taxes on coal and other
energy resources can redistribute portions of the tax to impacted
areas. In the eight-state study area Montana, North Dakota, and
Colorado have relatively high coal severance taxes.. Utah has no
severance tax, and in the other states the tax rate is relatively
low. A small portion of this revenue is returned to impacted areas
for water and sewer facilities, schools, and roads,, but most goes
instead into trust funds or capital facilities statewide.
In contrast to helping impacted arecis by redistributing sev-
erance taxes, all western states limit the amount of bonded debt
which towns, counties, and school districts may assume. This fur-
ther restricts the ability of these local governments to finance
and construct public facilities prior to population impact.
Some federal programs intended to deal with local impacts are
based on the location of federal lands and-or resources. This has
the effect of .assisting the counties and school districts in which
these are located, but not the towns receiving the population im-
pacts. No federal programs currently exist specifically to deal
with population impacts associated with energy development.
Water and sewage treatment facilities are the largest expen-
diture items for municipal facilities. Sewage treatment is almost
exclusively a municipal expenditure, since few areas in the West
outside of.towns have public sewage service. In addition to needs
for expanding water supply and sewage treatment facilities as a
consequence of population growth, the Clean Water Act of 1977 re-
quires upgrading of existing facilities to include secondary treat-
ment of sewage by 1983. Over one-half of the towns affected by
energy development in six western states either lack a water or
sewer system or have reached capacity in their existing systems.
Upgrading treatment works to the new standards adds to local gov-
ernments' financial burdens.
Some of the financial difficulty could be ameliorated by the
Wastewater Construction Grants Program, administered by the Envi-
ronmental Protection Agency (EPA). However, the program has run
into administrative delays in the distribution of funds, and is
focused more at large cities than at small towns. Large cities
are favored by procedures that allow metropolitan communities to
464
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apply directly to EPA, whereas
nonmetropolitan towns are re-
quired to go through a state
agency for funds (see box "Out
of Step").
Together with the impacts
of rapid, large, and unstable
population changes, these char-
acteristics of the policy system
contribute to three particular
issues likely to increase with
energy resource development:
• Revenue and service im-
balances will persist
among local government
units. Counties and school
districts can anticipate
rapid and large tax revenue
increases from energy
facilities, while towns
which incur the major pop-
ulation growth impacts
receive little additional
revenue.
OUT OF STEP
Mayor Mike Enzi of Gillette,
Wyoming has a string of stories to
tell about being turned down for
federal money. EPA rejected a re-
quest for sewage treatment facil-
ities because Gillette already had
a treatment plant and must wait un-
til 27 other towns in Wyoming get
their first ones. Most other eco-
nomic assistance is intended for
urban areas and high-unemployment
areas, not for areas with growth
and low unemployment such as
Gillette.
—Enzi, M.B. "Energy Boom: Wyo-
ming's Coal Veins Just Bring
Troubles."
Los Angeles Times, May 15, 1977,
p. V-3.
• Public and private sector cooperation
pacts is inadequate. The tendency is
the employees of an individual company
overall energy impacts affecting long-
service workers as well. Planning and
are made more difficult by a shortage
the timing, magnitude, and location of
in planning for im-
to deal only with
, rather than with
time residents and
growth management
of information about
development.
• State and local governments will increasingly compete for
direct access to federal funds. Most federal guidelines
require small towns to apply through state agencies, which
many local officials believe are unresponsive to local needs.
Alternative Policies
In dealing with growth management problems and issues, policy-
makers can pursue two complementary objectives: they can provide
funds to enable energy-impacted towns to accommodate increase pop-
ulation adequately, and they can assure these communities receive
planning assistance and accurate and timely information about en-
ergy development. Two general alternatives can be used to achieve
the first objective:
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TABLE 9ES-2: ALTERNATIVE POLICIES FOR GROWTH \1ANAGEMENT
POLICY OBJECTIVE
CATEGORY OF
ALTERNATIVE
SPECIFIC ALTERNATIVE
Provide adequate fi-
nancing for western
towns to accommo-
date energy-related
population growth
Change state and
local tax
structure
Municipal annexation of county land
Prepayment of property and sales taxes
State collection and distribution of prop-
erty taxes on energy facilities
Redistribution of state severance tax
funds to :.rapacted areas
Tax credits for private sector impact
assistance
Energy impact
assistance
Special programs for water and sewer
facilities in nonmetropolitan rapid-
growth areas
Distributior of federal land and mineral
payments directly to impacted towns
Federal and regional impact assistance for
municipalities
Assure that energy-
impacted com-
munities receive
adequate and
timely informa-
tion
Energy impact
planning
Federal growth management planning assis-
tance
State siting legislation requiring impact
information
• Changes in local and state tax structures;
• Increased impact assistance.
As shown in Table 9ES-2, local and state tax structure changes
include municipal annexation of county land so that energy facil-
ities could be included in a town's tax base. Prepayment of prop-
erty taxes to local governments could alleviate the lead-time prob-
lem during facility construction, and the provision of tax incen-
tives to encourage private sector impact assistance would stimulate
energy company initiatives to provide assistance. State severance
taxes on mineral mining are an important source of state revenue
in the West, and property taxes on energy facilities could poten-
tially provide additional revenue for impact assistance. However,
neither tax can be helpful to local governments unless the distri-
bution system is made more efficient arid flexible.
466
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Energy impact assistance programs could alter two existing
federal programs to make them more applicable to western towns.
For example, water and sewage treatment grant programs could be al-
tered to include specific criteria for energy development impacts
or, more broadly, for rapid growth situations nationwide. Federal
programs involving royalties and payments based on land and mineral
location could be altered to require states to allocate funds to
towns rather than to county governments. Additional funding for
impacted communities could be channeled through the Economic De-
velopment .Administration or Title V regional commissions.
The policy alternatives discussed above generally attempt to
redistribute the financial impact of energy-related growth manage-
ment problems. Alternatives for meeting the second objective fo-
cus more on energy development planning as a means of reducing, or
at least anticipating, impacts. A comprehensive information, plan-
ning, and assistance program could avoid many of the current im-
pacts on local communities in future energy development activity.
The Hart/Randolph impact assistance bill currently under consider-
ation in Congress is one such measure. At the state level, facil-
ity siting legislation with impact information requirements can
provide the knowledge necessary for local planners to deal with
impacts. Conditions can also be attached to siting permits to re-
quire energy developers to mitigate impacts directly.
Findings
Two categories of alternatives for providing adequate finan-
cial assistance to impacted communities have been evaluated: tax
structure changes and increased impact assistance.
Both categories of alternatives have the potential to increase
revenues and distribute them more directly to impacted communities.
While methods for increasing energy impact assistance appear to be
more effective in supplying the necessary amount of financial as-
sistance/ changes in the tax structure are the most direct and ef-
fective means of dealing with the "front-end" problems of impacted
communities.
The economic costs of increasing impact assistance will ex-
ceed those of changing the tax structure since the latter primarily
reallocates existing financial resources. Since our analysis shows
the total tax benefits to most local areas to be more than ade-
quate, redistribution policies appear to be the most effective and
efficient policies for dealing with growth management problems.
The distribution of costs, risks, and benefits is more equi-
table if the direct beneficiaries of energy development also bear
a share of the costs. This is most likely to be a result of al-
ternatives to change the tax structure. Broader considerations of
equity involve the values, preferences, and perspectives of
467
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individual policymakers. For example, Montana officials defend
their states' 30 percent severance tax as a reasonable public
policy, but eastern utilities argue that the rate is excessively
high.
In terms of flexibility, increases in federal and regional
impact assistance programs appear to be more adaptable to the va-
riety of impact needs of communities in different western states.
Both categories of alternatives are capable of being easily ad-
justed to specific situations and used in combination with other
alternatives.
Changes in existing federal impact assistance programs would
be easier to bring about since several of these specific alterna-
tives involve only incremental changes in existing federal policy.
For this category of alternatives, the particular implementation
strategies chosen will, in large part, determine the acceptability
of a specific alternative. Several of the specific alternatives
for changing jurisdictional control over revenue sources also
could potentially lead to political problems, since state and lo-
cal governments view the loss of control as a reduction in their
authority and their flexibility to address energy impacts.
Conclusion
Although this summary and comparison of two categories of
growth management alternatives identifies for policymakers the
range of problems and issues involved in alleviating the socio-
economic impacts of energy resource development in the West, it is
also apparent that this analysis cannot resolve all of the ques-
tions that are likely to be raised in making choices to address
these problems and issues. This is true in part because important
information is lacking. For some specific alternatives, there is
too little current experience to judge the effect a policy will
have on the alleviation of energy impacts. This lack of informa-
tion affects what alternatives are evaluated as well as how they
are evaluated.
Growth management problems and issues are somewhat more diffi-
cult to deal with than other issue areas in western energy develop-
ment. They are immediate and costly problems which could affect
hundreds of local governments in the West, and they make financial
demands on a federal system that has little funding for small towns
and rural areas. Moreover, antagonisms between federal, state, and
local governments over the distribution of tax receipts and other
revenues engender conflicts over most aspects of growth management.
Until the institutional mechanisms for state and local planning
are improved, energy impacts will continue to be dealt with on a
piecemeal and uneven basis in various states and communities.
468
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CHAPTER 9
GROWTH MANAGEMENT
9.1 INTRODUCTION
Energy resource development in the West can seriously affect
quality of life, particularly in small, isolated communities and
for energy workers and their families. In addition to being af-
fected by the housing problems discussed in the previous chapter,
public services and facilities in most energy-impacted communities
will almost certainly be inadequate to meet the needs of the
greatly increased population which energy development will bring.
The problems which people and communities can expect to face are
compounded by fluctuations in population due to changes in the
size of the work force, a lack of adequate funds especially for
capital expenditures, a general lack of a professional management
and planning capability, and a characteristic absence of impact
assistance programs.
This chapter focuses on these growth management problems and
issues. Following a brief summary of the impacts and policy con-
text described in detail in the previous chapter, specific local
service problems and issues are identified and discussed. This is
followed by an analysis of alternative policies and implementation
strategies for dealing with these problems and issues.
9.1.1 The Population Growth Impacts of Energy Resource
Development
Growth management impacts can vary significantly depending
on the characteristics of the energy development technology and
the location at which it is constructed and operated. The tech-
nological factors or characteristics which can significantly af-
fect growth management impacts are labor requirements (both the
size and stability of the work force) and scheduling, both for
the individual facility and in relation to other facilities. Lo-
cational factors or characteristics which can significantly af-
fect growth management impacts are size and location of the im-
pacted community and the distribution of revenues among various
469
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jurisdictions, for example among counties, school, districts, and
municipalities. *
Since many energy facilities require far more personnel dur-
ing construction than during operation, local communities are
often hard-pressed to provide the full range of local services
and facilities to workers, their families, and service and sup-
port personnel during construction. However, some of these im-
pacts can be mitigated by extending the construction phase of a
single facility or delaying the construction of other facilities
in the same area, but construction costs will be increased and
impacts will not necessarily be reduced in direct proportion to
the decrease in population which the scheduling change produces.
A. Community Size and Location
The most important factor influencing population impacts is
the size of a community before energy development, begins. Larger
cities (over about 10,000 population) generally serve as major
market centers for a wide area and, therefore, have more diver-
sity and capacity for growth in the public and private sectors.
A professional planning staff capable of in-house planning
is also more likely to be available in large towns. Services
and facilities are more likely to be available arid easier to ex-
pand than in smaller communities. In fact, most large towns and
small cities already have plans for expanding the services and
facilities which they provide.
In addition to size, the number of communities in the vicinity
of an energy development will help to determine the magnitude of
impacts that any one community will experience. An isolated town
where nearly all workers and their families live will be impacted
much more than will any one town in an area where the new popula-
tion is distributed more widely among several towns. For example,
Gillette, -a small isolated city in northeastern Wyoming, has
absorbed virtually all of the impacts of large-scale coal develop-
ment in Campbell County. On the other hand, development impacts
in western Colorado have been distributed among Rifle, Grand Val-
ley, Meeker, and Rangely.
White, Irvin L., et al. Energy From the West: A Prog-
ress Report of a Technology Assessment of Western Energy Resource
Development. Washington,"" D.C. : U.S., Environmental Protection
Agency, 1977; and White, Irvin L., et al. Energy From the West:
Impact Analysis Report. Washington, D.C.: U.S., Environmental
Protection Agency,forthcoming.
470
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B. Jurisdictional Distribution of Revenues
In much of the eight-state study area, the benefit of in-
creased revenues which comes with energy development accrues to
a jurisdiction other than the one that experiences the most ser-
ious growth management impacts. Property tax revenues usually
go to counties and school districts, not to the municipalities
where most of the workers and their families live. Increased
sales tax revenues most often go to the small cities which are
the regional trade centers rather than to the energy-impacted
community. In nearly all energy-impacted communities, therefore,
government has been unable to keep up with demands for services,
and planning for future rapid growth has been even more difficult.
9.1.2 Effects on the Quality of Life
Energy development can seriously affect the everyday lives
of residents of impacted communities. Inadequacies in these ser-
vices translate directly into residents' perceptions of adverse
effect on the quality of life.
Public service shortages are common in small towns every-
where, including those in the West, and the actual effect of
energy development is often difficult to determine. Most surveys
conducted in the region list local services and ask for level
of satisfaction. For example, residents in preimpacted communi-
ties and in those "currently affected" by energy development do
not differ substantially on satisfaction with some community
attributes. That is, in two communities not yet affected by de-
velopment, residents were very dissatisfied with local streets
and roads and housing availability and quality. These responses
are similar to those for five communities currently affected by
development.l
A broader research technique that does not restrict the range
of responses can identify social impacts, as opposed to reactions
to levels of services. However, surveys are still uncommon in
1See Mountain West Research. Construction Worker Profile,
Final Report and Community Reports. Washington, D.C.: Old West
Regional Commission, 1976.
471
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energy-impacted areas of the West; journalistic descriptions tend
to be much more common.l
Although many services are seen as being needed in small
towns, less tangible problems such as social stress are more dif-
ficult to document. Long-time residents, in particular, can be
affected if they do not want growth and the related changes. As
a result, an animosity between newcomers (who personify growth)
and long-time residents can easily develop.2 However, there is
some evidence that this ill will is more imagined than real.3
But the stereotypic view that newcomers are kept out of long-time
residents' society, a social distance that particularly affects
women and school children, still persists.^
The most comprehensive survey of residents' satisfaction
with local services that has been conducted was done as part of
Structured surveys on this topic are given many titles,
such as needs assessments and citizen policy surveys. Examples
are Gilmore, J.S., and M.K. Duff. Boom Town Growth Management.
Boulder, Colo.: Westview Press, 1975, pp. 89-177; Pernula, Dale.
City Gillette/Campbell County: 1977 Citizen Policy Survey.
Gillette, Wyo.: Gillette/Campbell County Department of Planning
and Development, 1977; Uhlmann, J.M., R. Kimble, and D.
Throgmorton, A Study of Two Wyoming Communities Undergoing the
Initial Effects of Energy Resource Development in the Powder
River Basin: Buffalo and Douglas, Wyoming--1975. Cheyenne, Wyo.:
University of Wyoming, Department of Anthropology, 1976.
2Fradkin, P.L. "Craig, Colorado: Population Unknown, Ele-
vation 6,185." Audubon, Vol. 79 (July 1977), pp. 118-27; Univer-
sity of Montana, Institute for Social Science Research. A Compar-
ative Case Study of the Impact of Coal Development on the Way of
Life of People in the Coal Areas of Eastern Montana and Northeast-
er^ Wyoming. Missoula, Mont. : University of Montana, Institute
for Social Science Research, 1974.
3Newcomers surveyed in two Wyoming towns believed old-timers
saw them much more negatively than the old-timers actually did.
See Uhlmann, Kimble, and Throgmorton. Two Wyoming Communities.
4Kneese, A.V. "Mitigating the Undesirable Aspects of Boom
Town Development," pp. 74-76 in Federation of Rocky Mountain
States. Energy Development in the Rocky Mountain Region: Goals
and Concerns. Denver, Colo.: Federation of Rocky Mountain States,
T975; "Fradkin. "Craig, Colo."
4,72
-------
the Construction Worker Profile.l The composite results from nine
communities reveal that long-time residents tend to be more satis-
fied with local services than are newcomers and that college-
educated and high-income households are more dissatisfied with
local services. Long-time residents seem to see a need for im-
provement in such services as streets, water supply, and housing;
newcomers also tend to prefer an improved range of shopping, en-
tertainment, and other private businesses.3 However, both groups
agree that improvement in impacted communities is needed.
9.1.3 Organization of the Paper
As mentioned earlier, growth management is the major concern
addressed in this chapter. Section 9.2 discusses the background
of problems and issues surrounding local services and facilities,
and Section 9.3 presents and evaluates policy alternatives for
this category of problems and issues. Alternatives are summarized
and compared in Section 9.4.
9.2 THE CONTEXT OF LOCAL GROWTH MANAGEMENT ISSUES IN THE WEST
The rapid population growth associated with energy develop-
ment greatly affects the ability of nearby local governments to
respond to increased demands for services generated by that
growth.^ Municipal services and facilities quickly become inade-
quate for long-time residents as well as for people who move into
the area because of energy development. Many public services,
such as water supply, sewage treatment, and medical care, can
fountain West Research. Construction Worker Profile, Final
Report and Community Reports. Washington, D.C.: Old West Re-
gional Commission, 1976. This study included a Project Survey,
concerning the location, origin, and family characteristics of
3,168 energy construction workers on 14 projects; a household
survey of 1,432 households in nine western communities (five cur-
rently affected by construction, two postimpact towns, and two
preimpact towns); and a community survey utilizing participant
observation in three communities.
2Mountain West Research. Construction Worker Profile,
pp. 57-58.
3Mountain West Research. Construction Worker Profile, Com-
munity Reports. This was the same trend found in the study by
Uhlmann, J.M., R. Kimble, and D. Throgmorton. A Study of Two
Wyoming Communities Undergoing the Initial EffecTts of Energy Re-
source Development in the Powder River Basin: Buffalo and Douglas,
Wyoming--1975. Cheyenne, Wyo.: University of Wyoming, Department
of Anthropology, 1976.
Section 8.1 for documentation of this growth.
473
-------
accommodate increased demand only if new facilities are construc-
ted. The construction of these facilities takes time as well as
money and results in a lag between the time when service needs
arise and when revenues are available. This "lead time" problem
is particularly serious in the case of energy-related construction
near small towns, where most western energy development will take
place. l
In addition to the "lead time" problem, disparities also
arise among local and state jurisdictions in the distribution of
costs and revenues associated with energy development, New prop-
erty taxes and other revenues from an energy project often go to
the county, school district, and/or the state, while the major
need for services and facilities occurs in the communities where
the workers and their families actually live.2 These needs can
arise in a county or state other than that where the energy devel-
opment takes place. For example, the Decker mine in southeastern
Montana, the nation's largest producing coal mine, has a work
force of about 300, but nearly all the workers and their families
live just south of Decker, in and around Sheridan, Wyoming. Thus,
Montana receives a severance tax on the coal produced, whereas
Sheridan and the state of Wyoming receive no coal-related revenue
from the mining operation. There are numerous other examples of
similar jurisdictional conflicts between towns and counties, and
between counties, throughout the West.
The public services and facilities needed in a community vary
somewhat according to population. For example, court, detention
facilities, and juvenile treatment facilities tend to be found in
all larger towns (10,000 population and larger), but may not exist
in smaller towns.3 Other services and facilities are needed in
all towns. One recent study of boomtown financing listed the
"•Colorado, Governor's Committee on Oil Shale Environmental
Problems, Subcommittee on Regional Development and Land Use Plan-
ning. Tax Lead Time Study for the Oil Shale Region: Fiscal Alter-
natives for Rapidly Growing Communities in Colorado. Denver,
Colo.: Colorado Geological Survey, 1974; and Bolt, R.M., et al.
Boom Town Financing Study, Vol. 1. Denver, Colo.: Colorado
Department of Local Affairs, 1976.
2We assume that workers will live :.n the vicinity of their
employment. This is certainly the current situation and is likely
to be the dominant one for the medium-term future. For informa-
tion on the origin and location of energy workers in the West,
see Mountain West Research. Construction Worker Profile, Final
Report. Washington, D.C.: Old West Regional Commission, 1976.
3County seats often have judicial and law enforcement facil-
ities for the entire county.
474
-------
following needs in order of priority:1 (1) fire protection;
(2) law enforcement; (3) water; (4) sewage treatment? (5) solid
waste collection and disposal; (6) hospital and medical facilities;
(7) detention facilities; (8) juvenile treatment and custody
facilities; (9) county and municipal courts;. (10) recreation
facilities; and (11) administrative space.
The costs for the set of facilities listed above ranges
from $1,500 to $2,300 per new resident. An increase in popula-
tion of 500 people, for example, will cost a town at least
$750,000. Water and sewage treatment facilities typically account
for about 75 percent of the total needed for new public facilities.
Operating expenditures also increase with additional population,
and average about $130 per capita.2 Operating costs can also
involve sudden jumps, for example, to change from a volunteer
fire department to a full-time department.3
The following section discusses the issues and current re-
sponses in local services and facilities in western towns. Finan-
cial considerations and planning are the two areas chosen here
for special consideration. In addition, water and sewage treatment
R.M. , et al. Boom Town Financing Study, Vol. 1. Den-
ver, Colo.: Co lor adcT Department of Local Affairs, 1976, p. 14.
In the original list, primary and secondary classrooms and other
educational facilities were designated as the tenth item. This
was omitted here because school financing typically is managed
exclusively by school districts rather than by municipal, county
or multicounty governments (see Mountain West Research. Construc-
tion Worker Profile, Final Report. Washington, D.C.: Old West
Regional Commission, 1976) . Streets and roads are usually main-
tained, but not built, by local governments.
2See Lindauer, R.L. "Solutions to the Economic Impacts of
Large Mineral Developments on Local Governments," in Federation
of Rocky Mountain States. Energy Development in the Rocky Moun-
tain Region: Goals and Concerns. Denver, Colo. : Federation of
Rocky Mountain States, 1975, pp. 63-68; THK Associates, Inc.
Impact Analysis and Development Patterns Related to an Oil Shale
Industry: Regional. Development and Land-Use Study~I Denver, Colo.
THK Associates, 1974, pp. 30-41. Costs are in 1975 dollars.
3James Conoho , Mayor of Hartsville, Tennessee, testified that
changing to a ten-man department will cost his community $100,000
per year. Statement in U.S., Congress, Senate, Committee on Envi-
ronment and Public Works. Inland Energy Development Impact Assist
tance Act of 1977. Hearings before the Subcommittee on Regional
and Community Development, 95th Congress, 1st session, August 2
and 27, 1977, p. 182. The higher wage levels in western towns
would probably require even greater costs, in the area of $150,000
per year.
475
-------
is discussed separately in the discussion of local financial
considerations.
9.2.1 Financial Problems and Assistance
In the usual energy development situation in the West, energy
facilities, such as mines and conversion plants, are located out-
side of nearby towns. These locations incur an ad valorem or
property tax obligation to the county and school district in
which the facility is located. The workers at the facilities
live in nearby (or more distant) towns, which do not receive a
corresponding increase in tax base. In the words of Mayor Richard
Waggener of Green River, Wyoming, "The county has the evaluation
(sic) we have the people." Municipal revenues are usually based
on sales taxes, property taxes on valuation within town boundaries,
and other charges and fees that tend to increase with population
increases. These revenues may be adequate to cover rising oper-
ating costs, but not to fund major capital improvements such as
water and sewer facilities. As Mike Enzi, Mayor of Gillette,
Wyoming, puts it: "We simply need money (and) reliable informa-
tion."2
Town residents benefit when the school district receiving
property tax revenue also serves the town.3 County governments
do provide town residents such services as hospitals, recreation/
county roads, and libraries, but little sharing of county wealth
occurs for municipal services and facilities, such as water and
sewers, city fire and police protection, and sanitation. The
City of Gillette is facing an annual deficit of $3-$4 million at
least through 1985. Campbell County, on the other hand, expects
an increasing surplus beginning in 1979 at the present property
tax rate of 5.269 mills; the surplus would be larger if the
*Waggener, Richar.d W. Prepared Statement in U.S., Congress,
Senate, Committee on Environment and Public Works. Inland Energy
Development Impact Assistance Act of 1977. Hearings before the
Subcommittee on Regional and Community Development, 95th Congress,
1st session, August 2 and 27, 1977, p. 195.
2Strabala, Bill. "Officials Eye Coal Concerns." Denver
Post, November 17, 1977, p. 4.
3This occurs most frequently where there are county-wide
school districts. Even in this situation, residents do not always
live in the same county (or state) as that in which the energy
facility is located. See Section 9.2.
476
-------
maximum rate of 12 mills were applied.1 The situation in Hayden,
Colorado, is similar.2
Energy facility construction exacerbates local financial
problems. Construction is a short-term, labor-intensive activity
that makes it difficult for local governments to anticipate long-
term service needs versus temporary needs of a construction-
related population. Further, production-based measures such as
severance taxes are not available until energy is produced.3
When construction workers (or others) live in mobile homes, their
contribution to the municipal tax base is generally not equal
to their demands on local governments.4 Finally, the fluctuations
involved in construction employment when several facilities are
built in an area create severe problems for capital'facilities
in towns. When population growth is erratic, public facilities
are unlikely to be available at the needed or most efficient
levels for more than short periods of time.5
Local governments have little control over the distribution
of revenues needed for public services and facilities. Control
of property tax revenues perpetuates disparities between towns,
on the one hand, and counties and school districts.on the other.
Wyoming, for example, has recognized the problem by creating a
Joint Powers Act that permits cities and counties to act jointly
in providing public services and facilities, essentially by
'Campbell County Chamber of Commerce. Economic Impact of
Anticipated Gro_wt h: City of Gillette and Campbell County, Wyoming,
Gillette, Wyo.: Campbell County Chamber of Commerce, 1976.
2Gif. s, V. "Boom Town on the Brink." Colorado/Business,
Vol. 5 (February 1978), pp. 30-42.
•'Tor: example, see Guenther, Max, Mayor of Underwood, North
Dakota, Statement in U.S., Congress, Senate, Committee on Environ-
ment: and Public Works. Inland Energy Development Impact Assist-
ance Act of 1977. Hearings before the Subcommittee on Regional
arid Community Development, 95th Congress, 1st session, August 2
and ?7, 1977, pp. 179-181.
'This point is elaborated in the discussion of Housing in
Chapter 8.
5See the fluctuations resulting from the energy development
scenarios in White, Irvin L., et al. Energy From the West; A
Progress Report of a Technology~As~sessment of Western Energy
Resource Development. Washington, D.C.: U.S., Environmental Pro-
tection Agency, 1977, Chapters 6-11.
477
-------
extending urban powers to counties when they act with a city.1
However, the initiative lies with the counties, which are reluc-
tant to become responsible for municipal finances and unwilling
to accept liability on debts related to increased town popula-
tions.2 Special service districts for particular services, such
as water supply or fire protection, provide a middle ground be-
tween local government autonomy and comprehensive joint action.
These districts also require cooperation of residents outside
of the towns.
A. State Action
Responses to local financial impacts frequently are based
on the existing property tax base, rather than on alternatives
to it.3 Prepayment of taxes in Utah4 and Montana5 maintains the
distinction between municipalities and the jurisdictions within
which the energy facilities are located. As a result, the prin-
cipal benefit is to school districts and county services such as
roads; little, if any, revenue is available for municipal ser-
vices. Experience to date with these: measures in the two states
is too limited to provide much insight into how effective this
legislation will be. A major disadvantage to tax prepayment is
that the Internal Revenue Service refuses to allow taxes to be
deducted until the year when the payment is due. This signifi-
cantly decreases the likelihood that voluntary prepayment will
be made.6
JDaley, J.B. "Financing Housing and Public Facilities in
Energy Boom Towns," in Rocky Mountain Mineral Law Foundation.
Rocky Mountain Mineral Law Institute: Proceedings of the 22nd
Annual Institute, July 22-24, 1976. New York, N.Y.: Matthew
Bender, 1976, pp. 123-24.
2Bronder, L.D., N. Carlisle, and M.D. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven
Western States. Denver, Colo.: Western Governors' Regional
Energy Policy Office, 1977.
3Alternatives to the current methods of local property tax
collection are mentioned in Section 8.5 below.
kDaley. "Financing Housing," pp. 123-24.
5 Ibid., pp. 117-19.
6Bronder, Carlisle, and Savage. Strategies for Alleviation
of Socioeconomic Impacts, pp. 557-58.
478
-------
States with severance taxes on coal and other energy resources
can alleviate the imbalance at the local level by establishing
a central collection and disbursement system. Table 9-1 shows
the range of severance taxes in the West, and excludes any state
receipts of federal mineral royalties. The seven states listed
in the table vary considerably in the extent to which they tax
energy resource production. For example, given a production level
of 100 million tons and an average selling price of $12 per ton,
Montana would collect $360 million whereas North Dakota would
collect only $50 million. Utah has no severance tax and a consti-
tutional prohibition on state revenue collection for local govern-
ments .
From the point of view of local impacts, the more important
variation is in the distribution of severance tax revenues to
local governments. Two states in our study area, New Mexico and
Wyoming, have no specific allocation of mineral revenues to local
governments; most of their severance tax transfer is to school
districts. Colorado, Montana, and North Dakota all earmark a
percentage of their severance tax receipts to local government.
The trend among the western states is for the state government
to retain the bulk of mineral tax revenues for state purposes,
such as the state general fund, capital improvements, and trust
funds.1 The allocation formulas of mineral tax legislation may
prove to be inflexible in some cases for dealing with as yet
unrealized local impacts. In addition, some towns have difficulty-
persuading the state disbursing authority of the magnitude of the
population impact they have experienced. For example, Miles City,
Montana, has been unable to afford the necessary Special Census
to document its recent population growth. As a result, even a
relatively effective system like that of the Montana Coal Board
has difficulty in dealing with impacts seventy miles or so from
the coal mine involved.
State limits on bonding and the debt local governments can
incur can hinder local attempts to finance facilities with bonds
which would be repaid with future tax revenues. Table 9-2 shows
the limitations on bonded debt in six western states. While in
some circumstances these limitations are not overly restrictive,
they can be too inflexible to meet the needs of energy impact
areas, given their lead time problem. Popular support for in-
creasing local debt limitations seems limited, at least in
JThe capital improvements authorized tend to include munici-
pal water and sewage treatment facilities, but the emphasis is
on roads, highways, schools, and universities. Bronder, L.D.,
N. Carlisle, and M.D. Savage. Financial Strategies for Allevia-
tion of Socioeconomic Impacts in Seven Western States. Denver,
Colo.: Western Governors' Regional Energy Policy Office, 1977,
pp. 557-58.
479
-------
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TABLE 9-2: LIMITATIONS ON BONDED DEBT IN SIX WESTERN STATES
(percent of assessed valuation)
STATES
Colorado
Montana
New Mexico
North Dakota
Utah
Wyoming
COUNTIES
1.5
2.5
4
5
2
2
MUNICIPALITIES
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b
6
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- = no restrictions
Source: Compiled from Bronder, L.D., N. Carlisle, and M.D.
Savage. Financial Strategies for Alleviation of Socioeconomic
Impacts in Seven Western States. Denver, Colo.: Western Gov-
ernors' Regional Energy Policy Office, 1977.
May be increased by 10 percent for water and sewer systems.
State makes up shortfalls through statewide levies.
/->
May be increased an additional 3 percent by 2/3 voter approval,
Eight percent limit for sewer projects; no limit on water
projects.
Wyoming, where a constitutional amendment to that effect failed
to pass in 1976.'
Some western states attempt to deal with this problem by
having either a state agency or a quasi-governmental entity sell
tax-free bonds to finance the construction of local public facil-
ities. Montana's Board of Housing is able to finance community
services and facilities, as well as housing, since Montana stat-
utes define housing development broadly to include "streets,
Ravage, M.D. "An Overview of Strategies for Financing the
Mitigation of Socioeconomic Impacts," in Bronder, L.D., N.
Carlisle, and M.D. Savage. Financial Strategies for Alleviation
of Socioeconomic Impacts in Seven Western States. Denver, Colo.:
Western Governors' Regional Energy Policy Office, 1977, pp. 559-60
481
-------
sewers, utilities, parks... and other nonhousing facilities as
the Board determines to be necessary, convenient, or desirable."1
B. Federal Actions
Federal programs have been less responsive than state pro-
grams to the conditions of energy impact areas. Two well-intended
programs based on federal land or mineral ownership are not nearly
as effective as they might be. For example, the Public Lands-
Local Government Funds Act or "In Lieu of Tax Payment" Act pro-
vides payments to local government units in which federal entitle-
ment lands are located.2 These are almost exclusively county and
school district lands, and revenues generally do not go to munici-
palities. In the Bureau of Land Management (BLM) Organic Act,
one-fourth of the royalties (12.5 percent of the total 50 percent
that states receive) from federal minerals are earmarked for local
governments, and loans may be made for social and economic impacts
of energy development in anticipation of future mineral revenues.3
Loans to municipalities tend to be rather small, because future
revenues on which loans can be based are limited. Unlike counties
and school districts, municipal revenues are not based on mineral
resources. The result, then, is that the loans do little to help
to fund the magnitude of services and facilities required.
Montana Revised Codes Annotated 35-503(8) (Cumulative Supple-
ment 1975); Daley, J.B. "Financing Housing and Public Facilities
in Energy Boom Towns," in Rocky Mountain Mineral Law Foundation.
Rocky Mountain Mineral Law Institute; Proceedings of the 22nd
Annual Institute, July 22-24, 1976. New York, N.Y.: Matthew
Bender, 1976, pp. 58-62. In Wyoming, the state supreme court
ruled on February 13, 1978 that the Wyoming Community Development
Authority was unconstitutional because it would allow bonds to be
issued prior to the collection of mineral tax revenues to repay
them. See Witzenburger v. State of Wyoming, Wyo. 1978, 575 P.2d
1100.
2Public Lands-Local Government Funds Act, Pub. L. 94-565,
90 Stat. 2662, 31 U.S.C. 1601 et seq.
3Federal Land Policy and Management Act of 1976, Pub. L. 94-
579, 90 Stat. 2743, 43 U.S.C. 1701 et seq. See also Savage, M.D.
"An Overview of Strategies for Financing the Mitigation of Socio-
economic Impacts," in Bronder, L.D., N. Carlisle, and M.D. Savage.
Financial Strategies for Alleviation of Socioeconomic Impacts in
Seven Western States. Denver, Colo.: Western Governors' Regional
Energy Policy Office, 1977, pp. 568-71. In practice, loans have
not been made against future revenues because of low interest
rates and constitutional prohibitions in some states such as
Wyoming.
482
-------
The federal programs relevant for general funding in energy-
impacted areas are primarily loan programs. Some specific pro-
grams, such as water and sewage treatment and planning, include
grant funds, but the tendency is for general-purpose funding to
be based exclusively on loans. The reliance on loans, rather
than grants, assumes that the local government will be able to
repay in the future.1 This assumption is valid for many county
governments, school districts, and other jurisdictions that have
large property tax receipts; it is not true for many towns in the
West, where the service needs are greater than in rural areas.
As a result of the lack of a general federal grant program,
governors and mayors in the West are speaking out in favor of
grants rather than loans. Governor Thomas Judge of Montana main-
tains that "a limited amount of grant money would be more useful
than a great deal of loan money."2 Local officials also voice
support for this view.3 However, recent proposals indicate a
preference for loan and loan guarantee programs on the federal
level. Senator Gary Hart of Colorado, author of the Inland Energy
Development Impact Assistance Bill (S.1493), comments: "A bill,
based on a grant program, particularly a 100 percent grant pro-
gram, has verv questionable chances of enactment in the near-
term."" Even the tendency for federally guaranteed loans is
coming into question. Guaranteed loans currently outstanding
for all existing programs are estimated to total $277 billion,
and President Carter would like to limit the spread of loan
guarantees.
5
l\].S.f Department of Energy, Energy Impact Assistance Steering
Group. Report to the President on Energy Impact Assistance,
Draft Report. Washington, "D.C.: U.S., Department of Energy,
1977.
2Judge, Thomas L., Governor of Montana. Statement in U.S.,
Congress, Senate, Committee on Environment and Public Works.
Inland Energy Development Impact Assistance Act of 1977. Hearings
before the Subcommittee on Regional and Community Development,
95th Congress, 1st session, August 2 and 27, 1977, p. 47.
3Webb, Mario L., Mayor of Farmington, New Mexico; Jim Young,
County Commissioner, San Juan County, New Mexico; and Fred L.
O'Chesky, Energy Resources Administrator, State of New Mexico.
Statements in Senate Committee on Environment and Public Works.
Iri land__Eue rq y _ Act_of_ JJ>1^__ JSejaring_s_, pp. 377-419.
'*Hart, Gary, Senator, Colorado. Statement in Senate Committee
on Environment and Public Works. Inland Energy Act of 1977.
Hejari_ng_s_, p . 48.
5"A Lid on U.S. Loan Guarantees." JBusiness Week, January 30,
1978, p, 64.
483
-------
While state and local government officials agree on the need
for grants, they do not agree on how the grants should be distri-
buted. Local governments in most cases greatly prefer to receive
federal money directly instead of having the funds going through
the state governments. Mayor Larry Kozisek of Grand Junction,
Colorado, attributes this to a lack of concern from state offi-
cials and the minimal political clout that rural areas and small
towns have at the state level.1 He cites delays in state distri-
bution of federal funds, and the allocation of a large portion
of federal assistance to counties rather than to municipalities.2
State officials, as might be expected, support funneling the
federal assistance through the states3 or through the Title V
Regional Commissions in which the states play a major role.1* The
Hart bill, mentioned above, calls for state control over funds.5
C. Water and Sewage Treatment
Water and sewage treatment facilities are the largest expen-
diture items among municipal facilities. Sewage treatment is
almost exclusively a municipal function, since few areas in the
West outside of towns have public sewage service. In addition
to needs for expanding water supply and sewage treatment facili-
ties as a consequence of population growth, recent water pollution
legislation requires that existing public treatment works install
secondary waste treatment by 1977 (now delayed until 1983)6 and
'•Kozisek, Larry, Mayor of Grand Junction, Colorado. State-
ment in U.S., Congress, Senate, Committee on Environment and
Public Works. Inland Energy Development Impact Assistance Act
of 1977. Hearings before the Subcommittee on Regional and Com-
munity Development, 95th Cong., 1st sess., August 2 and 27, 1977,
p. 178.
2Ibid., pp. 220-33.
3Link, Arthur A., Governor of North Dakota. Statement in
Senate Committee on Environment and Public Works. Inland Energy
Act of 1977. Hearings, pp. 42-44.
4Judge, Thomas L., Governor of Montana. Statement in Senate
Committee on Environment and Public Works. Inland Energy Act
of 1977. Hearings, pp. 44-48.
5Hart, Gary, Senator, Colorado. Statement in Senate Committee
on Environment and Public Works. Inland Energy Act of 1977.
Hearings, pp. 1974-75.
6Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566,
U.S.C. §§ 1251 et seq.
484
-------
"best practicable" waste treatment technologies by 1983.1 A
goal of the law is to prevent the discharge of pollutants to
local streams after 1985. These requirements apply nationwide.2
As shown in Table 9-3, over one-half of the towns affected
by western energy development either lack a water or sewer sys-
tem or have reached capacity in their existing systems. Upgrading
treatment works to the new standards adds to local governments'
financial burdens.
Upgrading treatment facilities is aided by the Wastewater
Construction Grants Program, administered by the Environmental Pro-
tection Agency (EPA). Various delays and complicated administra-
tive procedures in the program have been blamed for the delays
in meeting the 1977 deadline.3
The Construction Grants
Program, the largest recent
public works program in the
U.S., is intended to help com-
munities meet the costs of new
treatment works. Through fis-
cal year 1976, the eight west-
ern states had received only
1.55 percent of the total na-
tional funds for the program
(Table 9-4); the eight states
account for about 4 percent of
the nation's population. The
Construction Grant Program ap-
pears to be aimed more at large
cities than at small towns,
since large cities are somewhat
favored by procedures that al-
low metropolitan communities to
apply directly to EPA, whereas
nonmetropolitan communities are
required to go through a state
agency for funds (see box).
OUT OF STEP
Mayor Mike Enzi of Gillette,
Wyoming has a string of stories to
tell about being turned down for fed-
eral money. EPA rejected a request
for sewage treatment facilities
because Gillette already had a treat-
ment plant and must wait until 27
other towns in Wyoming get their
first ones. Most other economic
assistance is intended for urban
areas and high-unemployment areas,
not for 'areas with growth and low
unemployment such as Gillette.
—Enzi, M.B. "Energy Boom: Wyoming's
Coal Veins Just Bring Troubles."
Los Angeles Times, May 15, 1977,
p. V-3.
1 Federal Water Pollution Control Act Amendments of 1972.
Pub. L. 92-500, 86 Stat. 816, 33 U.S.C. §§ 1251 et seq.
2Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566,
33 U.S.C. §§ 1251 et seq.
3U.S., Council on Environmental Quality. Environmental
Quality: Sixth Annual Report. Washington, D.C.: Government
Printing Office, 1975, pp. 71-72; Kirschten, J. Dicken. "Plunging
the Problems from the Sewage Treatment Grant System." National
Journal, Vol. 9 (February 5, 1977), pp. 196-202.
485
-------
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TABLE 9-4:
SEWAGE TREATMENT CONSTRUCTION GRANTS—ALLOTMENTS
TO WESTERN STATES, FISCAL YEARS 1973-1976
STATE
Arizona
New Mexico
Colorado
Montana
North Dakota
South Dakota
Utah
Wyoming
Total
National Total
TOTAL ALLOTMENT
(millions of dollars)
43.6
36.3
89.9
28.2
12.0
17.7
45.0
8.3
281.1
18,000.0
PERCENT
0.24
0.20
0.50
0.16
0.06
0.10
0.25
0.05
1.56
100.0
Source: U.S., Environmental Protection Agency,
as reported in Kirschten, J.D. "Plunging the
Problems from the Sewage Treatment Grant System."
National Journal, Vol. 9 (February 5, 1977),
pp. 196-202.
One intent of federal water pollution restrictions is to
reduce large-city pollution problems. This is borne out by the
greater allocations of funds to the more urbanized states. Like-
wise, the construction grant program is a massive public works
effort that provides employment for construction workers in large
cities.1 It is not unusual for federal legislation to focus on
large city problems, such as the establishment of the Urban Mass
Transit Administration and the Department of Housing and Urban
Development (HUD). However, conflicts among large northeastern,
southern, and western cities and towns over the distribution
Kirschten, J. Dicken. "Plunging the Problems from the
Sewage Treatment Grant System." National Journal, Vol. 9
(February 5, 1977), pp. 196-202.
487
-------
of federal funds to each region are increasing.1 Any change in
the EPA pollution regulations or grants allocation to favor small
western towns over northeastern cities probably would give rise
to substantial regional conflict. The state priority systems for
EPA grants to nonmetropolitan communities tend to put towns that
have recently received funds far down on the list for future
funds. Water and sewer systems in towns where growth has con-
tinued, such as Gillette, remain overburdened.2
When EPA grant funds are not available to meet continuing
needs, towns may sometimes obtain assistance from agencies other
than EPA. The Economic Development Administration (EDA) and the
Title V Regional Commissions have frequently provided grants to
communities for water and sewage treatment plants. The EDA com-
monly does this under the Special Economic Development and Adjust-
ment Assistance Program (Economic Adjustment Program).3 Beulah,
North Dakota, and Carbondale, Utah, are among the western towns to
receive construction grants from EDA. "* Applications to EDA from
small towns need not go through a state agency, which often makes
funds available quickly.
State funding has also helped some towns meet their water and
sewer system needs. For example, over $3 million of the $11.6
million allocated by the Montana Coal Board through March 1977
to Big Horn, Rosebud, and Treasure Counties was for waiter and
lnThe Second War Between the States." Business Week, May 17,
1976, pp. 92-114; Peirce, N.R. "Northeast Governors Map Battle
Plans for Fight over Federal Funds Flow." National Journal,
Vol. 8 (November 27, 1976), pp. 1695-703; Havemann, J., and R.L.
Stanfield. "A Year Later, the Frostbelt Strikes Back." National
Journal, Vol. 9 (July 2, 1977) , pp. 1028-37.
2Enzi, M.B. "Energy Boom: Wyoming's Coal Veins Just Bring
Troubles." Los Angeles Times, May 15, 1977, p. V-5; and Pernula,
Dale. City of Gillette/Campbell County: 1977 Citizen Policy
Survey. Gillette, Wyo.: Gillette/Campbell County Department of
Planning and Development, 1977.
3Public Works and Economic Development Act of L965, Pub. L.
89-136, 79 Stat. 552, 42 U.S.C. 3241, 3243, 3245.
''U.S., Federal Energy Administration. Socioeconomic Impacts
and Federal Assistance in Energy Development Impacted Communities,
Federal Region VIII. Denver, Colo.: Federal Energy Administra-
tion, 1976. However, both EPA and EDA had rejected Gillette,
Wyoming's request for funds for treatment facility expansion.
See Enzi. "Energy Boom."
-------
sewer projects.1 The state of Wyoming also has allocated coal
tax grants to Wyoming communities, several for water and sewer
facilities.2
9.2.2 Health Services and Social Services
A. Medical Care
Adequate health services are among the most difficult to pro-
vide in rapid growth situations that accompany energy development.
Medical needs typically expand at least as rapidly as the popula-
tion, and even faster when a large proportion of the new residents
are children, as is commonly the case in communities affected by
energy development.3 Limited health services can result in a
smaller proportion of children being immunized against preventable
diseases, fewer screening tests for tuberculosis and other dis-
eases, and less followup on active cases of tuberculosis and
venereal disease. Inability to obtain early treatment can per-
mit other diseases to become more serious. **
A shortage of doctors is a common problem. Many small towns
have no doctor; even fewer communities have a hospital (Table 9-5)
Frequently the only hospital is in the county seat, and long dis-
tances separate other towns. The doctor/population ratios are
much lower in western towns than in the country generally. For
example, Gillette has a ratio of less than one doctor per 900
people, compared to the national average of one per 660 people.5
Public health clinics with staff nurses often supplement the med-
ical system.
^ronder, L.D., N. Carlisle, and M.D. Savage. Financial
Strategies for the Alleviation of Socioeconomic Impacts in Seven
Western States. Denver, Colo.: Western Governors' Regional
Energy Policy Office, 1977, pp. 129-34.
2Ibid., pp. 376-92.
3Mountain West Research. Construction Worker Profile, Final
Report. Washington, D.C.: Old West Regional Commission, 1976.
''Copley International Corp. Health Impacts of Environmental
Pollution in Energy-Development Impacted Communities, Executive
Summary, for the Environmental Protection Agency. La Jolla,
Calif.: Copley International, 1977.
5White, Irvin L., et a1. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Vol. II, p. 521.
489
-------
TABLE 9-5:
NUMBER OF TOWNS WITH A DOCTOR AND WITH A HOSPITAL
AMONG ENERGY-IMPACTED COMMUNITIES IN SIX WESTERN
STATES
STATE
Colorado
Montana
North Dakota
South Dakota
Utah
Wyoming
Total
TOTAL NUMBER
OF IMPACTED
COMMUNITIES
56
23
28
4
56
36
185
NUMBER OF
TOWNS WITH
A DOCTOR
24
11
10
5
18
19
87
NUMBER OF
TOWNS WITH
A HOSPITAL
16
9
7
4
11
13
60
Source: U.S., Federal Energy Administration, Region VIII, Socio-
economic Program Data Collection Office. Regional Profile; En-
ergy Impacted Communities. Lakewood, Colo.: Federal Energy Ad-
ministration, 1977. Communities over 40,000 population were
excluded from this table.
The shortage of doctors in small towns is not unique to the
West, but it is exacerbated by increasing medical needs caused by
energy development. Medical care is largely a private enterprise.
Hospitals and clinics may be available, but doctors must be at-
tracted to set up small town practices instead of large city loca-
tions with full-service hospitals.l One of the serious quality-
of-life impacts in energy boomtowns is the added difficulty of
attracting doctors to those locations.2 Getting nurses to
^oleman, Sinclair. Physician Distribution and Rural Access
to Medical Services, R-1887-HEW.Santa Monica, Calif.:Rand
Corporation, 1976; Lankford, Phillip L. "Physician Location
Factors and Public Policy." Economic Geography, Vol. 50 (July
1974), pp. 244-45.
2U.S., Department of Energy, Energy Impact Assistance Steer-
ing Group. Report to the President on Energy Impact Assistance,
Draft Report. Washington, D.C.: U.S., Department of Energy, 1977,
490
-------
work in rural areas appears to be less of a problem, but it is
more severe in energy-impacted communities.1
Although medical care is largely a private-sector service,
all levels of government have taken part in programs to provide
care to the population. County governments generally provide
some funds from property tax receipts for county hospitals and
clinics. Local governments in Colorado and North Dakota also
provide funds for emergency medical services (EMS) in rural areas
to supplement EMS grants from the U.S. Public Health Service.2
In the other states, state funds generally support EMS programs,
which are very extensive in most western states.3 In many cases,
priorities imposed at federal and state levels for health planning
preclude adequate attention to substate areas in health planning.
Health planning tends to be done either very locally or statewide,
and neither scope provides effective planning considerations for
energy impact areas . **
The U.S. Public Health Service's National Health Service Corps
(NHSC) is designed specifically to improve the delivery of health
care and services to residents in areas critically short of health
personnel.5 The NHSC is utilized in all eight western states in
an attempt to provide medical services in towns where a practicing
physician is not present. NHSC personnel are assigned for only
two years, so recruitment of doctors must be repeated frequently.6
1 Sloan, E.A. The Geographic Distribution of Nurses and Pub-
lic Policy. Washington, B.C.: Government Printing Office, 1975,
pp. 141-55; Rapp, Donald A. Western Boomtowns, Part I, Amended:
A Comparative Analysis of State Actions, Special Report to the
Governors. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1976, pp. 24-27.
2Emergency Medical Services Systems Act of 1973, Pub. L. 93-
154, 87 Stat. 594, as amended by Pub. L. 94-573, 90 Stat. 2709.
3
Rapp. Western Boomtowns, pp. 23-27.
''Copley International Corp. Health Impacts of Environmental
Pollution in Energy-Development Impacted Communities, Executive
Summary, for the Environmental Protection Agency. La Jolla,
Calif.: Copley International, 1977, p. 25.
5Emergency Health Personnel Act Amendments of 1972, Pub. L.
92-585, 86 Stat. 1290, 42 U.S.C. 254b.
6Rapp. Western Boomtowns, pp. 23-27.
491
-------
State loan programs for medical training are beginning to include
loan forgiveness programs to induce doctors to locate in rural
areas. This approach has been cited as the most effective public
policy means of attracting doctors away from large city loca-
tions. l
B. Social Services
Among the services most needed in boomtown situations are
social services, such as treatment and counseling for alcoholism,
child abuse, and juvenile delinquency. Thes.e services are often
not included in communities where the population has been stable
for many years, but become necessary as rapid growth and an influx
of newcomers disrupts a stable society.2 Urban growth alone spurs
demands for social services, as a larger number of people need
such services. These services generally require little in the
way of capital facilities, but they do require a continuing oper-
ating cost for professional staff members. The benefit from a
social service program has been well-documented from the experi-
ence of the Wyoming Human Services project, which had social
service teams in Gillette for several years and, more recently,
in Wheatland. 3
The problem of inadequate social services has received less
attention than the more costly municipal facilities. However,
the problem has received recognition from New Mexico Governor
Jerry Apodoca: "Impact assistance should not be limited to tradi-
tional infrastructure needs such as water and sewer, but should
extend to health, housing, social services, and other areas."'1
Sinclair. Physician Distribution and Rural Access
to Medical Services, R-1887-HEW. Santa Monica, CalifT": Rand
Corporation, 1976.
2Kneese, Allan V. "Mitigating the Undesirable Aspects of
Boom Town Development," in Federation of Rocky Mountain States.
Energy Development in the Rocky Mountai n Region: Goals and Con-
cerns . Denver, Colo.: Federation of Pocky Mountain States, 1975,
pp~ 74-76; Richards, Bill. "Western Energy Rush Taking Toll Among
Boom Area Children." Washington Post, December 13, 1976, pp. 1,
4.
3Uhlmann, Julie M. Gillette Human Services Project, Annual
Report, August 31, 1976. Laramie, Wyo.: University of Wyoming,
Wyoming Human Services Project, 1976.
''Apodoca, Jerry, Governor of New Mexico. Statement in U.S.,
Congress, Senate, Committee on Environment and Public Works.
Inland Energy Development Impact Assistance Act of 1977. Hearings
before the Subcommittee on Regional and Community Development,
95th Congress, 1st session, August 2 and 27, 1977, p. 78.
492
-------
All eight states, except Wyoming, have state-funded mental health,
alcohol, and drug abuse programs, but they have been inadequate
due to insufficient funding.1
Energy companies have contributed to social services in some
western communities. The Missouri Basin Power Cooperative and
Atlantic Richfield Company have provided support for the Wyoming
Human Services Project in Wheatland and Gillette, respectively.
A general reluctance on the part of energy companies to assist
communities, noted a short time ago,2 is probably beginning to
change.
9.2.3 Planning Responses
Planning is a necessary part of any response to rapid growth.
In western energy 'development, nearby towns are especially af-
fected. Communities commonly have land-use plans which include
zoning regulation and capital facility plans, including, for
example, plans for streets, water and sewer lines, and firehouses.
When a small town is impacted by energy development, existing
plans quickly become inadequate. The most basic lack in planning
for energy impacts is adequate and timely information. Local
government officials often do not have access to critical planning
information, such as construction schedules, accurate employment
estimates, and projected capital investment.3 It is admittedly
difficult for energy firms to provide this information, since
they must deal with uncertainties involved in markets, suppliers,
and government regulations.14 As a result, the' interaction between
*Rapp, Donald A. Western Boomtowns, Part I, Amended: A Com-
parative Analysis of State Action, Special Report to the Gover-
nors. Denver, Colo.: Western Governors' Regional Energy Policy
Office, 1976, p. 23.
2Arthur Young and Company. Problems on Financing Services
and Facilities in Communities Impacted by Energy Resource Devel-
opment. Washington, D.C.: Arthur Young, 1976.
3Bolt, R.M., et al. Boom Town Financing Study. Denver,
Colo.: Colorado Department of Local Affairs, 1976, Vol. 1,
pp. 40-41; and Schnidman, Frank. Awareness and Perception of the
States to Local and Regional Needs Created by Energy Production
or Extraction Facilities, for the U.S. Department of Housing and
Urban Development. Washington, D.C.: Urban Land Institute, 1977.
'4See the discussion of this point in Chapter 10, Capital
Availability, and Chapter 12, Energy Facility Siting.
493
-------
the.private and public sectors in energy-impact areas is frequently
not sufficient to solve the growth-related problems of' energy
development.1
The extent of the planning problem is indicated by the desig-
nation of 188 communities in Federal Region VIII as impacted by
energy resource development.2 A common element among these com-
munities is a general lack of capacity of the local governments
to deal with growth. Table 9-6 shows the absence of municipal
staff people (notably planners) who generally are needed to man-
age growth, particularly rapid growth. Municipal administrations
and staff also add to operating expenditures of money-short com-
munities.
Planning generally includes two principal activities: land-
use planning and management or program planning. Both activities
in energy areas require information concerning the scheduling,
magnitude, and related impacts of energy development. Land-use
planning is the common concern of the planning profession, espe-
cially for urban regions. In small western towns, program planninc
is at least as important, requiring budget priorities, the sequence
of projects, and the identification of revenue sources to meet
needs. These two types of planning are discussed in turn below.
A. Land-Use Planning
The lack of land-use controls at the local level is a perva-
sive condition in the West. Most incorporated municipalities
have zoning ordinances, building codes, and subdivision regula-
tions (Table 9-7), but land-use control outside of municipalities
is rare.3 Towns can zone only within their boundaries, and county-
wide plans (if they exist) frequently remain unenforced and
•'There are notable exceptions, such as Energy Fuels Company,
which has contributed 30 percent of the salary for the first city
manager in Hayden, Colorado. See Gits, V. "Boom Town on the
Brink." Colorado/Business, Vol. 5 (February 1978), pp. 30-42.
2U.S., Federal Energy Administration, Region VIII, Socioeco-
nomic Program Data Collection Office. Regional Profile; Energy
Impacted Communities. Lakewood, Colo.:Federal Energy Adminis-
tration, 1977. The other two states in our study area, Arizona
and New Mexico, are in Federal Region X and VI, respectively.
These regions have not done similar studies of their states.
3Building codes and zoning regulations are more common in
larger towns, but comprehensive or master plan documents are less
frequent than individual regulations. Many of the existing plans
are over ten years old, making them of questionable usefulness
in a time of rapid community change.
494
-------
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495
-------
TABLE 9-7: EXISTING PLANNING MECHANISMS IN SIX WESTERN STATES
STATE
Colorado
Montana
North Dakota
South Dakota
Utah
Wyoming
Total
NUMBER OF TOWNS WITH :
PLANNING
DOCUMENT
19
4
6
4
17b
20
70
BUILDING
CODES
27
10
22a
4
8
27
98
ZONING
ORDINANCE
22
9
23a
5
17
23
99
SUBDIVISION
REGULATION
21
12
16a
4
6
21
80
NUMBER OF
TOWNS
CONSIDERED
38
23
29
5
56
37
188
Source: U.S., Federal Energy Administration, Region VIII, Socioeconomic
Program Data Collection Office. Regional Profile: Energy Impacted
Communities. Lakewood, Colo.: Federal Energy Administration, 1977.
Including towns in the process of developing codes in 1977..
All other Utah towns were listed as unknown on this item.
c
Four Wyoming communities furnished incomplete information on these
items.
unenforceable. Rural residents, especially landowners, in the
West strongly believe in personal sovereignty over one's land and
resist planning that suggests or embodies governmental control of
private property.1 Land-use planning as an activity is accepted
, W. , and M.B. Jones. Land-Use Planning in the Rocky
Mountain Region. Denver, Colo.: Federation of Rocky Mountain
States, 1976; Christiansen, Bill, and Theodore H. Clack, Jr. "A
Western Perspective on Energy: A Plea for Regional Energy Plan-
ning." Science, Vol. 194 (November 5, 1976), pp. 578-84. The
view against zoning as an infringement of landowners' property
rights is not unique to the rural west. The city of Houston, for
example, has no zoning regulations. See Siegan, B.J. Other
People's Property. Lexington, Mass.: B.C. Heath, 1976.
496
-------
in the West, especially if funded from elsewhere (such as federal
programs discussed below), but regulation on the basis of a plan
is much less common.
Zoning and other land-use controls also have their problems.1
Zoning is a mechanism that depends on prior decisions regarding
the appropriate use of land. However, rezoning, variances, and
exceptions tend to be the rule as better or more opportune uses
of land arise.2 Zoning also is unable to undo past mistakes since
it must recognize the prior rights of existing uses. New or modi-
fied zoning may not be retroactive and nonconforming uses typi-
cally are allowed to remain. Further, zoning requires an intri-
cate administration that can absorb planning staff time, thus
neglecting general or comprehensive planning that reflects com-
munity values.
Planning is common at the state level in the West. In par-
ticular, Colorado, Montana, and North Dakota have statewide con-
trol structures for land-use planning and regulation.3 The other
states in the study area largely allow local landowners (who in-
fluence county commissions) to choose whether to adopt or avoid
land-use controls. (As discussed above, they usually avoid them
or adopt unenforceable planning mechanisms.) However, all eight
states have a department responsible for some degree of state
planning, technical assistance to local governments for assistance
in obtaining state and federal aid, planning, and community devel-
opment (Table 9-8). The same agency frequently serves as state
administering agency for federal grants under HUD's 701 program
(discussed in more detail below). Furthermore, all of the states
except Wyoming are divided into multicounty planning districts or
regions, although in some states, such as New Mexico, regional
planning organizations are not active. However, the states typi-
cally have minimal or no standards for assuring the qualifications
of local or regional planning staffs using state money. As a
arguments are taken from Woolfe, D.A. "Zoning is
Doing Planning In." Practicing Planner, Vol. 6 (June 1976),
pp. 10-13.
20ther responses such as condemnation are comparatively rare.
3Lamont, W., and M.B. Jones. " Land-Use Planning in the Rocky
Mountain Region. Denver, Colo.: Federation of Rocky Mountain
States, 1976.
497
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TABLE 9-8: STATE PLANNING AGENCIES
STATE
AGENCY
STATE OFFICE ADMINISTERING
HUD 701 GRANTS
Arizona
Colorado
Montana
New Mexico
North Dakota
South Dakota
Utah
Wyoming
Department of Economic Planning
and Development
Department of Local Affairs
Department of Community Affairs
State Planning Office
State Planning Division
State Planning Agency
Department of Community Affairs
Department of Economic Planning
and Development
Same
Colorado Division of
Planning
Same
Same
Same
State Planning Bureau
State Planning Coordinator
(Governor)
State Planning Coordinator
(Governor)
HUD = Department of Housing and Urban Development
result, state efforts to promote sound local planning efforts
have been handicapped.1
State attempts to plan on a statewide basis or to oversee
local planning efforts are becoming more common. However, state
actions often conflict with local desires, as illustrated by long-
time conflicts between Western Slope communities in Colorado and
state agencies in Denver.2 State agencies also are generally not
*Rapp, Donald A. Western Boomtowns, Part I, Amended: A Com-
parative Analysis of State Actions, Special Report to the Gover-
nors. Denver, Colo.: Western Governors' Regional Energy Policy
Office, 1976, pp. 42-43.
2Kozisek, Larry, Mayor of Grand Junction, Colorado, Statement
in U.S., Congress, Senate, Committee on Environmental and Public
Works. Inland Energy Development Impact Assistance Act of 1977.
Hearings before the Subcommittee on Regional and Community Devel-
opment, 95th Congress, 1st session, August 2 and 27, 1977, pp.
220-33.
498
-------
sufficiently coordinated to deal with a wide range of local prob-
lems such as those that result from energy development.1
The federal government has a large role in local land-use
planning, primarily through financial support for planning and
legislated planning requirements, such as EPA's Water Quality
Management Program. The HUD Comprehensive Planning Grants (701)
Program is the principal source of federal support for local
land-use planning.2 The objective of 701 is to strengthen
planning and decisionmaking capabilities of governors, local
governments, and area-wide planning organizations, and there-
by promote more effective use of the nation's physical, eco-
nomic, and human resources. All local governments except met-
ropolitan cities and counties and councils of government (COG's)
must apply through their state planning agency, which allocates
funds received from HUD. Thus all impacted communities in
the eight western states must receive these funds through
their state agencies or COG's. Of about $60 million funded
nationally for 701 planning in 1975, about $630,000 went to
impacted communities in six of the eight states in the study
area.3
The 701 program has assisted in the majority of planning
efforts undertaken nationwide in the past few years. The funding
has been increased to provide planning funds to many communities
as well as to multijurisdictional planning regions such as COG's
where planning was not common. In addition, the program promotes
and supports continuous management or process-oriented planning.1*
JLamont, W., and M.B. Jones. Land-Use Planning in the Rockft
Mountain Region. Denver, Colo.: Federation of Rocky Mountain
States, 1976; Rapp, Donald A. Western Boomtowns, Part I, Amended:
A Comparative Analysis of State Actions, Special Report to the
Governors. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1976, pp. 40-46.
2National Housing Act of 1954, Pub. L. 83-438, 68 Stat. 320,
12 U.S.C. 24, 1430 et seq., as amended, 40 U.S.C. 461, 42 U.S.C.
1407 et seq. See also Wachs, M.W. "Planning for Energy Needs:
701 Helps Meet the New Challenge." HUD Challenge, June 1976,
pp. 18-21.
3U.S., Federal Energy Administration. Socioeconomic Impacts
and Federal Assistance in Energy Development Impacted Communities,
Federal Region VIII. Denver, Colo.: Federal Energy Administra-
tion, 1976. More recent data have not been compiled for the West.
''Lament and Jones. Land-Use Planning.
499
-------
However, the plans produced with 701 funds need not be enforced
by any level of government, and may tend to merely reference docu-
ments for a community's professional planners.
EPA's 208 Water Quality Management Planning Program provides
fundincr for comprehensive planning on a statewide or area-wide
basis with an emphasis on improvement of water quality and control
of point and nonpoint pollution sources.1 Area-wide and state
planning agencies must develop water quality management plans that
include regulatory programs to control the location, modification,
and construction of facilities that can result in pollution and
programs (including land-use requirements) to control runoff and
other pollution from agriculture, mining, forestry, construction,
and urban stormwater.2 In effect, the 208 program requires land-
use planning indirectly as one means of achieving the program's
goals.3
Although the 208 planning program requires that 208 plans
be implemented4, it is not yet clear what this means in practice,
because no funding is included for enforcement in the 208 program.
A 208 plan may be able to take priority over any other plan for
an area within its planning boundaries, which in some cases are
entire states. Federal approvals or funding for projects could
possibly be withheld if the plan is not adhered to. The states
may be ultimately required to enforce the 208 plans within their
boundaries for EPA, but this is not yet the case.
In addition to HUD and EPA, EDA in the Department of Commerce
has a number of programs that provide planning assistance to state
JFederal Water Pollution Control Act of 1972,. Pub. L. 92-500,
86 Stat. 816, 33 U.S.C. § 1288. See also U.S., Environmental
Protection Agency. EPA Programs in Support of State, Regional,
and Local Planning. Washington, D.C.: Environmental Protection
Agency, 1976.
2Donley, D.L., and K.L. Hall. "Section 208 and 303 Water
Quality Planning and Management: Where Is It Now?" Environmental
Law Reporter, Vol. 6 (October 1976), pp. 165-70.
3Supalla, R.J. "Land Use Planning: An Institutional Over-
view." American Journal of Agricultural Economics, Vol. 58 (Dec-
ember 1976), pp. 895-901.
^Donley and Hall. "Sect. 208 and 303 Water Quality Planning;"
and 40 C.F.R. § 131-20(h).
500
-------
and local government and Indian nations.1 These generally tend
to supplement other federal programs, but they have become very
important to some governments, such as the Navajo Nation.2 Tech-
nical Assistance Grants that provide skilled professionals have
been widely used in the West, particularly in Colorado, North
Dakota, and by the Navajo Nation.
Indian tribes are a unit of local government eligible for
any of the federal programs described above as well as for several
special loan and grant programs. Many of the special programs
are administered by the Bureau of Indian Affairs (BIA). Road con-
struction and maintenance, school construction, and housing devel-
opment grants all are available through the BIA.3 As described
above, the BIA has provided considerable assistance to Indians in
the form of planning and technical assistance grants.
B. Program and Financial Planning
The priorities for a community's attention and revenue change
at a rapid rate in energy development situations. As one need is
taken care of, another equally important "brushfire" usually
awaits attention. The unstable pattern of population which com-
munities experience because of large construction projects inflates
temporary facility and service needs beyond those projected for
the long term. These short-term needs make planning for public
facilities difficult, because it is possible to overbuild if the
long-term population level is uncertain.k
1Economic Development-Support for Planning Organizations,
for redevelopment areas, Pub. L. 89-136, 42 U.S.C. §§ 3151, 3152;
and the State and Local Planning Program, for state and local
governments, Pub. L. 89-136, U.S.C. §§ 3121 et seq.
2Navajo Tribe, Office of Program Development. The Navajo
Nation Overall Economic Development Program, 1976 Annual Report.
Window Rock, Ariz.: Navajo Tribe, Office of Program Development,
1976.
3U.S., Office of Management and Budget. Catalog of Federal
Domestic Assistance. Washington, D.C.: Government Printing
Office, annually.
4This situation is discussed in several of the scenarios in
White, Irvin L., et al. Energy From the West: A Progress Report
of a Technology Assessment of Western Energy Resource Development.
Washington, D.C.: U.S., Environmental Protection Agency, 1977,
Vol. II.
501
-------
In many cases, it is more practical to provide only temporary
facilities for short-term needs.1 Planning for such needs, and
not greatly overestimating or underestimating, requires substan-
tial accurate information from energy developers. The informa-
tion, which should provide a fairly accurate schedule for each of
several developments, is not uniformly complete from all devel-
opers. This results in substantial information gaps for local
planners and greatly hinders planning.
A final significant problem lies in the possibilities of
state or federal funding. The time when promised funds will be
received is rarely predictable, and even eligibility for some
funds is uncertain or difficult to assess.2 As a result, program
planning currently is done largely on an ad hoc basis as possi-
bilities and conditions change. Finally, the choice between
state or federal funds may be made on the basis of such factors
as the ability to hire local people for planning, rather than
having to accept state personnel who are not committed to the
local area.3
One mechanism for dealing with information gaps and local
impacts on communities is comprehensive facility siting legisla-
tion. Private industry can be induced by state legislation, for
example, to take an active role in impact assistance to communi-
ties. The Wyoming Industrial Siting Administration (WISA) con-
centrates on mitigation of socioeconomic impacts as a condition
for siting permits for large energy and industrial facilities.
After studies and hearings by state agencies and local community,
a siting permit can be issued with conditions specifying the im-
pact mitigation required.1* In the only application processed
through mid-1977, Basin Electric Power Cooperative agreed to pro-
vide 37 specific types of impact alleviation amounting to several
1Howard, Needles, Tammen, and Bergendoff. Temporary/Mobile
Facilities for Impacted Communities. Washington, D.C.: Old West
Regional Commission, 1976.
2Enzi, M.B. "Energy Boom: Wyoming's Coal Veins Just Bring
Troubles." Los Angeles Times, May 15, 1977, p. V-5.
3This point has been mentioned by officials in western
Colorado and Montana.
^Industrial Development Information and Siting Act of 1975,
Wyoming Statutes 35-502.75 et seg. (Cumulated Supplement 1975).
502
-------
million dollars for capital and operating costs as well as housing
in connection with its power plant near Wheatland, Wyoming.1
This approach allows industry to propose mitigation measures
in its own way or to the point where a permit is granted. The
law has not yet been tested with investor-owned utilities which,
unlike co-ops, may not be permitted to include impact mitigation
costs in their rate base as a cost of doing business.
9.2.4 Summary of Local Services and Facilities Issues
Local services and facilities are in short supply and are
difficult to plan for in energy-impacted areas because of several
factors, including: (1) rapid and unstable population growth;
(2) a shortage of information about the timing, magnitude, and
location of impacts; (3) a lack of local funds in the towns, where
they are most needed; (4) a lack of adequate state and federal
programs to provide financial assistance to communities; and
(5) a shortage of staff expertise to deal with requirements for
federal and state programs.
Some particular issues that have arisen in the West as a
result of energy development are:
• Persisting revenue imbalances between counties and school
districts which receive revenues from energy facilities,
and municipalities which experience most of the population
growth impacts but receive little additional revenue.
• Generally inadequate public and private sector cooperative
planning, particularly developers dealing only with their
employees rather than with overall energy impacts that
include service workers.
• Conflict between state and local governments over direct
access to federal funds. Most federal guidelines require
small towns to apply through state agencies, which many town
officials believe are unresponsive to local needs.
Wyoming Industrial Siting Administration, Docket No. WISA-
75-3. See also Valeu, R.L. "Financial and Fiscal Aspects of
Monitoring and Mitigation." Paper presented at the Symposium on
State-of-the-Art Survey of Socioeconomic Impacts Associated with
Construction/Operation of Energy Facilities, St. Louis, Missouri,
January 1977.
503
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9.3 ALTERNATIVE POLICIES AND IMPLEMENTATION STRATEGIES FOR
GROWTH MANAGEMENT
9.3.1 Introduction
The discussion in the previous two sections leads to the
conclusion that policymakers basically confront two kinds of
growth management problems and issues as a consequence of energy
resource development in the West: inadequate funding for meeting
the community services and facilities needs of a greatly increased
population; and a lack of planning expertise and information. In
dealing with these problems and issues, policymakers can attempt
to achieve two policy objectives. First, they can attempt to
ensure that funds available to energy-impacted communities are
adequate to provide services and facilities at a level which
will minimize the adverse quality-of-life impacts of energy
resource development. And, second, they can attempt to ensure
that energy-impacted communities are provided planning assistance
and adequate and timely planning information. In the following
analysis, two categories of policy alternatives responsive to the
first objective and one responsive to -the second objective are
considered:
• Changes in the state and local tax structure;
• Increased impact assistance;
• Improved local planning .. Abilities.
Specific policy alternatives for each category of alterna-
tives are outlir d in Table 9-9. If policymakers elect to change
state and local tax structures, they can annex county land to in-
crease the tax base of municipalities, encourage the prepayment
of property and sales taxes, provide for state collection and
distribution of property taxes on energy facilities, impose sever-
ance taxes on the extraction and processing of natural resources,
and provide tax incentives that would encourage private developers
to take the initiative in mitigating local impacts. Three alter-
native policies that increase impact assistance are also discussed:
special programs for water and sewer facilities in rapid growth
areas, distribution of federal land and mineral payments directly
to towns, and federal and regional impact assistance for munici-
palities .
Policymakers can respond to the planning needs of western
communities by assuring local officials of accurate and timely
impact information prior to energy development. The options fa-
cilitating the sharing of information necessary for planning in-
clude energy impact planning assistance and impact reporting re-
quirements contained in state siting legislation.
504
-------
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The alternatives for responding to the financial and planning
needs of western communities are discussed in more detail in the
remainder of this section, and implementation strategies are
elaborated. The alternatives are then evaluated on the basis of
the five criteria outlined in Chapter 3, and comparisons are
drawn among alternatives to illustrate the consequences of making
each choice.
9.3.2 Description of Alternatives
A. What Are the Alternatives?
The categories of specific alternatives for meeting each of
the two general objectives are listed in Table 9-9. The specific
alternatives can be categorized according to whether they provide
immediate financial impact assistance to communities to mitigate
the existing impacts of western energy development or long-term
planning assistance to anticipate and avoid the effects of future
activity.
(1) Tax Alternatives
Policy alternatives to satisfy the first objective assume
that financial impacts will occur and that these can arid should
be redistributed, either by changing the state and local tax
structure or by altering federal impact assistance programs. As
mentioned in Section 9.2.1, energy development facilities are
often located in rural jurisdictions, whereas workers who operate
the plants usually live with their families in nearby towns, which
are unable to meet the increased demands of these new residents.
Redistribution could take place at the county level, by returning
a portion of county property and other tax receipts to communities
based on population. Similarly, state redistribution could col-
lect revenues at the county level and return them to the municipal
aovernments where rapid population growth has occurred.
(a) Annexation
Since there are few mechanisms or incentives for distributing
county revenues to municipalities, the first specific alternative
would facilitate municipal annexation of county lands where energy
facilities are located, thus allowing local communities to in-
crease their tax base and extend their zoning and planning powers
to energy development sites. Subsequent increases in municipal
revenues could then be used to finance higher levels of services.
Many western states have constitutional provisions that allow
municipalities to annex county property with the concurrence of
the affected residents and the county government. One version of
this alternative provides for cooperative, power sharing agree-
ments between a county with a large tax base and cities and towns
to participate in financing necessary public facilities. For
506
-------
example, the Wyoming Joint Powers Act permits counties, munici-
palities, school districts, or special districts to plan, create,
finance, and operate jointly in a number of functional areas.1
Utah has , enacted a similar mechanism, the Interlocal Cooperation
Act,2 which allows governmental units to exercise jointly any
powers either of them can exercise separately. Whether these
alternatives eliminate the disparities in revenue between differ-
ent jurisdictions will be evaluated in Section 9.3.3, and their
applicability to other states in the eight-state study area will
be assessed.
(b) Prepayment of Taxes
Even if municipalities and county governments have a suffi-
ciently large tax base from which to draw revenues for financing
increased levels of public services and facilities, new demands
often arise before energy resource development facilities become
operational and begin paying taxes. To solve this problem, the
second specific alternative would require the prepayment of prop-
erty taxes to give local governments "front-end" money to finance
higher levels of services, as well as capital improvements. The
state could collect the estimated tax obligation that a facility
would expect to incur during the construction or operation period
and spend the money on local community needs. Then when actual
tax assessments are made, energy companies would receive a tax
credit for the portion they had prepaid. «
(c) State Collection and Distribution of Taxes
The property tax has traditionally been a revenue source pri-
marily for local governments, and no state government in the West
derives a major proportion of its revenue from this mechanism. 3
However, the third specific alternative, which calls for changing
state and local tax structures, would allow the states to collect
and distribute property taxes on energy facilities as a means of
equalizing tax revenues among jurisdictions. Since one of the
problems identified in Section 9.2.1 was not a shortage of revenue
L.D., N. Carlisle, and M.D. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, p. 340; see also Sections 9-18.3 through
9-18.20 of the Wyoming Statutes.
2Utah Code Ann., § 11-13 (1953).
3Bronder, Carlisle, and Savage. Financial Strategies;
Stinson, T.F., and S.W. Voelker. Coal Development in the Northern
Great Plains; The Impact of Revenues of State and Local Govern-
ments , Agricultural Economic Report No. 394. Washington, D.C.:
Department of Agriculture, 1978.
507
-------
within the state, but rather inequities in the distribution of
total property tax revenues among jurisdictions, policymakers
seeking to achieve a better use of available revenue could choose
this alternative. This alternative is patterned on a Wisconsin
plan which provides for the statewide sharing of all property tax
revenues from energy plants.1 A tax rate equal to the statewide
average of all state, county, and local taxes could be applied
to the value of energy companies' taxable property and the rev-
enues could be distributed to impacted communities.
(d) Severance Taxes
A fourth specific alternative in this category is for policy-
makers to adopt a state severance tax on the extraction and pro-
cessing of natural resources. The severance tax has been defined
as "a levy assessed at flat or graduated rate...on the privilege,
process, or act of commercially severing or extracting natural
resources from soil or water and measured by the physical amount
or the^gross or net value of the natural iresources produced or
sold."2 The tax can be based either on specific units of produc-
tion (cents per ton produced) or on the gross value of the produc-
tion (percent of gross value or proceeds). All of the states in
this study except Arizona, South Dakota, and Utah have imposed a
severance tax on coal, oil, and gas, and various states also tax
electricity generation, mining, and oil shale activities.3
(e) Tax Credits
The fifth specific alternative for changing state and local
tax structures is to allow energy companies to claim a tax deduc-
tion for the value of any impact assistance they provide. This
option is designed to increase the amount of private sector im-
pact assistance available to local communities. Although energy
developers have provided some impact assistance and in-kind
services to municipalities, they have been reluctant to increase
their role without some recognition in the form of tax incentives.
Companies have also been hesitant to provide impact assistance in
connection with their projects because states often place limita-
tions on the allowable costs of business that may be recovered
!Chapter 76, Wisconsin Statutes, 1971.
2Bronder, Leonard D. Taxation of Coal Mining: Review with
Recommendations. Denver, Colo.: Western Governors' Regional
Energy Policy Office, 1976.
3Bronder, L.D., N. Carlisle, and M.D. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven West.'
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977.
508
-------
through increases in the rate base. Thus, one version of this
policy alternative might broaden the definition of costs that can
be passed through to customers by electric utilities.
(2) Impact Assistance Alternatives
The second category of alternatives for providing financial
assistance to energy-impacted communities focuses on improvements
in and additions to the existing array of federal aid programs.
While there are currently a large number of federal programs which
could provide impact assistance for local community needs, these
are usually subject to competing claims from communities with
needs unrelated to energy development. Further, as discussed in
Section 9.2.1, the eligibility criteria for existing federal pro-
grams favor rapid-growth areas in metropolitan areas.
(a) Special Water and Sewer Programs
The first specific policy alternative in this category would
overcome these problems by instituting special water and sewer
programs for nonmetropolitan rapid growth areas. Earmarking funds
for nonmetropolitan areas would enable policymakers to target the
money more directly to energy-impacted areas, rather than to
rapid-growth suburban areas.
(b) Federal Land and Mineral Payments
The d Listnbu'-.ioTj of federal land and mineral payments di-
rectly to towns on the basis of population growth involved the
reallocation of existing assistance funds rather than an increase
in the total amount of funds available. A portion of these pay-
ments currently is distributed to counties and school districts,1
exacerbating the inequality in revenues between local government
jurisdictions discussed in Section 9.1. The payment of funds di-
rectly to Kioal communities would free these jurisdictions from
dependence on loans which are currently made in anticipation of
revenues,' These funds could be used to finance a wide range of
loca.1 needs deriving from the increase in the service population
associate'"; with energy development. One proposed variation on
1 Public Lands-Local Government Funds Act, Pub. L. 94-565,
r
-------
this option would allow states to borrow against future mineral
royalties to meet front-end costs.1
(c) Federal Impact Assistance
The third policy option for changing federal energy impact
assistance programs would increase the funds available through
EDA and the Title V Regional Commissions,2 and disburse them di-
rectly to local communities. These two agencies have frequently
provided grants to communities for water and sewage treatment
plants, and some state officials think they could play a larger
role (see box, "Regional Commission Impact Assistance"). Al-
though the emphasis of this category of alternatives is on pro-
viding financial assistance to impacted communities, the Title V
Commissions could also contribute to meeting the second objective
by providing planning assistance and information to local commu-
nities.
(3) Information Alternatives
Two specific policy proposals have been identified for pol-
icymakers who wish to assure that impacted communities have accu-
rate and timely information about energy development.
(a) Federal Planning Assistance
The first specific alternative calls for comprehensive in-
formation, planning, and impact assistance at the federal level.
One attempt to create such a program is the "Energy Impact Assis-
tance Act of 1978," introduced by Colorado Senator Gary Hart and
Section 317 (c) of the Federal Land Policy arid Management
Act of 1976 already allows states to borrow against future min-
eral royalties. However, since the Secretary of the Interior has
refused to lend money at the three percent interest rate mandated
in the Act, measures have been introduced in both the House of
Representatives and the Senate to raise the rate to that at which
states now issue tax-exempt municipal bonds (4-1/2 - 5-1/2 per-
cent) . See U.S., Congress, House of Representatives, Report 95-
211 to accompany H.R. 10787, "Authorizing Appropriations for Ac-
tivities Carried Out by the Secretary of the Interior through the
Bureau of Land Management," May 10, 1978.
2Public Works and Economic Development Act of 1965, Pub. L.
89-136, 79 Stat. 552, 42 U.S.C. 3241, 3243, 3245. The area cov-
ered by this study includes two regional commissions: Four Cor-
ners (Utah, New Mexico, Arizona, Co'lorado) , created in 1965; and
Old Wqst (North Dakota, South Dakota, Nebraska, Montana, and
Wyoming), created in 1972. See also Derthick, Martha. Between
State and Nation; Regional Organizations of the United States.
Washington, D.C.: Brookings Institution, 1974.
510
-------
West Virginia Senator Jennings
Randolph.1 This bill is mod-
eled on the Coastal Zone Manage-
ment Act (CZMA)2 and would
"provide financial and techni-
cal assistance to state, local
governments, and Indian tribes
suffering economic impact as a
result of energy development
activities.
ii 3
The bill provides for
establishing impact assistance
teams composed of federal,
state, and local officials.
These teams would assess the
impacts of energy development
on specified areas and identify
available sources of assistance.
The impact assistance team
would also prepare a mitigation
plan based on the results of
its preliminary assessment.
This plan would identify means
for mitigating immediate im-
pacts of energy development
and procedures for establishing
a continuing planning capa-
bility.
(b) Siting Information
The second specific policy
alternative for providing ac-
curate and timely energy devel-
opment information relies on
the states to adopt facility
siting legislation with impact reporting requirements. Local
areas that have not previously experienced energy development or
for which new types of energy facilities are planned have a par-
ticular need to obtain a description of the impacts that can be
REGIONAL COMMISSION IMPACT
ASSISTANCE
At about the same time as the
introduction of the Inland Energy
Impact Assistance Bill, Governor
Thomas L. Judge of Montana pro-
posed a somewhat different solu-
tion. In a meeting with President
Carter, Judge proposed increasing
the funds available to the Old
West and Four Corners Regional
Commissions to $20 million annu-
ally. In addition, he proposed
that the Commissions be authorized
to provide 100 percent funding for
energy impact projects, 20 percent
more than is presently authorized.
The legislative requirements
would be simpler than in the case
of the Hart Bill, which would set
up a new bureaucracy modeled on
the Office of Coastal Zone
Management. Judge's proposal
gives strong support for the Title
V Regional Commissions as regional
institutions in which the states
and the federal government are
both active.
—Old West Regional Commission
Bulletin, Vol. 4 (July 15, 1977),
p. 1.
1 The 1978 Act is an amended version of Senate Bill 1293, In-
land Energy Development Impact Assistance Act of 1977, introduced
in May 1977 by Senator Hart.
2Coastal Zone Management Act of 1972, as amended, 1976, Pub.
L. 94-370, 90 Stat. 1013, 16 U.S.C. § 1013.
3"Inland Energy Development Impact Assistance Act of 1977--
S. 1493." Congressional Record, Vol. 124 (May 10, 1978), Section 2
511
-------
expected. At a minimum, the legislation "would recjuire reporting
of information on the needed construction and operating work
force, water use, land use, land needed for mining and waste dis-
posal, and air and water residuals. Although the kind of compre-
hensive facility siting legislation that this option would require
is not yet common in the West, the Wyoming Industrial Development
Information and Siting Act of 1975 is an example of the mechanisms
policymakers could adopt.1 The WISA conditions the approval of
siting permits for major energy and industrial facilities on the
mitigation of sqcioec6nomic impacts. As a result of this stipu-
lation, Basin Electric Power Cooperative agreed to provide major
impact assistance to Wheatland, Wyoming, near the site of its
power plant.2
B. How Can the Alternatives Be Implemented?
Implementation strategies for each of the three general cate-
gories of alternatives described above cire summarized in Table
9-10. This table indicates where primary responsibility for
implementation would be located, whether incentives or sanctions
would be required, and identifies some of the constraints associ-
ated with each specific alternative. Each of these entries will
be addressed in more detail as alternatives are evaluated in the
following section (9.3.3); they are set forth here to facilitate
a general comparison of alternatives.
With regard to roles and responsibilities, each specific im-
plementation strategy provides for a public role and/or responsi-
bility. This is perhaps most understandable with respect to
changes in existing federal energy impact assistance programs
where the federal government already plays a major role. The
major impetus for federal involvement has been the feeling that
the federal government, as the major landowner, should also beai
a portion of the cost of mitigating the impacts caused by energy
development on federal land. The regional demand for a strong
federal role is also tied to the residents' perception that much
energy development in this area will occur to meet national
energy objectives and therefore the federal government has a
responsibility to mitigate some of the impacts of this develop-
ment. The U.S. Congress has acknowledged some federal responsibility
1Wyoming Statutes 35-502 et seq. (Cumulated Supplement 1975)
2Wyoming Industrial Siting Administration, Docket No. WISA-
75-3. See also Valeu, R.L. "Financial and Fiscal Aspects of Mon-
itoring and Mitigation." Paper presented at the Symposium on
State-of-the-Art Survey of Socioeconomic Impacts Associated with
Construction/Operation of Energy Facilities, St. Louis, Missouri,
January 1977.
512
-------
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by passing the Public Lands-Local Government Funds Act or "In
Lieu of Tax Payment" Act, as well as the BLM Organic Act.1
Alternatives involving changes in state and local tax struc-
tures require a predominantly state or local role. If one of
these alternatives is chosen, state and local action will be re-
quired primarily to establish mechanisms that would provide more
financial impact assistance to local communities. These mecha-
nisms include changes in the legal requirements for annexation,
as well as amendments to the state and federal tax codes to pro-
vide incentives for early payment of taxes and for private sector
initiatives in impact assistance.
The final category of alternatives includes two policy op-
tions that require significant roles and responsibilities for
federal and state governments and the private sector. Growth
management planning assistance would be provided by the federal
government, but it also requires a positive response from the
states, which must adopt growth management plans and set prior-
ities for future development. On the other hand, the initiative
for including impact information requirements in siting legisla-
tion would rest with the individual states. Private energy devel-
opers also have a role because they would be required to show
that efforts had been made to mitigate the impacts of development
before receiving a siting permit.
The policy alternatives considered for growth management
vary somewhat in their implementability. Proposals that would
change state or local tax structures are most difficult to have
accepted, since they reallocate existing tax revenues. The muni-
cipal annexation of county land is designed to enable energy-
impacted communities to include nearby energy facilities within
their jurisdiction so energy developers can be taxed at the same
level as municipal residents; however, this option has generally
proved difficult to implement, since most states require the con-
sent of the county and of the residents on the land proposed for
annexation. The county government is likely to oppose such mea-
sures because it stands to lose considerable tax revenue, and cit-
izens fear they will pay higher taxes under municipal jurisdiction
without benefiting from municipal services. Therefore, annexa-
tion appears to be a workable strategy only if policymakers can
modify existing annexation procedures or offer substantial induce-
ments to county citizens to agree to be annexed.
The prepayment of sales and property taxes would shift the
time at which tax revenues become available to local officials
Public Lands-Local Government Funds Act, Pub. L. 94-565, 90
Stat. 2662, 31 U.S.C. 1601 et seq.; Federal Land Policy and Manage-
ment Act of 1976, Pub. L. 94-579, 90 Stat. 2743, 43 U.S.C. 1701
et seq.
514
-------
without increasing the total money available. It would require
that the state legislature adopt a change in collection procedures
similar to Utah's 1975 Resource Development Act, under which
energy developers may prepay state sales tax obligations they
would expect to incur during construction or operation.1 The
money is then spent on state-related improvements in the impacted
areas. This option might also allow direct disbursement to local
governments for spending on impact-related problems which they
have given high priority. However, there are several potential
problems which make this proposal unattractive unless incentives
or inducements are adopted. Tax prepayment is costly to companies
because they pay the taxes earlier than they are owed and the In-
ternal Revenue Service prohibits the deduction of the full amount
of the taxes in the year in which they are prepaid.2
The policy alternative which would have the state collect
and distribute property taxes on energy facilities provides an-
other method of overcoming inequities in available revenue be-
tween jurisdictions. Taxing powers currently are shared among
state, county, and local jurisdictions arid legislative action
might be required to set a statewide tax rate. The precedent for
this proposal is a plan for statewide sharing of property tax rev-
enues from energy plants adopted by Wisconsin in 1971.3 There is
likely to be considerable opposition to the implementation of
this alternative for two reasons: local governments fear loss of
control over the taxing power; and jurisdictions with higher rev-
enue collections do not want to lose tax monies to other areas
of the state. The final tax structure alternative, tax credits
for private sector initiative in providing impact assistance,
would require a change in the states' tax codes, and would likely
arouse a good deal of opposition if it were seen as a special
favor to business. It also runs counter to the philosophy that
the full costs of energy development should be internalized (i.e.,
be borne by the developers as a development cost).
The category of alternatives that focuses on changes in
energy impact assistance programs involves the least change from
existing policies. The major intent of these options is to aim
lrJ.S., Department of Housing and Urban Development, Office of
Community Planning and Development. Rapid Growth from Energy Pro-
jejctsj Ideas for State and Local Action. Washington, D.C.:
Government Printing Office, 1976, pp. 33-34.
2U.S., Department of Energy, Energy Impact Assistance Steer-
ing Group. %PQ£JL.J^.Ji^-.J^g-s>(3ent on Energy Impact Assistance
Draft Report. Washington, D,C.: Department of Energy, 1977,
p. 99.
3HUD. Rapid Growth from Energy Projects, p. 33.
515
-------
current impact programs more directly at energy-related population
growth problems. However, there is likely to be moderate to
strong opposition by urban communities if special water and sewer
programs are established for nonmetropolitan rapid-growth areas,
and state governments will likely be reluctant to give up control
over federal land and mineral revenues. Implementation will also
be influenced by the ratio of grants to loans in specific programs,
since local officials tend to prefer grants which do not have to
be paid back. Thus, federal and regional impact assistance to
municipalities will probably be the easiest option to implement,
since it could be accomplished by expanding appropriations for
EDA, general revenue sharing, or the Title V Regional commissions.
If direct municipal assistance were to be provided through general
revenue sharing reallocations, states might oppose it.1
The final set of alternatives represents the most significant
departure from existing policies. The two proposals — for federal
growth management planning assistance and state siting legisla-
tion with impact requirements—both seek to increase the informa-
tion available to officials in local communities. Both could be
implemented fairly easily although there is still some philosoph-
ical reluctance on the part of many citizens to embrace the idea
of widespread public planning. Incentives for federal growth
management planning assistance include technical assistance to
states and communities to develop growth management plans. The
requirement that a growth management plan be adopted could also
act as an incentive.
9.3.3 Evaluation of Alternatives
A. Evaluation Criteria
The assessment and comparison of alternative policies and
implementation strategies is based on five criteria that have
been developed by the research team: effectiveness, efficiency,
equity, flexibility, and implementability. Table 9-11 illustrates
1 The Inland Energy Development Impact Assistance Act of 1977,
introduced by Senator Gary Hart of Colorado as S. 1493 in May 1977
would provide loans to states for front-end investment in facil-
ities and services, together with repayment assistance of the pos-
sibility of forgiveness if development does not materialize. This
proposal was revised and reintroduced by Senator Hart in May 1978
with Senator Jennings Randolph of West Virginia as coponsor. The
new version of the bill would coordinate all federal impact assis-
tance programs and create an Office of Emergency Impact Assistance
within the Commerce Department. Federal, state, and local offi-
cials would serve as members of "assessment teams" to help ap-
praise problems in specific communities. "Inland Energy Devel-
opment Assistance Act of 1977, S. 1493." Congressional Record,
Vol. 124 (May 10, 1978). ~~
516
-------
how each criterion is defined in terms of the substance of growth
management problems and issues. This description is based on the
policy context of growth management issues in the West (9.2.2)
and derives from the policy objectives defined above (9.3.1).
Only the two categories of alternatives to meet the first objec-
tive are evaluated in detail in this chapter.
No single alternative is likely to rank high on every cri-
terion. Therefore policymakers have to make trade-offs in their
choices of methods for avoiding or mitigating negative impacts.
The purpose of this section is to discuss some of the implica-
tions and consequences of taking a particular policy action.
As applied to the issue of growth management, the five cri-
teria in Table 9-11 address two general concerns. The first
concern is with the amount of new impact and planning assistance
that can be made available to impacted communities in the western
states. Questions considered as part of this concern include:
how much assistance can be provided through existing impact aid
programs? how much assistance can be provided by new programs?
what are the costs, risks, and benefits of different alternative
methods of providing assistance? what groups will pay for the
increased assistance? The second general concern is with the
process for either avoiding or mitigating growth management pro-
blems. The process will be evaluated primarily in terms of
whether specific options can be implemented and whether they are
adaptable to changing demands for local services and facilities.
In addition, relationships among various levels of government,
as well as between the public and private sectors are considered.
(The discussion in Section 9.1 dealt with jurisdictional conflicts
between the federal government and the states and localities,
as well as between states and municipalities, counties and muni-
cipalities, and between different counties.) A consequence of'
failing to implement policies which do a better job of allocating
revenues among jurisdictions is likely to be a continuing shortage
of financial and planning assistance when and where it is most
needed to avoid or mitigate the impacts of energy development in
the West.
B. Evaluation of Alternatives for Changing State and Local Tax
Structures
Five specific alternatives for changing state and local tax
structures are evaluated and compared in this section:
• Municipal annexation of county land;
• Prepayment of sales and property taxes by industry;
• State collection and distribution of property taxes on energy
facilities;
517
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• State severance taxes;
• Tax credits for private sector impact assistance.
As these specific alternatives suggest, changes in tax struc-
ture could be made at both the state and local levels. (Incen-
tives, inducements, and sanctions for achieving these changes
were described in Section 9.2.3, together with appropriate insti-
tutional arrangements.) Suggested implementation strategies in-
clude :
• Changing legal requirements for annexation;
• Enacting state laws allowing prepayment of taxes and re-
moving federal tax disincentives for doing so;
• Changing the state tax code to enable the collection of a
single state tax on energy facilities;
• Enacting a tax on extraction and processing of natural
resources;
• Changing state tax codes to allow deductions for private
sector impact assistance.
The success of each policy alternative will be primarily a
function of the particular implementation strategy that is speci-
fied. Each of the implementation strategies requires some action
by state or local governments. The last strategy is designed to
encourage a larger role for the private sector. Other options
not discussed in this section might stimulate a larger private
sector role in providing impact assistance. It should also be
noted that the consequences of each alternative are largely de-
pendent on the underlying assumptions of the various implementa-
tion strategies that might be pursued.
(1) How Much Impact Assistance Could Be Provided?
The effectiveness of the five strategies in this section de-
pends both on the tax base available to various levels of goverpn-
ment and on the rate at which taxes are assessed. For example,
the additional taxes that can be collected on new property an-
nexed by a municipality may or may not be adequate to finance the
increased levels of services and new capital facilities needed.1
Taxes are more likely to be adequate to meet increased demands
for services and facilities when the new energy plants are
^render, L.D., N. Carlisle, and M.D. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts in Seven
Western States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977, p. 23.
519
-------
capital-intensive. In theory, municipal annexation of county
lands could be an effective option for providing revenues to
cities and towns. However, county governments to date have not
been willing to relinquish their control over taxing authority
on county property; therefore, it is difficult to determine the
tax revenues that could be made available for impact assistance
if this specific alternative were implemented.
The second specific alternative, the prepayment of sales
and property taxes, does not increase the total amount of money
available for impact assistance; however, it does make funds
available earlier and thus can overcome or mitigate the "lead-
time" problem. If the prepaid taxes are distributed to impacted
cities and towns, rather than counties, the prepayment alternative
can also be a fairly effective strategy for increasing the amount
of revenue available to cities and towns for impact assistance.
State collection and distribution of property taxes ranks
as a highly effective alternative because it allows policymakers
to draw on the entire state as a revenue base, with the power
to reallocate tax monies statewide, and "O distribute these monies
on the basis of needs. This strategy is also particularly effec-
tive for alleviating the problem of jurisdictional mismatches
described in Section 9.2, i.e., by ensuring that the jurisdiction
bearing the costs receives the benefits.
The effectiveness of state severance taxes in meeting state
impact needs will depend both upon the rate of taxation and the
level of mining and processing activity within a particular state.
Table 9-12 compares the current severance tax collections of the
six states in the study area that have severance taxes. This
mechanism appears to be very effective for raising impact assis-
tance funds, especially in New Mexico, Wyoming, and Montana.
However the effectiveness of the severance tax as a policy alter-
native to provide impact assistance funds also depends upon the
manner in which revenues are distributed to impacted areas
(see Table 9-1). Distributional questions about this alternative
are discussed in Section 9.3.3(C).
The specific alternative of granting tax deductions for im-
pact assistance provided by industry can also be effective,
especially on a site-specific basis. Energy companies have
played a role in setting up and maintaining numerous services and
facilities in energy-impacted communities. At a minimum, these
usually include streets, water and sewer distribution or collec-
tion networks, and parks. For example, Basin Electric Power Co-
operative has provided about 1,900 units of housing together with
520
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TABLE 9-12:
STATE SEVERANCE TAX COLLECTIONS, 1974-1976
(millions of dollars)
STATE
Colorado
Montana
New Mexico
North Dakota
Utah
Wyoming
YEAR
1974
$ 1
10
44
4
5
5
1975
$ 2
15
72
7
6
18
1976
$ 4
31
87
13
12
41
SOURCE: U.S., Department of Energy,
Energy Impact Assistance Steering
Group. Report to the President on
Energy Impact Assistance, Draft Report,
Washington, D.C.: U.S., Department of
Energy, 1977, p. 107.
other services in connection with its power plant near Wheatland,
Wyoming,1 and similar assistance could be expected in other areas.
In summary, the following alternatives can effectively pro-
vide additional revenue to cities and towns impacted by energy
development: prepayment of sales and property taxes; statewide
collection and distribution of property taxes on energy facilities?
state severance taxes; and tax deductions for private sector im-
pact assistance. Increasing the municipal tax base through
annexation of county land is a somewhat less effective alternative
because of uncertainties about the correspondence between addi-
tional tax revenues from the newly-annexed property and the needs
of impacted communities.
(2) What Will these Alternatives Cost?
The economic costs and benefits of changes in the tax struc-
ture appear to be minimal, since these alternatives generally
call for a reallocation of existing tax revenues, rather than an
appropriation of new funds. The highest increase in economic
1Wyoming Industrial Siting Administration, Docket No. WISA-
75-3. See also Valeu, R.V. "Financial Aspects of Monitoring and
Mitigation." Paper presented at the Symposium on State-of-the-
Art Survey of Socioeconomic Impact Associated with Construction/
Operation of Energy Facilities, St. Louis, Missouri, January 1977.
521
-------
costs will likely result if companies are required to prepay sales
and property taxes. The increased costs are incurred as interest
payments by industry when tax assessments are paid before they
are normally due. Additional economic costs are also associated
with state severance taxes and are proportional to the rate of
taxation. At the present time, for example, the economic costs
to industry of a severance tax on coal would be highest in Mon-
tana (30 percent).
The social benefits derived from these policy options could
be quite high. Increases in impact assistance can be used to im-
prove the social infrastructure in impacted communities and
thereby improve the quality of life. If the impacted community
is able to develop a large enough tax base, it will be able to
provide the services and facilities demanded by both new and long-
time residents, thus reducing the costs of dealing with boom-
related social problems such as crime, drunkenness, delinquency,
mental illness, and so forth. Water and sewage treatment plants
are among the public facilities that will benefit from increased
funds made available to impacted cities and towns, and the re-
sulting expansion of plants and equipment could yield identifiable
environmental benefits when fewer and/or more adequately treated
effluents are released into rivers and streams.
(3) Who Bears the Costs, Risks, and Benefits of Changes in the
Tax Structure?
Each alternative that secures a change in the tax structure
is based on the assumption that the costs and benefits of energy
development will be widely distributed. If an energy facility
located near an impacted town is annexed, taxes on the facility
can be used to finance the increased services its workers demand.
The prepayment of property and sales taxes shifts the finance
costs for "front-end" needs from impacted communities to energy
developers. Statewide collection and distribution of taxes on
energy facilities ensures that the costs and benefits of energy
development are spread across the entire state, rather than being
absorbed by a single community or local jurisdiction. A severance
tax on energy resources is passed through to customers; therefore,
residents outside the region where the energy is produced share
in the costs of impact assistance when they purchase power gener-
ated from the coal, oil, gas, or uranium upon which the tax has
been imposed.
Of all the alternatives discussed in this section, the sever-
ance tax raises the most far-reaching questions about equity.
Current tax rates in the eight-state study area range from about
2 percent for oil and gas production in some states to a high of
522
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30 percent on coal production in Montana.1 The wide variation in
the tax rate suggests there are different opinions about what is
a "fair" or allowable rate. One report argues that states in the
Northern Great Plains use the severance tax as an opportunity "to
shift a substantial part of their state tax burden onto coal con-
sumers in other states and coal-producing companies."2 Montana's
severance tax on coal, which is the highest in the U.S., is cur-
rently being challenged by Wisconsin Power and Light Company on
the basis that it is excessive and a burden on commerce.3 However,
officials in Montana describe another side of the problem. Jim
Nybo, a former official of the Montana Energy Advisory Council,
defends the state's 30 percent severance tax on two grounds:
It does two main things. It sets up a structure where we
can let coal development pay for the adverse social and
economic effects that are imposed on our state because of
the development. Second, it sets aside some of the reve-
nues from the one-shot exploitation of coal and invests
it in the future."
Policymakers will have to consider the equity of various policy
alternatives in this category in terms of the severity and dura-
tion of impacts, the taxing and financing structure, of local gov-
ernments which would allow them to meet local needs with local re-
sources, and the national demand for energy. However, the equity
of a particular policy alternative is ultimately a matter of per-
ception. Since perceptions of equity are likely to differ, the
successful implementation of any alternative depends upon the
ability of policymakers to accommodate different perceptions of
equity or offer incentives, inducements, and sanctions to various
stakeholders to get them to accept some level of inequity.
^render, L.D., N. Carlisle, and M.D. Savage. Financial
Strategies for Alleviation of Socioeconomic Impacts of Seven West-
ern States. Denver, Colo.: Western Governors' Regional Energy
Policy Office, 1977. See also Table 9-1.
2Nehring, Richard, and Benjamin Zycher. Coal Development and
Government Regulation in the Northern Great Plains; A Prelim-
inary Report, R-1981-NSF/RC. Santa Monica, Calif.: The Rand
Corporation, 1976.
3"The Fuels Outlook." Electrical World, Vol. 189 (March 1,
1978), p. 49.
^Schneider, Richard, and John S. Gilmore. Report of the
Denver Workshop on State-Local-Federal Relationships in Socio-
economic Impact Assessment. Denver, Colo.: University of Den-
ver, Denver Research Institute, n.d.
523
-------
(4) How Flexible Are the Alternatives?
The policy alternatives for changing state and local tax
structures to increase the amount of revenue provided to impacted
areas can generally deal with growth management problems and
issues in a flexible manner. Municipal annexation of county land
can be applied in any local jurisdiction in the West to broaden
the tax base. This option, as well as the prepayment of sales
and property taxes and the granting of tax credits for private
sector impact assistance, is applied on a site-specific basis;
thus, the design of these policies inherently assures that local
differences will be considered. The remaining two alternatives,
proposing state collection and distribution of property taxes on
energy facilities,, and the imposition of a severance tax, would
be applied uniformly on a statewide basis. Nevertheless, these
two specific alternatives still achieve a high degree of flexi-
bility by distributing funds to .various levels of government and
local communities to mitigate specific impacts. An additional
degree of flexibility is achieved because tax revenues depend
directly on the valuation of a facility or its output; increased
energy development will yield additional revenue, although the
revenues may not accrue until the operations phase begins.
Some specific policy alternatives in this category involve
trade-offs between flexibility and equity. While elimination of
jurisdictional inequities in funding seems to meet the criterion
of equity, this is achieved at the expense of uniformity in tax
structures among the different jurisdictions. For example, muni-
cipal annexation equalizes the tax burden between urban residents
and the rural county in which an energy facility is located, but
it also affects ranchers who may have demands for government
services that are different from those of city residents. The
state collection and distribution of property taxes preserves
both equity and flexibility because it creates a common pool 01
revenue and then distributes it on the basis of local needs.
(5) Can These Alternatives Be Implemented?
The variety of stakeholders involved makes the implementat:_njn
of the policy alternatives for this particular category quite
difficult. Municipal annexation of county lands has almost in-
variably encountered opposition from the county government, which
sees itself losing sovereignty, and from affected residents who
fear they will be required to pay higher municipal taxes without
receiving any municipal services. Because of this opposition,
many states have incorporated in their constitutions the principle
that no land may be shifted between jurisdictions, except with the
consent of the government jurisdiction in which the land is cur-
rently located and the affected landowners. In Wyoming, for
example, landowners must give permission for annexation when the
valuation of the property to be annexed exceeds $100,000. Given
this constraint, it may be difficult for policymakers to change
524
-------
existing annexation procedures unless they are able to persuade
property owners to support annexation, perhaps by offering serv-
ices which they now lack.
Prepayment of sales and property taxes is difficult to imple-
ment at the state level without concomitant federal action. As
noted earlier, private energy developers have little incentive to
pay taxes before they would normally be due because the Internal
Revenue Service currently does not allow companies to take the
full amount of the deduction for the year in which taxes were pre-
paid, and companies will be reluctant to make further prepayment
even when required by law, unless this tax regulation is changed.
State collection and distribution of property taxes on energy
facilities would require changes in long-established taxation
priorities and could be viewed by local governments as an intru-
sion on their power and authority. They would probably have to
be assured that they will receive equivalent aid from the state
in return for relinquishing their prerogative to tax energy facil-
ities .
Tax credits for private sector impact assistance are also
likely to encounter implementation difficulties since they are
viewed by some as special favors or "tax breaks" for business.
It might also be difficult to arrive at an acceptable value for
some services, such as in-kind assistance, furnished by energy
developers.
In comparison to the first four alternatives, the implementa-
tion of state severance taxes on energy resources should pose few
problems, since each of the six states in the study area within
which large-scale resource extraction and processing will occur
already has adopted some form of severance tax. Implementation
concerns would arise primarily from state attempts to increase
the tax rate.
The evaluation of the set of alternatives proposing changes
in state and local tax structures is summarized in Table 9-13.
This summary is intended to organize information about specific
policy alternatives in order to inform policymakers about possible
trade-offs among policy alternatives for providing adequate reve-
nue to energy-impacted communities. In Section 9.4, this category
of alternatives will be compared with another category that would
increase communities' revenues by raising the level of federal
energy impact assistance.
C. Evaluation of Changes in Impact Assistance Programs
This section contains an evaluation and comparison of three
specific policy alternatives to accomplish the general objective
of providing more revenue to impacted towns:
525
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» Special water and sewer grant programs for rapid-growth
areas;
• Distribution of land and mineral payments directly to energy-
impacted cities and towns;
• Increases in federal impact assistance directly to munici-
palities or through the Title V Regional Commissions.
In contrast to the specific alternatives in the previous
section, alternatives to change existing impact assistance pro-
grams would be implemented at the federal level with a variety of
incentives, inducements, sanctions, and institutional arrangements,
For this category, the following general implementation strategies
are considered:
• Changes in eligibility criteria for water and sewer grants
to focus such assistance specifically on rapid-growth pro-
grams and increase the available funds;
• Amendment of distribution procedures for federal land and
mineral payments in the relevant laws;1
• Increase funding for regional commissions and EDA change
revenue sharing criteria to give more assistance to im-
pacted communities.
The achievement of this objective will depend upon the par-
ticular strategy or combination of strategies selected by policy-
makers. Since each of the strategies presented here involves a
federal program it is assumed that the federal government will
have the primary implementation role. However, the presentation
of these specific implementation strategies is not: meant to pre-
clude the consideration of others or the adoption of alternate
assumptions about strategies that might be useful.
(1) How Much Impact Assistance Would these Alternatives Provide?
The three specific alternatives for achieving the general
policy objective of changing federal impact assistance programs
can be quite effective in guaranteeing adequate revenues for
energy-impacted towns in the West. These choices do not depend
on state or local tax bases, but rather on federal appropriation.
The increased federal assistance that can be made available
specifically for energy impacts out of existing and new federal
JPublic Lands-Local Government Funds Act, Pub. L., 94-506, 90
Stat. 2662, 31 U.S.C. 1601 et seq.; Federal Land Policy and Man-
agement Act of 1976, Pub. L. 94-579, 90 Stat. 2743, 43 U.S.C. 1701
et seq.
528
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sources could exceed $150 million annually if all three policies
are implemented.1
Special water and sewer programs could meet the water and
sewage treatment needs of rapid-growth communities by adopting
criteria that allocated funds specifically on the basis of popu-
lation increase. As discussed in Section 9.2.1, over one-half
of the towns impacted by energy development in the West lack either
a water or a sewer system or are at the capacity of their existing
system. A program of special water and sewer grants for rapid-
growth communities could meet these needs if the construction
grant allotments to western states were increased significantly
above the total which they now receive.
Dispensing land and mineral payments directly to the energy-
impacted cities and towns would also be effective in meeting the
needs of those communities. Since these funds currently are
handled by the states, energy-impacted communities must compete
with other towns not affected by energy development for a share
of the revenue, and when the needs of impacted communities are
compared with other state priorities energy impact assistance is
often not sufficient to meet community needs.
(2) What Will these Alternatives Cost?
As mentioned above, the costs of increased impact assistance
could exceed $150 million per year. This cost would be offset by
social benefits deriving from the improved level of services and
facilities, and other social and cultural amenities would increase
residents' satisfaction with the quality of life. This, in turn,
could increase worker productivity by 25-40 percent and reduce
labor turnover and construction delays.2 Since labor turnover,
construction delays, and lowered productivity significantly in-
crease the total costs of an energy facility,3 increases in fed-
eral assistance programs generally would yield economic as well
as social benefits.
1 The minimum figure of $150 million annually reflects the
Carter Administration proposal for impact assistance to energy-
impacted communities. The addition of loan guarantee programs and
other assistance allocated through general revenue sharing or the
Economic Development Administration would increase this total sub-
stantially. U.S., Office of the White House Press Secretary.
"Fact Sheet: Energy Impact Assistance Program." Press release,
May 4, 1978.
2U.S., Department of Energy, Energy Impact Assistance Steer-
ing Group. Report to the President on Energy Impact Assistance,
Draft Report. Washington, D.C.: Department of Energy, 1977, p. 34.
3 Ibid., p. 32
529
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Finally, special water and sewer grant programs for rapid-growth
areas would yield substantial environmental benefits in terms
of cleaner lakes and streams and purer water supplies for energy
development communities. Overall, this category of alternatives
is highly efficient in responding to the needs of energy-impacted
communities in the West.
(3) Who Bears the Costs, Risks, and Benefits of Increases in
Impact Assistance?
Although no strategy to increase federal energy impact assis-
tance is completely equitable, the three strategies to achieve
this alternative compare favorably. The equity of special water
and sewer grant programs will depend on the particular implemen-
tation strategy adopted. If water and sewer grants are provided
to all rapid-growth areas, the existing trend of water and sewer
grants primarily to fast-growing metropolitan suburbs would con-
tinue. On the other hand, if growth criteria are defined to tar-
get assistance to energy development communities outside the met-
ropolitan areas, impact problems could be mitigated.
Distribution of land and mineral payments directly to munic-
ipalities would by-pass the states, causing them to object to the
new policy as inequitable. The increase of federal and regional
impact assistance is the most equitable of the three policy op-
tions, since it involves several levels of government and is most
likely to distribute the costs of energy impacts to consumers out-
side the West.
(4) How Flexible Are the Alternatives?
Federal and regional impact assistance is a flexible option
since the regional commissions and the EDA are able to accommodate
a wide variety of administrative options for impact assistance
and deal with a broad range of impact needs. The amount of
assistance can be increased or decreased among various states
under this' option, depending on specific community needs.
In comparison, the specific alternative to distribute land
and mineral payments directly to towns is somewhat less flexible,
since the total allocation of funds to each state remains the
same. Thus, the federal government cannot shift impact assistance
priorities among states under this option. The functional speci-
ficity of special water and sewer grants makes them the least
flexible of the three options.
(5) Can these Alternatives Be Implemented?
Special programs to provide water arid sewer grants to rapid-
growth areas will likely be the most difficult specific policy
alternative to implement. However, this will depend on the
530
-------
particular strategy that is employed. If eligibility criteria
restrict special grants to nonmetropolitan areas, stakeholders
such as governments of rapid-growth metropolitan suburbs who now
receive the majority of such grants are likely to make strenuous
objections. This constraint on implementation can be reduced
or eliminated by making grants available in metropolitan areas as
well, but that may defeat the purpose of the option as an energy
impact assistance alternative.
The distribution of land and mineral payments to impacted
municipalities will be opposed by the states, counties, and school
districts that now control those funds. Thus, there will be
significant constraints on the implementation of this specific
alternative. Federal or regional impact assistance implementation
will be problematic if the Title V regional commissions are used
to distribute aid, since commissions for the nonwestern states
will likely expect to receive comparable increases in funding for
their programs.
Table 9-14 summarizes the preceding evaluation of the cate-
gory of alternatives for increasing federal energy assistance to
impacted municipalities in the West. This summary attempts to
show policymakers the mix of costs and benefits involved in
choosing among various alternatives. Officials have access to
several combinations of policies and implementation strategies
that will increase impact assistance. In section 9.4 this cate-
gory of alternatives is compared with another set of alternatives
that proposes changes in state and local tax structures.
9.4 SUMMARY AND COMPARISON OF GROWTH MANAGEMENT ALTERNATIVES
Communities in the West impacted by nearby energy development
activity will experience severe shortages of local facilities and
services in the early stages of the development. This chapter
identified and described a number of alternatives and implemen-
tation strategies to alleviate the problems caused by rapid growth.
These alternatives and strategies are designed to achieve one of
two major objectives: to meet the immediate needs of impacted
communities for adequate financial assistance to provide needed
local services and facilities, and to assure that planning assis-
tance and adequate and timely planning information are provided
to impacted communities. Alternatives and strategies addressing
the first objective were the principal focus of attention in this
chapter, and are the subject of this summary and comparison.
Two categories of alternatives for achieving the objective
of providing timely financial assistance were analyzed: changes
in the tax structure and increases in impact assistance. Table
9-15 summarizes the comparison and evaluation of these two cate-
gories and identifies the trade-offs inherent in making specific
policy choices.
531
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9.4.1 How Much Impact Assistance Would these Alternatives
Provide?
Both categories of alternatives have the potential for in-
creasing revenues available to impacted communities. However,
methods of increasing impact assistance through existing or new
programs promise to be more effective in supplying the amounts
of assistance needed. Changes in the tax structure—particularly
prepayment of taxes by industry—are the most direct and effective
means of dealing with the "front-end" problem of impacted communi-
ties and providing them with financial assistance when they need
it. Both categories of alternatives will improve the distribution
of financial assistance by providing funds directly to the juris-
disctions that must deal with the problems of rapid growth.
9.4.2 What Will these Alternatives Cost?
The economic costs of increasing impact assistance will be
greater than those of changing the tax structure since the latter
primarily involves reallocation of existing financial resources.
Economic and social benefits will accrue to impacted communities
under both categories of alternatives,. Risk of loss or failure
will be greater under some of the tax structure alternatives
(e.g., prepayment). Special water and sewer grants (under the
category of increased assistance) promise the greatest environ-
mental benefits. No significant environmental costs are apparent.
9.4.3 Who Bears the Costs, Risks, and Benefits?
The equitable distribution of the costs, risks, and benefits
of energy development in the West is primarily a function of the
degree to which the direct beneficiaries of such activity also
bear a portion of the attendant costs. It generally appears that
alternatives to change the tax structure are more likely to ensure
that the direct beneficiaries of energy development share in the
costs of the impacts. However, for each of the specific growth
management alternatives, policymakers will have to weigh a number
of considerations in determining what is the most equitable policy,
The state severance tax alternative, for example, reveals the
difficulty involved in making judgments of equity in this policy
analysis. Montana has imposed a 30 percent severance tax on coal
to defray the impact of development and the future; effects of
resource depletion. While state officials defend the tax as a
responsible public policy, eastern utilities argue that the 30
percent rate is excessively high. It seems likely that the res-
olution of this, and other questions of equity will depend pri-
marily on the values, preferences, and perspectives of individual
policymakers, as well as the context of specific energy develop-
ment situations.
536
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9.4.4 How Flexible Are the Alternatives?
Increases in federal and regional impact assistance programs
appear to be more adaptable to the variety of impact needs of
western communities than changes in the tax structure, although
the latter can be designed to meet unique needs. Both categories
of alternatives are capable of being easily adjusted to specific
situations and to use with other alternatives.
9.4.5 Can these Alternatives Be Implemented?
Changes in existing federal impact assistance programs will
be easier to effect since several of these specific alternatives
involve only incremental changes in existing federal policy. For
this category of alternatives, the implementation strategies
chosen will, in large part, determine the acceptability of a
particular policy choice. If special water and sewer grant pro-
grams for rapid-growth areas include fast-growing metropolitan
suburbs, they can probably be implemented quite easily. On the
other hand, if the availability of these special grants is re-
stricted to nonmetropolitan areas, the suburbs are likely to
raise strong objections. The choice of strategies will also af-
fect the implementability of the policy alternatives calling for
federal and regional impact assistance. If impact funds are pro-
vided only to regional commissions in the West, other regional
commissions may also demand funds.
The transfer of various impact assistance functions to higher
levels of government generally involves greater uniformity in
administration and less flexibility and control over revenue
sources by state and local governments. Thus, several of the
alternatives for changing jurisdictional control over revenue
sources also could potentially lead to political problems, since
state and local governments view the loss of control as a reduc-
tion in their flexibility to address energy impacts, and they
also see their authority threatened. For example, counties are
likely 'to resist the municipal annexation of rural land, since
that act would infringe upon their sovereignty. Local governments
will also likely oppose state collection and distribution of pro-
perty taxes on energy facilities, since this preempts their
ability to set local taxing and spending priorities. State gov-
ernments will feel threatened if land and mineral payments are
made directly to local governments, rather than to the states,
since the state has traditionally had the authority to decide how
these funds would be allocated between state and local governments,
Although this summary and comparison of two categories of
growth management alternatives identifies for policymakers the
range of problems and issues involved in alleviating the socio-
economic impacts of energy resource development in the West, it
is also apparent that this analysis cannot resolve all of the
537
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questions that are likely to be raised in making choices to
address these problems and issues. This is true in part because
important information is lacking. For some specific alternatives,
there is too little current experience to judge the effect a
policy will have on energy impacts. This lack of information
affects what alternatives are evaluated as well as how they are
evaluated.
In addition, this policy analysis is affected by the fact
that much experience with policy alternatives is unique to par-
ticular areas; therefore, few generalizations can be made that
are applicable to other energy development sites in the West.
Finally, policy analysis of growth management problems and issues
is pervaded by uncertainty, both about the identification of the
impacts of energy development and about how information can be
gathered on such impacts. Uncertainty about the nature of socio-
economic impacts makes it difficult for policymakers to predict
and plan for population growth from energy development and to
manage local public service needs resulting from such growth.
538
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CHAPTER 10
CAPITAL AVAILABILITY
EXECUTIVE SUMMARY
Expanded western energy production will require an unprece-
dented level of capital investment in the eight-state western re-
gion. In order to provide the capital necessary for extraction,
conversion, and transportation facilities, several uncertainties
will have to be reduced or resolved; these include technical, eco-
nomic, regulatory, and institutional factors.
Impacts
In order to produce about 125 quadrillion British thermal
units (Btu's) (125 Q's) nationally, about 42 Q's will need to be
produced from the eight-state region by the year 2000, according
to the modified Stanford Research Institute Low Demand case used
in this study. This western production will require a capital
investment of about $130 billion (1975 dollars) from 1975 through
2000. This amount is less than 3 percent of the total national
investment projected by the year 2000. Thus, western energy re-
source development probably will not be so large as to deplete
noticeably the national supply of financial resources. However,
the projected capital need is unprecedented within the West. By
comparison, total private investment in equipment and structures
in place in Federal Region VIII, which includes all of the eight
states except Arizona and New Mexico, was only $31.2 billion as
of 1973.
Individual energy projects are separate investments and each
must prove its commercial feasibility to attract investment capi-
tal. Many energy facilities planned for the West, especially ad-
vanced conversion technologies, require an investment over $1 bil-
lion each (Table 10ES-1). Such large facilities are equivalent
to almost the entire fixed investment of many large energy devel-
opment firms. The risk involved in such large facilities has a
large influence on the availability of financing for such projects.
The Policy Context
Capital availability for energy development could be limited
by several uncertainties and risks. Risks associated with large
539
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TABLE 10ES-1: CAPITAL REQUIREMENTS Ff« ENERGY FACILITIES
(millions of 1975 dollars)
FACILITY
Mines
sUrface Coal (12 MMtpy)
Underground Coal
(3.4 MMtpy)
Uranium Mining and Milling
(1,000 mtpy)
Conversion
Electric Power (3,000 MWe)
Gasification (250 MMcfd)
Synthoil
(100,000 bbl/day)
Oil Shale
( 100,000 bbl /day)
MATERIALS
AND
EQUIPMENT
64
35
8
459
469
1 , 0 1- 5
4 ,4
LABOR
AND
MISCELLANEOUS
35
21
16
4t>9
369
649
381
INTEREST
(construction)
30
20
6 '
351
219
695
296
TOTAL
129
76
30
1, 169
1,057
2,409
1,111
MMt ry - million tons per year M^cfd -" million cubic feet per day
mtpy -- metric tons per year bhl 'da> -- barrels per day
MWe = meqawatt-electric
energy projects can raise the interest rate necessary to attract
investment to a level at which the project becomes economically
infeasible. The most substantial risks affecting western energy
resource development appear to be:
• Technical; including uncertain performance of new tech-
nologies at commercial scale, relatively low investment
in research and development by the energy industry, and
the capital investment required for large commercial-sized
plants.
• Economic; including the world energy market arid its ef-
fect on the economic viability of advanced energy tech-
noligies and federal policies concerning energy pricing.
In addition, uncertainty over federal air quality and
fuel-switching policies makes demand for western coal
and investment in western energy development relatively
risky.
• Governmental and institutional uncertainties; including
the large number of regulatory and administrative approv-
als required for energy facilities; the imposition of
severance taxes on energy minerals; and the degree of
540
-------
control which Indian tribes might have on energy devel-
opment. These factors add to the time or cost of energy
development, thereby increasing financial risk to inves-
tors.
In response to these risks, energy developers and financial
institutions have developed various strategies. In the electric
utility industry, long-term fuel supply contracts and power-pooling
have become commonplace to assure a reliable electricity supply.
Gas utilities have reserves dedicated to them by producers and
require long-term "take of pay" contracts with distributing com-
panies. Financial institutions are moving increasingly to project
financing, which attempts to assure that projects and not just
corporations are financially sound. Thus, joint ventures and con-
sortia are becoming common in western energy development in an
attempt to keep the risks low enough to the individual companies
and to maintain a financially attractive project.
In addition to the risk considerations in western energy
projects, concern over the lack of competition and monopoly prac-
tices in western energy development have been raised. Since large
oil companies are acquiring large holdings of coal and uranium
reserves in the West, and little, if any, production has taken
place, large firms have been accused of trying to close off com-
petition from new energy forms by holding other energV resources.
Energy developers generally have the view that only large, diver-
sified firms have enough capital and technical expertise to do
the job .131 VvO«tern energy development.
Alternative Policies
Given the uncertainties of western energy development proj-
ects, the financial risks are usually greater than those of other
investment opportunities, which in turn raise the cost of obtain-
ing flrancinl hacking for western ventures. Hence, one policy
objeci-.v/e i~ lo assure the availability of investment capital for
western energy development. To meet this goal, three categories
of policy alternatives are identified:
* Provide financial subsidies to developers;
* Improve regulatory environment;
R" Promote new sources of investment.
Several specific alternatives are available for each of these
Categories (Table 10ES-2). For example, financial subsidies in-
clude tax preferences and price guarantees. Regulatory changes
produce greater certainty about pricing and permitting. The
price regulation/deregulation options differ from subsidies in
that the energy market would determine the actual price level, in
contrast to a price "floor" guaranteed by the government regardless
541
-------
TABLE 10ES-2: CAPITAL AVAILABILITY ALTERNATIVES
OBJECTIVES
Assure adequate
capital for western
energy development
CATEGORIES OF
ALTERNATIVES
Provide financial
subsidies to devel-
opers
Improve regulatory
environment
Promote new
sources of invest-
ment
SPECIFIC
ALTERNATIVES
Tax preference
Price guarantees
Expedite siting and
perrru t process
Deregulate oil and gas
pr: ces
Permit rolling-in for
synthetic fuels
Cor 51, mer risk assump-
tion for energy I'coj-
oct s
Encourage new parti-
cipants by improving
the leasing system
of the market price. Both approaches could reduce risks to in-
vestors by eliminating uncertainty over future energy prices. The
time-consuming energy facility siting and permitting process is
responsible for a large share of the cost of new energy facilities.
An expedited permit process could make the length of time involved
more certain and reduce the financing (interest) cost of a project.
New sources of investment could bring different participants
into the financing of western energy development. The federal gov-
ernment, Indian nations, energy consumers,, and small firms each
could provide an increased amount of investment in western energy
development. These new sources might be experimental within se-
lected situations, although none would be able to substitute com-
pletely for the traditional participants in western energy devel-
opment. Utility consumers could assume a major portion of the
economic risk of new projects if project costs could be recovered
in consumer energy rates. A similar procedure, called an "all-
events tariff" on customer bills, has been proposed as a means
for supporting coal gasification projects. Small firms could be
encouraged to participate in western energy development through
special financial subsidies, such as those discussed generally
above, and by special regulations and procedures for small firms
to acquire federal energy resource leases.
542
-------
Findings
Financial subsidies can relieve many of the risks associated
with western energy resource development. Price guarantees are
particularly appropriate for removing investor risks by transfer-
ring market-price uncertainties and liability to the government.
Tax preferences, especially investment tax credits, reduce capi-
tal exposure risks by allowing the developer to recapture part of
the capital investment almost immediately.
Financial subsidies could result in large governmental ex-
penditures, depending on the duration of the guarantee and the
relationship between the market price and guaranteed price. For
example, one study estimates that a price guarantee program for a
50 thousand barrel per day shale oil plant could cost the govern-
ment a net present value of $150 million (for a 15 percent rate
of return) to $625 million (for a 20 percent rate of return) over
a 20-year period, assuming a constant price of world oil. Govern-
ment liabilities to support synthetic coal facilities could also
be quite large. Current estimates for coal gasification suggest
prices would have to be guaranteed at about $1.30 (per million
Btu's) over the price of Alaskan gas and about $3.25 over the
price of domestic gas. Thus a 250 million cubic foot per day gas-
ification plant would require a subsidy of about $110 million,
roughly the entire annual operating cost for such a facility.
Taxpayers would ultimately pay for governmental subsidies.
In one sense, this represents an equitable sharing of costs and,
over a long period of time, an equitable sharing of the benefits
of technological improvement and, perhaps, reduced dependence on
foreign energy sources. However, price guarantees and tax pref-
erences would almost certainly benefit larger companies, since
they reduce investment risks but do not help small firms raise
the necessary initial capital. Financial subsidies will continue
to face substantial opposition from many public interest groups
and national legislators, since they are viewed as support to
"special interests" such as oil companies.
Alternatives for promoting new capital sources could be used
in conjunction with financial subsidies to encourage investment
by smaller firms. Resource leasing options may stimulate invest-
ment in the long run by making current regulatory procedures more
orderly. In the short run, development may be impeded as private
firms and public regulators adjust to new "rules of the game."
In some cases, firms may have to pay higher royalties, which would
discourage some development.
Consumer risk assumption alternatives, such as an all-event
tariff, shift most financial risks away from developers and increase
consumer costs, at least over the short term. However, this alter-
native is intended to be applied on an individual project basis in
543
-------
order to simulate new technological developments, with the goal
of self-supporting operations over the longer term.
Conclusion
Perhaps the capital availability problem is best illustrated
by the fact that despite the 1973 Arab oil embargo and subsequent
efforts by government to encourage exploitation of domestic energy
resources, not one commercial oil shale or coal synthetic fuel
plant has been built. Such facilities require an investment on
the order of $1 billion per plant, equivalent to the entire fixed
investment of many large energy firms., So far, no company has
been willing to accept such a risk in the face of the technical,
economic, and regulatory uncertainty involved. If government
wishes to increase domestic energy production by utilizing these
newer technologies, then it appears that some type of government
program, such as those discussed here, will be necessary to reduce
the risks involved.
544
-------
CHAPTER 10
CAPITAL AVAILABILITY
10.1 INTRODUCTION
Expanding western energy production to meet national needs
will require an unprecedented level of capital investment in the
eight-state study area. Between 1975 and the year 2000, energy
extraction, conversion, and transportation facilities could re-
quire an investment of up to $116 to $130 billion (in 1975 dol-
lars) .l Although this sum is less than 3 percent of the invest-
ment capital expected to be available nationally during this time
period, there is serious question as to whether this amount of
capital can be made available for western energy development at
the necessary rate and scale. Several major factors affect the
availability of this capital, including technological uncertainties
associated with large-scale synfuels conversion facilities, market
uncertainties related to energy pricing, the economic interests
of large energy firms, and a restricted and unstable regulatory
situation. These factors can pose two kinds of obstacles for
western energy resource development: financial risk and monop-
olized energy markets.
A major condition for capital availability is that private
sector investors be convinced that the energy projects proposed
amount corresponds to the adjusted Low Demand Case for
western energy development described in White, Irvin L., et al.
Work Plan for Completing a Technology Assessment of Western Energy
Resource Development.Washington,D.C.:U.S.,Environmental Pro-
tection Agency,1978, pp. 8-11. This case calls for production
of 1.32 billion tons of coal, 38 thousand tons of yellowcake per
year, and 2.5 million barrels of shale oil per day by the year
2000 in the eight-state study area.
2Assuming long-term trends persist, $4,710 billion dollars
would be available for new plant and equipment expenditures over
the period 1976-2000, of which western energy would represent
about a three percent share. See White, Irvin L., et al. Energy
From the West: A Progress Report of a Technology Assessment of
Western Energy Resource Development. Washington, D. C.: U.S.,
Environmental Protection Agency, T9~77, Vol. II, pp. 847-63.
545
-------
for the West will be at least as profitable and secure as other
investment opportunities. In financial markets, uncertainty
per se has economic consequences. Investors can usually be
brought into high-risk ventures only if enticed by "risk premiums"
which offer a higher rate of return than the investor can expect
from more secure investments. A further obstacle to western
energy development is a tendency toward monopoly or oligopoly
among large, diversified energy firms. Oil and gas companies have
acquired substantial portions of other energy resources, such as
coal and uranium. This raises concern over the possibility that
by controlling raw materials and process technologies these firms
could control future energy supply and prices. On the other hand,
there is also the opinion that these firms are the only energy
investors with sufficient capital and expertise to commercialize
technologies for synthetic fuels from coal and oil shale.1
This, chapter identifies some of the barriers to capital
availability, including the risk and lack of competition dis-
cussed above. The next section details the impacts of western
energy development on national capital markets and the problems
and issues surrounding capital availability. The final section
identifies and evaluates some policy alternatives for dealing
with the problems and issues related to making capital available
for western energy resource development.
10.2 CAPITAL AVAILABILITY PROBLEMS AND ISSUES
10.2.1 The Capital Availability Impacts of Western Energy
Resource Development
The major capital availability questions addressed in this
chapter are: (1) what total capital investment will be required
for western energy development and (2) will national capital
markets be capable of meeting this requirement?2
1See Sanger, Herbert, Jr., and William E. Mason. The Struc-
ture of Energy Markets; A Report of TVA's Antitrust Investigation
of the Coal and Uranium Industries, 3 vols. Knoxville, Tenn.:
Tennessee Valley Authority, June 1977.
2White, Irvin L., et al. Energy From the West; A Progress
Report of a Technology Assessment of Western Energy Resource De-
velopment. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Chapter 12; and White, Irvin L., et al. Energy From
the West: Impact Analysis Report. Washington, D.C.: U.S., En-
vironmental Protection Agency, forthcoming.
546
-------
The Low Demand Case of the Stanford Research Institute (SRI) -
Gulf interfuel competition model was taken as a plausible scenario
for the regional scale of development.1 This case calls for the
production of 1.3 billion tons of coal and 38 thousand tons of
yellowcake per year and 2.5 million barrels of shale oil per day
by the year 2000 within our eight-state study area.2 To determine
the capital investment required, capital cost estimates were made
for the major facilities that would be required in the eight-state
region to produce this quantity of energy.3 This resulted in an
estimated total capital cost of construction over the first 25
years of $128 billion (Table 10-1) . In terms of national invest-
ment in all industries, this is less than 3 percent of new plant
and equipment projected for installation by the year 2000. These
estimates indicate, therefore, that western energy resource devel-
opment will not. have a large effect on the availability of finan-
cial resources nationally.
Nevertheless, the projected capital need of $128 billion is
unprecedented in scale for the study area. By comparison, total
equipment and structures owned by private business (including
farms) in Federal Region VIII (Colorado, Montana, North Dakota,
South Dakota, Utah and Wyoming) was only about $31.2 billion as of
1973. "* Therefore, energy development can be expected to induce a1
large expansion in the western economy. At least in the initial
stages, most of the manufactured equipment and financial resources
going to western energy will come from outside the region.5
JCazalet, Edward G., et al. A Western Regional Energy Devel-
opment Study: Economics, Final Report. Menlo Park, Calif.:
Stanford Research Institute, 1976, Vol. 1.
Modifications to the Low Demand Case were made, as described
in White, Irvin L., et al. Work Plan for Completing a Technology
Assessment of Western Energy Resource Development. Washington,
D.C.: U.S., Environmental Protection Agency, 1978, pp. 8-11.
These modifications lower the level of oil shale and add geother-
mal development.
3The cost data were taken principally from Carasso, N., et al.
The Energy Supply Planning Model, 2 vols. San Francisco, Calif.:
Bechtel Corporation, 1975.
''Federal Region VIII corresponds to our study area except
that it does not include the states of New Mexico or Arizona.
Data estimated from U.S., Department of Commerce, Bureau of the
Census. The Statistical Abstract of the United States. Washing-
ton, D.C.: Government Printing Office, 1975, Table 675 and Sec-
tion 33.
5The new Bucyrus-Erie plant for manufacturing draglines in
Pocatello, Idaho, may be indicative of a growing westward shift
of mine equipment manufacturers.
547
-------
TABLE 10-1:
POTENTIAL NEW PLANT INVESTMENT IN WESTERN ENERGY
(billions of 1975 dollars)
ENERGY DEVELOPMENT
ACTIVITY3
Gasification
Oil Shale
Mine-Mouth Power
Surface Mining
Transportation
TOTAL
National new plant,
all industries
Western plant as
percentage of new
plant nationally
1976-
1980
0
.3
7.6
1.7
5.1
14.7
648
2.26
1981-
1985
.7
1.6
3.8
1.7
4.1
11.9
770
1.54
1986-
1990
4.9
3.2
2.5
2.0
4.8
17.4
914
1.90
1991-
1995
13.8
7.0
1.2
2.6
6.5
31.1
1086
2.86
1996-
2000
23.7
16.1
1.2
3.3
8.7
53.0
1289
4.11
1976-
2000
43.1
28.2
16.3
11.3'
29.2
128.1
4707
2.72
This level of energy development corresponds to the modified Stanford Re-
search Institute Low Demand Case, calling for production of 1.3 billion tons
of coal and 38 thousand tons of yellowcake annually and 2.5 billion barrels
of shale oil per day by the year 2000 in the eight-state region. See White,
Irvin L., et al. Work Plan for Completing a Technology Assessment of Western
Energy Resource Development. Washington, D.C.: U.S., Environmental Protec-
tion Agency, 1978, pp. 8-11.
New plant and equipment expenditures assumed to be 7.8 percent of Gross
National Product, which is assumed to grow by 3.5 percent per year. The
figure of 7.8 percent is the average from 1966-1975, as reported in the
"New Plant and Equipment Expenditures." Survey of Current Business. Wash-
ington, D.C.: U.S., Department of Commerce, various issues.
From the perspective of the national economy, money markets
can easily finance western energy development at this scale.
Therefore, this study has focused on the question of whether west-
ern energy projects are likely to be able to obtain sufficient
capital. This is largely a question of the commercial viability
of particular western energy development projects. Although many
investors could invest in energy development, they are not likely
to do so unless they expect the ventures to be at least as pro-
fitable and/or as secure as other investment opportunities.
Facility size is a key determinant of how well the financial
risks can be handled. Initial studies indicate that the unit cost
548
-------
of conversion facilities will be a decreasing function of plant
size.1 This would give an economic advantage to larger plants.
The capital costs of various facilities are estimated in Table
10-2. These facilities are large compared to current average
practice (and some don't exist at any commercial scale), but
these sites are expected to be within the range of possibility
during the time horizon of this study. As noted in the table,
conversion facilities are likely to cost over $1 billion each.
Such large facilities require a capital investment out of the
teach of many would-be developers. Table 10-3 lists a sample of
firms which have made various degrees of commitment to western
energy development. A $1 billion project would be approximately
the entire fixed investment of many of these firms. Thus, the
performance of these facilities would have a strong influence on
the entire company, and pose a substantial financial risk.2
The next section discusses the political and regulatory con-
text of capital availability for western energy development. Two
topics are given emphasis: financial risk and market competitive-
ness.
10.2.2 The Context of Capital Availability Issues in the West
A. Financial Uncertainties
The major risks facing energy developers can be classified
as technical, economic, governmental, and institutional. Tech-
nical risks include equipment failure and operation problems, as
well as unforeseen problems with new technologies such as syn-
fuels plants. Economic uncertainties, such as labor disputes and
trouble with financing, also include uncertainties about the price
competitiveness of synthetic fuels with oil and gas. Governmental
and institutional uncertainties include regulations and require-
ments that may change during the course of a project, legal chal-
lenges by opposition groups, and lead times for complying with
federal, state, and local procedures. These sets of factors are
presented in Table 10-4 as they affect power plant construction.
Their effects on synthetic fuels plants are as yet unxr.own, but
are likely to be larger for these new technologies. The three
^.S., Federal Energy Administration. Project Independence
Blueprint Final Task force Report—Synthetic Fuels from Coal.
Washington, D.C.: Government Printing Office, 1974, p. 38.
2A rule of thumb for the size of individual investments is
that they should be no more than 40-50 percent of a firm's assets.
The Alcan pipeline accounts for about 40 percent of its backers'
assets and is considered to be about as large as can be justified.
"Financing: The Real Test for Alcan Pipeline." Business Week,
November 28, 1977, pp. 102-4.
549
-------
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types of risks are discussed below with emphasis on synthetic
fuels facilities.
(1) Technical Uncertainties
Technical uncertainties are magnified for new technologies,
such as oil shale retorting and coal gasification. These tech-
nologies are still untested at a commercial scale, and the con-
sequences of unforeseen problems are further enhanced by the large
size of the facilities needed for commercial viability.
The capital intensity and large size of conversion facilities
result in a large capital investment requirement, often an in-
vestment which, as noted earlier, exceeds the total assets of some
developers. As one analyst has stated, "No longer can an oil
company or utility routinely budget these increments, and even the
best-heeled diners at the Petroleum Club will hardly feel their
manhood threatened if they respectfully decline to reach into their
jeans for a one-eighth share of such a staggering total [invest-
ment] . Ml
The federal government shares development risks with the
private sector on new energy technologies by funding a large
amount of energy research. The $4.245 billion budget proposed
for research by the Department of Energy (DOE) for fiscal year
(FY) 1979 represents 15.2 percent of the total federal research
effort. The only department with a larger research and develop-
ment budget is the Department of Defense.2
DOE's new organizational structure recognizes the progression
of innovation from basic research through commercialization. Basic
research is conducted in the Office of Energy Research, and pro-
jects on specific supply technologies are developed in the Office
of Resource Applications or the Office of Conservation and Solar
Applications. A Research and Development (R&D) Coordination Coun-
cil is to achieve coordination among the various programs.3
Federal support will probably be shifting more toward basic
research since this is an area in which business underinvests
^telzer, Irwin. "Capital Requirements for Energy Develop-
ment in the Western States Region." Paper presented at the
National Conference on Financial Requirements for Energy Devel-
opment, Albuquerque, New Mexico, October 30, 1975.
2Greenberg, Daniel. "New R&D Budget: A Boost But No Bonanza."
Science and Government Report, Vol. 8 (February 1, 1978), p. 2.
3Bachman, W.A. "DOE Takes Command of U.S. Petroleum Destiny."
Oil and Gas Journal, Vol. 75 (October 3, 1977), pp. 47-52.
553
-------
because the payoff is too far in the future and the output is
more useful to society as a whole than to individual companies.1
Moreover, progression toward commercialization requires perfor-
mance evaluations at increasingly larger scales, making commercial
projects more suited to joint public-private ventures.
There are still many risk factors even in the later stages
of development. Not the least of these are the increasingly lar-
ger facilities--from bench to pilot to demonstration models--
which require larger concentrations of capital. Federal efforts
appear to be concentrated on reducing technical uncertainties early
in a technology's development. Economic and governmental uncer-
tainties are most critical at the commercialization stage.
(2) Economic Uncertainties
The economic uncertainties facing western energy developers
are those which can alter demand conditions. The uncertainties
include the world energy market, federal and state regulatory
commissions, and national energy and environment-oriented fuel
policies. Although each of these has strong institutional fea-
tures, they are grouped together here because they are determi-
nants of business climate rather than of specific projects.
Organization of Petroleum Exporting Countries (OPEC) prices
for a barrel of oil are now the international energy-pricing yard-
stick. Since these prices are well above OPEC's production costs,
this yardstick price could be lowered by the cartel or if the
cartel disintegrated. While this would benefit consumers, it
could be costly for investors in energy developments which have
a high production cost, such as in coal gasification and oil shale
developments. The uncertainties over prices make investors reluc-
tant to develop new energy technologies despite apparent profit
opportunities.
Federal regulation of natural gas prices has considerable
effect on the prices paid by consumers. The Federal Energy Re-
gulatory Commission (FERC) determines prices to be charged for
interstate sales of natural gas, and also decides whether new
transmission facilities are needed.2 Current proposals to change
regulatory procedures or to deregulate natural gas prices by
1"Major Excerpts from Frank Press Briefing." Science and
Government Report, Vol. 8 (February 1, 1978), pp. 3-4.
2The Natural Gas Act, Pub. L. 75-688, 52 Stat. 821, 15 U.S.C,
§ 717, established federal regulation of gas; and the Department
of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565, trans-
ferred it from the Federal Power Commission (FPC) to the FERC.
554
-------
19851 could substantially change the competitive viability of
synthetic gas made from coal. As sources of easily exploitable
gas have become scarce in recent years, pipeline companies have
responded by seeking supplemental sources such as imports by pipe-
line from Canada and Mexico, imports in the form of liquefied
natural gas (LNG), and synthetic natural gas (SNG). These have
come only at much higher costs than fuels from conventional
domestic sources. This has raised difficult pricing issues for
the FERC. The traditional pricing method had been to "roll in,"
or average together, the costs of all sources to a pipeline com-
pany. With the advent of expensive, supplemental sources in 1972,
the Commission switched to an incremental method of pricing.
Under this system, users of the new gas pay the full cost of the
new gas.2 Although this policy has since been nullified, by this
order the Commission signaled its intent to (a) discourage the
use of high-cost supplements, (b) give incremental users an incen-
tive to seek alternative sources of energy, and (c) put the costs
on those who receive the benefits.3
These considerations will apply to western energy development
in the case of SNG. FERC has jurisdiction over coal gasification
facilities through the pricing of SNG. For example, when consid-
ering certification for a new pipeline, the Commission may attach
conditions limiting the price paid for SNG sources feeding that
pipeline.4 Recent proposals by DOE could directly improve the
viability of the first commercial coal gasification plant. In
addition to rolled-in pricing, the proposals include provisions
to recover the investment through higher consumer rates if the
project is not completed or is abandoned. Thus, an "all-events
tariff" would have consumers guarantee the plant through higher
bills.5 Rolled-in pricing, in particular, could make SNG attrac-
tive since pipeline companies could spread the extra cost of the
comingled gas among all their customers. Similar stimulation '
could make oil shale development attractive. Shale oil prices
have always been projected to be above market oil prices (see box
entitled "Shale Costs Keep Rising"). This type of federal
1"Conferees Accept Gas-Compromise Bill." Oil and Gas
Journal, Vol. 76 (May 29, 1978), p. 45.
2FPC Order No. 622, June 28, 1972.
3Columbia LNG Corp. v. FPC. 491 F. 2d 651 (1974).
4As was done in Transwestern Coal Gasification Co., FPC
Opinion No. 728, April 21, 1975.
5"DOE Backs First Coal Gasification Plant." Oil and Gas
Journal, Vol. 76 (June 12, 1978), p. 22.
555
-------
insurance or guarantee indicates
that the federal government ac-
tually intends to promote syn-
thetic fuel development.
State utility commissions
have jurisdiction over intra-
state markets, which are rela-
tively more important in the
case of electric utilities.
Authorizing legislation has not
spelled out pricing formulas in
any detail, so that courts have
given state commissions wide
latitude, subject only to the
standard that "the return to
the equity owners should be
commensurate with returns on
investments in other enter-
prises having corresponding
risks."1 In interpreting such
guidelines, most utility regu-
lators seem to have concluded
that shortages and blackouts
are less tolerable to consumers
than higher prices. The
Supreme Court's standard in
the Hope case also gives sup-
port to a risk-minimizing
approach, emphasizing "success-
ful operation," "financial
integrity," and "attracting
capital."2
SHALE COSTS KEEP RISING
Ir 1970, a Cabinet task force
estimated that shale oil could be
produced for about $4 a barrel; In
1973, estimates were made of $5,60;
in 1974 the cost was figured at
$6.80; in 1975 estimates ran in the
neighborhood of $15. Superior Oil
Company now claims that Number 6 o:l
can be produced for no more than
$15/barrel, but the economics depend
on credits being assumed for other
products being recovered from the
ore. Superior wants to go ahead
with a 13,000 barrel/day plant, but
has been held up since 1970 by nego-
tiations for a land swap with the
Bureau of Land Management.
Upon completion of Interior Depart-
ment approvals, 7 to 9 years would
be needed to bring the plant on line.
•—Weidenbaum, Murray, & Reno Harnish.
Government Credit Subsidies for En-
ergy Development. Washington, D.C.:
American Enterprise Institute for
Public Policy Research, 1976, p. 6;
and Bureau of National Affairs.
"Interior Policy, EIS Delay New Oil
Shale Demonstration Plant." Energy
Users Report, Current Report No.~190
(March 31, 1977), p. 16.
Two other significant demand uncertainties affect the level
of western coal development. Some recent policies have decreased
the attractiveness of western coal as a means for meeting air
quality standards. The 1977 Clean Air Act Amendments, for example,
require that all coal-fired facilities, regardless of the sulfur
v. Hope Natural Gas Co., 320 U.S. 605 (1944). In this
case, the Supreme Court interpreted ratemaking sections of the
Natural Gas Act.
2Ibid.
556
-------
content of the coal burned, be equipped with the "best available
control technology" for removing sulfur oxides from flue gases.1
This policy could reduce the demand after 1990 for Northern Great
Plains coal to only half of what was anticipated.2 The Environ-
mental Protection Agency (EPA) has not yet developed regulations
under the new act, so some ambiguity about the final requirements
and effects remains.3 This uncertainty makes investment in
western coal mines more risky than had previously been the case.
The second policy that affects western energy development is
mandatory fuel-switching. Under the Energy Supply and Environ-
mental Coordination Act of 1974 ** (ESECA) and amendments adopted
by the energy conference committee in November, 1977, certain
major fuel-burning installations are prohibited from using natural
gas or petroleum as their primary energy source. The purpose is
"to foster greater national energy self-sufficiency by requiring
certain... installations... to use indigenous coal and other fuel
resources in lieu of natural gas or petroleum.5
ESECA would seem to have significant potential for increasing
the demand for coal, but, after three years on the books, it has
actually induced very little fuel switching.6 Even though coal
prices have fallen while oil prices have risen (during 1974-1977),
oil-fired power plants can still be cheaper to own and operate
than coal-fired facilities. In these cases, utilities have gone
to court to oppose conversion orders.
Opposition has also come from other federal agencies. For
example, at the request of the EPA the Federal Energy
!clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
685.
2Krohm, G.C., C.D. Dux, and J.S. Van Kuiken. Effect on Re-
gional Coal Markets of the "Best Available Control Technology"
Policy for Sulfur Emission, National Coal Utilization Assessment.
Argonne, 111.: Argonne National Laboratory, 1977.
3See Chapter 6 on air quality for an expanded explanation
of this uncertainty.
^Energy Supply and Environmental Coordination Act, Pub. L. 93-
319, 88 Stat. 246, as amended by Pub. L. 94-163, 89 Stat. 871.
5Quoted in "Energy Act Coal Conversion Proposals: A Summary."
Coal Industry News, Vol. 1 (December 12, 1977), p. 5. Note also
that synthetic gas from coal can be used in power plants.
6Rowe, James L. , Jr. "Conversion to Coal Still is Mostly
Talk." Washington Post, June 19, 1977, pp. Ll, L6.
557
-------
Administration (FEA)l deleted 23 power plants from its list of
54 slated for mandatory conversion to coal.2 EPA said that con-
version of those power plants "would conflict with the national
commitment to protect and improve the environment and, therefore
would be inconsistent with the purposes of ESECA." Until such
differences of opinion are resolved and a firm policy established,
coal and uranium producers will continue to face demand uncertainty
related to fuel-switching.
(3) Government and Institutional Uncertainties
Even if an energy development is technically feasible and
economically sound, it still faces several governmental and insti-
tutional barriers to being brought on-line. One of these barriers
is simply the number of regulatory approvals that must be sought.
For example, Southern California Edison and its partners spent
thirteen years and $22 million in acquiring water rights and
preparing an environmental impact statement for the Kaiparowits
project. At that point they still needed 220 more authorizations
from 42 agencies.3 Interests opposed to development tend to favor
complicated procedures because (a) it gives them more time to pre-
pare their case and more opportunities to publicize it; (b) the
larger the number of approvals required, the greater the chance of
a permit denial; and (c) mounting costs may induce the developer
to abandon a project. The Environmental Defense Fund's energy
specialist has remarked, "Delaying is often the answer. You tie
up the economic investment of a company, and they finally do
something else."4 His position is sound since delay is expensive.
For example, if a billion dollar project is half completed, each
month's delay adds $4 million in interest, cost, and a year's de-
lay amounts to $50 million.5
Many of the governmental uncertainties in western energy de-
velopment occur at the state level, especially with regard to state
policies on water allocation, land reclamation requirements,
lrThe program is now administered by the Economic Regulatory
Administration within DOE.
2Bureau of National Affairs. "New England Utilities to Chal-
lenge FEA Conversion Order in Federal Court." Energy Users Re-
port, Current Report No. 194 (April 18, 1977), pp. 9-11.
3Myhra, David. "Fossil Projects Need Siting Help Too." Pub-
lic Utilities Fortnightly, Vol. 99 (September 29, 1977) , pp. 24-28,
"ibid., p. 26.
5At an annual interest rate of ten percent.
558
-------
taxation, and impact mitigation requirements.1 As noted in
Chapters 2 and 12, officials in some western states are expressing
concern that the West is being viewed as an "energy colony" for
the rest of the country. While by no means a consensus position,
this concern and proposals for dealing with it, such as possible
federal energy-impact assistance, do contribute to the uncer-
tainty with which investors and developers must deal. For example,
the boomtown effects of energy development can be quite severe,
as discussed in Chapters 8 and 9. Many of the alternatives for
dealing with these effects call for either direct or indirect
assistance'from developers. Until the nature and extent of the
developers' responsibility is established, investors and devel-
opers will not know what the effect will be on the cost of devel-
opment. 2
An area of state policy with a direct economic effect on
energy development is state severance taxes on energy minerals.
A quantitative indication of the impact of state severance taxes
on developers is indicated in Table 10-5. There is considerable
variation among states, with Utah having the lowest rates for
each of the minerals tabulated here. The highest rate for gas,
oil, or uranium is 5.5 percent, seemingly not enough to greatly
affect the economic viability of many mines.3 Rates on coal have
moved much higher, particularly in the Northern Great Plains states
Uncertainty is introduced by the rapid rate of change in state
law. For example, of the eighteen severance tax rates listed in
Table 10-5, nine were changed during the 1977 legislative session.
The perception of taxes by developers on the one hand and by
state and local governments on the other, may diverge considerably.
In most cases, revenues would seem to look bigger to the local
government than the cost does to the developer. That is, the pro-
portional impact on developers and their ultimate customers is not
as great as on the units of government receiving the revenues.
Chapters 4 (Water Availability), 7 (Land Use), and 9 (Growth
Management) discuss the problems and issues in these areas.
2Gilmore, John S. "Boom Towns May Hinder Energy Resource De-
velopment." Science, Vol. 191 (February 13, 1976), pp. 535-40;
Jacobsen, Larry G. "Coping with Growth in the Modern Boom Town."
Personnel Journal, Vol. 55 (June 1976), pp. 288-89, 303; and Chap-
ters 8 and 9 of this report focus on housing and growth management
problems and issues. See also U.S., Energy Research and Develop-
ment Administration. Assistance from Energy Developers: A Nego-
tiating Guide for Communities. Washington, D.C.: Energy Research
and Development Administration, Office of Planning, Analysis, and
Evaluation, 1977.
3Note, however, that in most cases property and other taxes
are applied in addition to severance taxes.
559
-------
TABLE 10-5:
STATE MINERAL SEVERANCE TAXES
(percent)
STATE
Colorado
Montana
New Mexico
North Dakota
Utah
Wyoming
COAL3
7.2b
30.0
4.6b
11. 3b
0.0
10. 5f
GAS
AND OIL
5 . 0 c
2.65
4 . 9 b , e
5 . 0 c
2.0
4.0
URANIUM
2.5C
_ d
5.0b
_ d
1.0
5.5
Surface-mined.
Law written in cents per unit. Values of
resources assumed here of: $8.33/ton for
coal in Four Corners States, $5.73/ton for
coal in Northern Great Plains, $1.45/
thousand cubic feet for gas, $9.15/barrel
for oil, $40/lb. for uranium (yellowcake).
Before property tax credits.
No taxable production in 1977.
e3.4 percent effective rate for gas.
Reverts to 8.5 percent after the 2 percent
special levy has accumulated to $160 million
(probably around 1993).
Source: Bronder, Leonard D. Severance
Tax Comparisons Among WGREPO States,
Staff Analysis No. 77-28. Denver, Colo.:
Western Governors' Regional Energy Policy
Office, June 1977.
560
-------
Consider, for example, Montana's 30 percent severance tax. Since
transportation can triple the cost of coal at the destination as
compared to the mine-mouth cost, such taxes represent about 10
percent of the delivered price. But if, as projected in the SRI
Low Demand Case, Montana is producing 525 million tons per year
by 2000, the severance tax will yield more than $1.5 billion per
year. By comparison, the state government's revenues from all
sources in recent years have been only about $700 million (fiscal
1973) .
The producing states view taxation as an effective way of
achieving several objectives, including repairing and compensating
for social and physical damages. Developers and out-of-state
consumers might be expected to tolerate energy taxes for such
purposes, but may protest vigorously when they see coal revenues
virtually financing whole state governments. In fact, 53.5 per-
cent of Montana's severance tax (after 1979) is allocated to gen-
eral government purposes such as education; 35 percent is speci-
fically earmarked for mitigating coal development impacts. The
remainder goes to such things as parks acquisition, research on
energy alternatives, and renewable resource development. The
justification for this 11-1/2 percent seems to be based on the
belief that Montana should start building economic alternatives
against the day when the coal runs out. In the words of the
state budget director, "With the tax money in the bank, we can
ride out the kind of economic catastrophes the copper companies
used to threaten us with if they didn't get their way."1 But
out-of-staters are beginning to feel that "the emerging pattern
of state coal tax policy in the Northern Great Plains is one of
OPEC-like revenue maximization."2
Uncertainty about governmental actions is even greater when
a proposed development is on an Indian reservation. The Council
of Energy Resource Tribes (CERT) represents 22 tribes who collec-
tively own more than half of the uranium resources in the U.S.
and 16 percent of the coal. CERT has been less shy than state
governments about acquiring an "OPEC-like" reputation. Last year
they went directly to OPEC for assistance in planning.3 The in-
creased aggressiveness of Indians has already resulted in renego-
tiation of coal leases which had originally been arranged by the
!Quoted in Richards, Bill. "Boom in Strip Mining: Windfall
for Montana." Washington Post, May 22, 1977, pp. Al, A4.
2Nehring, Richard, and Benjamin Zycher. Coal Development and
Government Regulation in the Northern Great Plains. Santa Monica,
Calif.: The Rand Corporation, 1976, p. 148.
3Fialka, John. "The Navajo Nation." Washington Star,
October 23, 1977.
561
-------
Bureau of Indian Affairs (BIA) in the 1950's and 1960's. For
example, the Crow Tribe in Montana has received a proposal for
$1.35/ton royalty from AMAX, Inc. compared to 17.5 cent royalties
which had been common for Indian resources as late as 1974.* The
Crow may also collect some revenues which would otherwise go to
the states. Recently they requested and received a favorable
ruling from the Interior Department to the effect that states can-
not tax Indian coal. Shell Oil has responded by offering a 38
percent royalty if Montana's 30 percent tax is actually avoided.2
BQth state and Indian fiscal actions raise legal issues which
might not be resolved very quickly. The Interior Department's
ruling on Indian coal, for example, may go through a long series
of appeals. Severance and conversion taxes have prompted litiga-
tion on constitutional grounds. When almost all of a commodity
produced in a state is exported from that state, taxation of it
could be considered a restraint of interstate commerce, which is
prohibited by the federal constitution. Several utilities have
challenged New Mexico's electricity generation tax on such
grounds.3
B. Responses to Risk
Energy developers and financial institutions have developed
various strategies to deal with the uncertainties described above.
In fact, much of the traditional behavior of electric and gas
utilities has been oriented towards reducing risk. Electric util-
ities, especially, have received a legal mandate to provide "all
the power demanded at all times to all comers."^ This fact has
led to several distinctive industry features, including an expan-
sionist attitude that growth is necessary, proper, and inevitable,5
and backward vertical integration, i.e., utilities acquiring owner-
ship of their supply sources, such as mines, trains, and storage
facilities. The Tennessee Valley Authority, for example, has
^rittenden, Ann. "Coal: The Last Chance for the Crow." New
York Times, January 8, 1978, Section 3, p. 11.
2"U.S. _i_ndians Demand a Better Energy Deal." Business Week,
December 19, 1977, p. 53.
3"N.M. Court Weighs Electricity Tax Suit." Denver Post,
November 12, 1977.
4Maher, Ellen. "The Dynamics of Growth in the U.S. Electric
Power Industry," in Sayre, Kenneth, ed. Values in the Electric
Power Industry. South Bend, Ind.: University of Notre Dame Press,
1977, p. 189.
5Ibid.
562
-------
acquired uranium properties in Wyoming to be assured of a fuel
supply for its nuclear power plants.
The concern with assured supply has also led to long-term
fuel contracts and power-pooling among utilities within a region.
Virtually all of the electric utilities in the West have been
interconnected via the Western Systems Coordinating Council, a
voluntary group at least implicitly encouraged by the Economic
Regulatory Administration (ERA).l Similar pools have been estab-
lished to cover most of North America. The regional councils are
further grouped into a National Electric Reliability Council.
Gas utilities have also emphasized reliability of service,
although not quite to the same extent as electric utilities.
Pipeline companies have usually sought assurances on both ends
that their lines would be fully utilized well into the future.
Specifically, they have required reserves to be dedicated to them
by producers, thereby assuring supply, and they have insisted on
long-term "take or pay" contracts from distributing companies.2
Oil pipelines, too, have rules which enable them to keep their
lines full at all times.3 The advent of coal gasification will
heighten the utilities' risks. (As can be seen in Table 10-6,
most of the synthetic fuels plants proposed to date are of the
gasification type.) In contrast with the current system of many
small natural gas producers feeding into each interstate pipeline,
each SNG plant would be very large (on the order of 250 billion
cubic feet/day). And, as noted earlier, the required investment
would just about equal the total assets of an entire gas company.4
Financial institutions have started to fund selected projects
which, according to traditional financial balance sheet analysis,
would not be considered creditworthy for investors. In a related
trend, a developer's arrangements with financial institutions and
other parties are involving many investors, with banking special-
ists often coordinating them (see box entitled "Challenging
Assignment").
Greyer, Stephen, and Paul MacAvoy. Energy Regulation by the
Federal Power Commission. Washington, D.C.: Brookings Institu-
tion, 1974, pp. 112-13.
2Ibid., pp. 5-6. Take or pay contracts require the buyer to
pay a specified amount whether or not he has enough storage capa-
city to accept delivery during slack periods.
3Pipeline Demurrage and Minimum Shipment Rule on Propane, 315
I.C.C. 443 (1962).
"The land, plant, and equipment of the eight gas companies
identified in Table 10-3 averages $1.69 billion. Source: Moody's
Utilities, 1977.
563
-------
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CHALLENGING ASSIGNMENT FOR INVESTMENT BANKER
The Alcan gas pipeline from Prudhoe Bay to the lower 48 states pro-
mises to be "the most expensive and complicated single project that the
U.S. capital markets have ever had to finance." Its estimated cost ($13
billion) is half as large as the total assets of the dozen gas transmission
companies involved, whereas the oil companies which built the Alyeska
pipeline had assets 13 times as large as the project cost. Moreover,
President Carter has strictly ruled out government guarantees.
Probable U.S. participants include:
First Boston Corporation investment bankers heading up the financial
arrangements
Loeb Rhoades and Company investment advisors
12 gas transmission companies, as owners/operators of 4 legally independent
segments of the project
Exxon, ARCO, and BP-Sohio, the gas producers, who are likely to guarantee
some of the debt.
Federal Energy Regulatory Commission, which will determine the gas's
selling price
A 5-agency federal executive policy board to expedite permitting procedures
Bank of America, leading a consortium of banks in short-term financing
Massachusetts Mutual Life Insurance, and numerous other insurance compa-
nies, buying long-term bonds.
The State of Alaska, beneficiary of taxes and royalties, which may guar-
antee some of the debt
Pacific Gas Transmission and Pacific Gas and Electric, owner/operators of
the West Coast leg, handling financing on their own
—"Financing: The Real Test for Alcan Pipeline." Business Week,
November 28, 1977, pp. 102-4.
Lenders also have moved increasingly toward project financing,
whereby assurance is sought that a particular project has a good
chance of success.1 This success is measured by the actual cash
flow generated from an energy project as a source of repayment
Wilson, Wallace W. "Capital for Coal Mine Development."
Coal Mining and Processing, Vol. 13 (January 1976), pp. 68-70.
This is especially the case for coal mine projects, largely in re-
sponse to fluctuations in the coal industry which have resulted
in the average rate of return on capital staying 2.5 percentage
points below other mineral industries since 1971. See Tomimatsu,
Tommy, and Robert E. Johnson. The State of the U.S. Coal Industry:
A Financial Analysis of Selected Coal Producing Companies with
Observations on Industry Structure,Bureau of MinesInformation
Circular 8707. Washington, D.C.: U.S., Department of the Interior,
Bureau of Mines, 1976, Table 9.
565
-------
rather than from the strength of the firms involved.l Hence, a
reliance has evolved on long-term contracts, utility-owned rail-
road cars, and other devices that assure that a project is finan-
cially sound in itself.
In its reliance on real assets, project financing is akin to
a mortgage, but the lenders' share in the commercial risks remains,
since the debt is repaid only if, as, and when the coal is mined.
The approach, which originated in the oil industry, has become
common throughout other energy industries.
Electric utilities also have been trying to find ways of
stretching their borrowing power. As a result of rapid growth in
what is the most capital intensive industry of all,2 electric
companies are relying on external sources (securities markets)
for a steadily increasing share of their construction capital.
Another consequence of large and lengthy construction projects is
that $40 billion is now tied up in unfinished facilities-~equiva-
lent to 18 percent of all electric plant investment in the U.S.
Traditionally, utilities have increased their borrowing to pay the
interest on construction work in progress (CWIP), putting further
strains on their creditworthiness. Recently, however, many
state utility commissions have allowed the customers to be charged
immediately for interest on CWIP. The rate-payers are in effect
made into investors, but the utility is enabled to reduce its
borrowing—legally defined—by just that amount. The device has
been challenged before many state utility commissions, and it is
not yet a common practice.
A recent proposal for stimulating coal gasification financing
uses a similar method. DOE is recommending to the FERC that the
first commercial coal gasification project in the U..S. in Mercer
County, North Dakota be guaranteed by increases in customer rates
if the plant should fail. In other words, consumers rather than
Dickers, Edward L. "Comments on Project Financing," in
U.S., Department of the Interior, Bureau of Land Management.
Southwest Energy-Minerals Conference Proceedings. Santa Fe,
N. Mex. : Bureau of Land Management, 1977,' Vol.~l, p. 217.
2Electric utilities currently have an average of $3.50 invested
in plant and equipment for each $1.00 of annual revenue. This com-
pares with less than $1.00 for the steel industry and 55C for the
auto industry.
3For both favorable and critical views, see Corey, Gordon.
"Further Observations on the Taxation of Regulated Utilities."
Public Utilities Fortnightly, Vol. 100 (November 10, 1977), pp.
16-18; and Newburger, David. "Electric Power—Who Pays for Ex-
pansion?" Environment, Vol. 19 (June 1977), pp. 50-52.
566
-------
investors, would bear the risk through an "all events tariff" on
gas bills. The Federal Power Commission (FPC), FERC's predecessor,
historically disapproved of the practice of requiring customers
to guarantee utility projects, but DOE feels this arrangement is
needed to get synfuels projects started.1
C. Energy Market Competitiveness
Increasing amounts of capital have been invested in western
energy development by large diversified energy firms. Exxon, Gulf,
and Kerr-McGee are among the largest owners of domestic coal and
uranium reserves, including substantial portions of these resources
located in the West. In addition to oil companies, firms tradi-
tionally powerful in the West, such as Burlington Northern and
Union Pacific Railroads, are now developing energy resources, or
have merged with energy companies, as Anaconda Copper has with
ARCO. While this trend is bringing to the West unprecedented
sources of capital, technical expertise, and marketing channels,
it also brings the danger of excessively concentrated economic
power. It is possible that oil companies are acquiring mineral
rights and process patent rights simply in order to preempt poten-
tial sources of competition. Of 24 petroleum companies with major
coal reserves, only 8 have mined any of it.2 Oil company entry
into other fields may thus lead to less production than if they
were kept out of those fields.
Concentration of ownership can occur at several levels:
mineral resources, production facilities, patents, and federal
leases. Adverse consequences of any of these types of concentra-
tion could include restricted production, higher prices, a slower
rate of innovation, or domination of state and local governments
(see box entitled "State Lobbyists"). The diversified energy
firms which have been entering western energy production maintain
that their participation is needed. A recent Bureau of Mines '
study agreed with that point of view, stating that the emerging
trend should strengthen coal's financial structure and aid its
position in the new capital market. Furthermore, a parent or
controlling company with a coal subsidiary or affiliate can readily
1"How to Finance Gas Produced From Coal." Business Week,
June 19, 1978, pp. 33-36.
2Federal Trade Commission survey noted in Greider, William.
"U.S. Oil Industry Stakes Out Role for the Future." Washington
-------
shift capital funds according
to program needs.1 Conflict,
then, has arisen between the
major oil companies who claim
they are the only ones with
enough capital and expertise to
do the job and some consumer-
oriented groups who fear that
the majors are simply nipping
competition in the bud.
Since the passage of the
Sherman Act in 1890 it has been
a national policy to promote
competition by preserving a
large number and variety of de-
cisionmaking units in the eco-
nomy.2 The first landmark
action taken under the anti-
trust laws, Standard Oil Co.
v. U.S.,3 which broke up the
Standard Oil Trust, was only the beginning of a long series of
enforcement actions since "in time the resulting segments grew
and became more powerful than the original company."4 In fact,
a 1940 suit—perhaps the most ambitious undertaking ever by the
Justice Department's Antitrust Division—was called the Mother
Hubbard case, because it covered everything. The Americar!
Petroleum Institute, the major oil companies and their affiliates
were charged with every conceivable form of an anticompetitive
conduct.5
STATE LOBBYISTS
"They're slick," says Wyoming
state senator Roger McDaniel of ener-
gy company lobbyists. "We've had
them in here from New York, Los
Angeles,....and all over....Some of
them are a little intimidating for a
part-time legislator."
Governor Herschler in an inter-
view in June 1977, related that in
the past, "...everyone knew everyone
else's business and that kept things
under control. Now we're dealing
with new people and huge amounts of
money. I know that somewhere down
the road someone's going to get
caught with their hand in the till."
—Washington Post. June 26, 1977.
^omimatsu, Tommy, and Robert E. Johnson. The State of the
U.S. Coal Industry: A Financial Analysis of Selected Coal Pro-
ducing Companies with Observations on Industry Structure, Bureau
of Mines Information Circular 8707. Washington, D.C.: U.S., De-
partment of the Interior, Bureau of Mines, 1976, p. 11.
2 "Special Pro ject--Th,e Energy Crisis: The Need for Anti-
trust Action and Federal Regulation." Vanderbilt Law Review,
Vol. 24 (May 1971), pp. 724-25.
3Standard Oil Co. v. U.S., 221 U.S. 1 (1911).
4U.S., Congress, Senate, Committee on the Judiciary. Petro-
leum, the Antitrust Laws and Government Policies. S. Report 1147,
Serial 11979, 85th Cong., 1st sess., 1957.
5U.S., Congress, House, Select Committee on Small Business.
Anticompetitive Impact of Oil Company Ownership of Petroleum Pro-
duct Pipelines. Hearings before the Subcommittee on Special
Small Business Problems, 92d Cong., 2d sess., June 13-15, 1972.
568
-------
The major oil firms have grown very large and profitable
compared to any other industry; in fact, ten of the twenty largest
industrial corporations in the country are oil and gas companies.
The firms in this industry among Fortune's 500 listing gave in-
vestors a compound rate of return of 13.5 percent per year over
the period 1966-1976, higher than any other industry.1 A more
salient determinant of whether markets will be competitive, how-
ever, is firm size relative to industry size. In this regard,
the oil industry is less concentrated than the average manufactur-
ing industry. The four largest firms in the typical manufacturing
industry account for roughly 40 percent of production.2 Four-firm
ratios (the share of the market accounted for by the four largest
firms) in the petroleum industry as of 1974 were somewhat lower,
ranging from 26.0 to 35.1 percent at various stages of processing.3
Certain other features of the energy industry tend to increase
the influence of the large companies more than suggested by the
foregoing figures:
• The top firms at one stage of processing, such as crude pro-
duction, tend to be the same firms which lead the other stages,
such as marketing. There are only about 20 such "vertically
integrated" firms, accounting for 58 to 94 percent of pro-
cessing at various stages.
• The majors "do not function as independent or competitive,
but as cooperative entities at every strategic point of the
industry's integrated structure."1* They cooperate in
joint ventures for bidding on offshore leases, building
pipelines, developing foreign reserves, and other pro-
jects. Joint ventures "establish a community of interest
among the parents and a mechanism for avoiding competition
between them."5
lnThe Fortune Directory of the 500 Largest U.S. Industrial
Corporations." Fortune, Vol. 95 (May 1977), p. 66.
2Scherer, F.M. Industrial Market Structure and Economic
Performance. Chicago, 111.: Rand McNally, 1970, p. 63.
3Markham, Jesse. "Market Structure and Horizontal Divesti-
ture of the Energy Companies," in Moore, W.S. Horizontal
Divestiture. Washington, D.C.: American Enterprise Institute
for Public Policy Research, 1977, p. 17.
4Adams, Walter. "Horizontal Divestiture in the Petroleum
Industry: An Affirmative Case," in Moore, Horizontal Divestiture,
p. 7.
5Ibid.
-------
• The oil companies have been diversifying into other energy
resources.
This last trend, "horizontal" diversification, bears most
directly on the western region. Oil and. gas are expected to be
superseded by coal, uranium, and oil shale as the major western
energy resources, and the integrated energy companies have already
acquired the largest single share of reserves of these energy
materials.1 As shown in Table 10-7, oil and gas companies own
41.1 percent of the nation's privately held coal reserves. In
western operations, independent coal companies have become the
exception rather than the rule. Similar penetration by oil and
gas firms has occurred in the uranium industry, where 10 out of
the 20 largest holders of reserves are oil and gas companies.2
Federal leasing policy will have a direct influence on the
competitiveness of western energy markets. Although federal coal
until recently accounted for only 1 percent of national production,
almost 80 percent of western reserves are federally owned or lie
under or adjacent to federal lands. The federal leases which have
been granted to date have resulted in a greater concentration of
control than for the coal industry as a whole, and especially in
subregional market areas. In Utah, Arizona, and New Mexico,
which tend to serve markets to the west, four firms (Peabody,
Arizona Public Service, El Paso Natural Gas, and Continental Oil)
hold 43.6 percent of the leased acreage.3 In the Wyoming, Montana,
North Dakota area, which tends to serve markets to the south and
east, four groups (Pacific Power & Light, Peabody, Richard D.
Bass Petroleum, and Exxon) hold 34.8 percent of the leased acreage.
Production on the federal leases has been nonexistent or, at
most, leisurely, suggesting the possibility that they were ob-
tained for speculative purposes. Of the 16.4 billion tons under
lease in the eight-state region, only 32.6 million tons were mined
during 1976. Even if production grew by more than 20 percent per
year until full capacity were reached, it would take 4'0 years to
1 The one major exception to the decline of oil and gas is in
western Wyoming, where recent discoveries are likely to yield the
best fields since Alaska's Prudhoe Bay. Ratner, Steven. "Geolo-
gically Weird 'Overthrust Belt1 Excites Oil Drillers." New York
Times, December 27, 1976, p. Dl.
2Greider, William. "U.S. Oil Industry Stakes Out Role for the
Future." Washington Post, May 22, 1977, p. A16.
3Bierman, Sheldon L., et al. Innovation versus Monopoly: Geo-
thermal Energy in the West, Final Report, Report No. DGE/3036-1.
Washington, D.C.: U.S., Energy Research and Development Adminis-
tration, Division of Geothermal Energy, July 1977, Table 52.
570
-------
TABLE 10-7:
COAL RESERVES OF INDUSTRIAL GROUPS, 1976
(millions of tons)
GROUP
Oil and Gas
Continental (Consolidation)
Exxon (Monterey, Carter)
El Paso Natural Gas
Occidental (Island Creek)
Gulf (Pittsburg and Midway)
Mobil
Sun
ARCO
Phillips
Tenneco
Other
Railroads
Burlington-Northern
Union Pacific
Other
Metals
Newmont et al. (Peabody)
AMAXa
U.S. Steel
Bethlehem Steel
Other
Independent Coal
North American
Westmoreland
Pittston
Other
Utilities
Pacific Power and Light
Other
Other Industries
All Identified Reserves
RESERVES
13,700
8,400
5,200
3,570
2,750
2,500
2,200
2,200
2,000
1,700
10,880
55,100
11,400
10,000
1,990
23,390
8,900
5,040
3,000
1,800
3,200
21,940
5,100
L,950
1,700
6,860
15,610
1,700
4,720
6,420
11,790
134,250
Source: National Coal Association. Implica-
tions of Investments in the Coal Industry by
Firms From Other Energy Industries. Washing-
ton, D.C.:National Coal Association, 1977,
Appendices B and H.
aAMAX might also be classified with oil and
gas, as it is 21 percent owned by Standard
Oil of California.
571
-------
mine the coal already under lease.1 Moreover, a Bureau of Land
Management (BLM) study found that owners of leases covering 60 per-
cent of these reserves have never produced and have not indicated
any plans for production before 1990.2 The average age of these
leases is already 11 years. A Federal Trade Commission (FTC) staff
report on the 20 largest federal lessees identified seven that
were not producing; five of the seven lessees are oil companies.3
In recognition of the federal government's growing role in
the coal industry, various measures have been adopted to make sure
that this role promotes a competitive market. A traditional pol-
icy in minerals leasing has been the requirement of "diligent de-
velopment."4 Under current regulations, mining plans "must pro-
vide for the mining of all the reserves of the logical mining unit
of which the lease is a part in a period of not more than 40
years."5 One of the purposes of diligent development is to dis-
courage private companies from holding reserves indefinitely in
anticipation of future price rises or, worse, from causing price
rises by withholding production. The Secretary of the Interior
also is required to consult with the Attorney General regarding
the effect on competition of all proposed leases.
However, such measures may be inadequate. In regard to
leases issued before the current moratorium, Interior has never
cancelled a lease for failure to maintain diligent development.6
As for other incentives, such as a $4 per acre annual rental if
no production is underway, "it is doubtful that rentals of this
magnitude would have a significant effect in stimulating
Raleigh, W.A. "Mediation Research Aims to Unlock Federal
Coal Leasing Program." Coal Industry News, Vol. 2 (January 23,
1978), p. 11.
2Quoted in Bierman, Sheldon L., et al. Innovation versus
Monopoly: Geothermal Energy in the West, Final Report, Report No.
DGE/3036-1. Washington, D.C.: U.S., Energy Research and Devel-
opment Administration, Division of Geothermal Energy, July 1977,
p. 499.
3Ibid., p. 500.
4Mineral Leasing Act of 1920, Pub. L. 66-146, 41 Stat. 437,
30 U.S.C.A. 207.
530 C.F.R. 211.10(c) (6) (ii) .
6U.S., Congress, House, Committee on Interior and Insular
Affairs. Federal Coal Leasing. Hearings before the Subcommittee
on Mines and Mining, 93d Cong., 2d sess., July 25--August 15, 1974.
572
-------
production."1 The other approach mentioned above, antitrust
review of leases, calls for very subjective judgments.
The Peabody Coal case illustrates the difficulties in this
field.2 The FTC opposed the 1968 merger of Peabody Coal (the
nation's largest) with Kennecott Copper (the nation's largest in
that industry). It was argued that the merger eliminated Kenne-
cott as a potential competitor who might otherwise have entered
the industry on its own. The final arrangement which the FTC
accepted, however, could be questioned on the same grounds: the
leaders of the purchasing group were Newmont Mining and the
Williams Companies. Newmont is the fourth largest copper producer
and owns substantial stock in the 2nd and 10th leading coal
producers; Williams has extensive oil and gas interests, especially
oil pipelines. At the same time, other copper/energy combinations
have been left standing, namely Anaconda with ARCO, and AMAX with
Standard Oil of California.
Federal legislation to divide energy companies or keep them
out of new fields generally has not been been successful. Senators
Hart (D-MI) and Abourezk (D-SD) offered an amendment to an emer-
gency natural gas act (S. 2310) which mandated "vertical divesti-
ture." That is, major oil and gas companies would have to choose
only one of the four phases--production, transportation, refining,
and marketing--ard loave the others. The measure failed the Senate
in October 1975 by only nine votes, and a similar measure (S. 2387)
passed th^ Senate Judiciary Committee in June 1976 but failed to
reach the ,'Ioor. Questions concerning competition in the energy
industry will eor.tinue to be raised in the context of western
energy deveJopment.
10,2.3 Summary
A number of risks and uncertainties in western energy devel-
opment potencies! ly limit the availability of capital for develop-
ment dt ', h,:; scale projected in our scenarios. These risks arise
from techp i c-;: L, economic, and governmental and institutional
factors. In addition, diversified energy companies have acquired
o.S., Congress, Senate, Committee on Interior and Insular
Affairs. Report to the Federal Trade Commission on Federal Energy
Land Policy: Efficiency, Revenue, and Competition, Committee
Print, by the Federal Trade Commission, Bureau of Competition and
Economics. Washington, D.C,: Government Printing Office, 1976.
2Shifrin, Carole. "Debate Continuing on Peabody Coal Decision."
Washington Post, August 14, 1977, pp. Ll, L3.
573
-------
large holdings of energy resources in the West, raising fears that
these firms are closing off potential competition from new energy
forms.
• Technical factors that add to financial risk include: un-
known performance for new technologies at commercial scales',
relatively low investment in R&D by the energy industry,
and large capital investments required for commercial-
size plants.
• Economic factors include: the world energy market and Its
effect on the economic viability of advanced energy techno-
logies, and federal policies concerning energy pricing. In
addition, uncertainty over federal clean air and fuel-
switching policies makes demand for western coal and invest-
ment in western energy development relatively risky.
• Governmental and institutional uncertainties that contribute
to financial risk include: the large number of regulatory
and administrative approvals required for energy facilities,
particularly at the state level; the imposition of severance
taxes on energy minerals; and the degree of control which
Indian tribes might have on energy development. These
factors add to the time or cost of energy development,
thereby increasing financial risk to investors.
• Major oil companies are acquiring large holdings of coal,
oil shale, and uranium reserves in the West, and little
if any production has taken place. This has brought accu-
sations that the large firms are trying to close off com-
petition from other energy resources. The firms themselves
hold the opposite view, claiming that only large, diversi-
fied firms have enough capital and expertise with energy to
do the job.
In sum, although western energy development overall would not
be constrained by national capital availability, individual energy
projects will be subject to a number of uncertainties that threaten
secure investment. The problem for one particular facility will
tend to spread to other facilities since financing tends to follow
areas of proven success. The problems evident for individual
facilities can have a broader influence on the capital available
for western energy development generally.
10.3 ALTERNATIVE POLICIES FOR CAPITAL AVAILABILITY
10.3.1 Introduction
Given the uncertainties surrounding large energy development
ventures in the western U.S. (and elsewhere), financial risks
will often be greater than for other investment opportunities,
574
-------
TABLE 10-8: CAPITAL AVAILABILITY POLICY ALTERNATIVES
OBJECTIVE
CATEGORIES
OF ALTERNATIVES
SPECIFIC ALTERNATIVES
Assure adequate
capital for
western energy
resource devel-
opment
Provide financial
subsidies to
developers
Tax preferences
Price guarantees
Improve regulatory
environment
Promote new
sources for
investment
Expedite siting process
Deregulate oil and gas
prices
Permit "rolled-in"
prices for synthetic
fuels
Encourage new partici-
pants by improving
leasing system
Consumer risk assumption
for new energy pro-
jects
thereby raising the cost of obtaining financial backing. The
policy objective on which this section is based is to assure
the availability of investment capital for western energy devel-
opment. To meet this goal, these categories for policy alter-
natives are identified:
• Provide financial subsidies to developers;
• Improve the regulatory environment;
• Promote new sources of investment.
There are several specific alternatives within each of these cate-
gories (see Table 10-8). For example, financial subsidies could
be provided either through tax incentives or price guarantees in
order to encourage investment in new, risky energy technologies.
Regulatory changes could produce greater certainty about pricing
and permitting associated with western energy facilities. The
price regulation/deregulation options differ from subsidies in
that the energy market would determine the actual price level,
in contrast to a price "floor" supported by the government
regardless of market forces. Both approaches could reduce risks
575
-------
TABLE 10-9: FINANCIAL SUBSIDIES
SPECIFIC
ALTERNATIVE
IMPLEMENTATION
STRATEGY
CONSTRAINTS
Tax preferences
Investment tax credit,
accelerated depre-
ciation, or tax
exempt bonds for
energy facilities
Reduction of govern-
ment revenues;
administrative
burden on IRS
Price guarantees
Price floors for cer-
tain synthetic
plants set by DOE
Could require sub-
stantial government
expenditures
IRS = Internal Revenue Service
DOE = Department of Energy
to investors by eliminating uncertainty over future energy prices.1
The time-consuming energy facility siting and permitting process
is responsible for a large share of the cost and risk associated
with new energy facilities. An expedited permit process would
shorten the time involved, thereby reducing the financial risks
and the interest cost of a project.
The second category of alternatives, promoting new sources of
investment, would bring different participants into the financing
of western energy development. Increased consumer rates to help
pay for new facilities and streamlined energy resource leasing
systems could, along with other results, increase the amount of
investment in western energy development. The following section
describes the policy alternatives listed in Table 10-8 in more
detail.
10.3.2 Description of Alternatives
A. Financial Subsidies
Table 10-9 lists the specific alternatives considered in
this category, along with possible implementation strategies and
potential constraints for each specific alternative. One specific
'The situation is more complicated for coal gasification
plants, whose feasibility is affected by the ability to utilize
existing pipeline infrastructure. This requires a decision
whether to roll in the synthetic gas price with that of natural
gas currently committed to the'pipeline.
576
-------
alternative is to institute tax preferences for energy development,
such as a larger investment tax credit, accelerated depreciation,
or tax exempt status for energy facility bonds. All would need to
be included in tax code changes, which would require Congressional
action. The Internal Revenue Service (IRS) already administers
thousands of tax preferences, some designed to promote equity,
some as incentives for a wide range of activities. The ones with
the largest current impact on energy investment are: the invest-
ment tax credit, percentage depletion, accelerated depreciation,
and special treatment of intangible development costs.1 Tax
exemption for bonds is another tax preference measure that has
been granted to help finance pollution control equipment but not,
as yet, energy facilities generally.
The investment tax credit will be given particular attention
in the evaluation section. As currently in effect, this provision
of law allows businesses to reduce their tax liability by 10 per-
cent of their expenditures on new equipment. Recent proposals have
focused on several potential modifications of the credit:2 (a) in-
creasing the rate, (b) making the rate permanent (it is scheduled
to revert to 7 percent eventually), (c) increasing the rate for
certain industries, (d) extending the credit to buildings as well
as equipment, and (e) allowing a company to offset up to 90 per-
cent of its tax liability with the credit (compared with 50 per-
cent now). The evaluation below will concentrate on an alterna-
tive such as (c): increasing the credit for domestic energy pro-
duction investments.
Price guarantees, the other specific alternative considered
in the financial subsidies category, would support the develop-
ment of synthetic fuel and other advanced energy technologies by
setting a floor price for the product. In the case of synthetic
gas and shale oil, the guaranteed price required could be as much
as 50 percent above the market price of gas and oil. The purpose
of guarantees is to assure that new technologies are ^ven at a
commercial scale and that sufficient experience takes ~~ to
allow improvements and refinements in the technologies. rj.j_^^
guarantees would probably be more narrowly targeted than tax
preferences, and would be administered by the DOE rathsr than IRS.
Guarantees resemble tax preferences in that actual govern-
ment expenditure depends on the response of the private sector.
^rannon, Gerard. "Existing Tax Differentials and Subsidies
Relating to the Energy Industries," in Brannon, Gerard, ed.
Studies in Energy Tax Policy, Papers Prepared for the Energy
Policy Project of the Ford Foundation. Cambridge, Mass.:
Ballinger, 1975.
2See, for example, Samuelson, Robert J. "Carter's Tax
Tightrope." National Journal, Vol. 10 (January 28, 1978), p. 138.
577
-------
The fiscal impact of tax preferences depends on how extensively
firms take advantage of them, while the cost of guarantees is a
function of the firm's costs, as well as market conditions. How-
ever, the two specific alternatives could differ markedly in ulti-
mate expenditure and in the budgeting process. Guarantees differ
from a fiscal point of view, in that whatever expenditures actu-
ally are made must be budgeted and go through the usual disburse-
ment procedures. Tax preferences, on the other hand, are not
budgeted expenditures, but reduce the income available in the
government budget in an ex post way that is often difficult to
predict.
B. Improve Regulatory Environment
The second category of alternatives considered is to improve
the regulatory environment (see Table 10-10). The regulatory
situation surrounding energy facilities affects the capital
investment available for those ventures. Obtaining siting and
other permits, for example, can result in significant delay in
energy projects which means higher facility costs. Expediting
the siting process, which is discussed in detail in Chapter 12,
is one way of increasing the investment in western energy devel-
opment.
Deregulation of oil and gas prices would provide an incentive
for synthetic fuel facilities because the; higher price that crude
oil and natural gas would bring would allow synthetics to be more
competitive. In contrast to price guarantees, deregulation would
not involve government expenditure, although in both cases, higher
costs would be borne by consumers or taxpayers. If prices were
completely deregulated, the immediate effect would probably be a
sudden price rise, followed by erratic prices as they adjusted to
the market level. The role of OPEC in price stability (discussed
in Section 12.2.2) would be greater in the case of deregulation.
The economic viability of shale oil and SNG also can be im-
proved without price deregulation by rolled-in pricing for syn-
thetic fuels that use existing pipelines. As discussed earlier,
rolled-in pricing was common until 1972, although not in the
context of coal gasification. If gasification is to become wide-
spread as a substitute for increasingly expensive natural gas,
rolled-in pricing is probably essential. Otherwise, users of
synthetic gas would have markedly higher gas costs than those
using traditional sources, reducing the potential market for coal
gasification facilities.
As indicated in Section 10.2.2, the pricing alternatives con-
sidered here have a long history, and have been the subject of
considerable political debate between producing and consuming
states. The impact on western energy production is not often em-
phasized, but there is significant potential influence on the
578
-------
TABLE 10-10: IMPROVE THE REGULATORY ENVIRONMENT
SPECIFIC
ALTERNATIVE
IMPLEMENTATION
STRATEGY
CONSTRAINTS
Expedite siting
process (see
Chapter 12)
"One-stop" siting
process
Requires new state
legislation
Deregulate oil
and gas prices
Federal legislation
removing price con-
trols on oil and
natural gas
Requires new federal
legislation; oppo-
sition by consumer
interest groups
Permit "rolled-
in" prices for
synthetic
fuels
FERC to spread costs
of synthetic fuels
projects over all
customers of certain
pipelines
Previous FERC prece-
dents
FERC = Federal Energy Regulatory Commission
feasibility and investment attractiveness of western coal and oil
shale resources for synthetic fuels. Many of the synthetic fuel
projects considered for the West (see Table 10-6) may be post-
poned or cancelled because of pricing issues.
C. Promote New Sources of Investment
New investment sources considered here include investors
other than large firms and their financial backers. These new
sources might be experimented with in selected situations, al-
though none would be able to substitute completely for tradi-
tional participants in energy development. Two specific alterna-
tives are considered in this category as summarized in Table 10-11,
One approach to broadening participation would be to stream-
line the procedures for transferring federal energy resources to
the private sector. The system of distributing uranium resources,
especially, can be characterized as chaotic and archaic. In this
environment, competitive advantages may accrue to the larger firms
who can employ staffs of geologists, lawyers, and claim investi-
gators. Moreover, since the federal government itself does not
579
-------
TABLE 10-11: PROMOTE NEW SOURCES OF INVESTMENT
SPECIFIC
ALTERNATIVE
IMPLEMENTATION
STRATEGY
CONSTRAINTS
Encourage new
participants
by improving
leasing sys-
tem
Put federally owned
uranium resources
under leasing
system; streamline
leasing system for
other resources; set
aside certain per-
centage for small
companies
Changes in federal
mineral leasing
systems require
Congressional
action and are dif-
ficult to bring
about
Consumer risk
assumption for
new energy
projects
FERC approval for
guaranteeing that
costs of new energy
projects will be
covered by consumer
rates
Consumer opposition
FERC = Federal Energy Regulatory Commission
know who holds valid mining claims,1 it may be possible for a few
firms to quietly gain control of large portions of the nation's
uranium resources. Other energy resources are already allocated
under leasing systems; however, modifications in procedures could
enhance the opportunities of smaller firms. Two particular pro-
posals which have been considered are to replace preference right
leases on coal lands with a competitive bidding system, and also
to institute a two-stage competitive bidding system for less well-
mapped resources such as geothermal. The two-stage competitive
bid awards an exploration lease to the firm which offers the low-
est discovery bonus share--i.e., the exploration lease is awarded
(stage 1) to the firm that agrees to accept the lowest share of
revenues received if and when the discovered resource is commer-
cially developed. At stage 2 bidding would be similar to conven-
tional competitive bonus bidding methods, except it would take
place only after economically workable quantities of an energy
!U.S., Congress, Senate, Committee on Interior and Insular
Affairs. Report to the Federal Trade Commission on Federal Energy
Land Policy: Efficiency, Revenue, and Competition, Committee
Print,by the Federal Trade Commission, Bureaus of Competition and
Economics. Washington, D.C.: Government Printing Office, 1976,
p. 671.
580
-------
resource are discovered.l Another approach is to institute special
lease procedures aimed at encouraging small firm activity. For
example, the Department of the Interior reserved 35 percent of the
oil and gas tracts off the coast of Massachusetts for leasing to
smaller firms.2
Energy consumers are another possible source for investment
capital. Utility consumers could assume a major portion of the
capital cost and associated risks of new projects if project costs
could be recovered in consumer rates. This is essentially what
has been proposed by DOE to assure financing for the first coal
gasification facility proposed near Beulah, North Dakota.3 The
DOE plan would make gas customers effectively guarantee a majority
of the cost, with a consortium of energy firms putting up the re-
mainder. If this policy were to be employed for all synthetic
fuel projects, capital availability would be a minor problem, since
customers of gasification utilities would be assuming a majority
of the investment risk.
10.3.3 Evaluation of Alternatives
This section will evaluate two of the three categories of
policy alternatives identified for addressing capital availability
problems:
• Provide financial subsidies to developers;
• Promote new sources for investment.
The alternatives will be evaluated and compared in terms of the
five criteria used in other chapters and described below.
A. Evaluation Criteria
The five basic criteria used to evaluate the policy options
are: effectiveness, efficiency, equity, flexibility, and imple-
mentability. Table 10-12 shows each criterion as it is defined
^.S., Congress, Senate, Committee on Interior and Insular
Affairs. Report to the Federal Trade Commission on Federal Energy
Land Policy: Efficiency, Revenue, and Competition, Committee
Print, by the Federal Trade Commission, Bureaus of Competition and
Economics. Washington, D.C.: Government Printing Office, 1976,
pp. 734-35.
?Bernstein, Peter J. "System to Aid Small Firms." Denver
Post, January 18, 1978.
3"How to Finance Gas Produced from Coal." Business Week,
June 19, 1978, pp. 33, 36; "DOE Backs First Coal Gasification
Plant." Oil and Gas Journal, Vol. 76 (June 12, 1978), p. 22.
581
-------
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by the problems and issues in the context of capital availability
for western energy development.
The effectiveness of alternatives is defined by the degree to
which implementation strategies used are capable of achieving the
policy objective of making adequate capital available for western
energy development. This objective must also include consideration
of short- and long-term effectiveness and the degree of risk re-
maining for the private sector.
Efficiency refers primarily to economic costs and benefits
associated with a policy option, as well as the probability of
financial failure. Equity here refers to the impact each alter-
native has on the various participants, such as those in the pub-
lic sector and energy firms. The projects which benefit and the
ultimate bearers of the cost are key elements of equity for cap-
ital availability options. Flexibility for these policy options
refers to reversibility and the possibility of variances for
special conditions. Reversibility is important for capital in-
vestment policies that may be appropriate to support new technol-
ogies (such as coal gasification) but could be prohibitively
costly if and when a technology is widely deployed. Implement-
ability of a policy alternative is determined by the institutional
or legal changes that the alternative would require, and the values
that are affected.
B. Evaluation of Financial Subsidies
The financial subsidies alternative includes tax incentives
and price guarantees. While tax incentives can include a range
of measures, such as accelerated depreciation, percentage deple-
tion, and tax-exempt bonds, the following evaluation focuses pri-
marily on investment tax credits.
(1) How Much New Capital Would Be Attracted?
Price guarantees could effectively reduce investors' risks,
depending on the level of guarantee. If a potential investor is
guaranteed a profit (that is, guaranteed a sufficient price floor),
much of the risk of investing would be removed. Essentially, the
market-price uncertainty, as well as the liability, would be trans-
ferred to the government. Price guarantees would also reduce some
of the cost uncertainties associated with construction and opera-
tion. Of course, not all risks are removed since, for example,
unexpected technical difficulties could raise costs above the price
floor. Therefore, while price guarantees relieve investors of
market price uncertainties, they do not totally eliminate the
problem of capital exposure. That is, the developer must still
raise funds at the time of construction, keep the funds tied up
for a long time, and bear potentially disastrous risks of techni-
cal problems, strikes, etc. As brought out earlier (Table 10-3),
the financing of a single, large facility would approximate the
583
-------
entire fixed assets of many would-be developers. Price guarantees
help the ultimate profit potential of the larger firms which can
get these projects under way, but getting started is the major
hurdle for the smaller firms.
Tax preferences can take a number of forms, ranging from an
increased investment tax credit to tax-exempt status for bonds.
The relative effectiveness of these options depends critically
on their amount and importance to individual firms. For example,
the investment tax credit is presently limited to 50 percent of
a firm's net income, thus restricting mary utilities in their
utilization of this credit. It is therefore not only the percent-
age of the credit but the maximum credit allowed that affects its
effectiveness. Generally speaking, the strength of price guaran-
tees is the weakness of tax preferences, and vice-versa. An in-
vestment tax credit removes little of the market-price uncertainty
of investments and does not guarantee to the investor a profitable
operation once the facility is functioning. Tax credits do have
the advantage of reducing capital exposure by allowing the devel-
oper to recapture part of its capital almost immediately. Of
course, without sufficient profits the tax credit would not be
effective; this appears to be a problem not only for many smaller
firms but also some large electric utilities.
A factor which potentially limits the effectiveness of the
investment tax credit is that the percentage can be changed annu-
ally in the tax code, which increases the uncertainty of the pro-
fitability of the investment. For example, if investments were
made in anticipation of large credits, the firm gambles that the
credit would not change during the construction period, which can
often last 8 years, or longer. The investment tax credit has had
an erratic recent history, and, therefore, this uncertainty may
reduce its effectiveness as a means of increasing investment in
large-scale energy facilities.
(2) What Are the Costs, Benefits, and Risks of Financial Subsidies?
The costs of government subsidies depend on the range of
energy facilities covered and the extent of the subsidy.. Sub-
sidies (particularly price guarantees) would be quite inefficient
in the traditional economic sense, since uhey would support tech-
nologies that are not economical at existing market prices. The
resulting disparity and liability, of course, will rest on the
government and the taxpayers. The benefits of technological im-
provements and increased domestic energy production, therefore,
must be balanced against these costs.
In the case of price guarantees, the incurred liability of
government to support such technologies could be quite substantial.
Current projections by the ERA estimate gasified coal at $5.50 per
million British thermal units in 1978 dollars, compared to $2.26
584
-------
for domestic gas and roughly $4.20 for Alaskan imported gas.1
Thus, the amount of the guarantee or subsidy could be $1.30 over
the price of Alaskan gas, implying a subsidy to a 250 million
cubic foot per day gasification plant of about $110 million per
year, roughly the entire annual operating cost for such a facility
(less interest charges and administration).
Naturally, the total liability that the government would
incur with a price guarantee would depend on both the duration of
the guarantee and the relationship between the market price and
guaranteed price during that time frame. In 1975, the Synfuel
Interagency Task Force of the President's Energy Resources Council
used a dynamic simulation model (FIST) to estimate the federal
liability incurred over various time periods and prices in the
support of a shale oil plant. As the figures from the model indi-
cate (see Table 10-13), a price guarantee could become quite
expensive over the long run, depending on the rate of return, the
time period of guarantees, and the real price of competing oil.
For example, to guarantee a 15 percent discounted cash flow rate-
of-return, for 20 years when oil costs $ll/barrel (1975 dollars)
would cost the government $157 million (1975 dollars). As market
prices rise closer to the guarantee level, (which is generally
expected in the case of natural gas), the subsidy would decrease.
However, if the market price rises slowly or stays below the
guaranteed price, the government could be supporting expensive
energy supply sources for many years.
The investment tax credit has quite a different time pattern
of cost. It shows up as a government cost in the form of foregone
tax collections early in the life of the project. A ten percent
investment tax credit on a billion dollar facility will reduce
taxes by $100 million, assuming the firm can take advantage of the
full credit. Later success or failure of the project will not
affect the amount of subsidy.
Overall efficiency, i.e., results per dollar of expenditure,
is difficult to predict. However, the price guarantee approach
could possibly be made more efficient than the investment tax
credit. With a statement of legislative intent to promote prom-
ising new energy technologies, administrators could be given
some latitude in choosing facilities to support with price guaran-
tees. By contrast, tax subsidies are generally applied "across
the board." The IRS is not set up for making technical judgments
based on engineering, environment, or economic factors.
lMDOE Backs First Coal Gasification Plant." Oil and Gas
Journal, Vol. 76 (June 12, 1978), p. 22.
585
-------
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(3) Who Bears the Costs and Who Benefits?
The fundamental feature of government subsidies is that the
taxpayers ultimately pay for them. Tax preferences reduce federal
revenues, while price guarantees involve direct expenditure of
federal funds.
A major question concerning the equity of these policy alter-
natives is which facilities will be covered. If synthetic fuel
facilities receive a benefit which, say, conventional gas pro-
ducers do not, then those gas producers will be forced to face a
new source of competition. The consumers of the synthetic gas,
though, will benefit by paying market price, even though they are
using gas which costs more than that to produce. This economic
benefit to some consumers (since all parts of the country would
probably not use synthetic gas) would be subsidized by all tax-
payers, whether they would directly benefit or not. A benefit
which taxpayers generally (i.e., the nation) presumably will get
for their expenditure is some experimentation with and refinement
of new energy technologies, which would be needed on a larger
scale in the future and increased domestic energy supply with all
of its implications (improved balance of payments, lower unemploy-
ment, etc.).
Another question concerning the equity of these policy alter-
natives is whether or not they favor the larger energy-related
firms over the smaller ones. In the case of price guarantees and
investment tax credits, the alternatives are definitely of more
value to the larger companies. While price guarantees and tax
credits will encourage the large companies to put up the initial
capital necessary for the development of a facility, they do not
help the smaller firms as much since their main problem is coming
up with the initial capital necessary to begin such a plant. Given
the advantages of price guarantees and tax preferences for the
larger company, there is the possibility that the equity question
may emerge into a regional conflict. Many of the eastern mines
are owned by smaller firms whereas the western energy deposits are
owned by large conglomerates which the price guarantee and tax
incentive will assist. Hence, the eastern firms may consider the
federal subsidies as unnecessarily shifting coal production to the
West.
Another equity issue is also raised with respect to one of
the tax incentives mentioned previously, tax-exempt bonds. When
tax-free status is granted to bonds, investors are willing to
accept substantially lower interest rates (about 2 percentage
points lower). The government is implicitly making up the dif-
ference via lower income tax collections. The equity issue arises
because usually it is the upper-income groups, for whom tax exemp-
tions are most beneficial, who take advantage of such provisions.
587
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(4) Are the Options Flexible?
In considering the flexibility of these financial subsidies,
two aspects must be considered: the extent to which they can be
tailored to specific technologies or facilities and the extent to
which they can be modified over time as changing circumstances
dictate. Since tax codes are changed almost on a yearly basis,
the investment tax credit is a very flexible policy alternative
in terms of allowing changes over time. It permits credits on a
yearly basis and could be changed in annual tax code revisions.
However, this flexibility can, as discussed previously, limit the
effectiveness of tax credits since industry faces the risk of
changing tax credits during the construction period for large
energy facilities. With' regard to tailoring the investment tax
credit to specific technologies or facilities, the investment tax
credit is not flexible. As noted previously, investment tax cred-
its are generally applied "across the board." One possible solu-
tion to these problems would be to allow variances for certain
industries which exempt them from future revisions (for some
specified period of time), or which allow greater administrative
discretion in expanding or reducing the tax credit. This option
would, of course, require a revision in the tax code to set a
maximum and minimum that policymakers could change as needed or
apply to specific industries without annual tax code revision.
This could provide industry with some greater stability and yet
assure taxpayers that they will not be locked into costly long-
term policies.
In contrast to the investment tax credit, price 'guarantees
could easily be tailored to specific technologies .(or even to
individual plants as part of a demonstration program) but they
are not inherently flexible over time. A price guarantee program
can be terminated at any time, but this would not retroactively
affect facilities already in operation or under construction. Of
course, flexibility could be enhanced by initially designing the
price guarantee program so it only lasts -for a particular facility
for a relatively short time (say 5 years) but this approach would
also seriously limit its effectiveness in attracting investment
capital.
(5) Are the Financial Subsidies Alternatives Implementable?
A major problem in choosing specific policy alternatives for
providing financial subsidies to energy developers is that policies
that are attractive to industry may be opposed by other parties,
such as the taxpayer who will bear the costs or proponents of
competing energy options (e.g., solar). Nevertheless, generally
speaking, the various financial subsidy policies, depending on the
specifics of each, can probably find support among policymakers.
Tax preferences, especially, have considerable precedent in our
history and do not involve a new approach to economic policy.
588
-------
Price guarantees, on the other hand, have not generally been used
for industrial products although there is a long history of their
use for agricultural production. Overall, the precedents and the
belief that new, alternative energy technologies should be sup-
ported would suggest that generally financial subsidy policies are
acceptable to the majority of the taxpayers.
However, allowing substantial administrative discretion with
the investment tax credit in order to provide increased flexibil-
ity, as discussed previously, would require major policymaking
changes, and seriously challenge long standing traditional values.
Decisionmaking in the tax area is traditionally left to the legis-
lative body. An increase in administrative discretion in these
areas would probably be difficult to achieve.
Opposition to the price support alternative can probably be
expected from some individuals and groups based on the cost and
the time period involved. This alternative causes concern among
those who fear expensive price supports over an indefinite period
of time. Since the technologies are not developed to a point
where they are competitive in the market place, the taxpayers will
have to pay the difference between the cost and the market price.
Also, all taxpayers will be paying for the energy used by a small
part of the public.
In order for this alternative to gain the support necessary
from both the energy industry and other parties to gain acceptance,
the interests of both will have to be protected. The greatest
concern would seem to be clear legislative intent that the program
will not perpetuate itself, but only serve to encourage a nascent
industry until it either becomes self-supporting or reaches a point
where long-term success has been shown to be unachievable. The
program will also have to be administered in such a way as to limit
the number of new facilities involved until the technology is
proven to be either worthwhile, or too costly.
(6) Summary Evaluation of the Financial Subsidies Alternatives
Table 10-14 summarizes the findings about financial subsidies.
These alternatives are potentially very effective because they
can bring directly to bear the vast resources of the federal gov-
ernment. This aid, however, will still call for most of the in-
vestment capital to come from the private sector. The subsidies
considered here improve the expected profitability of energy ven-
tures, but leave with the private sector the task of raising most
of the initial investment. Firms facing significant financial
constraints—small firms and many electric utilities—may not be
able to take full advantage of such programs.
The costs to be borne by the general taxpayer could be sub-
stantial. Hence, the implementing legislation must carefully cir-
cumscribe the role of administrative discretion. On the one hand,
589
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administrators should be enabled to select only those projects
which are most needed to demonstrate and commercialize new tech-
nologies. On the other hand, taxpayers must be given assurance
that aid will be terminated when a technology either becomes prof-
itable or is shown to be uneconomic.
C. Evaluation of Promoting New Sources of Investment
Within these categories of alternatives (promoting new sources
of investment), two specific alternatives are being considered.
One deals generally with improving the leasing systems used for
making federally owned energy resources available for development.
The second aims at making energy consumers major sources of invest-
ment capital through the use of charges to consumers for the costs
of energy facility projects under construction.
(1) Will More Investment in Western Energy Development Be Made?
Current regulatory requirements, such as uranium patenting
and preference right leasing, often release federally owned min-
erals for token fees. Any new laws or regulations which increase
developer payments to the federal government will tend to reduce
the number of potential mine sites which industry would consider
for development. For this reason, it is possible that improved
leasing systems could decrease the total capital made available
for western energy development.
On the other hand, if wider opportunities to participate are
created, more participants and a more competitive energy market
could eventually change. It is also possible that streamlined
leasing procedures could increase the total pace of development.
For hard-rock minerals such as uranium, the current system is so
chaotic that there may be seven or eight claims on a single piece
of land, with many legal bases for one to challenge another. One
report strongly suggests that gaps and anomalies in the legal
structure create confusion and vexatious litigation.1 By making
the parties' rights clearer, a leasing system for making uranium
resources available for development could reduce costs and intro-
duce more certainty. In the case of poorly mapped resources (geo-
thermal, oil, and gas), -the two-stage competitive bidding system
described previously could also attract greater industry parti-
cipation by reducing risks. This is because the larger cash out-
lays for a production lease, do not have to be made until the
^.S., Congress, Senate, Committee on Interior and Insular
Affairs. Report to the Federal Trade Commission on Federal Energy
Land Policy; Efficiency/ Revenue, and Competition, Committee
Print,by the Federal Trade Commission, Bureaus of Competition and
Economics. Washington, D.C.: Government Printing Office, 1976,
p. 666.
592
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exploration stage is completed. The net effect of these forces
is difficult to predict, but on balance, the improved leasing
systems will probably decrease investment capital for western
energy development due to substantially increased bonus bid and
royalty payments to the federal government.
The other specific alternative being considered, consumer
risk assumption, will probably spell the difference between fea-
sibility and failure for many energy conversion projects. This
option can be implemented in the case of regulated industries,
where the monopoly situation leaves consumers little choice but
to accept special assessments in the case of project failure.
Moreover, the regulatory framework facilitates other devices to
improve the developers' prospects, such as rolled-in pricing and
recovery of interest during construction.l In fact, these devices
have been coupled with the first application before the FERC for
an "all-events tariff."2 Such a regulatory package provides con-
siderable security to the developers, and may be expected to sub-
stantially increase the number of gas companies who will adopt
coal gasification.
(2) What Are the Costs and Risks of Investment from New Sources?
The proposed leasing reforms tend to increase the revenues
collected by the government. As noted above, this may impair the
willingness of industry to develop federally owned resources. It
may also push upward the prices ultimately charged consumers for
energy.
A quantitative estimate for revenue potential may be gained
from previous experience with western coal leasing. The bonus
payments received in 1974, at 2.44 cents per ton, were more than
three times as large as in any previous year.3 Still, the market
value of coal in Utah (all the coal in question was in Utah) at
that time was much greater—about $10. A 12.5-percent royalty
(which is now Interior's goal) would have yielded $1.25/ton, or
more than 50 times as much as actually was collected. Even allow-
ing for the fact that bonuses are paid immediately, whereas
royalties are deferred, collections were probably less than
'See Section 10.2.2 above.
2"DOE Backs First Coal Gasification Plant." Oil and Gas
Journal, Vol. 76 (June 12, 1978), p. 22.
3U.S., Congress, Senate, Committee on Interior and Insular
Affairs. Report to the Federal Trade Commission on Federal Energy
Land Policy: Efficiency, Revenue, and Competition, Committee
Print by the Federal Trade Commission, Bureaus of Competition and
Economics. Washington, D.C.: Government Printing Office, 1976,
Table 9.19.
593
-------
one-twentieth of what they could have been under a percentage
bonus system. Applying a factor of 20 to the average bonus
receipts of $2.09 million/year during 1966-71, l it may be sur-
mised that more than $40 million dollars per year of potential
revenue has not been collected. This figure would increase if,
as expected, federal coal leasing activity reaches a faster pace
than before the moratorium.
Even the proponents of consumer risk assumption concede that
coal gasisification, at its current stage of development entails
greater economic cost than other gas sources. The ERA, in sup-
porting a coal gasification project before FERC, estimated the
gas cost at $5.50 (1978.currency), whereas the most expensive gas
alternative (imported LNG) was only $4.27.2 Consumers would not
only be paying for the higher energy costs, but they also would
be assuming a majority of the risks in the event of unexpected
technical problems. Hopefully, experience gained in commercial
scale synthetic fuels technology will lower the cost in the fu-
ture, so that special financial provisions will not be needed
indefinitely.
(3) Who Bears the Costs and Who Benefits?
As noted above, the revised leasing procedures would gener-
ate more revenue for the federal and state governments, thus
constituting a benefit for taxpayers. On the other hand, these
added fees will, to some extent, be passed along to energy con-
sumers, although a prime rationale for these new leasing proce-
dures is the enhancement of competitive forces which will tend to
hold down energy prices. The developers would correspondingly
absorb any added costs.
Clearly "consumer assumption of risk" implies that gas con-
sumers will bear what are expected to be the higher costs of
synthesized gas. Outside lenders would be guaranteed a complete
return of their investment under the first "all events tariff"
which has been proposed. This would be achieved mainly by a "cost
Issuance of new federal leases has been virtually halted
since 1971, due to challenges by environmentalists and planning
by the Interior Department for completely new procedures. Full
resumption of new leasing is not expected before the mid-1980's.
See Lee, L. Courtland, and David C. Russell. "Whatever Happened
to Federal Coal Leasing?" Coal Mining and Processing, Vol. 14
(June 1977), pp. 60-63, 112; also Bagge, Carl."Federal Leasing?
In the 1980's Perhaps." Coal Mining and Processing, Vol. 15
(September 1978), p. 49.
2 "DOE Backs First Coal Gasification Plant." Oil arid Gas
Journal, Vol. 76 (June 12, 1978), p. 22.
594
-------
of service tariff" being charged to the customers, sufficient to
cover all costs of construction and operation. The pipeline com-
panies would probably receive a somewhat lower rate of return on
their equity (which represents 25 percent of the total investment),
since the ERA has recommended that "appropriate consideration
(be given) to the degree to which risks associated with this pro-
ject are being preguaranteed by consumers."1 In all other re-
spects consumers bear any additional costs.
As noted previously, compared to other "supplemental" sources
of gas, the Lurgi process will cost an additional $1.23/thousand
cubic feet (in 1978 currency). A plant of 125 million cubic
feet/day capacity would thus entail an added cost of $50.5 million
per year, or about $6.30 per year for each of the participating
companies' customers. This is a minimal estimate, since costs
of new technologies tend to rise in the development stage, and
even cheaper alternatives may become available. For example, a
major gas discovery in Alberta has recently cast doubt on the
economic viability of the Alaskan gas pipeline.2
Gas consumers and the public more generally do gain some
benefits from the consumer assumption of risk alternative. Prob-
ably the most important is reliability of supply, as compared to
imports and limited domestic reserves. In addition, experience
with new conversion processes may lead to technological break-
throughs and eventually lower costs.
(4) Are the Options Flexible and Reversible?
The proposed leasing systems, by making the process more
organized, make it at least potentially more flexible. The current
system leaves the government in a rather passive position, with
private companies nominating coal tracts and claiming uranium
resources at times and places of their own choosing. A planned
leasing program would give the government a greater opportunity
to guide the pace of development, as well as concentrating it in
areas which are the most environmentally acceptable. However,
a basic restructuring of mineral leasing would require new legis-
lation, hence would be virtually irreversible. Mining is currently
regulated under laws enacted in 1872 and 1920. These periods of
time indicate how infrequrently fundamental legislation is passed
in this area.
lnDOE Backs First Coal Gasification Plant." Oil and Gas
Journal, Vol. 76 (June 12, 1978), p. 22.
2See "A Halt to the Alaska Gas Line?" Business Week,
September 25, 1978, pp. 155, 158.
595
-------
The consumer assumption of risk alternative is very flexible
because the FERC can make these decisions on a case-by-case basis.
Once made, however, a decision would have to be adhered to over
the life of a long-term contract of 20 or 30 years.
(5) How Much Innovation Will Be Required?
The proposed leasing changes would require new legislation
and, as just noted, significant changes in minerals legislation
come quite infrequently. Still, recent passage of a surface min-
ing and reclamation act appears indicative of congressional inter-
est in the mining field at this time. If new legislation were
adopted, probably claims already recognized would be "grandfathered"
into continued validity. Unfortunately, whether "grandfathering"
is attempted or not, legal controversies over ownership could
extend over a long period, as has already happened with oil shale.l
A feature of the streamline leasing procedures which would
facilitate implementation is that they would be much simpler than
the current, virtually chaotic system (especially in the case of
uranium). Two-stage competitive bidding, however, would be ad-
ministratively more complex than onestep bidding systems.
Consumer risk assumption could be implemented by the FERC
without further legislative authorization. The FPC (predecessor
to FERC) has traditionally disapproved of such devices, but DOE
backing of the approach may now have some influence. Apparently
DOE is now leaning this way because currently loan guarantee
programs are too complicated and time-consuming.2
(6) Summary Evaluation of "New Sources of Capital" Strategies
A summary of the evaluation of this category of alternatives
is given in Table 10-15. The resource leasing options may stimu-
late mining investment in the long run by making procedures more
orderly. In the short run, chough, mining may be impeded as both
private firms and public regulators adjust to new "rules of the
game." Firms will also have to pay higher royalties, which may
discourage some development. Higher fees would be borne by the
mining firms and these could be passed on to energy consumers
depending on competitive market forces.
Consumer risk assumption via a device such as the "all events
tariff" shifts most financial risk away from the developers, hence
:Green, Carol, and Gay Cook. "U.S.. Oil Shale Land Policy
Called 'Mess.'" Denver Post, September 12, 1978, pp. 1, 12.
2"How to Finance Gas Produced From Coal." Business Week,
June 19, 1978, p. 36.
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could be very effective in stimulating investment. This could be
a very costly alternative, though, unless significant breakthroughs
are achieved in synfuels technology. In fact, a major rationale
for this kind of subsidy is that promising technologies will be
supported only temporarily until breakthroughs are made and/or
conventional sources become just as expensive.
D. Summary Comparison of Capital Availability Alternatives
The effectiveness of these alternatives depends critically
on the particular implementation method. In general, the subsidy
alternative could be very effective because it brings directly to
bear the financial resources of the federal government (see
summary Table 10-16).
Very different kinds of firms would be involved in each of
these alternatives. The "new sources" strategies reduce the risk
of financial failure, hence could attract small firms or those
facing financial constraints (e.g., some utilities). In fact,
some options within this overall strategy could be deliberately
designed to aid the smaller firm. By contrast, the subsidies al-
ternative does not greatly reduce capital exposure—the amount of
capital tied up for long periods and subject to possible loss;
that is, statistically expected profitability is increased but
substantial risks remain. Hence, participation would tend to be
limited to well capitalized firms, such as integrated oil com-
panies .
Most of the options considered here are inefficient in the
economic sense, inasmuch as they promote the use of resources and
technologies whose cost is greater than that of available alaterna-
tives, such as imported oil. The primary rationale for their adop-
tion is the need to balance economic efficiency with reduced de-
pendence on foreign sources, and faster technological advancement.
Additional economic costs are borne by taxpayers in the case of
subsidies, and by energy consumers in the case of the consumer
assumption of risk alternative. The costs and benefits and their
distribution in the case of improved leasing systems is uncertain,
but generally taxpayers should benefit through higher government
revenues for the right to develop federally owned resources.
Implementation may come more readily for the subsidy strat-
egies, especially in the case of the tax incentives alternative
since it has considerable precedent and politically it may be more
acceptable since it doesn't require government expenditure (rather,
government revenues are reduced). The improved leasing system
alternative, on the other hand, strongly affects well-defined
groups, such as uranium and coal mining firms. Strcitegies such as
consumer risk assumption go against the traditional orientation of
agencies, such as the FERC, which would have to implement them,
although it may be experimented with on a case-by-case basis.
600
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602
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CHAPTER 11
TRANSPORTATION
EXECUTIVE SUMMARY
The demand for western energy resources largely comes from ur-
ban areas outside the West. This will require existing transporta-
tion facilities for raw resources (such as coal) and for converted
energy forms (such as electricity) to be expanded. Many of the
benefits associated with western energy are received outside the
West, while the costs of expansion of energy transportation will
be largely confined to the western states and other states along
the transportation routes. Consequently, expansion of energy
transportation networks raises difficult political issues, and
often involves opposition by landowners, local and state govern-
ments, environmental groups, and owners of competing transportation
modes.
Impacts
The extent of transportation impacts depends on the level of
energy production in the western states. A scenario used through-
out this study (amounting to national production of 124 quadrillion
British thermal units [Btu's] [124 Q's] by the year 2000) results
in the capital and land requirements for energy transportation fa-
cilities shown in Table 11ES-1. Coal slurry pipelines, as a new
mode for shipping raw coal, would require large amounts of capital
(up to $14.2 billion) for construction. Electric transmission
lines will involve considerably lower costs, but will occupy the
greatest quantities of land for their rights-of-way (up to 205,000
acres) .
Railroads and coal slurry pipelines compete directly for
large, long-term shipments to coal users such as electric utilities.
On such shipments, railroads appear to have advantages when:
(1) variable quantities are shipped over time; (2) there are multi-
ple origins and destinations; and (3) established mainlines are
used as routes. Slurry pipelines appear to be superior when:
(1) large volumes of coal are shipped over long distances; (2) high
rates of inflation occur; (3) coal mines are large and close to-
gether; (4) there is a large, secure market in one location;
(5) "-arge supplies of water are available; and (6) the terrain
favors pipeline construction. The cost structures of rails and
slurries also differ considerably. Pipelines will need to be built
603
-------
TABLE 11ES-1: CAPITAL AND LAND REQUIREMENTS BY 2000
FOR THREE TRANSPORT MODES
MODE
CAPITAL COSTS
(billions of 1975 dollars)
LAND
(thousands of acres)
Coal Slurry Pipeline
Unit Trains
Electric Transmission
14.2
9.9
2.2
184
67
205
from scratch, requiring a large construction force but few perma-
nent employees. Railroads, on the other hand, have much track in
place and employ a large number of operational workers.
Environmental impacts of railroads primarily include noise,
wildlife habitat fragmentation, and disruption of highway traffic
in towns through which trains pass. These impacts have been pres-
ent in the West, but would increase in intensity and frequency as
western energy development expands. Slurry pipelines have their
major effect in the consumption of water, estimated at 788 acre-
feet per million tons of coal, which would come from water-scarce
western locations. In addition, coal fines (very small particles
of coal) will produce a sludge at the receiving end of a slurry
line. Thus, both rails and slurries have their costs and advan-
tages on specific aspects of energy transportation.
High-voltage electric transmission lines impact large quanti-
ties of land, since wide right-of-way corridors are required. As
voltage is increased, wider corridors are required but fewer lines
(and corridors) are needed at the higher voltages because of their
larger carrying capacity. Thus, to cut both construction and land
costs, and because of increasing size of power plants, utilities
have been moving toward the higher voltage lines. In addition to
land-use impacts, transmission lines have been associated with
electric shock, electronic communication interference, and biolog-
ical effects on both humans and animals (such as livestock).
These problems, which may be minor or nonexistent at low voltages,
become of more concern as voltages are increased.
604
-------
The Policy Context
Energy transportation is a very fragmented policy area, in
which routes and modes are selected by energy developers in the
same manner as facility siting decisions are made (see Chapter 12),
Until recently, relatively few conflicts arose over energy trans-
portation. As greater quantities of coal, in particular, are de-
veloped, economic and physical impacts raise issues for transpor-
tation, both of raw coal and of electricity generated from coal.
The principal issues include:
• Railroads have had a virtual monopoly on coal traffic. Coal
tends to be considerably more profitable than shipments of
other commodities because it is sent in high-volume, long-
distance shipments. Slurry pipelines provide an alternative
to railroads for the most attractive traffic, and are opposed
strongly by western railroads.
• There is some question whether the railroad industry will be
able to provide adequate transportation capacity subject to
environmental and related pressures. Some rail routes will
have heavy traffic which, even if not resulting in bottle-
necks, will create long delays at railroad crossings. A
great dc.al of opposition to railroads has arisen in western
towns along rail routes concerning health and safety aspects
of trains blocking crossings for long periods of time (up to
several hours each day). Most western towns have only one
or t.w'o grade crossings and very few have an overpass or
underpass.
• Largely because they will involve new construction, both
slurry pipelines and electric transmission lines involve
significant land use and aesthetic impacts. However, these
types of concerns are usually less with pipelines since they
* Th3 opposition to electric transmission lines has grown over
mote than land use, and has tended to focus on electric
shock, communications interference, and possible effects on
humans and livestock. Insufficient information is available
to date to judge the biological effects, but farmers and
:.
-------
threaten the regional water supply in the long run,, even if
new water sources are found. However, in comparison with elec-
tric power generation, slurry pipelines consume 23 to 39 per-
cent less water per unit of coal burned or shipped. Rail
shipment of coal requires negligible quantities of water.
These and other policy issues raised in the context of trans-
portation of western energy can rarely be resolved at any single
level. Federal, state, and local governments, farmers and ranchers,
railroads, utilities, and other participants all have an interest
in these issues. Together, these groups contribute to an uncer-
tainty about the kind and level of opposition and support for any
policy solution.
Alternative Policies
The policy objective chosen for addressing energy transpor-
tation issues was to provide adequate capacity for transporting
energy resources produced in the West while minimizing undesir-
able environmental and socioeconomic impacts. As shown in Table
11ES-2, four categories of policy alternatives and some selected
specific policy alternatives may be suggested toward achieving
this objective. The coal-carrying capacity of railroads can be
enhanced by route expansion, an increase in rates, and greater
economic and regulatory stability. Adverse impacts of coal unit
trains can be mitigated by improving safety at crossings, (gener-
ally by grade separations) and by reduction of train noise in
communities. Coal slurry pipelines can be promoted as a comple-
mentary energy transport mode by granting them eminent domain.
Impacts of high-voltage transmission lines (HVTL's) can be mini-
mized by limiting voltage, increasing research on technological
alternatives, such as high voltage direct current (DC) transmis-
sion, and instituting interstate planning for power line routes.
FINDINGS
Rails:
In order to utilize the supply of coal in the West, coal car-
rying capacity of railroads must be increased. Railroads should
be able to physically meet the increased demand for track and
rolling stock, provided the necessary investment capital is avail-
able. To meet projected demands, total investment outlays will
approach $8 billion by 1985, which is considerably larger than the
recent rate of capital outlays by railroads. Achieving investment
of this magnitude and increasing rail capacity will require govern-
ment policies that assure economic and regulatory stability for
railroads. Policies of this type include an investment tax credit
of 20 percent, federal loans, expedited procedures for discontinuing
marginally cost-effective rail service, subsidies of new track.
outlays, and permitting long-term contracts.
606
-------
TABLE 11ES-2: TRANSPORTATION POLICY ALTERNATIVES
CATEGORIES OF ALTERNATIVES
Enhance coal-carrying capacity
of railroads
Mitigate adverse impacts of
unit trains
Promote coal slurry pipelines
Minimize impacts of high-
voltage transmission lines
SPECIFIC POLICY ALTERNATIVE
Expand railroads in energy areas
of the West
Increase rail rates
Assure economic and regulatory
stability
Improve safety and mobility for
vehicles crossing rail routes
Reduce train noise in communities
Grant eminent domain to coal
slurry pipelines
Limit voltage
Increase research on technological
alternatives
Institute interstate planning for
high-voltage transmission line
routes
Since coal transportation to centers is characterized by high
volume and small seasonal fluctuations, long-term contracts for
coal are more feasible than for other bulk commodities (such as
grain) and would allow rail companies to plan investments with
greater confidence in levels of future earnings. However, long-
term contracts increase risks for the railroads since they specify
a certain rate to be charged for the duration of the contract and
miscalculation of costs and expected revenues could prove disas-
trous .
Improving rail capacity through government subsidies (e.g.,
investment tax credits or federal loans) is a more equitable method
of spreading the costs of investment and operation among the bene-
ficiaries of rail service compared to current practice. For ex-
ample, consumers of power generated in coal-fired power plants are
subsidizing noncoal rail operations by paying prices substantially
above costs. Although there is considerable precedent for govern-
ment subsidies for railroads, this approach may be difficult to
implement given the current political disposition for balancing
the federal budget.
607
-------
Unit Trains:
The greatly increased amount of rail traffic resulting from
energy development in the West will have substantial impact on
communities along the major routes. Alternatives for reducing
these impacts include improving safety signals at rail-vehicle
crossings, constructing grade separations, noise barriers, or by-
pass lines around communities, and revising land-use plans along
rights-of-way. However, little can be done to reduce the physical
impacts except move the tracks away from people, or vice-versa.
Alternatives ranging from most to least effective are: construc-
tion of rail by-passes around towns, construction of grade separa-
tions, upgrading rail-crossing safety devices, and construction of
noise barriers.
Grade separations and track rerouting are the most, costly of
the alternatives, the former ranging between $750,000 and $1.5 mil-
lion (depending on conditions), and the latter expected to cost
$500,000 per mile for new double tracks.
A task force at the state level could be created in order to
formulate plans to mitigate unit-train coal impacts. The task
force, composed of representatives from railroads, local govern-
ments, and state and federal agencies would determine priorities
for safety signals and grade separations and specify areas where
rerouting of tracks around towns is desirable. The major imple-
mentation constraint is lack of adequate funds; increased federal
funding for such posposes, with contributions from states and
railroads, may be required.
Slurry Pipelines:
Coal slurry pipelines can feasibly transport western coal to
distant demand centers, if eminent domain powers are granted by
Congress and if sufficient water is available. In some cases,
transportation of coal via slurry lines is cheaper than transport
by rail. Generally coal slurry pipelines will allow coal to be
economically transported farther outside the region than if just
rail transport is used.
Extension of the right of eminent domain to slurry pipelines
will promote competition among coal carriers, resulting in more
efficient coal transportation from the West to the demand centers.
However, slurries are relatively inflexible in terms of shipping
capacity; they must be operated at a more or less constant volume
of flow and at very high capacity between a fixed supply point
and a fixed demand point. Thus, under no circumstances would
slurry pipelines totally substitute for rail transport.
The physical impacts of slurry operations along the route are
not as pronounced as those associated with rail operations. Gen-
erally, the lines will not be apparent except while excavating for
construction or for repair of plugs or breaks in the line.
608
-------
Extension of the right of eminent domain to coal slurry pipe-
lines by Congress will be met with opposition from railroads, labor
unions, and water scarce states such as Colorado and Wyoming.
Railroads offer a higher level of operations employment and the
financial strength of railroads will be lessened if traffic is
lost to slurry pipelines. On the other hand, with a combined
slurry pipeline/railroad system, there will be loss of threat to
coal supply disruption due to railway strikes.
High-Voltage Transmission Lines:
Limiting voltage on HVTL's will reduce health and safety im-
pacts along routes, but will increase the proliferation of lines
and result in greater costs to power utilities and consumers.
Costs vary greatly with the volatage level; for example, investment
costs would be approximately one-third larger for 500 kV lines
than for 765 kV lines in order to carry the same amount of power
over a distance of 1,000 miles.
A second approach for reducing HVTL impacts is through in-
creased support of DC transmission research and development. Im-
pacts of DC transmission are generally less than those associated
with alternating current (AC) transmission. Increased funding
from government and industry is needed to increase DC efficiency
in short-distance transmission to match its superiority to AC for
long-distance applications.
Finally, adverse impacts of HVTL's may be reduced by improved
interstate planning. Current procedures in which regulations and
the control of right-of-way siting vary from state to state can
create significant problems. While this option reduces flexibility
for individual states and utilities, it may provide greater cer-
tainty and fewer delays in the siting process.
609
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CHAPTER 11
TRANSPORTATION
11.1 INTRODUCTION
For western energy resources to be available where they are
needed, they will have to be transported to demand centers in other
regions of the country. Existing transportation facilities for raw
resources (such as coal) and for converted energy forms (such as
electricity) will have to be supplemented and in some cases expanded,
The expected western coal production of 1,300 million tons annually
by the year 2000 will require additional transport infrastructure.1
Approximately half of the western coal mined is projected to be ex-
ported in raw form, which could result in the need for 3,500 miles
of new railroad track and 11,000 miles of coal slurry pipelines.
Mine-mouth conversion to electricity, accounting for about one-fifth
of the coal produced, could require about 9,000 miles of high volt-
age transmission lines (HVTL's). The remainder of the coal is pro-
jected to be used in the production of synthetic oil and gas, which
will require about 4,300 miles of 36-inch pipeline.2
But attempts to install or expand an energy transportation fa-
cility often prompts opposition from landowners, local and state
governments, environmentalists, and owners of other transportation
modes. Right-of-way acquisition has led to protracted conflicts,
JThis figure corresponds to the Low Demand Case of the Stanford
Research Institute (SRI)-Gulf interfuel competition model used in
our regional analysis. See Cazalet, Edward G., et al. A Western
Regional Energy Development Study; Economics, Final Report, 2 vols.
Menlo Park, Calif.: Stanford Research Institute, 1976. As used
here, the "West" refers to the eight states in our study area:
Arizona, Colorado, Montana, New Mexico, North Dakota, South Dakota,
Utah, and Wyoming.
2See White, Irvin L., et al. Energy From the West; A Progress
Report of a Technology Assessment of Western Energy Resource Devel-
"opment. Washington, D.C.: U.S., Environmental Protection Agency,
1977, Vol. II, Section 12.7, for details on anticipated production
levels and transportation needs through the year 2000 according to
SRI's Nominal Demand Case. More detailed projections on these ship-
ments are presented in the following section.
610
-------
even in states with well-defined siting procedures. For example,
despite public hearings during the siting process, HVTL construction
sites were picketed recently in Minnesota.1 In some cases, state
authorities will not or legally cannot grant the power of eminent
domain to a transportation mode which passes through the state with-
out picking up or discharging a payload. It may be difficult to
establish a federal procedure which both deals effectively with this
problem and accommodates legitimate state interests.
Conflict has been especially pronounced in the case of proposed
slurry pipelines for transporting coal long distances. The major
issues concern the facts that slurry pipelines consume relatively
large amounts of water and may reduce railroad revenues. However,
even with competition from slurries, increased coal production would
guarantee that western railroads will experience increased demand.
In fact, railroads are likely to experience difficulties in raising
the capital needed to expand facilities at the rate needed to meet
increased needs.
In the following section, the transportation impacts of western
energy resource development are summarized. These impacts are then
related to the social and political context within which they will
arise, and the problems and issues which are likely to result are
identified and described. In the final section of this chapter
alternative policies and implementing strategies for dealing with
these problems and issues are identified, evaluated, and compared.
11.2 TRANSPORTATION PROBLEMS AND ISSUES
11.2.1 Transportation Impacts of Energy Resource Development
The anticipated expansion of western energy transportation fa-
cilities and the projected capital costs associated with the low
level of development being considered for our eight-state study area
are shown in Table 11-1. These data are based on Stanford Research
Institute's (SRI) Low Demand Case which calls for an annual energy
demand growth rate of approximately 2.1 percent and predicts a
national energy supply of 124 quadrillion British thermal units
(Btu's) (124 Q's) for the year 2000 with an end use demand of 67.97
Q's.2 The SRI model traces the flows of products from sources to
end uses by linking centers of supply regions to centers of demand
regions. The results are an estimate of the gross flows of energy
1"Troopers Arrest Eight in Power Protest." Denver Post,
January 13, 1978.
2See Chapter 12 in White, Irvin L., et al. Energy From the
West: A Progress Report of a Technology Assessment of Western
Energy Resource Development. Washington, D.C.: U.S., Environmental
"Protection Agency, 1911.
611
-------
TABLE 11-1:
INCREASED WESTERN ENERGY TRANSPORT, 1975-2000
(Low Demand Case)
MODE
Slurry
Unit Train
Gas Pipeline
DC Transmission
Oil Pipeline
ENERGY FORM
Coal
Coal
Gas from Coal
Electricity
Shale Syncrude
THROUGHPUTS3
350 MMtpy
306 MMtpy
2.56 bcfd
29,600 MWe
1.79 MMbbl/day
Total Capital Costs
CAPITAL COSTS
(billions of
1.975 dollars)
14.2
9.9
3.93
2.17
.86
31.06
MMtpy = million tons per year
bcfd = billion cubic feet per day
DC = direct current
MWe = megawatt-electric
MMbbl/day = million
barrels per
day
Source: White, Irvin L., et al. Energy From the West; A Prog-
ress Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Vol. II, Tables 12-1, 12-2, 12-55.
aQuantities are adjusted to reflect equivalent throughputs over a
standardized distance of 1,000 miles.
which can be expected, not the flows for any particular route. This
model was used to estimate the magnitude of transportation activity
that can be expected in (or to originate from) our study area.
If all of the coal called for by this scenario in the year 2000
is transported by rail, it would represent a growth of about 22
percent in the freight revenue for all commodities of the ten larg-
est western railroads which currently haul coal (assuming an aver-
age revenue of $3.54 per ton). This projected increase in rail
traffic would require a fleet of approximately 380 unit-trains,
each consisting of five or more 3,000 horsepower locomotives and
100 hopper cars capable of transporting 100 tons of coal each. In
612
-------
TABLE 11-2:
LAND AND STEEL REQUIREMENTS
BY THE YEAR 2000
(Low Demand Case)
MODE
Unit Train
DC Transmission
Coal Slurry Pipeline
LAND
(thousands
of acres)
67
205
184
STEEL
(millions
of tons
1.5
NA
5.9
DC = direct current
NA = not available
Source: White, Irvin L., et al. Energy From
the West; A Progress Report of a Technology
Assessment of Western Energy Resource Develop-
ment. Washington, D.C.: U.S., Environmental
Protection Agency, 1977, Vols. II and IV.
o
According to the Low Demand Case there will be
an annual energy supply by the year 2000 of
124 quadrillion British thermal units; see
Section 11.2.1 above.
all, this much rolling stock would consume in excess of 1.5 million
tons of steel.l
The transportation modes necessary to move energy from the
resource area to where it will be consumed vary considerably in
their land and material requirements. These requirements are
summarized in Table 11-2. Steel is the major material requirement,
especially for coal slurry pipelines. Significant quantities (as
much as 65,000 tons) of aluminum could also be used in electrical
transmission.
Several economic characteristics of transportation modes are
presented in Table 11-3. Oil pipelines are clearly the least ex-
pensive and most energy efficient means for transporting a given
quantity of energy. Power lines are the most capital-intensive
1 National Coal Association.
D.C.: National Coal Association, 1974.
Coal Facts 1974-1975. Washington,
These estimates of steel
utilization do not include requirements for new track or replace-
ments in the existing network. See White, Irvin L., et al. Energy
From the West; A Progress Report of a Technology Assessment of
Western Energy Resource Development. Washington, D.C.: U.S.,
Environmental Protection Agency, 1977, Vol. II, Table 12-68.
613
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and least energy efficient mode. Of course, many other considera-
tions enter into the decision to utilize a particular mode of trans-
portation, especially specific requirements of the firms which sup-
ply and demand energy resources. For example, the use of HVTL's is
contingent on the availability of sites for the power plant, the
geographical distribution of projected demand growth, the existing
grid, the kilovolt (kV) design choices available, and the avail-
ability of transmission line routes.
Slurry pipelines and railroads largely compete for the same
coal traffic. According to Table 11-3, their unit costs vary by no
more than 20 percent. Various studies have produced different con-
clusions about how costs compare. For instance, a 1975 Bureau of
Mines study found that: "Neither (rail or slurry) is superior to
the other in any broad spectrum. Yet for specific cases, one will
undoubtedly be preferable to the other though likely by narrow
margins."1 An Office of Technology Assessment study concluded
that: "If one ignores regulatory distortions and larger social
costs, slurry pipelines can...transport coal more economically than
can other modes under certain circumstances."2
The western coal transport system will probably evolve into
a mixed system, with each transportation mode (including trucks and
conveyors for short hauls) taking a share of the overall market.
Railroads appear more economical in situations characterized by:
(1) variable quantities to be shipped over time; (2) multiple points
of origin and destination; and (3) routes which utilize already
established mainlines.3 Slurry pipelines are generally more eco-
nomical when: (1) high volumes of coal are to be shipped over long
distances; (2) low real interest rates are obtainable; (3) mines
are large and close together; (4) there is a large, secure market
in one location; (5) large supplies of inexpensive water are avail-r
able; and (6) terrain favors pipeline construction.^
Campbell, T.C., and Sidney Katell. Long Distance Coal Trans-
port: Unit Trains or Slurry Pipelines, Bureau of Mines Information
Circular 8690. Washington, D.C.: Government Printing Office, 1975.
2U.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines. Washington, D.C71Office of Technology Assessment,
1978, p. 15.
3See, among others, Rieber, Michael, and Shao Lee Soo. "Route
Specific Cost Comparisons: Unit Trains, Coal Slurry Pipelines and
Extra High Voltage Transmission," Appendix B in White, Irvin L.,
et al. Energy From the West; A Progress Report of a Technology
Assessment of Western Energy Resource Development. Washington,
DTc.: U.S., Environmental Protection Agency,1977.
^Office of Technology Assessment. Technology Assessment of
Coal Slurry Pipelines, p. 15.
615
-------
Differences in cost structure will lead to different transpor-
tation impacts on the western economy. Table 11-3 shows that rail-
roads have the lowest proportion of their costs front-ended, imply-
ing that most of their costs are operational, because railroads
employ a relatively large number of operational workers as compared
to pipelines. Pipelines, on the other hand, require a large con-
struction labor force and only a few permanent workers. In both
cases, the workers' residences will be spread out along the whole
length of the transport corridor, with some concentration at each
end. Railroads, therefore, would contribute to greater long-term
employment growth in the western economy. However, local govern-
ments will experience more beneficial direct fiscal effects from
slurry lines since they would add a larger increment to the existing
property tax base. According to a Wyoming state study, slurry
lines bring $18,000 of assessed valuation for each permanent em-
ployee while railroads bring $6,800.1
A critical determinant of economic impacts is the status of
excess capacity on the main rail routes. Although western rail
lines are generally underutilized at the present time, increased
coal transport could eventually result in delays for noncoal rail
shipments. Of course, the reverse could also be the case if
priority were given to the other commodities.2
If coal traffic continues to grow, railroads eventually will
have to upgrade signaling systems, repair roadbeds, and build new
track. Capacities under various configurations have been esti-
mated as follows: 28 trains per day with single track, 65 for
single and double track segments alternating each 10 miles, and
100 trains per day for double track.3 One likely consequence
would be that intermediate communities would receive faster and
more reliable rail service.
lFreudenthal, David D., Peter Ricciardelli, and Michael N.
York. Coal Development Alternatives; An Assessment of Water Use
and Economic Implications"! Cheyenne, Wyo. 1 Wyoming, Department
of Economic Planning and Development, 1974, Table VII-4.
2See U.S., Congress, Senate, Committee on Energy and Natural
Resources, and Committee on Commerce, Science and Transportation.
National Energy Transportation, Vol. I: Current Systems and Move-
ments , Committee Print, by the Congressional Research Service.
Washington, D.C.: Government Printing Office, 1977, p. 54.
3A11 of these are assumed to have centralized traffic control.
See Harza Engineering Company. Analysis of Energy Projections and
Implications for Resource Requirements, for the Missouri River
Basin Commission, Yellowstone Level B Study. Chicago, 111.:
Harza Engineering Co., 1976, Table B-l.
616
-------
In addition to these economic impacts, each of the transpor-
tation modes produces a range of environmental impacts along their
routes. These impacts may be considered either technology-
dependent, such as noise pollution associated with rail transport,
or location-dependent, such as the disruption of highway traffic
in communities caused by an increase in the number of unit trains.
In either case, these impacts are a potential cause of conflict
among the various participants in the development of energy re-
sources within the eight-state study area and along the transpor-
tation routes.
Table 11-4 provides an overview of the types and intensity of
impacts that currently are or can be experienced. It should be
noted that most of these impacts are dependent on the interaction
between technological and locational factors. Thus, the estimate
that as few as 4 unit trains per day will cause outdoor noise
annoyance levels within 1,000 feet of the tracks has different
meanings depending on whether the rail route bisects numerous small
communities or avoids populated areas altogether.
11.2.2 The Context of Transportation Issues in the West
Four modes--railroads, coal slurry pipelines, oil and gas
pipelines, and HVTL's—are critical to the transportation of energy
from the eight-state study area. Trucks and conveyors may also be
important, particularly for short-distance hauls. Of these modes,
three (all except oil and gas pipelines) are particularly involved
in generating policy issues in western energy development.
As noted above, the transportation of energy from the West
has already begun to generate conflicts among the various parties-
at-interest in western energy development. These conflicts can be
divided into three categories: economic, physical, and planning.
Economic conflicts have arisen among competing transportation
modes, often because of the way each mode is regulated, but also
because of each technology's resource requirements or its impact
on the region's economic development potential. For instance,
slurry pipelines require large quantities of water which threatens
some western interests.
The physical impacts during construction and operation have
produced conflict between the operators and impacted communities.
Noise, aesthetic impacts, accidents, and other disruptive effects
have become issues in many communities along transportation routes,
which has increasingly involved all levels of government.
The third conflict-generating category is transportation
planning, which involves the choice of transportation mode and
route, and the acquisition of right-of-way. Active participation
by a range of interested parties makes this the most potentially
volatile of the three categories of conflicts.
617
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619
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The remainder of this section discusses each of these conflict
categories, their historical evolution, the participants and their
values with regard to transportation modes, and the existing legal
and institutional infrastructure.
A. Economic Conflicts
The economic basis for conflict among the parties-at-interest
in energy transportation in the eight-state study area is closely
related to the historical development of the region. The railroad
was the mode of transportation which activated the growth of the
region during the latter part of the nineteenth century. Oil and
gas pipelines and HVTL's were introduced during the 1920's. In
the case of each transportation technology, government subsidy and
regulation of rate structures is a key feature and a critical point
of conflict. For instance, disputes have arisen between railroad
and trucking interests because federal money provided significant
support for construction of the interstate highway system but not
for improvement and development of rail lines. This initial sup-
port has been paid for in full through gasoline and tire taxes, and
no subsidy exists. This governmental involvement in highway con-
struction has had and continues to have a significant impact on the
region's economic development.
(1) Railroads
Railroad development in the West was subsidized primarily by
land grants. Between 1850 and 1871, approximately 54 million acres
within our study area were given to railroad interests by the fed-
eral government (Table 11-5). Although the initial grants did
not generally include mineral rights, the railroads often mortgaged
or sold these lands in order to purchase prime agricultural lands
and lands with mineral rights and timber.1 Because the railroads
often sold transportation and land package; deals to incoming set-
tlers, the railroad's control of productive lands along their
routes greatly influenced the pattern of urban development and
economic activity in the region.
Farmers, ranchers, and townspeople of the West soon perceived
that the railroads, which had given them their opportunity, were
"...eating up all the profits of agriculture by charging high
freight rates for hauling grain and cattle to markets." In addi-
tion to reducing the profit margin of early settlers by charging
high freight rates for hauling agricultural and mineral exports,
the high prices of manufactured goods brought into the area by
^ossman, Frank H., and Newton Morton. Principles of Trans-
portation. New York, N.Y.: Ronald Press, 1957, pp. 38-39.
2Clark, D.E. The West in American History. New York, N.Y.:
Thomas Y. Crowell, 1946, p. 62'0.
620
-------
TABLE 11-5:
FEDERAL LAND GRANTS TO RAILROADS IN
THE WESTERN STUDY AREA
STATE
Arizona
Colorado
Montana
New Mexico
North & South Dakota
Utah
Wyoming
ACRES
7,695,203
3,757,673
14,736,919
3,355,179
16,697,490
2,230,085
5,749,051
PERCENT OF
STATE AREA
10.6
5.6
15.6
4.3
23.7
4.1
9.2
Source: Henry, Robert S. "The' Railroad Land Grant Legend in
American History Texts," in Carstensen, Vernon, ed . The Public
Lands . Madison, Wis.: University of Wisconsin Press, 1968,
Table 2, p. 129.
rail from the industrial Northeast made the area relatively unat-
tractive as a market and retarded its economic development.
In an early attempt to regulate rail rates, state railroad
commissions established rate ceilings under which railroads had
to operate.1 However, railroad-sponsored lobbies and politicians
generally dominated these commissions and the problem of rate abuse
continued. When, in 1886, state control of intrastate transporta-
tion was affirmed by the Supreme Court's ruling in the Granger
cases, federal action quickly followed in the form of the Act to
Regulate Commerce (commonly known as the Interstate Commerce Act
of 1887) . 2 This act established a basis for federal price regula-
tion in interstate transport and set a precedent for future federal
intervention into virtually every aspect of rail and pipeline com-
merce. Table 11-6 gives an overview of other rail-related legis-
lation and outlines the broad legal context for the movement of
western energy.
This early federal and state rate regulation highlighted con-
flicts of interest among various groups in the West. For example,
the banking industry has often been politically allied with railroad
in, D, Phillip. Economics of Transportation. Homewood,
111.: Richard D. Irwin, 1972, pp. 211-24.
Interstate Commerce Act of 1887, 24 Stat. 379, Chapter 104,
49 U.S.C. §§ 1-27.
621
-------
TABLE 11-6: KEY RAILROAD TRANSPORT LEGISLATION
ACT
GOAL
Transport Act
of 1920
Emergency Trans-
portation Act of
1933
Transportation
Act of 1940
Reed-Bulwinkle
Act of 1948
Transportation
Act of 1958
Railroad Revital-
ization and Reg-
ulatory Reform
Act of 197-6
Established the "rule of rate making" in
which the ICC was urged to initiate rates,
and otherwise adjust rates in such manner
as to provide a fair return on the carrier's
investment. Further, the ICC was required
to issue certificates of public convenience
and necessity to railroads wishing to ex-
pand routes.
Assigned the ICC the role of assuring "ade-
quate" (minimum) carrier revenues.
No carrier should be required to operate
under a rate structure that will protect
the traffic of a competing mode.
Legalized carrier rate associations founded
for rate fixing purposes and placed their
operation under ICC oversight.
Reinforced the 1940 Act and encouraged in-
termodal umbrella rates for competitive
purposes except where facts and circum-
stances dictated alternative strategies.
Allows railroad operators greater flexibil-
ity in the areas of rate-making, provision
and type of service and route abandonment.
ICC = Interstate Commerce Commission
Source: Heskett, James.L. , et al.
York, N.Y.: Ronald Press, 1973, pp
Transportation Law. Dubuque, Iowa:
Snow, John Wi, and Mark Aron.
Business Logistics. New
103-35; Guandolo, John.
W.C. Brown, 1965, pp. 1-28;
"Assessment of the Regulatory
Reform Sections of the Railroad Revitalization and Regulatory
Reform Act," in MacAvoy, Paul W., and John W. Snow, eds. Rail-
Road Revitalization and Regulatory Reform. Washington, D.C. :
American Enterprise Institute for Public Policy Research, 1977,
pp. 183-90.
622
-------
interests in their conflicts with cattlemen, as represented for
example, by the Wyoming Stock Growers Association.1 The railroad
industry also developed an extensive national lobbying effort
characterized by the early rate-making associations and more re-
cently by the Association of American Railroads (AAR). The former
were comprised of representatives of the industry who met to deter-
mine rates among competing rail lines so that "rate wars" and such
conflicts could be avoided.
Tight governmental regulation of railroads has benefited some
financially while contributing to the failure of others. Regula-
tion also led directly to a diversification of economic interests
by western railroads and a lack of experimentation in terms of the
provision of new service.2 Further, the high fixed costs of rail-
roads (debt service on roadbed and rolling stock, maintenance, and
so forth) force the railroads to maintain a high level of traffic
flow relative to capacity. It should be noted that all of the laws
listed in Table 11-6 contain provisions designed to promote rail-
road consolidation. The objective is to achieve greater efficiency
by scaling up the size of railroads and reducing competition.
In addition to regulation, railroads face a new economic issue
in the West in the competition from coal slurry pipelines (slurries)
for transporting coal from the region. Slurries would provide a
point-to-point coal transport mode for electric utilities and other
users based on long-term contracts lower than the railroads could
match. The Slurry Transport Association argues that slurry pipe-
lines would end rail monopolies, thereby lowering transportation
costs, and would enhance the reliability of energy supply.3
Railroad companies generally argue that coal slurry pipelines
could threaten their solvency by forcing them to lower freight
Richards, Bill. "Changes Sweep into Wyoming." Washington
Post, June 21, 1977.
2Luna, Charles. The UTU Handbook of Transportation in
America. New York, N.Y.: Popular Library, 1971, p. 66.
federation of Rocky Mountain States, Natural Resources Com-
mittee. A Comparison of Unit Trains and Slurry Pipeline Transpor-
tation Costs. Denver, Colo.: Federation of Rocky Mountain States,
1976, Appendix B.
623
-------
rates to remain competitive.1 Slurry pipelines, they argue, would
cut into the railroads' most profitable and convenient hauls, i.e.,
those which transport large volumes of materials over long dis-
tances. In general, railroad companies believe that "it does not
make good sense to encourage development of an unnecessary and
duplicate system of transportation that would take away the very
means of railroad survival."2 William Dempsey, President of the
AAR, told Congress in April, 1978 that in no way can slurry pipe-
lines and railroads operate together.3
The issue in part revolves around the capacity of the railroad
industry to provide adequate transportation facilities to meet
coal-use demand while responding to economic and environmental
goals including efficient and reliable service. ** Some aspects of
this capacity issue include:
• Adequacy of rolling stock. These problems will be greatly in-
tensified if the projections of demand for up to 38,000 new
hopper cars, plus replacement of existing deteriorated rolling
stock, are approached by the year 2000. However, railroads
and shippers (who own a majority of new coal-hauling cars)
may be able to obtain sufficient numbers of hopper cars and
federation of Rocky Mountain States, Natural Resources Com-
mittee . A Comparison of Unit Trains and Slurry Pipeline Transpor-
tation Costs. Denver, Colo.: Federation of Rocky Mountain States,
1976, Appendix B. This occurred in reaction to a slurry pipeline
introduced in Ohio in 1957. The railroads responded by developing
the unit train concept and after 6 years forced the pipeline out
of operation. See U.S., Congress, Senate Committee on Energy and
Natural Resources, and Committee on Commerce, Science;' and Transpor-
tation. National Energy Transportation, Vol. Ill: Issues anci
Problems, Committee Print, by the Congressional Research Service.
Washington, D.C.: Government Printing Office, 1977, p. 196; and
Hudson Institute. Research Analysis of Factors Affecting Transpor-
tation of Coal by Rail and Slurry Pipelines. Croton-on-Hudson,
NTY7: Hudson Institute, 1976^ p. 11.
2Federation of Rocky Mountain States. Comparison of Transpor-
tation Costs, Appendix A.
3Bureau of National Affairs. "ICC Seeks Slurry Pipeline Juris-
diction as Railroad Industry Reaffirms Opposition." Energy Users
Report, Current Report No. 24 (April 13, 1978) , p. 25~
4Environmental effects of rail transportation are discussed
in the following section on Conflicts Over Physical Impacts.
624
-------
locomotives to pull them, even though significant backlogs
presently exist.l
• 'Track capacity. Another aspect of physical capacity is
whether the trackage can accommodate the probable number of
trains between coal-producing points and coal consumers.
Numerous stretches of track have been projected to be over-
loaded, given high future coal shipment projections.2 This
would result in greater shipment expense and time require-
ments because of the necessity to employ longer routes
avoiding the bottlenecks. For example, at the present time
coal shipment from Wyoming to eastern Oklahoma utilities
takes 3 days longer than railroads initially expected.3
However, changing the signalling system and adding some sec-
tions of track to a single line track may be able to double
track capacity.1*
• Financing capacity. The costs of expanding rail capacity to
serve the greater production of western coal are roughly pro-
portional to increases in coal production. Uncertainty about
demand for western coal puts the necessary investment into
equal uncertainty.
Equipment "trust certificates" (a form of mortgage) are gen-
erally used for financing railway equipment. The mobile nature of
the equipment permits repossession and makes it effective collateral.
While the increase in equipment necessary for coal movement may
cause some increase in the yield of such certificates, the major
coal moving railroads should be able to obtain the necessary rolling
stock by this means or by leasing, if customer-owned equipment is
not used.5 Importantly, most western coal is moved in cars owned
^analytics, Inc. Coal Transportation Capacity of the Existing
Rail and Barge Network, 1985 and Beyond. Palo Alto, Calif.: Elec-
tric Power Research Institute, n.d., p. 6. As cited in U.S., Con-
gress, Senate, Committee on Energy and Natural Resources, and Com-
mittee on Commerce, Science, and Transportation. National Energy
Transportation, Vol. Ill: Issues and Problems, Committee Print,
by the Congressional Research Service.Washington, D.C.: Govern-
ment Printing Office, 1977, p. 461; and "Freight Car Orders Climbed
65% in May." Wall Street Journal, June 12, 1978.
2Manalytics, Inc. Coal Transportation Capacity, p. 6.
3Clock, Greg. "Coal Boom Causes Rail Growing Pains." Daily
Oklahoman, September 24, 1978, p. 1.
''Senate Committees on Energy and Natural Resources, and Com-
merce, Science, and Transportation. National Energy Transporta-
tion, Vol. III.
5 Ibid., p. 462.
625
-------
or leased by shippers, such as
utilities, who pay for them
through fuel cost adjustments
passed directly to consumers.
Track and right-of-way,
however, cannot be repossessed
and sold; it is the condition
of the company that gives them
value. Railroads need to offer
returns on investment competi-
tive with those offered by other
companies to obtain financing.
Although the western railroads
which will be moving a lot of
coal are generally in better
financial shape than most rail-
roads, it is not clear that
they have the current profit-
ability to be able to obtain the
nance funds (see box).:
LOW RETURN ON INVESTMENT
Despite expanding shipments of
coal, railroads have comparatively
low return on investment. Burlington
Northern and Southern Pacific Trans-
portation for example, have 2.1 per-
cent and 2.5 percent rates of return
on investment, respectively, which
are so low that they claim that they
can't raise needed equity capital
without increasing freight rates.
—Drew, Christopher. "Texas Battle
of Coal Hauling Rates Risks U.S.
Energy Plan, Efforts to Lift Rail
Net." Wall Street Journal, June 16,
1978, p.. 16.
requisite investment and mainte-
One report estimates that the total capital investments re-
quired to be made by railroads to meet capacity and maintenance
needs by 1985 equal about $40 billion, of which coal-related invest-
ments will conservatively require 10 percent.2 This would amount
to twice the recent annual level of capital outlays.,
Railroad profits may need to improve significantly to attract
the additional equity. Alternatively, help with financing may need
to be provided by the federal government, customers, or others.
Rates that permit railroads to be profitable enough to build for
coal movement may make potential alternatives to rail transport
(such as slurries) more attractive to shippers.3
^.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. Ill: Issues and Problems,
Committee Print, by the Congressional Research Service.
ton, D.C.: Government Printing Office, 1977, p. 462.
Washincr-
The Railroads, Coal and the
Washington,
2Richard J. Barber Associates.
National Energy Plan: An Assessment of the Issue.
D.C.: Richard J. Barber Associates, 1977, p. 37. As cited in
Senate Committees on Energy and Natural Resources, and Commerce,
Science, and Transportation. National Energy Transportation,
Vol. Ill, p. 465.
3Senate Committees on Energy and Natural Resources, and Com-
merce, Science and Transportation. National Energy Transportation,
Vol. Ill, p. 465.
626
-------
All of the capacity prob-
lems discussed above depend on
the economic health of the rail-
roads, which in turn is related
to restrictions on railroads in
rate-making, common carrier re-
quirements, entry into markets,
and abandonment of lines.
• Rate-making restrictions
include prohibition on
long-term contracts and the
exclusion of profit in de-
termining reasonable rail
rates. Current regulations
require that rates be nego-
tiated annually. Thus,
both the utility and the
railroad face uncertainty
over future rail rates.
Since transport costs may
be increased annually and
may represent as much as
50 to 70 percent of total
fuel costs, protests by
utilities are sometimes
made (see box). However,
utilities usually are per-
mitted to pass coal trans-
portation costs on to con- ~~
sumers without immediate review through "fuel cost adjust-
ments." The Interstate Commerce Commission (ICC) is currently
evaluating policies that would permit long-term contracts on,
a case-by-case basis and that would establish minimum and max-
imum freight rates on western coal.1 Finally, concerning
"reasonable" rail rates, the ICC and the courts have ruled
that such rates do not include profits or a return on equity
capital.2 The Railroad Revitalization and Regulatory Reform
Act (4-R Act) allows for a profit element in controlled rail
rates, but the ICC has failed to implement this to date.
HAULING PRICES ESCALATE
When City Public Service Com-
pany of San Antonio, Texas, started
building its coal-fired plant in
1973, Burlington Northern and South-
ern Pacific estimated coal shipment
costs of $7.90 a ton, roughly equal
to the cost of the coal at the mine
in Wyoming. Later the price went to
$10.93, then $11.94, while coal
prices were fairly constant. When
the railroads posted $18.23 in 1977,
San Antonio protested. The rail-
roads maintain they must charge sub-
stantially in excess of their costs
along routes they monopolize in
order to maintain service elsewhere.
Interstate Commerce Commission has
permitted other railroads to price
transportation in excess of 20 per-
cent above costs to locations in
Arizona and to Houston, Texas.
—Drew, Christopher. "Texas Battle
of Coal Hauling Rates Risks U.S.
Energy Plan, Efforts to Lift Rail
Net." Wall Street Journal, June 16,
1978, p. 17.
Information Letter, Association of American Railroads,
May 25, 1978, p. 2. A mechanism for these changes exists in the
Railroad Revitalization and Regulatory Reform Act (Pub. L. 94-210,
90 Stat. 31, 45 U.S.C. 801) of 1976, which permits a rate to stand
for five years if more than $1 million is invested in related fa-
cilities .
2"Rules to Govern the Assembling and Presenting of Cost Evi-
dence," 337 I.C.C. 315-18(1970), interpreted in Burlington-
Northern, Inc. v. U.S., 555 F2d 536 (1977).
627
-------
• Common carriage refers to.the requirement that a transporta-
tion mode must carry, at published rates, the goods of all
shippers who request the specified service.1 Common carriers
cannot treat shippers in either a discriminatory or a prefer-
ential manner, a restriction that has put some uncertainty
on unit trains as a coal transport mode. For example, even
if a long-term shipping arrangement exists, railroads may
have to "bump" or reduce service to utilities in favor of new
shippers who have an equal claim to the railroad's limited
capacity.
• Entry into new areas and abandonment of lines can take place
only with certification of public convenience and necessity.
This poses a particular problem if a railroad wishes to elim-
inate some classes of traffic or to abandon entirely to avoid
financial loss. Low-use routes are more common in the West
than elsewhere in the country; 4.71 percent of the carloads
go on "potentially uneconomic light density lines," compared
with 1.24 percent in four other regions.2 Although track
abandonment in the West was less than the rate of 8.2 percent
nationally from 1970-1976, applications were filed and/or
granted for abandonment of 23 percent of the track in South
Dakota during the same period (Table 11-7). Thus, rail capac-
ity and use generally are decreasing on all but high-traffic
routes. But, because of the restrictions on abandonment of
low-use routes, rates must be high enough on high-volume
routes to subsidize the others and maintain overall solvency.
This may not be possible where there are viable alternatives
for shippers of high-volume commodities such as coal.
(2) Slurry Pipelines
Slurries, as mentioned earlier, represent new competition with
the railroads for long-distance coal transportation.. Although coal
slurry pipelines are common carriers by legality, they are contract
carriers by nature, and pipeline financing requires long-term con-
tracts. While the development of slurry pipelines would contribute
to the use of western coal, uncertainty exists because there is no
experience with slurries of the scale proposed (600-1,500 miles). 3
i
Interstate Commerce Act of 1887, 74 Stat. 379
2U.S., Department of Transportation. "Rail Abandonments and
Their Impacts," in McAvoy, Paul, and John Snow, eds,. Railroad
Revitalizat.ion and Regulatory Reform. Washington, D.C.: American
Enterprise Institute, 1977, p. 160.
3Guccione, E. "Railroads vs. Pipelines: There's Room For
Both." Coal Mining and Processing, Vol. 15 (February 1978),
pp. 48-51.
628
-------
TABLE 11-7: APPROVED AND PENDING TRACK ABANDONMENTS 1971-1977
STATE
Arizona
Colorado
Montana
New Mexico
North Dakota
South Dakota
Utah
Wyoming
APPROVED
NUMBER
5
9
6
3
4
13
7
5
MILES
79
110
142
58
145
461
44
86
PENDING
NUMBER
3
4
2
1
3
5
1
0
MILES
72
50
69
14
28
322
4
0
Source: McAvoy, Paul, and John Snow, eds.
Railroad Revitalizat-ion and Regulatory Reform.
Washington, D.C.: American Enterprise Insti-
tute, 1977, pp. 152-53.
The potentially lower cost of slurry operation (Table 11-3)
presents the principal competition to the railroads, and would es-
pecially affect western railroads. If slurries succeed as a major
transportation mode, they could take over 25 percent of the total
coal movement from the West in the year 2000. 1 This could create
a revenue impact on western railroads of up to $628 million, and
an impact on rail employment of more than 6 percent.2 Offsetting
pipeline employment will be only short-term during construction
and would tend to exacerbate boomtown conditions in some towns as
a 400-person construction force moves at about 40 miles per month
along each pipeline.3
1U.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines. Washington, D.C.: Office of Technology Assessment,
1978, p. 74.
2 Ibid., pp. 75-77.
3Freudenthal, David D., Peter Riceiardelli, and Michael N.
York. Coal Development Alternatives; An Assessment of Water Use
and Economic Implications. Cheyenne, Wyo.:
of Economic Planning and Development, 1974,
Wyoming, Department
p. 29.
629
-------
The railroads have obstructed slurries primarily by not allow-
ing them to cross railroad rights-of-way. Without the right of
eminent domain, slurries may have difficulty in crossing, for ex-
ample, the 49 sets of railroad tracks between Wyoming and Arkansas.
However, the railroads, which had eminent domain rights as well as
land grants during their expansion, have not been completely suc-
cessful in attempting to restrict slurries from their rights-of-
way. Slurry interests have won a number of cases in state courts.
In addition, much of the opposition to the pipelines is due
to their water demand and other environmental factors; these are
discussed in the section on conflict over physical impacts.
(3) High-Voltage Transmission Lines
Economic issues also arise over HVTL's, especially in terms
of the choice of converting coal to electricity within the West
and transporting the energy by HVTL's, or shipping coal out of the
region by rail or pipeline. Since HVTL construction has benefited
from federal subsidies, coal (and slurry) transport may be at a
disadvantage in some situations. Federal subsidies for HVTL con-
struction began under the Rural Electrification Act of 1935.x
Under this act, rural areas are able to obtain the bulk of their
financing from the Rural Electrification Administration at rela-
tively low interest rates.2 Much of the power generated by rural
cooperatives in the West is exported, although privately-owned
utilities account for the bulk of long distance transmission from
the region.
Interstate flows of electricity have been federally regulated
since 1935 when the Federal Power Act charged the Federal Power
Commission (FPC) with the responsibility of "assuring an abundant
supply of electricity throughout the United States with the great-
est possible economy and with regard to the proper utilization and
conservation of natural resources."3 FPC jurisdiction in electric
l!'The Electric Century, 1874-1974, Commemorating Electrical
World's One Hundredth Anniversary." Electrical World, Vol. 181
(June 1, 1974), p. 431.
2Arthur D. Little, Inc. "Capital Needs and Policy Choices
in the Energy Industries," Part 3 of U.S., Federal Energy Adminis-
tration. Project Independence Blueprint Final Task Force Report--
Finance: Financing Project Independence, Financing Requirements
of the Energy Industries and Capital Needs and Policy Choices in
the Energy Industries. Washington, D.C.: Government Printing
Office, 1974.
3Federal Power Act, Title II of Public Utility Act of 1935,
Pub. L. 74-333, 49 Stat. 847, 848, 851; Natural Gas Act, Pub. L.
75-688, 52 Stat. 821.
630
-------
power ratemaking extends to interstate wholesale transactions1 and
setting of hydroelectric power rates. In 1977, the Federal Energy
Regulatory Commission assumed these responsibilities. Intrastate
flows are regulated by state utility commissions and interstate
transfers between utilities require the approval of the affected
states. 2
It appears that HVTL's can achieve even greater economies of
scale than they have to date. For instance, "electricity can be
transmitted as effectively 300 miles over a 765 kV line as it can
be transmitted 10 miles over a 138 kV line."3 Each mile of trans-
mission line can require from 15 to 20 acres of land. This demand
for land, the competition with other land uses, and the economies
of scale offered by larger lines largely explain why utilities
have moved increasingly to higher voltages.1* Table 11-8 includes
a comparison of costs for the various alternating current (AC)
voltages which shows that the higher the voltage the lower the
overall costs. The choice of higher voltage lines reduces the
amount of right-of-way that must be purchased and the number of
lines and towers that must be built. Even though costs per line
are higher for higher-voltage lines, the smaller number required
(and the increasingly large size of power plants) makes HVTL's
attractive to utilities.5
Table 11-8 compares various voltage-level AC HVTL's on the
basis of costs for land and equipment for transmitting 51,000
megawatts a distance of 1,000 miles.6 Higher voltage reduces the
interstate transactions made up only 7.3 percent of
total industry sales in 1970. Breyer, Stephen G. , and Paul W.
MacAvoy. Energy Regulation by the Federal Power Commission.
Washington, D.C.: Brookings Institution, 1974.
2Ibid.
3U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. I: Current Systems and Move-
ments , Committee Print, by the Congressional Research Service.
Washington, B.C.: Government Printing Office, 1977, p. 357.
k Ibid. , p. 358.
5 In addition to these economic issues, the physical impacts
of HVTL's have generated considerable concern; this is discussed
in the next section on conflicts due to physical impacts.
6 This is the amount of electricity projected to be produced
in the West by the year 2000. See White, Irvin L. , et al . Energy
From the West: Impact Analysis Report. Washington, D.C.: U.S. ,
Environmental Protection Agency, forthcoming, Chapter 11.
631
-------
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number of transmission lines needed for this amount of electricity,
but overall energy efficiency (or total line loss) is about the
same at any voltage. Equipment costs, including towers, lines,
compensation stations,1 and terminal equipment, are all higher per
mile per line for high voltage lines, but the total line cost, in
particular, decreases because the number of lines decreases rapidly
as voltage increases. Land requirements (and costs) similarly de-
cline with increased voltage. The data illustrate clearly the
economic incentive to utilize higher voltage transmission systems,
but currently there are still technical problems in attaining
voltages as high as 1,500 kV.
Table 11-8 also compares AC with direct current (DC) transmis-
sion, although exact comparisons by voltage are not possible. DC
has several advantages over AC, most of them due to technological
differences between the two. DC transmission is lower in cost for
long distances, because no compensation stations are needed, line
losses are lower, and less insulation is needed. However, DC is
primarily a long-distance transmission form, and intermediate line
tapping is costly, primarily because conversion stations to AC are
necessary. Such converters are costly and require filters and
land near the point of consumption.2 These difficulties and the
convenience of use of electricity intermediate between a power
plant and a demand center have kept AC as the predominant HVTL
form in the U.S.
(4) Other Modes
The movement of coal by truck has also caused some localized
problems in the West. Truck transportation is used primarily in
strip mining operations.3 They cause traffic congestion in small
towns, pollute the air, make noise, and damage road-beds. For
example, it has been estimated that a three-axle coal truck, run-'
ning on a well-maintained highway at the maximum legal load limit
Compensation stations boost the voltage intermittently along
the route to compensate decreases in voltage with transmission
distance.
2Hingorani, Narain. "The Reemergence of DC in Modern Power
Systems." EPRI Journal, Vol. 3 (June 1978), p. 7; and Montana,
Department of Natural Resources and Conservation, Energy Planning
Division. Draft Environmental Impact Statement on Colstrip Elec-
tric GeneratTng Units 3 and 4, 500 Kilovolt Transmission Line's"
and Associated Facilities. Helena, Mont.: Department of Natural
Resources and Conservation, 1974, Vol. 4, pp. 20-25.
3U.S., Department of Transportation, Coal Transportation Task
Force. Transporting the Nation's Coal, A Preliminary Assessment,
Report to the Secretary of Transportation. Washington, D.C.:
Department of Transportation, 1978, p. II-3.
633
-------
would cause damages annually requiring $8,000 in road maintenance
costs while only paying $1,350 in licensing fees.1 Most of the
cost of maintaining roads falls on the state governments.
Oil and gas pipelines, funded almost entirely by private in-
vestors, became an important means of energy transport, in the West
during the 1930's. Unlike coal slurry pipelines, oil and gas pipe-
lines were granted the power of eminent domain and have sparked
little or no opposition. Some natural gas pipelines were construc-
ted during the 1940's with the help of federal subsidies.2 Since
the oil and gas pipeline network in the West is not likely to ex-
pand significantly in the future, few major conflicts can be ex-
pected over economic effects of this form of energy transportation.
B. Conflicts Due to Physical Impacts
Regardless of the transportation mode chosen to export energy
resources from the eight-state study region, areas along the routes
will experience a variety of impacts. Although impacts vary con-
siderably among technologies, they Ccin be said to either disrupt
human and/or animal communities or pose a threat to human health
and safety. Following a brief description of the historical con-
text of these problems, the physical impacts associated with rail-
roads, oil and gas pipelines, power lines, and uranium transport
are discussed in turn.
From a historical perspective, the railroad has had the
greatest physical effects on the West. Between 1860 and 1885, the
extension of railroads into the northern portion of the eight-state
study area promoted economic development which in turn contributed
to the extermination of the buffalo and, therefore, the end of the
mobility of the Plains Indians. As discussed earlier, the rail-
road technology of the period accounted in large part for the
spatial distribution of towns and farming activity in the West.
The cattle industry, seeking to remain ah the periphery of this
westward movement of "civilization," set the stage for many of the
classic and often bloody confrontations over land use in the re-
gion. And, for all its economic impacts,3 the railroad industry
•'U.S., Congress, Senate, Committee on Public Works, Subcom-
mittee on Transportation. Energy Impacted Roads. Hearings, 94th
Cong., 2d sess., May 26, 1976, p. 66. As cited in U.S., Congress,
Senate, Committee on Energy and Natural Resources, and Committee
on Commerce, Science, and Transportation. National Energy Trans-
portation, Vol. I: Current Systems and Movements, Committee Print,
by the Congressional Research Service. Washington, D.C.: Govern-
ment Printing Office, 1977.
2Luna, Charles. The UTU Handbook of Transportation in
America. New York, N.Y.: Popular Library, 1971, p. 66.
3See Section A above.
634
-------
was viewed by the majority of the West's population as a vital
lifeline and harbinger of civilization and progress.l
The other transportation modes, pipelines and HVTL's, are
newcomers by comparison. As late as the 1930's there were few
crude oil and natural gas pipelines in the area and these were
largely peripheral to the national pipeline network that had
evolved between the Gulf States and Midwest.2 The use of HVTL's
was limited to the region's metropolitan areas until enactment of
the Rural Electrification Act in 1935.
The use of fossil fuels and transmission of electricity al-
lowed the West to move away from a raw material-based economy to-
ward industrialization. This was because fossil-fueled machinery
replaced labor-intensive farm and ranch operations, freeing this
agricultural labor force for other tasks. Simultaneously, indus-
trial development in the West was largely based on the evolving
electric-powered manufacturing machinery of the day.3 As in the
case of the railroad, this series of transformations and the range
of social, economic, and environmental consequences they brought
were welcomed in the West.
For the most part, these three transportation modes were not
met with serious objections by the people of the West.4 But dur-
ing the past decade, objections have been raised concerning each
of them.5 As shown in our impact analysis reports, railroads and
Clark, D.E. The West in American History. New York,
N.Y.: Thomas Y. Crowell, 1946, pp. 448-628 for a detailed treat-
ment of these occurrences. Other standard references include
Webb, Walter P. The Great Plains. Boston, Mass.: Ginn, 1931;
and Turner, Fredrick J. The Frontier in American History. New
York, N.Y.: Holt, 1920.
2U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. I: Current Systems and Move-
ments. Committee Print, by the Congressional Research Service.
Washington, D.C.: Government Printing Office, 1977, pp. 1-10,
160--85.
3Landes, David S. The Unbound Prometheus. Cambridge,
England: Cambridge University Press, 1969, Chapter 5.
'ibid.
5See Chapters 1 and 2 for a broader discussion of the context
of western energy resource development.
635
-------
HTVL's are expected to undergo significant expansion in the West.
If coal slurry pipelines are accepted, a virtually new industry
will be established.2 On the other hand, the existing oil and gas
pipeline system will not be significantly expanded.
(1) Railroads
Railroads transport most of the coal in the region and are,
therefore, highly visible. Perhaps the most controversial aspect
of coal transport by railroads results from unit train movements
through the small communities in the region. Unit trains usually
consist of around 100 hopper cars holding 100 tons of coal each
and are pulled by five or more diesel locomotives. Except for
stops for labor changes and fuel, these trains move nonstop from
origin to destination.3 The effect on small communities can be
particularly disruptive, because grade separations (overpasses and
underpasses) are not common. The mayor of Lusk, Wyoming explains:
"We get one freight a day through here now and that ties up traf-
fic coming in or out of town."1* In anticipating the increased
unit train movement, Mayor Hammond summed up the worries of his
constituency: "What do we do if there is a fire or if someone has
a heart attack on the other side of the track when these unit
trains start running? We just don't know what's going to happen."5
The Sierra Club has filed suit with the U.S. District Court
in Washington in an attempt to force the Burlington Northern and
Chicago and North Western Railroads to reassess the impacts of a
proposed 113 mile link through the Wyoming coal fields.6 This new
route is projected to allow 30 to -48 unit trains to pass through
a number of small towns daily. In addition, these trains would
make 306 crossings of county highways in the area. Legal action
JWhite, Irvin L. , et al . Energy From the West: _ A Progress
Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Vol. II, Chapter 12. See also, White, Irvin L.,
et al . Energy From the West: Impact Analysis Report. Washing-
ton, D .. C . : U.S., Environmental Protection Agency, forthcoming,
Chapter 11.
2Ibid.
3Glover, T.O., et al . Unit Train Transportation of Coal,
Bureau of Mines Information Circular 8444. Washington, D.C.:
U.S., Department of the Interior, Bureau of Mines, 1970, p. 1.
^Richards, Bill. "Paying the Price for Western Energy."
Washington Post, December 13, 1976, pp. Al , A4 .
5 1 bid.
636
-------
has been motivated by public safety as well as environmental
concerns.
Human safety as well as economic concerns were at issue when
the residents of Lusk, Wyoming, petitioned Burlington Northern to
provide signals at railroad crossings in their community. The
railroad's response in this case was: "the motoring public is the
chief beneficiary of projects which improve crossing safety, and
financial support of such projects should so reflect." However,
state laws in the West generally maintain that it is "the duty of
the railroad company to construct and maintain without compensation
a crossing separated from the street by a bridge or otherwise when
reasonable public safety and necessity are required."1 Further,
public utility commissions in several of the states within our
study area often make decisions concerning the allocation of costs
between railroads and towns."
Loss of livestock due to train traffic is also an economic
issue. Ruth Rice, a rancher and member of the Sheridan County,
Wyoming, Board of County Commissioners, has lost livestock to unit
trains; she and other westerners are ready to take action to deal
with this problem. She hae said: "We are finding out that we are
all citizens and we have the same rights as the railroads and big
mining companies. We may have created a monster in these trains.
And when you deal with a monster you have to make sure you protect
yourself."?
Railroads can also produce health impacts, primarily due to
air and noise pollution. Windblown coal dust from uncovered hop-
pers in a unit train could possibly cause damage to surrounding
1See, for example, St. Paul v. Great Northern Rail Road Co.,
138 Minn. 25, 162 N.W. 78~8^in American Jurisprudence LegalTorms,
2nd ed. Rochester, N.Y.: Lawyers Co-operative Publishing Co. and
San Francisco, Calif.: Bancroft-Whitney Co., 1972, Section 276.
"These states have various ways of allocating costs and reg-
ulating railroads. For more information, see Georgetown Univer-
sity, Center for Strategic and International Studies. National
.2251 ^AA^y Project: Interim Report: Transportation Task Force.
Washington, D.C.: Georgetown University, Center for Strategic and
International Studies, 1977, pp. 29-30.
Uichards, Bill. "Paying the Price for Western Energy."
Washington Post, December 13, 1976, p. A4. Three of our eight
states (Colorado, Montana, and Wyoming) have statutes which place
liability on the railroad for this cattle loss if the railroad has
been negligent in its duty to supply and construct cattle fences
along its right-of-way. Colorado—pursuant to 40-27-102 (Colo.
Rev. Stat. 1973 [1976 Supp.]); Montana—under 72-40 (Rev. Codes of
Montana 945 [1975 Supp.]); Wyoming—37-209 (Wyoming Statutes 1957
[1977 Supp.]).
637
-------
vegetation while diesel engines contribute to local air pollu-
tion1 However, neither of these effects is thought to be seri-
ous.
On the other hand, noise pollution from the unit trains may
be a significant impact in terms of the potential for daily and
long-term human irritation and hearing loss. Each time a unit
train passes, the noise level reaches a peak of over 100 decibels
A-weighted (dBA) at a distance of 100 feet. This noise level would
require two people one foot apart to shout to communicate.2 The
primary noise source from trains is the locomotive and the level
is essentially independent of train speed. Engine noise levels
will typically vary between 90 and 100 dBA; horns used at grade
crossings are also quite noisy and have been measured at 110 dBA
at 100 feet.3 The Noise Control Act of 1972 requires the Environ-
mental Protection Agency (EPA) to develop national noise control
standards for interstate commerce by railroad according to best
available technology1* except where EPA and the Department of Trans-
portation (DOT) deem that a local standard takes precedence as
necessitated by special local conditions.5 The AAR challenged the
Act and this resulted in a federal court ruling that explcitly
stated that EPA noise regulations applied to all rail equipment
and facilities in all jurisdictions.6 Current Railroad Noise Emis-
sion Standards limit the maximum permitted sound level from loco-
motives to 96 dBA at 100 feet from the track, with the standard
dropping to 90 dBA for locomotives manufactured after 1979. These
standards are based on current best practical technology and eco-
nomic feasibility, and therefore apparently it is not feasible to
restrict engine noise levels further below 90 dBA. The other
major noise source is the wheel-track interface and this source
^zabo, Michael F. Environmental Assessment of Coal Trans-
portation. Cincinnati, Ohio: U.S., Environmental Protection
Agency, Office of Research and Development, Industrial Environmen-
tal Research Laboratory, 1977, p. 1978.
2White, Irvin L., et al. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource De-
velopment. Washington, D.C.:U.S.,Environmental Protection
Agency, 1977, Vol. II, p. 941.
3URS Company. Coal Train Assessment, Final Report for Colo-
rado Department of Highways. Denver, Colo.: URS Company, 1976,
p. V-8.
''Noise Control Act of 1972, Pub. L. 92-754, 86 Stat. 1234,
42 U.S.C.A. §§ 4901 et seq. (1973).
5Ibid., § 17(c)(2).
6Association of American Railroads et al. v. Costle, 562 F.
2d 1310 (1977).
638
-------
is highly sensitive to train speed and track condition. These
train car noise levels range from 75 to 85 dBA at 100 feet. ]
The nonurban environment is also affected by railroads. Con-
struction of new links will often require the removal of vegeta-
tion and landscape alteration, resulting in the fragmentation of
local wildlife habitats and the disruption of ongoing natural pro-
cesses such as erosion. Due to demand uncertainty, new rail line
construction will likely be limited to small distances over the
short term,2 but our projections indicate that 3,500 miles of new
track could be required by the year 2000. As mentioned previously,
the operation of railroads can often result in prairie fires and
destruction of livestock. Both are costly to rural inhabitants.
(2) Pipeline Conflicts
Of the three modes considered, oil and gas pipelines produce
the fewest physical impacts. Construction of oil, gas, or coal
slurry pipelines will incur some short-term environmental damage
due to trenching and right-of-way clearance activities; however,
much of the natural environment is restored after this phase.
The exception is tree coverage which must be kept off pipeline
right-of-way. Depending on surrounding vegetation, this may re-
sult in a situation where the pipelines themselves are not visible,
but their right-of-way is clearly defined.
During operation, there is some danger of accidents at com-
pressor stations associated with gas and oil pipelines. Also,
explosions can result when high pressure gas pipelines are ruptured
by excavation activities. In 1974, 4 fatalities and 20 injuries
resulted from gas line explosions.3 There is also the danger of
spills from oil or coal slurry pipeline operations. Oil spills
can produce severe impacts, especially if the oil enters rivers
or lakes, but such events occur infrequently and the effects are
usually short-term and highly localized. There is virtually no
experience on which to judge the risks and effects of coal slurry
spills, but this is not felt to be a major factor.
Company. Coal Train Assessment, Final Report for Colo-
rado Department of Highways. Denver, Colo.: URS Company, 1976,
p. V-8.
2 U.S., Department of the Interior. The Need for a National
System of Transportation and Utility Corridors. Washington, D.C.
Government Printing Office, 1975, p. IV-5.
3U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. I: Current Systems and Move
ments, Committee Print, by the Congressional Research Service.
Washington, D.C.: Government Printing Office, 1977, p. 13.
639
-------
(3) Electric Power Lines
It is not clear whether HVTL's will continue to be accepted
passively in the West (or elsewhere). In several cases during the
past few years, transmission line projects have been opposed, par-
ticularly by farmers and ranchers. Their objections focus on
several factors including the negative visual impacts of the lines,.
annoyance to lifestyle, and safety. The negative visual impacts
of HVTL's have not yet become an issue in the study area; however,
landowners in other parts of the nation are objecting on the
grounds that the presence of HVTL's reduces land values.1 Simi-
larly, opposition to annoyances such as radio and television static
has begun to be voiced.2 The possible impacts of transmission
lines are summarized in Table 11-9. These impacts and reactions
to them apply primarily to AC transmission; the alternative, DC,
is discussed later.
Human safety is currently the focal point for protest against
HVTL's in the study area. Farmers and ranchers have experienced
electric shock while operating equipment or in metal barns near
HVTL's. Residents of the area also are becoming aware of recent
research findings that concluded: "biological effects will prob-
ably be induced in humans exposed to overhead lines and...such
effects may be harmful."3 These findings, presented to the New
York Public Service Commission by Andrew Marino, concerned 765 kV
lines in that state, but the argument has been used in a similar
dispute in North Dakota.4
Two of the state legislatures in the study area are consider-
ing restructuring their HVTL approval process as a consequence of
recent protests.5 To date, organized environmentalist action in
JKatz, Barbara J. "Reaching for the Switch: Maryland Neigh-
borhoods Fight Super Power Line." Washington Post, December 11,
1977.
2"The New Opposition to High Voltage Lines." Business Week,
November 7, 1977, p. 27.
3Bernstein, Peter.- "High Voltage Power Lines Protested."
Denver Post, February 8, 1978. Similar concerns are expressed in
Young, Louise B. Power Over People. New York, N.Y.: Oxford Uni-
versity Press, 1973. It should be noted that some research de-
bunks the magnitude of these health and biological impacts. See
Miller, M.W., and G.E. Kaufman. "High Voltage Overhead." Envi-
ronment , Vol. 20 (January/February 1978), pp. 6-15.
^"Troopers Arrest Eight in Power Protest." Denver Post,
January 13, 1978. Marino also said, "the typical powerline over
80,000 volts (80 kV) is hazardous."
5"Opposition to High Voltage Lines."
640
-------
TABLE 11-9: IMPACTS OF TRANSMISSION LINES ON THE ENVIRONMENT
Calternating current only)
Effects of Construction and Maintenance
Clearing of land within right-of-way
Clearing and maintenance of access roads
Soil compaction and other physical damage due to con-
struction activities
Interference with agriculture due to towers
Aesthetic impact of towers and lines
Hazard of Electric Shock from Contact with Lines
Effects of Corona
Radio and television interference
Audible noise
Production of ozone and oxides of nitrogen
Effects of Electric and Magnetic Fields
Fuel ignition by spark discharges
Induced electric shocks
Biological effects of electric and magnetic fields
Interference with cardiac pacemakers
Source: Miller, Morton W., and Gary E. Kaufman. "High Voltage
Overhead." Environment, Vol. 20 (January/February 1978), p. 8.
this controversy has been minimal but this is likely to change.
A spokesperson for the Sierra Club recently stated: "High voltage
transmission has come up marginally in our litigation, but we may
be getting into it directly if the action is going along as fast
as it apparently is."1 On the other side of the controversy, the
utilities communicate a feeling of urgency in building new lines.
A spokesperson for the American Electric Power Company said,
"Without these high voltage lines, utilities may simply not be able
to meet the growth in power demand over the next decade."2
lnThe New Opposition to High Voltage Lines." Business Week,
November 7, 1977, p. 27.
2 Ibid.
641
-------
Legislation has been enacted in a number of states in recent
years to attempt to avoid conflict by bringing diverse groups into
the planning process. Yet an "open" process has not resolved the
difficulties. The current public outcry on both sides of the bor-
der between North Dakota and Minnesota exemplifies the continuing
problem. Both states have siting commissions that include separate
procedures for siting HVTL's. In both cases, public participation
is an integral part of these proceedings. Both state commissions
granted the power of condemnation to the utilities involved (United
Power Association and Cooperative Power Association) after consid-
ering evaluations of the environmental, social, and economic im-
pacts. Yet there was still conflict when construction began.l
DC electric transmission does not create the electric field,
corona, and shock hazards associated with AC lines, permitting a
smaller right-of-way and less land-related impact. However, there
is an unknown level of ground return through the soil and metallic
structures such as pipelines that AC lines (which are grounded in
an additional overhead line) do not cause.2 Additional research
on DC transmission is needed to provide data for evaluating and
comparing the two HVTL systems.
(4) Coal Slurry Pipelines
The principal environmental conflict over coal slurry pipe-
lines concerns their water consumption from water-scarce western
coal areas. Some agricultural and ranching interests in the eight-
state study area believe that water requirements for coal slurry
lines would place an unnecessary burden on the regional water
supply.3 Several national environmental groups support this view.
Legislators representing the West have divergent viewpoints:
Representative John Melcher (D-Montana), Chairman of the House In-
terior Subcommittee on Public Lands, opposes slurry pipelines. He
bleieves that gaining access to the Madison Formation (a water-
bearing geological structure underlying several western states)
will be a key stumbling block for slurry pipelines.1* Representative
l!1High Voltage Power Lines Protested." Denver Post,
February 8, 1978, p. 27.
2Montana, Department of Natural Resources and Conservation,
Energy Planning Division. Draft Environmental Impact Statement on
Colstrip Electric Generating Units 3 and 4, 500 Kilovolt Transmis-
sion Lines and Associated Facilities.Helena, Mont.: Department
of" Natural Resources and Conservation, 1974, Vol. 4, pp. 20-25.
3See Corrigan, Richard. "Railroad Versus Coal Pipelines—
New Showdown in the West." National Journal, Vol. 8 (March 6,
1976), p. 294.
"ibid., p. 295.
642
-------
Teno Roncalio (D-Wyoming) views slurry pipelines as a way to avoid
the degradation of the western environment. He believes that
slurry lines can accommodate large-scale coal development. One of
his legislative assistants was quoted as saying that "...what we're
trying to do is keep our skies clear. I think most people (in
Wyoming) would rather see it (coal) shipped out of the state than
consumed in it."1
On a comparative basis with other energy conversion and trans-
port configurations, coal slurry is not particularly water-
intensive. Table 11-10 shows that consumption of western water by
slurry pipelines would be much lower than that for most forms of
coal conversion carried out at the mine-mouth (gasification is an
exception). The water requirement of electric power generation
is far greater than any other type of coal use. The shipment of
coal from the West by slurry pipelines will consume less western
water than converting the coal within the region. Export of raw
coal by rail or slurry involves the trade-off between water use
and the disruptions of rail traffic to towns and roads along rail
routes. The question of whether coal should be exported or con-
verted in the West appears to be a question of equal importance
to the rail-slurry conflict. Water use and HVTL and pipeline im-
pacts are inherent in a choice of coal conversion in the region.
Slurries are able to use low-quality water, such as highly
saline water that is unfit for agricultural, industrial, or drinking
purposes. But in the Powder River Basin coal area, the origin of
most of the anticipated slurry pipelines, most available water is
usable. This means that competition with existing users remains
a critical issue throughout the West.2 The problems and issues
in water allocation are discussed further in Chapter 4.
There is some disruption of land, vegetation, and wildlife
during the construction of a slurry pipeline. Rights-of-way of
100 feet are required for the equipment so that as much as 12 acres
per mile of pipeline could be impacted.3 As long as environmen-
tally sensitive areas such as marshes and refuge areas are avoided,
the construction impacts of slurry pipelines will be temporary and
minimal. Since many railroads already exist in the West, not as
]See Corrigan, Richard. "Railroad Versus Coal Pipelines--
New Showdown in the West." National Journal, Vol. 8 (March 6,
1976), p. 295. '
2For example, see Strain, Peggy. "Water, Land, Life--It's
All One in Valley Pipeline Debate." Denver Post, November 13,
1977.
3U.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines. Washington, D.C.: Office of Technology Assessment,
1978;
643
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much new right-of-way will be needed for them as will be needed to
develop coal slurry pipelines in the West. But the environmental
impacts on vegetation and wildlife of constructing new rail lines
is longer term. It is easier to restore vegetation and wildlife
habitat over underground slurry pipelines than along railroads.
During operation of a slurry pipeline, it is necessary to pro-
vide a pond at each pumping station to hold the upstream line vol-
ume if in case of emergency it has to be dumped. A pond of water
is also provided at each station to flush out the downstream line
segment as may be needed.l This represents an additional water
and land-use impact of slurry pipelines.
Any slurry dumped as a result of a pipeline breakage would be
placed in the holding ponds at each pumping station. This dumped
slurry could not be easily reintroduced into the pipeline because
standby equipment for dredging, mixing, and reinjecting into the
pipeline would be needed. Pipeline breaks that occur between pump-
ing stations could result in spilling of the slurry onto adjacent
lands, but such breaks are expected to occur infrequently.2
Plugging of the line is another operational problem that may
occur, as it has at the existing Black Mesa line in Arizona.
After locating the plug, the line must be dug up and part of it
replaced. While a line can be shut down for short periods of time
(generally less than three days), when plugging occurs the entire
line must be flushed, the plug located and dug out and the slurry
reintroduced from the supply point. This could result in a disrup-
tion of service for almost three weeks. Utilities dependent on
this coal will either have to have sufficient slurry in storage or
find another source of coal during this time. Disposal of the
flushing water also presents a problem because it is too dirty to
use for cooling and does not have enough coal to clean it for use.3'
^rmbruster, F.E., and B.J. Candela. Research Analysis of
Factors Affecting Transportation of Coal by Rail and Slurry Pipe-
line,Final Report.New York,N.Y.:Hudson Institute, 1976,
VoIT 1, p. 12.
2Freudenthal, David D., Peter Ricciardelli, and Michael N.
York. Coal Development Alternatives: An Assessment of Water Use
and Economic Implications. Cheyenne, Wyo.: Wyoming, Department
of Economic Planning and Development, 1974.
3Rieber, Michael, and Shao Lee Soo. "Route Specific Cost
Comparisons: Unit Trains, Coal Slurry Pipelines and Extra High
Voltage Transmission," Appendix B in White, Irvin L., et al.
Energy From the West: A Progress Report of a Technology Assessment
'of Western Energy Resource Development.Washington,D.C.:U.S.,
Environmental Protection Agency, 1977, Vol. IV, p. 59.
645
-------
Finally, at the receiving end of the pipeline, the water must
be disposed of in some manner unless it is used by the conversion
technology or is pumped back to its source. Centrifuges can sep-
arate most of the coal from the water. Additional treatment such
as flocculation (chemicals added to cause settling of fine parti-
cles) can eliminate almost all of the solids content in the water
but other chemicals may still be present in the water. All prob-
lems with handling of wastewater from a coal slurry operation have
not been solved and there may be cause for some serious environ-
mental concern.1
(5) Uranium Transport
Some 80 to 90 percent of the nation's uranium ore reserves
and milling capacity are located in the eight-state western region.
Yellowcake (processed uranium ore) containing about 80-85 percent
uranium oxide from western mills will be transported by truck.to
uranium conversion facilities in Metropolis, Illinois, and Sallisaw,
Oklahoma. This means that most yellowcake will be shipped east-
ward along Interstate Routes 40 and 70.2 In 1975, about 9,600
tons of yellowcake was shipped from the West. (This is much less
weight than the amount of coal carried by a single unit train.)
Both the Nuclear Regulatory Commission and DOT regulate these
movements.3
Although handling of radioactive material has become a highly
visible national issue, yellowcake has a relatively low level of
radioactivity and thus its potential dangers are minimal. Trans-
porting yellowcake has not been a major issue surrounding western
energy development. However, when accidents have occurred, there
have been expressions of public concern. For example, a recent
l\l.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines. Washington, D.C.:Office of Technology Assessment,
1978, p. 122.
2White, Irvin L. , et.al. Energy From the West: A Progress
Report of a Technology Assessment of Western Energy Resource
Development. Washington, D.C.: U.S., Environmental Protection
Agency, 1977, Vol. II, Chapter 12, p. 408.
3U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. I: Current Systems and
Movements, Committee Print, by the Congressional Research Service.
Washington, D.C.: Government Printing Office, 1977, p. 450; and
Atomic Energy Act of 1954, Pub. L. 83-703, 68 Stat. 919, as amended
by Pub. L. 91-560, 84 Stat. 1472, 42 U.S.C. §§ 2207, 2092, 211
(1970). See also "Memorandum of Understanding Between AEC and
DOT." 38 Fed. Reg. 8466 (April 2, 1973).
646
-------
spill of 21 tons of yellowcake near Springfield, Colorado, prompted
the state health department to ask federal authorities to require
stronger containers on uranium trucks.1
C. Planning (Route Selection) Conflicts
The expansion of transportation facilities for exporting energy
results in conflicts over the availability of land and the selec-
tion of routes.2 Historically, the federal government had a major
role in land allocation in the West. Beginning with the federal
land grants to railroads (see Section 11.2.2.A), the federal gov-
ernment distributed large amounts of land in the eight-state study
area, much of it purchased by small farmers and ranchers under the
Homestead Act of 1862.3 The small allotments (160 acres) were too
small for survival, particularly in the dry short-grass plains
area.1* As mentioned earlier, this precipitated some of the earli-
est land-use conflicts in the study area.
The situation today is much the same as it was in the 19th
century, with the farm and cattle interests retaining a keen aware-
ness of the land and the traditions that it holds. On the other
hand, railroads, pipeline companies, and electric utilities want
to move their products over the most cost-efficient routes avail-
able. At the same time, major shifts are occurring in the roles
and responsibilities of various levels of government. State pub-
lic utility commissions generally have the greatest control over
route selection since they oversee the eminent domain process.
The newest ingredient in the transportation policy system is
concern for the environment which adds to land availability and
route selection problems and issues. One immediate effect of in-
creased environmental concerns has been greater public participa-
tion in the review of proposed routes. With regard to federal
lands, this occurs as a part of the review process mandated by the
Joseph. "Accident Puts Focus on Transporting
Hazardous Materials." Denver Post, October 6, 1977, p. 3.
2Land availability for mining is addressed in Chapter 7,
Land Use, while the same question is addressed for conversion fa-
cilities in Chapter 12, Energy Facility Siting. See also Barnes,
Peter. Land Use Resources in the United States. Washington, D.C
New Republic, 1972.
3Clark, D.E. The West in American History. New York, N.Y.:
Thomas Y. Crowell, 1946, Chapters 29, 30, 33, 34, 36, and 37.
4This is Walter Prescott Webb's thesis in Webb, W.P. The
Great Plains. Boston, Mass.: Ginn, 1931.
647
-------
National Environmental Policy Act.1 Also, six of the eight states
in our study area have enacted state environmental protection
laws,2 and several of them have placed state energy development
under a comprehensive facility siting agency.3 These state siting
commissions authorize condemnation of lands necessary for trans-
portation only after the conversion facility is approved and usu-
ally after it is under construction. Economics and potential en-
vironmental impacts are the central considerations in the process.1*
Table 11-11 indicates state siting commission control over trans-
portation modes other than railroads.
The laws regarding right-of-way acquisition on federal and
other lands are summarized in Table 11-12. On federal lands, en-
vironmental impact statements (EIS's) have added to the complexity
of the process, particularly in the cases of pipelines and HVTL's.
The acquisition of pipeline and HVTL rights-of-way on federal lands
requires approval of the Secretary of the Interior.5 Accommoda-
tion has been made for interagency and interdepartmental coopera-
tion in these proceedings, particularly concerning the EIS process.
For example, Environmental Criteria for Electric Transmission have
been issued to ensure consistency.6
National Environmental Policy Act of 1969, Pub. L. 91-190,
83 Stat. 852, 42 U.S.C. §§ 4321-47 (1970).
2Utah and New Mexico are the exceptions. U.S., Council on
Environmental Quality. Environmental Quality, Seventh Annual Re-
port. Washington, D.C.: Government Printing Office, 1976,
pp. 133-35.
3These states include Arizona, Montana, New Mexico, and North
Dakota. Southern Interstate Nuclear Board. Power Plant Siting in
the United States. Atlanta, Ga.: Southern Interstate Nuclear
Board, 1976.
14 An excellent example is Montana. See Montana Major Facility
Siting Act, Chapter 8, §§ 70-814 through 70-816.
5For pipelines see 31 Stat. 790 (1901) and 43 U.S.C.A. § 5
(1974). These acts do not specifically include coal slurry lines
in their provisions; however, permits to construct and operate
coal slurry lines have been interpreted to fall under the 1901
act. For HVTL's, see 31 Stat. 790 (1901) and An Act Relating
to Irrigation Distribution Systems, Pub. L,. 91-487, 86 Stat.
804; 43 U.S.C. § 959 (1964). This gives discretionary power to
the Secretary of the Interior in cases involving federal nonre-
served lands.
643 C.F.R. § 2851.2-l(c)(6) (1976). Environmental Criteria
for Electric Transmission text available from Superintendent of
Documents, Government Printing Office, Washington, D,.C.
648
-------
TABLE 11-11: STATE CONTROL OF TRANSPORTATION SITING'
STATE
MODE
FACILITIES COVERED
Arizona
Montana
HVTL
HVTL
Pipelines
New Mexico
North Dakota
HVTL
HVTL
Pipelines
>_ 115 kilovolts (kV)
Associated with facilities when >_ 69
kV (except HVTL >_ 230 kV if less~than
10 miles in length)
Gas and liquid hydrocarbons from gas-
ification facilities producing >_ 25
MMcfd or liquefaction facilities pro-
ducing >_ 25 thousand bbl/day. Also,
pipelines for geothermal fluids are
covered.
When >_ 230 kV
All HVTL >_ 230 kV. Any HVTL that do
not follow quarter or whole section
lines or paths of other transport
modes.
Gas or liquid carriage of coal, gas,
water, or liquid hydrocarbons to or
from conversion facilities.
HVTL = high voltage transmission line
>_ = greater than or equal to
kV = kilovolt
MMcfd = million cubic feet per day
bbl/day = barrels per day
Source: Southern Interstate Nuclear Board. Power Plant Siting
in the United States. Atlanta, Ga.: Southern Interstate Nuclear
Board, 1976.
•3
These laws do not cover railroads nor, in some cases pipelines.
These transportation modes are usually under the control of a
state railroad commission or sections of the state public utility
commission.
649
-------
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Because federal and state review processes now provide for the
participation of many groups previously excluded from direct in-
volvement, opportunities for conflict have increased. The private
landowner whose land is under consideration for condemnation and
the private interests that use public lands for grazing or recre-
ation are no longer obliged to rely strictly on the energy devel-
oper or transportation company's economic decisions concerning
"least-cost routes." Attitudes such as "we own the right-of-way
and you must live with it"l have left a lingering impression on
private landowners who now often use environmental and quality-of-
life concerns to justify their challenge of new routes.
In considering long-range plans for conversion facilities and
transportation routes, states with siting commissions seem to favor
transportation corridors in which several modes or companies share
a right-of-way. In response to a Congressional recommendation,
the Bureau of Land Management has investigated the necessity and
desirability of establishing a national system of transportation
and utility corridors across federal lands.2 A major stumbling
block to this concept is a lack of cooperation among states along
proposed routes. State right-of-way grants are often contingent
upon the carrier demonstrating that energy shipments of an inter-
state nature constitute a benefit to the state.3 (This has been a
problem with western energy development where, for example,
Arizona, New Mexico, and until recently, Colorado and Wyoming have
reacted adversely to coal slurry pipelines. "*) Thus, states that
contain neither the origin of the route nor its destination may
pose a problem for new energy transportation routes. For example,
Nebraskans have begun to raise questions about the increase in unit
train traffic on their railroad lines.5
*A Wyoming mayor describing railroad attitudes, quoted in
Richards, Bill. "Paying the Price for Western Energy." Washing-
ton Post, December 13, 1976, p. A4.
2U.S., Department of the Interior. The Need for a National
System of Transportation and Utility Corridors. Washington, D.C.:
Government Printing Office, 1975. This document advocates the
identification and utilization of "planning corridors" which are
several miles in width and which can accommodate different energy
transportation facilities.
3Carey, Dwight L., et al. Study of Alternative Locations of
Coal-Fired Electric Generating pTants to Supply Energy From Western
Coal to the Department of Water~Resources. Los Angeles, Calif.:
University of California at Los Angeles, Institute of Geophysics,
1977, pp. 4-39 through 4-40.
'Ibid.
5Richards. "Price for Western Energy."
651
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11.2.3 Summary of Problems and Issues
Railroads, slurry pipelines, HVTL's, and trucks are the trans-
portation modes most likely to raise problems and issues in the
transport of energy resources within and from the eight-state study
area. Each of these modes has already produced conflicts among
parties-at-interest over economic and physical impacts and asso-
ciated planning and routing questions.
Economic conflicts are underscored by the history and opera-
ting characteristics of railroads. Price discrimination under
monopoly conditions led to early federal regulation of rates; how-
ever, this monopoly persists, particularly in terms of transporting
energy in bulk form such as coal. Coal slurry pipelines appear to
be a technologically feasible and, in some cases, a price-
competitive alternative to railroads. This is one reason the rail-
roads have opposed them. Also, some citizens and state governmental
officials have expressed concern that water requirements for slurry
pipelines will deplete the region's already scarce water resources.
Conflict also arises over the physical impacts of each of the
transportation modes. New corridors in the study region will cause
environmental impacts, due to the removal of vegetation and the
disruption of wildlife habitat. This can be a short-terra phenom-
enon during construction in the cases of HVTL's and buried oil,
gas, and slurry pipelines, but railroads would have continued ef-
fect during operation. Health and safety questions are also
raised, particularly for unit trains which produce noise pollution
and the risk of accidents. Small towns in particular will be dis-
rupted since railroad routes within the study area tend to bisect
them. Increased movements of unit trains extend the time frame
within which these towns are effectively divided and increases
concern about accidents at crossings. HVTL's meet with resistance
because of their aesthetic effects, particularly in scenic areas
and their potential safety and health hazards. As a result, many
state governments are reevaluating their HVTL regulatory programs.
Even prior to the perceived health hazards, HVTL's were considered
by many to be an irritant due to the static they cause in radio and
television sets, and the noise and occasional electric shocks they
produce.
Finally, conflicts arise in the planning (route selection)
process due to the multiplicity of state jurisdictions that must
be crossed, the checkerboard land ownership patterns within these
jurisdictions, and legal mandates to account for environmental as
well as economic criteria. There are private, state, federal, and
Indian lands in the West. To be available for transportation uses,
state and privately owned lands must be declared in the public do-
main by the responsible agency. These agencies have now expanded
the criteria for making this decision beyond those traditionally
used. States have adopted mechanisms for widespread public review
of such decisions through siting commissions and state environmental
652
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protection programs. Use of federal and Indian reservation lands
necessitates widespread federal agency participation through EIS's,
certificates of need, and other requirements. States which are
crossed by energy transportation facilities but which are not sup-
ply or demand centers are particularly reluctant to bear the im-
pacts of these facilities.
These conflicts combine to create two major long-term energy
transportation issues in this study area:
• How can energy transportation systems best be expanded to
meet the projected levels of energy production in the eight-
state study area?
• What roles should local, state and federal governments as-
sume in assuring the movement of energy supply from the study
area while protecting the well-being of its citizens?
11.3 POLICY ALTERNATIVES FOR TRANSPORTATION
11.3.1 Introduction
Increasing domestic energy production and protecting and en-
hancing the environment are both national policy objectives. As
emphasized throughout this study, the West is expected to contrib-
ute significantly to increases in national energy production, and
most of that contribution will be transported for consumption in
other regions of the country. This energy transportation, as in-
dicated in the preceding sections, will produce a range of impacts.
Energy production and transportation goals can conflict with other
policy goals, and policymakers will have to determine acceptable
trade-offs.
The primary policy objective in the area of energy transporta-
tion is to provide adequate capacity for transporting energy re-
sources produced in the West while minimizing undesirable environ-
mental and socioeconomic impacts. In this section, four categories
of policy alternatives are discussed, each focusing on a particular
aspect of the policy objective of this chapter. These four cate-
gories of alternatives are:
• Enhance the coal carrying capacity of railroads;
• Mitigate the adverse impacts of unit trains;
• Promote coal slurry pipelines;
• Minimize the impacts of HVTL's.
Table 11-13 lists a number of specific- policy alternatives in each
of these four categories. It should be noted that, broad concerns
over the form of transported energy, such as the choice between
exporting raw coal or converting it first to electricity are not
653
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654
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directly addressed in this chapter. Consequently, energy transpor-
tation choices are discussed with the assumption that such large
scale policy choices (as discussed in Chapter 13) have already
been made.
11.3.2 Description of Alternatives
The first category of alternatives primarily addresses the
regulatory context in which the railroads operate, and includes
alternatives for expansion, increasing rail rates, and assuring
more stability in regulation. The second category is concerned
with the impacts rather than the capacity of coal shipment by rail.
The impacts fall into the principal categories of safety and noise,
each of which suggests a specific policy alternative. The third
category addresses coal slurry pipelines as a transport mode for
coal that would be a viable alternative to railroad shipment. The
fourth category includes policies to reduce the impacts and haz-
ards of high-voltage electric transmission lines.
A. Enhance Capacity of Railroads
Enhancement of the economic and material resources of the
rail transportation mode as a broad policy option can be achieved
through specific policies and implementations that increase rail-
roads' share of energy transport, increase the price per ton of
coal shipped, or assure the economic stability of railroads through
economic and regulatory guarantees or policies.
Railroads' share of energy transportation in the West is af-
fected by decisions of mine-mouth or demand-center conversion fa-
cility siting, competition with other transport modes, and state
and national policies that affect the attractiveness of western
coal as an energy resource. Each of these involves a complex
range of implementation strategies and will not be elaborated in
this section. It should be emphasized that rail transport depends
on a strip-and-ship policy which, in turn, would be consistent with
western opposition to conversion facilities such as power plants.
If western conversion is promoted, HVTL's or pipelines rather than
railroads would be transporting energy from the West.
As a competitor for rail shipment of raw coal, coal slurry
pipelines are the primary threat to rail monopoly. The alternative
of promoting slurries is evaluated in a later section; this section
considers expansion of rail lines into new areas (such as Four Cor-
ners) and double-track routes as an enhancement of rail capacity.
Federal assistance may be desirable in order to allow production
and shipment of western energy from previously inaccessible areas.
An enlarged investment tax credit to 20 percent for railroad ex-
pansion is a possible implementation strategy that could reduce
the tremendous inertia against rail expansion.
655
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On the subject of rail freight rates, the price of transport-
ing coal by rail is affected by year-to-year contracts between
utilities (or other consumers) and railroad companies. Rate sched-
ules are posted with the ICC, and subject to policies specified in
legislation summarized in Section 11.2. The 4-R Act of 1976l per-
mits new flexibility in rates which are negotiated between a rail-
road and a utility. Intervention in establishing rates must be
initiated by proponents of reduced rates in order to convene a
hearing to review tariffs. Under present ICC policies rail car-
riers can impose rates above cost on one commodity (such as coal)
to offset losses on other routes or commodities. In locations
where alternative modes do not exist (such as in many southwestern
locations) this is an effective method to enhance the capital-
forming capability of the railroads. In other locations, such as
along routes paralleling inland waterways maintained by the federal
government, barge competition may preclude this option.
The economic stability of railroads can be maintained through
other economic and regulatory policies,. Economic policies include
federal loans, federal assurance for repayment of obligations such
as bonds, or outright purchase of stock issues by a government
fund.2 Regulatory policies include permitting railroads to make
long-term contracts with shippers for movement of coal.3 Standard
rate agreements may extend for a maximum of one year, but the 4-R
Act includes a provision allowing rates to be established for a
five-year period without change where an investment in transporta-
tion equipment of more than $1 million is made.
Federal loans have been a major source of funds for railroads,
especially financially ailing lines needing iruprovod equipment.
In addition, loan guarantees have been made to r
-------
In addition, in the case of some western locations, no rail service
is presently available (such as in the coal fields of the San Juan
Basin in northwestern New Mexico). For these types of locations,
subsidy of new track may be needed to provide rail service for
coal export as well as for economic development of the region.
B. Mitigate Adverse Impact of Unit Trains
There are a number of things that can be done to reduce the
adverse consequences of increased rail transportation of coal on
communities along the railway. These include improvements in
safety and access across railroad lines, such as (1) installing or
improving grade crossing safety signals; (2) constructing grade
separations; and (3) constructing by-pass rail lines around some
communities. Noise impacts from rail traffic can be dealt with
by other alternatives, such as (1) constructing noise barriers
along the right-of-way in sensitive areas; (2) reducing noise emis-
sions from trains; and (3) revising land-use plans along railroad
rights-of-way, taking into account increased coal train traffic.
The safety and access impacts of coal transportation affect
all communities along a rail route. Safety signals at certain
crossings might reduce accident risk, especially in towns where
traffic is heavy. Rural signalization is generally not considered
a serious option because of costs. Most towns will need to have
access for emergency vehicles and general traffic; this need will
increase as rail coal shipments increase. Construction of grade
separations (over- and underpasses) in larger towns is already per-
ceived as a need, and may become a major issue in smaller towns
as a result of western energy development. Finally, by-pass lines
around larger cities would largely avoid the crossing problem as
well as noise problems, and would permit somewhat higher train
speeds. By-passes around smaller communities or construction of
major new sections of main line by-passing several towns are other
possible options.
Noise reduction alternatives include improving the engineering
design of locomotives, coal cars, or tracks; alternatives that
primarily would require additional research and are not short-
term options. Reducing train speeds would reduce noise somewhat,
but would exacerbate traffic and access problems. Noise barriers,
to be effective, must extend significantly above the noise source,
notably the locomotive exhaust outlet. Building barriers, lowering
tracks, and planting trees are possibilities in this area. Land-
use plans could prevent future urban activities from locating near
railroad tracks, thereby reducing noise received. Finally, grade
separations also mitigate the noise problem by obviating the need
for hornblowing.
A particular implementation strategy that could address sev-
eral of these policy alternatives is to establish a task force at
the state level, consisting of representatives of, for example,
657
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the state transportation or highway department, the railroad firms
operating in the state, local governments, and appropriate federal
agencies, such as the ICC. This task force would undertake plan-
ning studies, based on projected levels of coal transport, to
determine the level of community impacts and to establish prior-
ities for actions to mitigate these impacts.1 For example, the
task force would identify crossings where improved safety signals
or grade separations are justified and may identify communities
where the rerouting of tracks or the construction of noise bar-
riers is desirable. The lead agency, usually the state transpor-
tation department, would then carry out the recommendations of the
task force. The financial resources required could come from such
sources as state highway funds, railroad companies, and federal
funds made available through federal highway programs or the 4-R
Act of 1976. In addition, for those states with significant levels
of coal production, some portions of state severance taxes on coal
could be set aside for these purposes.
In carrying out its planning and evaluation function, the
task force would consider the costs and benefits of the safety and
noise policies in order to determine priorities among and within
affected communities and to compare the alternative mitigation
measures. It should be noted that it probably would not be prac-
tical for the task force to undertake implementation of noise miti-
gation. The reduction in noise emissions from trains would prob-
ably best be dealt with through a uniform national standard, while
the land-use planning process would remain in the hands of the
local governmental units. However, the task force could make rec-
ommendations to the appropriate federal agencies on noise standards
and could assist local governments with revisions of land-use
plans.
C. Promote Coal Slurry Pipelines
Granting eminent domain at the federal level is the specific
policy option considered here, rather than the granting through
individual states. The ICC would need to certify public conve-
nience and necessity, but the usual obligations of common carriage
seem to be excluded from the controls on slurries, as discussed
earlier. This alternative directly addresses the objective of in-
creasing energy transport capacity, doing so by an expansion in
the number of energy transport modes available.
:An example of this type of planning study is one for Colorado
funded by the Four Corners Regional Commission: URS Company.
Coal Train Assessment, Final Report for Colorado Department of
Highways.Denver,Colo.: URS, 1976.
658
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D. Minimize Impacts of High Voltage Transmission Lines
Three quite different options are considered that would reduce
the impacts of high-voltage electricity transmission. The first
is to reduce the level of voltage that can be used to a ceiling
below which certain adverse impacts are minimal (e.g., 350-400 kV).
The determination of the level would be an important part of the
implementation of this alternative, since conflicts over the in-
creased costs of utilizing lower voltage versus the hazards of
higher voltage make the capacity ceiling problematical. A second
alternative is to expand research on alternatives to AC transmis-
sion, especially DC transmission. Since most of the impacts of
high-voltage transmission are a consequence of the nature of AC,
the impacts should tend to be avoided with this alternative.
Finally, institution of interstate planning for transmission line
routes could address interstate conflicts over routing, width of
right-of-way, and other aspects of HVTL's. In part, this alter-
native is included within the more detailed discussion of facility
siting found in Chapter 12.
E. Summary of Description of Alternatives
The alternatives discussed above can be applied separately or
in combination by a range of public and private policymakers.
Many of the policies involve decisions by industry to reduce im-
pacts while expanding transport capacity. These decisions, of
course, will be influenced by government regulations, incentives,
and other policies. In other cases, the initiative will generally
rest with governments (federal, state, and local), which influence
the actions of the private sector through incentives, regulations,
and other policies.
11.3.3 Evaluation of Alternatives
A. Evaluation Criteria
The five basic evaluation criteria identified and defined in
Chapter 3 are used in the evaluation and comparison of policy
alternatives in this section. Table 11-14 defines these criteria
as they apply to this category of problems and issues and lists
the qualitative and quantitative measures which are used. As
shown in Table 11-14, applying these criteria raises questions
which relate to the substantive features of each alternative as
well as those which address the political concerns of the policy
options.
Each of the four categories of policy alternatives is evalua-
ted in this section according to these criteria. A summary evalua-
tion will follow the discussion of each policy category.
659
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B. Evaluation of Enhancing Rail Capacity
(1) Is the Alternative Effective?
Several studies have assessed the capacity of western rail-
roads to meet future coal transportation demands,1 and the consen-
sus generally is that railroads will be physically able to acquire
the necessary rolling stock and maintain or upgrade; track capacity
to meet expected needs (e.g., 345 million tons per year of western
coal production is projected by 1985 in the National Energy Plan).
One factor working in the railroads' favor in financing these ca-
pacity increases is that they can be added more quickly than a new
mine can be opened or a new power plant built. Thus, uncertainty
over the general financial requirements for upgrading railway ca-
pacity will not be a critical factor since investment capital can
be sought on an ad hoc, as-needed basis.2
However, investment needs for the necessary improvements are
anticipated to be about $8 billion.3 Since this is considerably
above the recent annual level of capital outlays4 the policy op-
tions being considered (increasing the flexibility of long-term
contracts, flexible pricing, and enhancing government subsidy of
railroads) are probably necessary to assure adequate western coal
transportation capacity.
JFor example see Manalytics, Inc. Coal Transportation Capac-
ity of the Existing Rail and Barge Network, 1985 and~Beyond7
Palo Alto, Calif.: Electric Power Research Institute, n.d., p. 6;
and Richard J. Barber Associates. The Railroads, Coal and the
National Energy Plan: An Assessment of the Issue. Washington,
D.C.:Richard J. Barber Associates, 1977^p~,37. As cited in
U.S., Congress, Senate, Committee on Energy and Natural Resources,
and Committee on Commerce, Science, and Transportation. National
Energy Transportation, Vol. Ill: Issues and Problems, Committee
Print,by the Congressional Research Service.Washington, D.C,:
Government Printing Office, 1977, pp. 461--63.
2Barber Associates. Railroads, Coal,, and NEP. As cited in
Senate Committees on Energy and Natural Resources, and Commerce,
Science, and Transportation. National Energy Transportation, Vol.
Ill, p. 464. ~
3 ,
'Senate Committees on Energy and Natural Resources, and Com-
merce, Science, and Transportation. National Energy Transportation,
Vol. Ill, p. 463.
4Barber Associates. Railroads, Coal, and NEP. As cited in
Senate Committees on Energy and Natural Resources, and Commerce,
Science, and Transportation. National Energy Transportation,
Vol. Ill, p. 465. ~
662
-------
In addition, although it is expected that overall rail capac-
ity can be made sufficient to meet demands, there are cases where
rail routes are not serving some important energy producing areas,
such as the San Juan Basin in northwestern New Mexico and the as-
sociated cities of Farmington, Aztec, Bloomfield, and Shiprock.
It is unlikely that rail service will be effectively provided for
these areas without substantial government subsidy, including pro-
visions that make new investment attractive, such as the proposed
20 percent investment tax credit for railroads.1 The new 110-mile
rail line to coal fields near Gillette, Wyoming, is the first
major extension of national rail service in 70 years.
A major problem in increasing reliance on rail transportation
is interruption in service due to strikes and accidents. Strikes
can affect some or all routes for weeks or months at a time, which
can cause severe problems for coal users if the back-up supply is
depleted. Generally, however, rail strikes pose a smaller threat
to coal supply than do strikes of coal miners. Train derailments
can also interrupt service for up to a week, but typically only
two or three days. These short-term interruptions generally have
not affected utilities or other coal users.
(2) How Are Costs and Benefits Affected?
A major factor affecting the desirability of expanding coal
transportation by rail is economic and environmental costs. The
environmental costs are discussed under the alternative of miti-
gating adverse environmental impacts from rail transportation.
This section focuses primarily on economic costs, emphasizing
costs for shipment by unit train to utilities near demand centers.
One factor affecting the ability to evaluate and manage coal-
shipment rates is difficulty in obtaining an understanding of how
to calculate actual costs and compare these with "reasonable rates."
Tariff information may be published annually or at other times;
costs differ according to volume, points of origin, car size,
train type, and type of delivery location such as docks, ports,
or utilities. Defining "cost," therefore, is a difficult regula-
tory process. There are significant fixed costs (such as roadbed),
but no uniformly agreed basis for apportioning that cost to the
various classes of service. Consequently, it becomes difficult to
define "discrimination" or excessive costs. As a result of these
factors, the Congressional Research Service and the ICC have in-
dicated the need for "revised uniform terminology" in tariff sche-
dules to understand their feasibility and degree of controversy,
and to facilitate the regulatory process.
testimony by Association of American Railroads Staff before
U.S. Senate Finance Committee, August 23, 1978; reported in
"Rails Asking for Billions in Subsidies." Denver Post, August 25,
1978.
663
-------
Railroads might be more competitive and stable if permitted
to make binding long-term rate agreements with shippers of coal.
Long-term rates might permit savings to the railroad from greater
certainty of traffic and administrative ease. The problems raised
with long-term rate agreements are equity among shippers, among
railroads, and among modes, as well as the changes that would be
necessary in the regulatory or statutory framework, including
that governing coal slurry pipelines, discussed below.
However, railroads may not be interested in long-term fixed
rates as long as they can adjust rates to meet their financial
needs. Both the railroad and the shipper would be "locking them-
selves in" over the term of the contract. The railroad might mis-
calculate its advancing costs of inflation, labor, and maintenance,
or might fail to provide for them adequately by contractual
clauses which index rates to such variables.l The shipper, on the
other hand, would preclude his own use of other transportation op-
tions, such as slurry pipelines, or might be unable to participate
in the benefits of general rate reductions of the railroad.2
There are other, less direct, links between western economic
interests and railroads' coal hauling activities. First, rail-
roads employ about 4.8 employees per million tons of coal per 100
miles and a total of nearly 30,000 in the western states (Table
11-15). Railroads also carry assessed property valuations of 20
cents per annual ton of capacity along rail routes. These tax
revenues (for which comprehensive data are not available) will
accrue mostly to county governments.
(3) How Are Costs and Benefits Distributed?
Many of the conflicts associated with transportation problems
deal with problems of equity among shippers, the transportation
sector, and the general public. These equity problems are associ-
ated primarily with routes and rate structure (i.e., how costs are
distributed)-.
An underlying problem in evaluating transportation inequities
is the incremental and commodity-specific orientation of transpor-
tation policies. In addition, each mode has major economic costs
redistributed in different ways. Water-borne commerce, for exam-
ple, is subsidized through government built and maintained inland
waterways systems. Truck and auto traffic is serviced by a
•'U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. Ill: Issues and Problems,
Committee Print, by the Congressional Research Service.Washing-
ton, D.C.: Government Printing Office, 1977, p. 479.
2Ibid.
664
-------
TABLE 11-15:
RAILROAD EMPLOYMENT IN WESTERN
STATES, 1976
STATE
Arizona
Colorado
Montana
New Mexico
North Dakota
South Dakota
Utah
Wyoming
Total
RAILROAD EMPLOYEES
3,460
5,710
5,820
2,840
2,900
1,130
4,750
3,090
29,700
Source: American Association of Railroads,
Yearbook of Railroad Facts, 1976. Wash-
ington, D.C.: AAR, 1976, p. 60.
government owned and maintained surface road system that pays no
property taxes. The economic effect of these kinds of cost redis-
tribution is difficult to document. But the patterns that emerge
characterize transportation policies as overt political trade-offs
among competitive modes and routes. This pattern of cost redis-
tribution is due to the difficulty in achieving an integrated and
comprehensive transportation policy. The evaluation of equity be-
comes highly judgmental, often reflecting attitudes about which
industrial groups, routes, services, and patterns of subsidy best
serve the public and the national interest.
Current procedures intensify equity conflicts by permitting
rates in excess of costs for many western coal routes.1 The alter-
native described here, allowing more flexibility for railroads,
contributes to this conflict so that consumers served by coal-fired
utilities or other end users subsidize the rail industry and also
benefit shippers and consumers of noncoal commodities. Implementa-
tion strategies that diminish shipper (e.g., electric utility)
subsidies in favor of government subsidies, including loans,
grants, and tax incentives, would spread costs over a larger gen-
eral public. If increased use of western coal is a desired na-
tional goal benefiting the general public, then government subsi-
dies may distribute increased capital needs more equitably than
:Drew, Christopher. "Texas Battle of .Coal Hauling Rates
Risks U.S. Energy Plan, Efforts Lift Rail Net." Wall Street
Journal, June 17, 1978, p. 19.
665
-------
using coal shipment as a means to subsidize other commodities and
routes, such as grain shipment or the movement of industrial goods.
However, this type of government implementation strategy might
conflict with the railroad's interest in achieving a more inde-
pendent industry.1
The western industries which are most dependent on rail ser-
vice are agriculture, forestry, and mining. Assuring adequate
financial capacity for railroads could protect the interests of
these users in terms of track availability, routes, and rates as
discussed below.
Track availability. While an increased volume of coal unit
trains could cause delays for other classes of freight, it is also
possible that roadbed and signaling improvements as well as
double-tracking will become more widespread in response to coal
traffic, making for better all-around service. In a few cases,
new routes will be opened, cutting perhaps hundreds of miles off
of shipping distances.2 However, coal shipments along some routes
are likely to compete for cars, engines, and schedules with exis-
ting passenger and freight transportation, placing these at a dis-
advantage. The extent of this disruption is uncertain and is dif-
ficult to predict.
Routes. Also important for the regional economy would be
provisions that currently operative rail lines will not be aban-
doned. Concern over rail abandonment in the northeastern states
played an important role in shaping the 4-R Act in 1976. Low-use
routes are common in the West, as pointed out in Section 11.2.2.A.
If flexibility is granted the western railroads in terms of reduced
exit restrictions, some areas may lose rail service.
Rates. One of the serious concerns which has kept long-term
rate agreements from being a policy option in the past is the
1U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. Ill: Issues and Problems,
"Committee Print,by the Congressional Research Service.Washing-
ton, D.C.: Government Printing Office, 1977, p. 466.
2For example, Burlington Northern and Chicago & Northwestern
are planning a 113-mile line from Gillette to Douglas, Wyoming,
connecting the mainlines of those two railroad companies. U.S.,
Department of the Interior, Bureau of Land Management. Final
Environmental Impact Statement, Eastern Powder River Coal Basin
of Wyoming. Washington, D.C.: U.S., Department of Interior,
1974, Vol. V, map 12.
666
-------
possible effects on shippers other than the one who had the agree-
ment. 1 A main purpose of railroad and common carrier regulation
is to prevent discrimination among shippers.2 Of course, if the
railroad offered the same rate to any shipper for a given volume,
term, and distance, unfairness would be reduced.3
In addition, coal as a commodity is more susceptible to long-
term contracting in all phases than most goods. Coal supplies a
continuing steady demand, which generally is not subject to the
wide seasonal or yearly variations typical of many other bulk com-
modities (e.g., grain). Therefore, allowing long-term rates for
coal movement and not for all other materials shipped by rail
could be justifiable.4
On the other hand, long-term contracts may reduce competition
among railroads by preventing the shipper from switching his traf-
fic to another line for the term of the contract. It is possible
that one railroad could use contract rates to lock up the traffic
in a given area to which another railroad would desire to extend
or improve service.
(4) Are the Alternatives Flexible?
The policy alternative of increasing the economic capability
of railroads enhances flexibility in coal transportation. It can
provide more hopper cars to serve more routes and locations, and
enhances the capability of existing track to speed service to a
greater number of customers. Rolling stock is the most flexible
capital investment; however, commitments to track also enhance a
system's ability to service multiple customers in a variety of
locations. Added track does represent a fixed commitment for ser-
vice, however, and abandonment of service to communities or indus-
try is frequently resisted by the public and regulatory agencies.
1U.S., Congress, Senate, Committee on Energy and Natural Re-
sources, and Committee on Commerce, Science, and Transportation.
National Energy Transportation, Vol. Ill: Issues and Problems,
Committee Print, by the Congressional Research Service. Washing-
ton, D.C.: Government Printing Office, 1977, p. 480.
2U.S. Railway Association. "Intermodal and Intramodal Com-
petition," in MacAvoy, Paul, and John Snow, eds. Railroad Revi-
talization and Regulatory Reform. Washington, D.C.: American
Enterprise Institute, 1977, pp. 54-55; and Friedlander, Ann. The
Dilemma of Freight Transport Regulation. Washington, D.C.:
Brookings Institution, 1969.
3Senate Committees on Energy and Natural Resources, and Com-
merce, Science, and Transportation. National Energy Transporta-
tion, Vol. Ill, p. 481.
14 Ibid.
667
-------
Enhanced economic capability of railroads does not per se
reduce options to utilize other transportation modes. Competition
with other modes (truck, slurry, barge) may be enhanced to the
benefit of shippers using other modes if a strong rail mode compe-
tition exists.
Among the possible implementation options, some government
subsidy programs may be the most flexible alternatives, and long-
term unit train contracts are the least flexible because they are
contract specific. Tax incentives on capital investment are flex-
ible policy choices that do not commit the railroads to a fixed
plan or set of services. Likewise, grants, or loan subsidies can
be implemented to meet specific short- or midterm needs. However,
significant commitments to improve railroads by government subsidy
could tend to become a nearly irreversible policy commitment to
public support for a major private sector activity.
(5) Can the Alternatives Be Implemented?
Allowing special, lower rates for coal transport based on lot
size to facilitate large shipments is considered by the ICC as
"personal discrimination" and has not often been accepted.1 Also
if railroad flexibility were implemented in terms of routes and
services, it would include allowing line abandonments. While a
need for flexibility by railroads may be generally recognized, no
one is eager to see service terminated for their particular com-
munity or commodity.2 In short, some means of attaining economic
stability for railroads go against several traditions, values, and
interests.
On the other hand, enhanced government subsidies have a long
record of widespread acceptance by the public. However, the rail-
roads would apparently desire private sector funding by achieving
a better rate of return on investments, rather than simply re-
ceiving loans or loan guarantees.
The railroads also have been active in seeking preferential
investment tax credits. Significant historical record exists for
a variety of such government subsidy policies, and these couid be
specifically tailored to meet the needs of transporting western
energy resources. However these policies of government subsidy
have received increasing criticism from tax-conscious segments of
government and the public. It is possible that continued subsidies
of the railroads will become less acceptable in the future.
lMThe Eastern Rail Disease Spreads -co the Midwest." Business^
Week, January 23, 1978, pp. 79-80.
2 "Transportation: The Reins Loosen.." Business Week,
April 4, 1977, p. 93.
668
-------
C. Evaluation of Mitigating Unit Train Impacts
(1) How Effective Are the Various Mitigation Measures?
The overall effectiveness of such a policy alternative would
depend on the effectiveness of each specific mitigation measure
(e.g., grade separations or noise barriers) and on the total amount
of funding that could be made available for the program. The
costs and possible funding sources are discussed later. In the
following, the degree to which the individual mitigation measures
can reduce the community impacts of unit trains is briefly discus-
sed .
It is clear that the most effective measure of the specific
policy alternatives is to construct by-pass rail lines for unit
trains (and other "nonstop" traffic). This simply removes the
source of the problem. Of course, some of the problems, such as
safety hazards at grade crossings, would be transferred to the
new route but, assuming road traffic is less and fewer towns are
divided, then the overall impact would be less. Grade separations
could be provided along the new route at roads with significant
traffic levels.
Since most communities would probably not want to give up
their existing rail service, issues concerning line abandonment
discussed .mder the previous alternatives also are raised here.
Especially in certain cities which rely heavily on rail service,
it might: v>e necessary for the railroads to maintain existing lines
through those comir'.uiut j es .
The upgrading of safety devices at grade crossings would re-
duce, but not eliminate the hazards for pedestrian and vehicular
traffic but would do nothing for the "barrier" effect or access
problems created by a high volume of train traffic. Construction
of fjr.ade separations for the major traffic arteries in a community
would pf fe---t-1 veJ y eliminate both of these problems.
Two measures were identified for dealing with noise: con-
struct noise barriers (such as berms, walls, or vegetation) and
redufp emission levels from trains. An obvious possible way to
control noise from this source is to reduce train speeds, but
these? are already limited in most communities to 20 or 30 miles
i>es: -i. ^r , Also, this would do nothing to control the major noise
5 ..-,- , , locomotives, and reducing the speed even further would
exacerbate the traffic congestion problem. According to EPA
standards, locomotives manufactured after 1979 must meet a stan-
dard of 90 dBA at 100 feet. Thus, as newer locomotives are brought
into service and older ones phased out, noise problems will be
reduced. Whether noise emission levels could practicably be re-
duced even further is unknown. The other alternative is to con-
struct noise barriers. To be effective, however, such noise bar-
riers must extend significantly above the noise source, the major
669
-------
one being the locomotive exhaust outlet. One study shows that
barriers as high as five-story buildings or more are required to
lower noise levels below 80 dBA for locomotives at 100 feet.1
Constructing barriers this high or lowering tracks this much would
not only be expensive but also might be physically impossible to
accomplish within existing rights-of-way, especially in towns.
Thick stands of trees will also provide some noise barrier effect,
but this would be difficult to accomplish in many of the arid
western regions and sufficiently wide rights-of-way do not exist
in many western communities. In summary, one study concluded that
there was little that could be done to reduce noise impacts in
sensitive areas near the tracks other than either relocating the
tracks or the receptors (people).2
The final measure considered in this policy category is the
revision of land-use plans in communities, taking into account
projected increases in train traffic. This measure is not aimed
so much at ameliorating existing impacts but rather at preventing
future ones as towns expand and grow. A particular zoning desig-
nation for an area of land near the railway might have been com-
patible with railroad operations during a period of low traffic
volume, but it might be incompatible witn higher train traffic
levels where noise and access become more significant. Such areas
might therefore be rezoned to a classification, such as agricul-
tural or heavy industrial, that would not be incompatible with
nearby high-volume railway operations. Existing land uses are not
changed by this policy, so that only future impacts are addressed.
Finally, it should be noted that while the set of measures
considered here is aimed at reducing the adverse community im-
pacts of coal train transport, some might also incrementally con-
tribute to the first part of the policy objective, namely, in-
creasing western coal transportation capacity. For example, the
rerouting of unit trains around communities and the construction
of grade separations might allow unit trains to travel faster and
thus reach .their destinations more quickly. While overall capac-
ity of a railway route is a complex function of the number of loco-
motives, cars, and track available and the average speed allowed,
generally as average speed increases, the capacity of the route
should increase.
:Wyle Laboratories. Assessment of Noise Environments Around
Railroad Operations, Report WCR 73-5. N.p., 1973. As cited in
URS Company.Coal Train Assessment, Final Report for Colorado
Department of Highways. Denver,~Colo.: URS, 1976, p. 11-49.
2URS. Coal Train Assessment, p. VII-49.
670
-------
(2) What Are the Economic Costs of This Alternative?
There are very few data available on the costs of implementing
the various measures identified; also, the costs for some will be
highly dependent on site-specific factors. It has been estimated
that grade crossing protection can cost up to $70,000 per crossing,
while the construction of grade separations generally ranges from
$750,000 to $1.5 million, depending on conditions. To give some
idea of total cost magnitude, there are 167 grade crossings in
urban areas in Colorado alone. To construct grade separations for
each of these crossings would cost from $125 to $250 million.1
No data are available on the cost of constructing berms or
walls to act as noise barriers, but, as noted previously, it is
considered to be extremely expensive.2 With respect to reducing
emission levels from locomotives, EPA has estimated that to meet
the new standards required for locomotives manufactured in 1979
(90 dBA at 100 feet) will not in itself be sufficient to necessi-
tate increases in rates.3
The cost of constructing by-pass routes around communities
will depend very much on the routes available and the land values
near the community. One source indicated that a typical cost for
constructing new double-tracks is $500,000 per mile.4 Thus, to
construct a by-pass of 15 miles could be expected to cost on the
order of $7.5 million. Besides these direct costs, this measure
also creates a number of other important costs and benefits for
the community. Land values along the new route, land-use plans,
and community growth patterns can all be substantially altered by
the construction of a new rail line. Conversely, if an existing
rail line were abandoned, there would be other community effects.
On the one hand, the removal of the rail line through a central
business district could allow for community redevelopment programs
and could raise property values along the old right-of-way. On
the other hand, loss or lowering of rail service could have a dis-
ruptive effect on some businesses and require the relocations of
some rail-dependent industries. The importance of rail service to
a town and its industries must be determined on an individual
basis, and trade-offs will certainly be necessary.
1WRS Company. Coal Train Assessment, Final Report for
Colorado Department of Highways. Denver, Colo.: URS, 1976,
pp. VII-20 and VII-12.
2Ibid., p. VII-49.
3 Ibid., p. V-8.
"*U.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines, Prepublication Draft. Washington, D.C.: Office of
Technology Assessment, 1978.
671
-------
The costs of implementing the task force and carrying out the
required planning studies would be relatively small compared to
the costs of implementing the various impact mitigation measures,
but they would not be insignificant. No firm data are available,
but assuming the majority of task force members would be contrib-
uted by their employers, the task force could probably be operated
(including contracted planning studies) for a cost of $150,000 to
$400,000 per year. After the initial planning studies were com-
pleted, costs could drop significantly.
(3) How Are Costs and Benefits Distributed?
The primary beneficiaries of impact mitigation policies will
be the residents of communities through which coal train traffic
passes and the motoring public more generally. If rail capacity
is also improved, end consumers of the energy and the nation more
broadly will benefit from the increased domestic energy supply,
while the railroads may derive some direct benefits from some of
the measures through increased railway capacity.
The sharing of costs necessary to implement the various impact
mitigation measures is dependent upon how the program is structured.
There are four general sources of funds to carry out this program:
state highway or general revenue funds; railroads; local govern-
ment sources; and federal funds.
Most states currently spend some state highway funds to up-
grade highway/railroad crossings but the amounts currently being
spent are probably inadequate to address the problem effectively.
Local governments also could finance some portion of these costs
but their resources are usually quite limited, as emphasized in
Chapter 9. In Colorado, the Public Utilities Commission's Railroad-
Highway Grade Crossing Protection Fund receives $20,000 per month
from the Highway User Trust Fund to be used for the upgrading or
installation of grade crossing protection. This fund-is used only
in cases where no federal funding is available; the railroad must
pay a minimum of 10 percent, based on the benefit to the railroad,
with the remaining cost divided between the county or city that
owns the roadway and the fund.1 Not only are the total dollar
amounts quite limited, but the funds cannot be used for the full
spectrum of alternative measures being considered in this policy
option.
An attractive means for financing such a program in states
with substantial coal development is to use some portion of state
severance taxes on coal production. This is an equitable approach
since it in effect passes these impact mitigation costs on to the
energy consumers. Of course, this approach would not be possible
1URS Company. Coal Train Assessment, Final Report for Colo-
rado Department of Highways. Denver, Colo.: URS, 1976, p. VIII-12.
672
-------
for those noncoal producing states that lie on the major coal
transportation routes from the West to coal consuming areas.
It would seem that to oe equitable, railroads should also pay
for some portion of the costs for the impact mitigation measures,
at least in proportion to the direct benefits that they would re-
ceive. However, this would have to be handled on a case-by-case
basis and would require a "goodwill," cooperative attitude on the
part of the individual railroad companies. There appears to be no
way under most existing state laws that railroads could be forced
to participate in the cost sharing. Given the competitive nature
of the industry, the financial condition of many railroads, and
past experiences with some companies, there are reasons to expect
that overall the railroad industry would pay for only a small
fraction of the total impact mitigation costs.
As happens in so many other cases of this type, the federal
government would probably be required to finance the major share
of the costs for this policy alternative. There are three possible
means for making these funds available: federal highway funds;
federal funding for railroad industry improvements; and special
appropriations specifically for this purpose. The Federal Highway
Act of 1976 does provide for funding of rail-highway safety proj-
ects. This act represents a major change in federal policy in
that it allows federal financing for crossing safety projects on
all public streets and roads, not just those on the Federal Aid
Highway System. In addition, funding can be used to finance track
relocation demonstration projects in urban areas.1 The level of
funding for these projects was $200 million for fiscal year 1977,
which is a small amount compared to the magnitude of the needs
associated with western energy development. For example, Colo-
rado's share of these funds amounted to $2,755,000 in fiscal 1977.
The legislation also carries a stipulation that at least one-half
of the Federal Aid Highway System monies be used for installation
of signal devices at rail-highway crossings, which seriously limits
the availability of funds for grade separation projects.2
Another possible source of federal funds for railroad improve-
ments is made available through the 4-R Act of 1976. However,
railroad companies are eligible to apply for funds under the Act
only if they were unable to raise the funds in normal money mar-
kets.3 One study noted that railroads operating in Colorado (Union
Pacific, Burlington Northern, Santa Fe , and Rio Grande) were rela-
tively prosperous compared to many others in the industry and thus
Company. Coal Train Assesment, Final Report for Colorado
Department of Highways^ Denver, Colo. : URS, 1976, p. VII-11.
2 Ibid. , p. VII-12.
3Ib_id.
673
-------
GRADE CROSSING BILL MAKES PROGRESS
A bill has been approved by a
U.S. House subcommittee to provide
$200 million to help states build
railroad overpasses and underpasses
in areas where heavy coal traffic
exists. Representative Jim Johnson,
R-Colo., who introduced the bill,
noted that at least 20 Colorado high-
way crossings of railroads would
qualify for the federal construction
money. The bill is now being con-
sidered by the House Public Works and
Transportation Committee.
—Parmenter, Cindy. "House Unit
Passes Rail Overpass Bill." Denver
Post, May 5, 1978.
will likely be ineligible to
receive funds under the Act.1
The Act may also provide funds
to government entities to be
used for railway improvement and
rehabilitation, including proj-
ects concerned with highway-rail
safety.
A third possible avenue
for federal financing of such a
program is special appropria-
tions specifically for this pur-
pose. One such bill was re-
cently introduced in Congress
but was not passed (see box).
One group who might oppose such
a program is slurry pipeline
interests who might view the
public expenditure of funds to
mitigate railroad impacts as inequitable. They could argue that
slurry pipelines could be constructed without public financial sup-
port and not create the adverse community impacts caused by unit
trains.
(4) Is the Alternative Flexible?
This policy alternative would rank high on the basis of flex-
ibility. It proposes no across-the-board approach. Rather, the
establishment of a task force within each state, made up of rep-
resentatives of all affected groups, would set goals and priorities
among competing projects based on the perceived needs within that
state and the availability of funds. Thus the program is easily
adjustable to different locations and to changing conditions.
(5) How Difficult Will It Be to Implement the Alternative?
The initial program could be easily established by the admini-
strative branch of state government. No new legislation would be
necessary to initiate the task force and the planning studies.
The main obstacle at this point would be the budgeting of funds
required for the task force operation and the planning studies.
The ultimate effectiveness of the program will, of course, de-
pend on the amount of funds available to carry out the measures
recommended by the task force. As noted, these measures can be
expensive and presently there do not appear to be any existing
programs at the state or federal level to finance the full range
:URS Company.
Department of Highways.
13.
Coal Train Assessment,. Final Report for Colorado
VIII-12 and
Denver, Colo.: URS, 1976, pp
674
-------
of improvements at the level likely to be needed. It is this
aspect of the policy alternative that will be the most difficult
to implement since new federal and/or state funding programs may
be required.
D. Evaluation of Coal Slurry Pipeline Promotion
(1) Will Coal Transportation Capacity Be Enhanced?
Coal slurry pipelines could feasibly transport a portion of
western coal to demand centers if construction is not blocked by
the lack of eminent domain powers and if sufficient water (or
other transport medium) is made available. This alternative,
therefore, may be effective for increasing the capacity for trans-
porting western coal outside the region by removing one of the
obstacles, lack of eminent domain powers. The reliability of the
supply of western coal to the nation also will be increased be-
cause disrupted service on one mode, such as a rail strike, will
not directly affect the other mode.
Adequate capacity in supplier industries and capital markets
is available to expand both slurry pipelines and rail systems
faster than coal mining or coal-fired power plants can be expanded.
The choice of either mode will not be limited by capacity, but by
cost and demand. The demand for coal slurry pipelines will de-
pend on national coal demand growth rates, environmental regula-
tions, and transportation costs. For example, a strict definition
of best available control technology coupled with high slurry
transportation costs would tend to reduce the demand for western
coal and the use of coal slurry pipelines.
While the extensive use of coal slurry pipelines will probably
not greatly affect the national use of coal and the rate of coal
development, it will probably increase the rate of development and
use of western coal. Granting coal slurry pipelines, which are
most economical for long distance shipments, the right of eminent
domain will probably allow western coal to be transported econom-
ically farther outside the region than if just rail transport of
coal is used. This could result in a slightly reduced growth rate
xii the development of midwestern and eastern coal, and a reduction
in railroad revenue.1
(2) What Are the Costs and Benefits?
Under at least some circumstances, coal slurry pipelines can
transport coal at lower cost than any other coal transport mode.
Coal slurry pipelines are particularly attractive when supplying
^.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines, Prepublication~Draft.Washington,D.C.:Office of
Technology Assessment, 1978, p. 75.
675
-------
mines are large and closely spaced, high annual volumes of coal
are shipped over long distances, real interest rates are low in
light of anticipated rates of inflation, terrain is favorable,
sufficient water is available at low cost, rail operations are in-
efficient or needing upgrading, there is no parallel navigable
waterway, and there is a secure long-term market for the coal. In
short, coal slurry pipelines involve high capital costs and rela-
tively low operating costs compared to railroads which are subject
to higher operating costs and the effects of wage inflation. These
conditions generally are met for western coal, with two possible
exceptions: western coal-hauling railroads are among the most
efficient and well-maintained in the country; and the availability
of water is open to serious question, especially in Wyoming, the
origin of most planned slurry lines. Overall economic efficiency
in coal transportation probably would be obtained by a combination
of rail and slurry pipelines for coal shipments, despite opposi-
tion from rails to any penetration by slurries into the coal-
hauling business.
The larger issue is over the environmental effects of both
modes. Water use by slurries is not as large as some mine-mouth
conversion of coal, as indicated in Section 11.2.2, but is more
visible, as it leaves the state and the region in a pipeline rather
than in the form of vapor from power plant cooling towers. However,
raw coal for burning or conversion at a demand center can be ship-
ped either by rail or by slurry, and railroads require essentially
no water. Temporary construction impacts of slurry lines will
tend to be larger-scale than any likely construction of new rail-
road track, but neither are considered severe. These construction
impacts of slurries include land disruption, as land is cleared
and trenches are dug, and socioeconomic effects, as the construc-
tion force moves along the route as construction proceeds. This
large, temporary construction employment is contrasted with the
larger and more stable employment in the railroads.
Operation impacts appear to be greater from rail transport,
including noise, land-use disruption, accidents at crossings, and
other safety and access problems discussed earlier. Slurries, on
the other hand, will generally be underground. Slurries will re-
quire excavation if plugs or breaks should occur, as discussed
earlier. Rail operating impacts may be relatively greater but
have been around for a long time and are better understood, where-
as slurry impacts will be completely new.
(3) How Are Costs and Benefits Distributed?
If coal slurry pipelines are given the right of eminent domain
while regulations on railroads are not relaxed, coal pipelines
would have a significant regulatory advantage. Probably the major
disadvantage that the railroads would bear is their inability to
676
-------
enter into long-term contracts.1 Precedent exists for eminent '
domain in the 1947 Amendment to the Natural Gas Act, which gave
similar authority to gas pipelines. Most oil and fertilizer pipe-
lines have been built only between states with state-level eminent
domain authority.2
Coal slurry development in the West will probably result in
reduced revenues in the future for western railroads and.more com-
petition between the two modes. While overall coal transport costs
will probably be reduced, the costs of shipping items other than
coal by rail will be increased. It has been estimated that if
pipelines took 45 percent of the western coal ton-miles by the
year 2000, western railroads would have to raise their rates to
all other shippers by from 4.0 to 4.7 percent (over levels in the
absence of slurries) to maintain a constant level of profitability.3
However, this point does not take into account efficiency improve-
ments stimulated by the increased competition and it could also be
interpreted to mean that rail rates would simply decline less if
slurries are allowed to compete rather than there being an increase
in rates compared to the current situation.
Coal slurry pipelines are favored by some in the West who be-
lieve tax revenues will be increased by their development. In
Colorado, for example, some legislators have predicted that, by
allowing slurry pipelines to run through the state, from $2 to $3
million in taxes will be gained by the state. However, the same
legislators did not want Colorado water to be used.1*
The method by which coal slurry pipelines obtain water can
significantly affect the distribution of costs. The Central Utah
Project, which is projected to cost approximately $1 billion, is
aimed at providing more water for energy development needs (mainly
coal conversion) and will be funded by the public with the costs
of this development to be passed on to or recouped from water
users.5 On the other hand, coal slurry operators are likely to
be required to pay the expenses of obtaining their own water supply,
^T.S., Congress, Office of Technology Assessment, Coal Slurry
Pipeline Project Staff. A Technology Assessment of Coal Slurry
Pipelines, Prepublication Draft. Washington, Q.C.: Office of
Technology Assessment, 1978, p. 3.
2 Ibid., pp. 22-23.
3 Ibid., Section V.
4"It's Coal Slurry Pipeline Water That Worries Lawmakers."
Wyoming State Tribune, December 20, 1977.
5Wynkoop, Steve. "Diversion of Water for Energy Studied."
Denver Post;, December 16, 1976.
677
-------
such as developing the necessary well supply system.1 This would
result in a more direct internalization of water costs than would
the public construction of water projects.
(4) Is the Policy Flexible?
Granting coal slurry pipelines the right of eminent domain
will provide a choice of modes for exporting coal from the West.
Under the current regulatory context, in most cases coal must
either be exported by rail or converted to another energy form be-
fore being transmitted outside the region. Giving large coal users
a choice will increase competition and flexibility in transporting
coal. The nation will not be limited to one transport mode which
may be subject to labor disputes and other problems.
Coal slurry pipelines do not have the flexibility in economic
shipping capacity that railroads do. Flow velocity cannot be
varied greatly and the delivery of slurry must continue during
shut-down periods at the receiving power plan't. Both routing and
the types of commodities slurry pipelines can carry are inflexible
compared to railroads.2
Granting coal slurry pipelines eminent domain at the federal
level will preempt the states from granting or denying this right
in response to local political conditions. This would be a reduc-
tion in flexibility in regulating slurry pipelines, and may be
subject to differing interpretations in the courts.
(5) Are There Barriers to Implementation?
This alternative as analyzed here would involve federal action
although there are other implementation strategies under which
coal slurry pipelines could be developed. Some proposals have al-
ready been made before the U.S. Congress to grant coal slurry pipe-
lines the right of eminent domain, and a precedent for granting
such a right exists in the 1947 Amendment, to the Natural Gas Act,
which gave similar authority to interstate natural gas pipelines.
As noted earlier, railroads have joined with agricultural in-
terests in opposition to the development of coal slurry pipelines
in the West, each for different reasons. National labor unions
have also voiced opposition to slurry pipelines. For example, the
Railway Labor Executives Association of the AFL-CIO opposes granting
Strain, Peggy. "Water, Land, Life—It's All One in Valley
Pipeline Debate." Denver Post, November 13, 1977, pp. 3, 15.
2Murray, Francis X., ed. Where We Agree: Report of the
National Coal Policy Project. Boulder, Colo.: Westview Press,
1978, pp. 42-43.
678
-------
slurry pipelines the right of eminent domain, fearing it may cost
railroad jobs.l The United Mine Workers opposes slurries because
they may make it easier to transport nonunion western coal into
eastern markets during strikes, thus weakening the union's bar-
gaining position.2
A major reservation to slurry legislation in Congress concerns
water requirements for the pipelines and the availability of west-
ern water for agricultural, municipal, and other needs. The states
have particularly focused on the water issue in their opposition.
In May, Wyoming Governor Ed Herschler testified against slurry
pipelines before the Senate Energy Committee: "If Wyoming is to
continue to play a substantial role in fulfilling the nation's
energy demands, then our water must be kept available for uses in
the state of Wyoming, and not shipped to other states."3
In 1977, the Colorado General Assembly approved legislation
to prohibit temporarily the export of water from the state in coal
slurry pipelines.4 Slurry interests note that the pipelines re-
quire about a ton of water for each ton of coal, while energy con-
version facilities require more water to process the same amount
of coal (this is discussed is more detail in Section 11.2.2) .
Other states, such as Utah, seem to be unopposed to use of water
for energy development. Utah plans to divert water for energy uses
despite opposition from agricultural interests.5
Railroads are perhaps the major barrier to the implementation
of proslurry alternatives. Railroads note that their lines are
presently underutilized and that slurry pipelines would cut into
the most profitable and convenient hauls, those shipping large
volumes of material from point to point over long distances. As
noted by the president of the AAR in testimony before the House
Interior Committee: "This is the "cream1 of the coal traffic...
that would be 'skimmed1 by the pipeline operators, while
Kerrigan, Richard. "Railroads Versus Coal Pipelines—New
Showdown in the West." National Journal, Vol. 8 (March 6, 1976),
p. 294.
2 Ibid., p. 295.
3Bureau of National Affairs. "DOE Assures State Rights in
Coal Slurry Lines; Bill Goes to Floor." Energy Users Report,
Current Report No. 249 (May 18, 1978), p. 21.
""It's Coal Slurry Pipeline Water That Worries Lawmakers."
Wyoming State Tribune, December 20, 1977.
5Wynkoop, Steve. "Diversion of Water for Energy Studied."
Denver Post, December 15, 1976.
679
-------
railroads—as true common carriers—would be required to provide
service to all."l
Thus, considerable opposition to slurries exists, which
threatens their wide use as a coal transport mode. On the other
side of the issue are public utilities which need coal for power
generation, the National Coal Association, consumers who prefer
low-cost means of coal transport in order to keep rates low, and
federal energy planners who see slurries as an aid to expanded
western coal production. The conflict will not easily be resolved,
and some experimentation with a large-scale, long-distance slurry
pipeline might help to make cost comparisons possible.
E. Evaluation of Reducing High Voltage Transmission Line Impacts
(1) How Effective Will the Policy Be?
As discussed in Section 11.2.2 and illustrated in Table 11-8,
there are considerable economic advantages to higher voltage AC
transmission, but these also are associated with larger impacts.
Regulation of the voltage to a maximum of, for example, 600 kV
would reduce the corona and electric shock effects on humans and
wildlife in their vicinity. This advantage is countered with a
corresponding need for a greater number of HVTL's in order to
transmit the same amount of power at the lower voltage capacity.
The cost impacts of this trade-off are considered under efficiency.
Increased research on technological alternatives to AC trans-
mission lines could focus on the DC option. Since DC has few of
the electric field effects of AC, adverse impacts would be mini-
mized for new lines using DC technology. Under present technolo-
gical capabilities, DC is not an alternative to AC for short-
distance, distribution-oriented transmission. Increased research
and development (R&D) effort to reduce the cost of terminal facil-
ities could bring about improvements in that capability to match
DC's superiority in long-distance, point-to-point transmission.
The choice of routes for HVTL's, especially across state
boundaries, has considerable bearing on the impacts of the trans-
portation mode. Interstate differences in the control of trans-
mission line rights-of-way siting create problems each time a new
set of transmission lines is built. Interstate planning would not
necessarily increase transmission capacity, but it might produce
design and route selection decisions which minimize adverse im-
pacts.
^orrigan, Richard. "Railroads Versus Coal Pipelines—New
Showdown in the West." National Journal, Vol. 8 (March 8, 1976),
p. 293.
680
-------
(2) What Are the Costs and Benefits and How Are They Distributed?
Setting a maximum limit on HVTL voltage would directly affect
the costs of AC transmission. Lower voltage means more transmis-
sion lines, and correspondingly higher costs for land, materials,
and construction. As Table 11-8 indicated, 500 kV lines would
cost $4 billion (36 percent) more than 765 kV lines transmitting
the same amount of electricity (51,000 MWe) over 1,000 miles.
These higher costs would be borne by the customers of the power
system. The benefit in reduced health and safety impacts also
would be countered by the greater environmental damage associated
with the right-of-way and construction. These impacts, like those
of health and safety, affect populations along the length of the
transmission lines.
Increased research on DC transmission to remove technological
uncertainties and to make them economically more attractive will
require considerable expenditures by both the electric power in-
dustry and the federal government. For example, in 1977 the fed-
eral government spent approximately $11 million for underground
and overhead DC transmission research while the Electric Power
Research Institute (EPRI) allocated $9.7 million for research on
overhead DC lines and $7.2 million for underground lines.1 If the
research is successful, electric utilities and their customers will
benefit from the availability of the more efficient options while
residents along transmission lines will benefit since many impacts
along DC lines would be .less than with AC. Some impacts however,
such as telephone interference, may be worse than with AC. The
benefit of such R&D would, of course, only benefit future HVTL's,
not those lines existing or constructed in the near future. Thus,
this is primarily a long-term option, with benefits to be received
mainly after considerable R&D expenditure is made.
The costs and benefits of improved planning and siting pro-
cedures are difficult to quantify. As emphasized in Chapter 12,
the implementation of well-represented planning and siting mecha-
nisms increases the input of interested parties, with the intention
of decreasing opposition to the resulting agreement. That is, the
goal is to reach decisions which equitably distribute the costs
and benefits. Utilities (and their customers) may also benefit
from greater certainty and fewer delays in the siting process.
(3) Are the Alternatives Flexible and Implementable?
A single maximum voltage for all HVTL's in a state would not
be a flexible alternative compared to the existing situation in
Don E. , et al. Our Energy Future: The Role of Re-
search, Development, and Demonstration in Reaching a National Con-
census on Energy Supply. Norman, Okla.: University of Oklahoma
Press, 1976.
681
-------
which there are no standards and utilities are free to choose the
optimal voltage for their transmission lines subject to state
agency approval. Because of the restrictions imposed, utilities
could be expected to oppose such an approach. In addition, con-
sumer groups could be allied to counter increased electric rates
due to greater costs for lower-voltage HVTL's. The trade-off is
of the health and safety of residents near the transmission lines
versus the economic considerations of utilities and their custom-
ers.
A research, development, and demonstration program on DC
transmission would increase flexibility by creating an alternative
to AC. This approach would be easy to implement through both
existing research conducted at the EPRI and the programs supported
by the Department of Energy. Little opposition would be likely,
except in choices such as the priorities for research and levels
of funding. This is also an area of research which could benefit
from international cooperation since electric power tremsmission
is a problem common to all countries regardless of their primary
energy resources.
Interstate planning of HVTL's will reduce the flexibility
states now have in HVTL siting procedures since it will require a
concensus with neighboring states. Also, any significant changes
in siting procedures could be perceived cis decreasing the flexi-
bility of electric utilities. For these reasons, formalized inter-
state HVTL siting procedures will likely be difficult to implement.
11.3.4 Summary Evaluation
Table 11-16 lists features of each of the four categories of
policy alternatives in terms of the evaluative criteria. A com-
parison of the alternatives, especially in effectiveness, is not
warranted because of their diversity. The first and third options
are aimed primarily at increasing capacity while the other two are
concerned primarily with impact mitigation. In terms of equity,
railroads and electric utilities probably would be harmed relative
to other industries, through higher mandatory costs,. An exception
is the enhanced rail capacity options which would, in effect, sub-
sidize rail expansion in the West.
The highest flexibility would probably result from combina-
tions of all the alternatives. Railroads and slurries could share
responsibility (and profits) for coal shipments. Both railroad and
HVTL impacts are in need of mitigation measures. The principal
difference between them is that rail impacts are localized at a
number of sites (including towns and rural crossings), and mitiga-
tion can be handled in a "piecemeal" fashion at individual sites.
HVTL impacts are more uniform along the entire length of a line,
precluding piecemeal solutions. If trends to reduce federal ex-
penditures remain in effect, several alternatives could be hindered,
especially subsidies for rail expansion, grade separation projects,
682
-------
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and possibly even R&D. In that situation, industry would have to
bear a greater share of the cost of impact mitigation, and energy
consumers would pay rather than taxpayers generally.
685
-------
CHAPTER 12
ENERGY FACILITY SITING
EXECUTIVE SUMMARY
Facility siting policies will largely determine both the kind
and level of impacts resulting from energy resource development in
the West; thus, they have increasingly become the focus of contro-
versies about the distribution of costs, risks, and benefits of
energy development. Attempts to reduce impacts through the sit-
ing process are constrained by current federal, state, and local
facility siting laws and regulations, which are fragmented, unco-
ordinated, and often in direct conflict.
Impacts
Locational characteristics, which help to determine impacts
in the West include: local topography; climate; background air
pollution levels; dispersal potential; proximity to pristine
areas; water availability; community size and location; local eco-
nomic, historical, cultural, financial, and political conditions;
and plant and animal community characteristics. Characteristics
of technologies which determine impacts at a given site include:
labor and capital intensiveness, emission quantities, land and
water requirements, and construction and operation scheduling.
Coal conversion technologies produce the most air, water,
and socioeconomic impacts in the West, while surface mining of
coal produces the greatest land-related impacts. However, the
extent of all these coal impacts varies considerably with loca-
tion. Of the resources studied, oil shale is the most geograph-
ically concentrated, allowing the least amount of locational flex-
ibility with regard to impacts. Uranium and geothermal resources
in the West are also more concentrated than coal and conversion
facilities must be located near to the resource.
The identification of critical technological and locational
factors is a key aspect of our study, since many consequences
could be minimized if the most suitable combination of technology
and location is chosen. Hence, baseline knowledge about techno-
logical and locational characteristics can be a critical element
in energy facility siting decisionmaking.
686
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The Policy Context
No comprehensive federal or regional siting policy exists,
and few states in the West have attempted to develop an overall
siting process. Thus, siting decisions are usually fragmented,
not coordinated with related choices about energy development,
and subject to long delays. Thus, inadequate attention is given.
to technology-location combinations which can be used to reduce
many of the impacts of development.
Among the most important factors influencing siting processes
are the following:
• Federal and state environmental legislation restricts
where development can occur, helps to define how facil-
ities will be configured, and requires lengthy and un-
certain review processes.
• Public participation has opened siting decisions to
more diverse interests. Environmental interest groups
have been the most visible of these "new" participants;
but agricultural groups, coalitions of ranchers, Indians,
and other parties-at-interest have become important par-
ticipants in siting.
• Intergovernmental disputes increasingly influence siting,
since western facilities largely serve demands outside
the region. Many western states have adopted restrictive
siting laws in order to reduce resource exploitation by
outside interests, while others have actively tried to
encourage development. Federal court cases, regional
voting blocs in Congress, a variety of interstate con-
flicts, and federal-state disputes help to shape west-
ern siting decisions.
These factors, along with the inherent importance of siting,
have created a complex policymaking system which is essentially
out of the control of developers, federal agencies, or the state
and local interests which face the most direct consequences of en-
ergy resource development. Because the facility siting system has
seldom been successful in balancing the variety of interests at
stake, many interest groups resort to a variety of tactics to de-
lay or cancel projects. As a result, it has become virtually im-
possible to anticipate when, where, and at what level development
will occur, and these uncertainties directly contribute to the in-
ability of local and.state governments to manage development im-
pacts and growth.
687
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Alternative Policies
These issues suggest that two policy objectives will be im-
portant to facility siting: site energy facilities in locations
which will result in the most acceptable mix of costs, risks, and
benefits; and provide better ways for interest group involvement
without unacceptable delays. As shown in Table 12ES-1, several
alternatives exist for achieving these objectives.
TABLE 12ES-1: FACILITY SITING ALTERNATIVES
OBJECTIVE
Site energy facilities in
locations which will result
in the most acceptable mix
of costs, risks, and bene-
fits.
Provide the means for
interested parties to par-
ticipate in siting deci-
sions without causing
unreasonable delays
CATEGORY OF
ALTERNATIVES
Technology-site evaluations
Impact assistance
Increase citizen involve-
ment in siting decision-
making
Provide participation
process support
SPECIFIC
ALTERNATIVES
Designate acceptable and
unacceptable technology-
location combinations
Implement site screening
and site banking techniques
Require impact mitigation
by developers, state or
federal government s
Compensate state and local
governments for impacts
Provide for information
exchange between partici-
pants and agencies
Encourage administrative
interaction between agen-
cies and participants
Allow direct participant
input into agency decisions
Provide technical or fi-
nancial assistance for
participants
The site selection process can be improved by choosing ac-
ceptable combinations of technologies and locations, including
site-screening and site banking, by requiring impact assistance
to state and local governments, or by compensating adversely im-
pacted groups. Access to siting can be increased by encouraging
information exchange and interaction, by allowing direct partici-
pant input into agency decisions, and by providing technical or
financial assistance for parties-at-interest.
688
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Findings
Siting is among the most critical components of energy policy-
making since it is an occasion at which most of the important ques-
tions and issues of resource development come together. However,
there is very little to suggest that the current siting system
can possibly convert these diverse values into reasonable policies,
and, in many respects, it represents fragmented, incremental de-
cisionmaking ad absurdum.
The value of technology site evaluations is that they could
provide something the present siting system has very little of--
comprehensive consideration of relative advantages and disadvan-
tages of various siting strategies. While this could never remove
all of the uncertainties associated with energy development, it
could present the opportunity to improve significantly the infor-
mation base in the siting process. In particular, technology-site
evaluations provide a means to reduce the risks of energy develop-
ment by removing from consideration areas where opposition is
most widespread.
While the success of technology-site evaluations partially
depends on the quality and timeliness of information produced,
success will also require more fundamental changes in the system.
The most important of these appear to be equitable access to de-
cisionmaking by parties-at-interest in combination with limits on
how long and in what manner siting decisions can continue to be
contested after review processes are over. This does not imply
that our knowledge of energy development technologies and loca-
tional factors is advanced enough to predict, once and for all,
the consequences of development. It does suggest that, if issues
are given a fair hearing, stricter limits should be placed on how
they can be appealed. This approach to siting will probably
lengthen, rather than shorten, the initial processes in order for
various interests to be expressed. However, it could shorten the
total time required to bring a facility on line, and could also
reduce some of the uncertainty associated with facility siting.
However, perhaps not even these revisions will improve the
siting process. In the end, "reasonable" determinations of where
to locate energy development facilities may depend on the willing-
ness of parties-at-interest to recognize the legitimacy of other
values. If participants are not able to reach compromises over
competing interests, the major alternative approaches appear to
be either to accept the uncertainties, inequities and, at times,
paralysis, of the existing system or to adopt more centralized and
controllable policymaking institutions.
-------
CHAPTER 12
ENERGY FACILITY SITING
12.1 INTRODUCTION
Since the impacts of energy resource development are heavily
dependent on the type of energy technology chosen and the location
at which the technology is deployed, siting policies will largely
determine what impacts actually occur whesn western energy re-
sources are developed. Facility siting is the process which
matches an energy supply technology, such as a power plant or mine,
with a specific location. Through siting, the overall impacts of
energy development can be affected by the manner in which the
technology is linked to the characteristics of the location. For
example, siting water-intensive facilities (such as steam-electric
power plants) in a water-short area (such as the Upper Colorado
River Basin) is likely to intensify water availability problems
and spur conflicts over water rights. Likewise, siting energy
conversion facilities near national parks or other clean air areas
will increase the likelihood of conflicts over air quality. Be-
cause of these kinds of interrelationships, an analysis of siting
necessarily draws upon the analyses described in the previous
eight chapters.
Since energy development begins with facility siting, siting
decisions often become the focus of a broader controversy over how
the costs and benefits of development should be distributed. Sit-
ing energy conversion facilities in the West and developing west-
ern energy resources has already led to major interregional and
interstate conflicts. A developing rivalry between energy-rich
western states and energy-consuming eastern states is particularly
significant.l Other problems arise because laws and regulations
governing facility siting often are uncoordinated and overlapping
among and between levels of government. At the federal level, no
single agency has the responsibility for looking at the overall
need for a major energy facility from the viewpoint of the long
Richard D. "States Rights Vs. National Energy Needs
Natural Resources Lawyer, Vol. 9 (No. 1, 1976), pp. 41-48.
690
-------
range public interest,1 and federal siting activities are often
inconsistent with state programs. In fact, for siting policy,
"the gap between federal and state jurisdiction remains something
of an institutional no man's land." As a result, those siting
laws and regulations which are intended to mitigate the impacts
of energy facilities often do so in a fragmented, redundant man-
ner. Many siting issues are resolved only on a permit-by-permit
basis. For example, the licensing process for a coal-fired power
plant may involve up to 50 separate permits, each requiring dif-
ferent public hearings and legal findings.3 When combined with
the conflicts among participants with different interests who
disagree on the trade-offs between the benefits and costs of en-
ergy development, these characteristics lead to delays in siting
new energy facilities.
This chapter addresses the problems and issues of siting
specific energy facilities in the West. In general, it will
evaluate alternative strategies of siting energy facilities
throughout the West to achieve certain economic and energy pro-
duction goals while protecting the environmental quality of the
region. One regional siting strategy, for example, is to export
coal for conversion in facilities sited at or near metropolitan
demand centers. This would eliminate many population-related and
environmental impacts of energy development in the West, such as
boomtowns and land-use problems.4 For the most part, siting coal
facilities outside the region is a way to avoid all facility-
related impacts in the West except those associated with mining.
Most of the land-use impacts mentioned in Chapter 7 would still
occur in a "strip and ship" coal export strategy as would the
water quality impacts cited in Chapter 4 resulting from aquifer
interruption in surface mining. The transportation impacts iden-
tified in Chapter 12 would also tend to be greater if coal was
exported. However, most of the benefits (such as higher levels
aVan Dyke, Hubert. "The Federal Perspective," in Kloman,
Erasmus, ed. The Federal System and Energy Facility Siting.
Washington, D.C.: National Academy of Public Administration,
1977, p. 38.
2Zeni, L.E. "The State Perspective," in Kloman. Energy
Facility Siting, pp. 9-21.
3Calvert, J.R. "Licensing Coal-Fired Power Plants." Power
Engineering, Vol. 82 (January 1978), p. 34.
4Metzger, James E., and Erik V. Stenehjem. "An Analysis of
the Socioeconomic Impacts of Alternative Siting Patterns: Mine-
mouth Versus Remote Electrical Generation." Paper presented at
the 70th Annual Meeting of the Air Pollution Control Association,
Toronto, Ontario, Canada, June 20-24, 1977.
691
-------
of employment and an increased tax base) of western energy devel-
opment1 would either be greatly reduced or eliminated by a facil-
ity siting pattern that emphasized coal use outside the region.
In national terms, moving coal conversion facilities from
our eight-state study area to other areas (primarily the Midwest,
South, and West Coast) would simply redistribute the impacts.
For example, air pollution issues concerning ambient air quality
and emission controls (see Chapter 6) would be transferred to
other regions, raising a host of policy questions, such as in-
creased health hazards for larger population concentrations and
possibly higher pollution control costs. Air quality considera-
tions near major cities are already forcing the selection of rural
sites for energy facilities serving metropolitan energy demands.
These rural sites still are often within the commuting area for
skilled labor, so that population-related impacts are greatly
reduced.2 Water availability, while less of a problem outside
the West, can also constrain siting and the extent of energy
development in the interior and eastern regions of the nation.3
Although the adverse impacts in the West clecirly would be
lessened by shipping coal to conversion plants sited in other
regions, the consequences of developing other energy resources
would still remain. Within the West, impacts will still occur
as oil shale, gas, uranium, and geothermal energy are developed.
With the important exception of oil shale, these impacts generally
will be smaller in magnitude than those from coal. Further, be-
cause of the concentrated location of oil shale, those impacts
will affect a relatively small portion of the region, primarily
western Colorado and eastern Utah.
Intermediate siting strategies--that is, locating facilities
between the mine-mouth and demand-centers—could include energy
parks or clusters of facilities, or development could follow a
more dispersed pattern which avoids siting concentrations. Through
these strategies, various impacts could be reduced. For example,
1 White, Irvin, L., et al. Energy From the West: Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protec-
tion Agency, forthcoming.
2See Westinghouse Electric Corporation, Envrionmental Sys-
tems Department. Socioeconomic Impact of Power Generation: A
Planning Study. Pittsburgh, Pa.: Westinghouse Electric Corpora-
tion, 1977; and Shurcliff, A.W. "The Local Economic Impact of
Nuclear Power." Technology Review, Vol. 79 (January 1977), pp.
40-48.
3Van Kuiken, J.C., et al. Long-Term Siting Patterns for
Major Electrical and Coal Conversion Facilities. Argonne, 111.:
Argonne National Laboratory, 1977.
692
-------
more water may be available at an intermediate site than either
at or near a mine or demand site. And the availability of a
work force in a larger town can lessen the population-related
impacts of development. However, if a strategy of concentrating
facilities is followed, air quality and most other physical im-
pacts would be greater. A strategy to disperse or spread energy
facilities around the West1 would reduce the magnitude of many
impacts, although at considerable expense if locations near major
resource areas were not used. However, the concentration of some
resources (particularly oil shale) would make this strategy dif-
ficult to implement. Depending on site characteristics, dispers-
ing energy facilities would tend to mitigate boomtown effects,
lower the magnitude of air, water, and ecological impacts, and
lessen the burden on limited water supplies. On the other hand,
increased transportation facilities would be needed to serve a
greater number of sites, with a corresponding increase in impacts.
The remainder of this chapter is divided into two major sec-
tions. The first describes energy facility siting choices as
well as a description of the social and political context of sit-
ing issues in the West. The second section focuses on alterna-
tive policies for energy facility siting. Included in this sec-
tion are descriptions, assessments, and comparisons of two cate-
gories of policy alternatives: those which enable the siting
of energy facilities in locations which will not result in unac-
ceptable costs and risks, including technology-site evaluation
and impact assistance; and those which provide the means for
participants to facilitate siting decisions without unreasonable
delays, including increasing citizen involvement and participa-
tion process support.
12.2 ENERGY FACILITY SITING PROBLEMS AND ISSUES
12.2.1 Siting Impacts of Energy Resource Development
Since energy facility siting involves choosing the location
for energy technologies, knowledge of the locational and tech-
nological factors affecting impacts are central to the siting
process. Matching technologies to locations through the siting
process involves such considerations as the resource requirements
and residuals for each technology. These form the basis for
making environmental-economic-energy trade-offs and restrict the
locational flexibility of energy facilities. For example, water
intensive facilities, such as coal liquefaction projects and
strategy is similar to the "smaller dispersed facili
ties" option discussed for air quality in Chapter 6.
2Dickson, E.M., et al. Synthetic Liquid Fuels Development
Assessment of Critical Factors, Vol. III. Menlo Park, Calif.:
Stanford Research Institute, 1977.
693
-------
power plants configured to use wet cooling, will be more re-
stricted by water availability than coal gasification will be.
By comparing the resource requirements and residuals of the tech-
nologies to the distribution of requisite resources, the avail-
ability of potentially acceptable sites can be determined. As
this implies, the location and characteristics of energy resources
are equally significant. Feasible sites for a given technology
are constrained by the distribution of resources. Thus, the
fact that oil shale occurs in only a small portion of western
Colorado, eastern Utah, and southwestern Wyoming is a major con-
straint on oil shale resource development. These kinds of data
should be part of the knowledge base available to policymakers.
Therefore, the discussion below briefly outlines the critical
technological and locational factors that can be taken into ac-
count in energy facility siting decisions.
The facility siting process encompasses all of the categories
of impacts from energy development discussed in the preceding
chapters. The impacts resulting from the deployment of energy
technologies at various locations have been identified in our
Energy From the West; Impact Analysis Report.1 Specific impacts
discussed in the preceding chapters will not be described here.
However, in order to illustrate the range of technological and
locational factors which may alter the impacts of energy devel-
opment, the most significant of these factors are outlined in
Table 12-1. As this table indicates, there are a number of air
quality, water availability and quality, socioeconomic, and eco-
logical factors which, taken individually or in combination, may
be manipulated by policymakers to influence the pattern or scale
of impacts.
A. Technological Factors
The technological factors associated with energy development
vary considerably with the technology chosen. Labor intensive-
ness (or personnel requirements) affects all four categories of
impacts studied. A larger population results in higher automo-
bile emissions, a need for more water and an increased sewage
treatment capability, a wider variety of culture and lifestyles,
and greater land-use infringement on the surrounding wildlife
habitat. Water requirements have an effect on ecosyste:ms which
depend on instream flow and wetland availability; for electric
power generation, these water requirements depend on the type of
cooling. Both the quality and type of air emissions and water
effluents also generate ecological impacts.
White, Irvin L., et al. Energy From the West: Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protec-
tion Agency, forthcoming.
694
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In general, the impacts associated with oil shale and coal
conversion technologies are greater than with extraction tech-
nologies. The principal exceptions are land use, particulate
emissions and, in some cases, water availability impacts. Among
the coal conversion technologies, on a unit of energy output
basis, electric power generation produces the most air impacts
and uses the largest quantities of land and water. Surface oil
shale processing (the TOSCO II process) produces the most liquid
effluent, followed by Synthoil coal liquefaction. Coal gasifica-
tion and liquefaction require the largest work forces and, con-
sequently, result in the greatest population-related impacts.
B. Locational Factors
As indicated in Table 12-1, locational charcteristics which
influence the level of impacts include: local topography, air
pollution dispersion potential, background levels of air pollu-
tants, meteorological conditions, proximity of the site to pris-
tine areas such as national parks, community size and location,
available work force, characteristics of local economy, charac-
teristics of the resources, water availability and quality, and
plant and animal communities.
The importance of the locational characteristics in influenc-
ing the severity and distribution of impacts has been described
in the other chapters in this report. For instance, in the analy-
ses of housing and local facilities and services (Chapters 8 and
9), it is emphasized that the size of a community before the con-
struction phase of development determines to a large extent the
level of population impact. Small towns generally have limited
planning capabilities and inadequate public facilities and ser-
vices. Siting energy facilities near larger towns (population
10,000 or larger) can help overcome these limitations.
As was mentioned above, the physical location of a resource
may be a primary obstacle to development. Similarly, the heating
value or other chemical characteristics can limit the attractive-
ness of a resource base. Thus the sulfiar content of coal, which
varies substantially within the West, renders some resource loca-
tions more favorable for development than others. The choice
of location for facilities that export their product in a raw
form (e.g., coal, oil, and gas) tends to respond to the avail-
ability of high-quality and low-cost resources. Thus, the thick
seams of low-sulfur coal in the Powder River Basin area surround-
ing Gillette, Wyoming, have attracted a dozen large surface mine
operations.1 On the other hand, energy conversion facilities
(synthetic gas, electricity, and hydrocarbon liquids) tend to be
constrained by market-area and distribution systems factors. For
1"Wyoming Grassland Transformed to Coal Mining Center."
Civil Engineering—ASCE, Vol. 47 (September 1977), pp. 50-56.
696
-------
example, utilities in California and the Southwest generally do
not consider Northern Great Plains coal; likewise, the coal gasif-
ication proposals for North Dakota are intended for nearby Mid-
western markets.1
The air and water impacts resulting from energy development
vary with other locational characteristics. Air impacts depend
critically on local meteorology, topography, existing air quality,
and the nearness of Class I Prevention of Significant Deteriora-
tion (PSD) areas. Water impacts differ with the amount and quality
of available water, including both surface and groundwater. Air
and water impacts can be reduced by siting energy conversion fa-
cilities in areas with the most favorable conditions. However,
for resources like oil shale this is not always technically pos-
sible, and in some cases, locational choices are constrained by
energy transportation cost considerations.2
12.2.2 The Context of Facility Siting Issues in the West
Since there is now no comprehensive national siting strategy,
decisionmaking authority in energy facility siting is often frag-
mented, parochial, and reactive in nature. As a result, policy-
makers in this system often lack the capability to balance eco-
nomic, energy, and environmental trade-offs in determining "best-
fit" sites for new energy facilities. Nor is it easy, given the
fragmented policy system, to determine which sites should be
avoided or which are the critical impact-causing factors. More-
over, the siting process has inherent redundancies which, when
coupled with interest group intervention, can delay the decisions
regarding the siting of new facilities. The siting process is
characterized by the involvement of many different interests and
authorities representing a diversity of viewpoints, and possess-
ing limited information.
This section of the chapter briefly describes the current
site selection process and how decisions are made concerning the
acceptability of a proposed site. The manner in which this pro-
cess has evolved over time and the efforts which have been made
to change it are also briefly described.
Although the initial determination of the need for and loca-
tion of new facilities is usually made by energy industries, their
^orsentino, J.S. Projects to Expand Fuel Sources in Western
States; Survey of Planned or Proposed Coal, Oil Shale, Tar Sands,
Uranium, and Geothermal Supply Expansion Projects, and Related
Infrastructure, in States West of the Mississippi River (as of
May 1976), Bureau of Mines Information Circular 8719. Washington,
D.C.: Government Printing Office, 1976.
2See Chapter 11, Energy Transportation, on this point.
697
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decisions are shaped and modified by public policy. As Russell E.
Train, the former Administrator of the Environmental Protection
Agency (EPA) noted, the present siting process is a purely "reac-
tive" system in which industry selects the sites and the state
and federal regulatory agencies respond to permit requests.1
Utilities and other energy companies engage in system plan-
ning which constantly assesses their system needs,. As shown in
Table 12-2, important aspects of system planning that influence
siting decisions for utilities are: load forecasting, generator
selection, reliability analyses, territorial considerations, cor-
porate policy, and economics.2 Government agencies and public
interest groups generally are not active in the early planning
stages for new energy facilities. Once a firm's system planning
indicates that additional demands for energy will develop, several
options are open to the company in addition to acquiring sites
for new facilities. For example, an electric utility may be able
to expand or replace units on existing sites, or it may choose to
purchase power from other sources.
Considerable controversy surrounds the determination of need
for new energy supply, and it is at this point in the siting pro-
cess that governmental and other interested participants become
involved. Opponents of utilities maintain that firms purposely
engage in capacity-increasing projects for self-serving reasons.
On the other hand, questioning energy need has been termed a
deliberate tactic used by obstructionists to delay new energy
projects.3 In any case, delays do result; Robert I. Hanfling,
the Acting Director of Utility Projects for the Department of
Energy (DOE), notes that conflict over the need for new energy
facilities is one of the major problems in getting projects com-
pleted on schedule.k Indeed, Montana Power Company's application
for two additional power plants at Colstrip, Montana, was denied
Barter, Luther J. "Virginia Refinery Battle: Another
Dilemma in Energy Facility Siting." Science, Vol. 199 (February
10, 1978), p. 671.
2Cirillo, Richard R., et al. An Evaluation of Regional
Trends in Power Plant Siting and Energy Transportation. Argonne,
111.: Argonne National Laboratory, 1976, p. 5. This table and
the discussion in this section apply primarily to electric util-
ities, but they also relate to activities by other energy firms.
3 See Sayre, Kenneth M. Values in the Electric Power Industry.
South Bend, Ind.: University of Notre Dame Press, 1977, for a
more detailed examination of the different perceptions of how
the determinations of need for new energy are made by utilities.
^Cavanaugh, H.A. "Utility Decisions: What Voice for the
Public?" Electrical World, Vol. 188 (December 15, 1977), p. 89.
698
-------
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by the Montana Department of Natural Resources and Conservation
largely because the need for new facilities in Montana was not
adequately established. Most of the electricity from the proposed
Col strip units was to be exported to Pacific Coast states.1
Once the need for new energy facilities has been established,
and assuming the utility decides to locate facilities on new sites,
a screening process usually identifies several prospective sites
for additional analysis. As indicated in Table 12-2, the most
significant criteria used in evaluating the specific sites are
engineering, safety, environmental, institutional, and economic
considerations.2 Although the utility's system planning and site
selection process must consider how the proposal conforms to fed-
eral, state, and local requirements, the utility's plans are
largely proprietary and not subject to public inspection. His-
torically, once the utility persuaded the state utility commis-
sion and the Federal Power Commission (FPC) that a. new facility
was needed and that the project was economically sound, there was
little public debate in the siting process itself. The utility
would apply to the state utility regulatory commission for a
certificate of public convenience and necessity, and if this ap-
plication was approved, it would acquire the site using its right
of eminent domain, and then build the facility after securing the
necessary permits.3 However, a number of changes have occurred
during the past decade to transform this orderly siting process
into one of the most controversial aspects of domestic energy
development.
First, as environmental concerns have increased during the
past decade, numerous environmental laws and regulations which
affect siting of energy facilities have been enacted at both the
federal and state levels. Individual citizens, organized in-
terest groups, and governmental agencies are using these legal
avenues to participate in siting decisions. Taken together these
factors have increased the justifications required of companies
seeking siting permits for new facilities. Second, interest
groups have successfully challenged siting plans and delayed
1 See Western Interstate Nuclear Board. Regional Factors in
Planning and Siting Electrical Energy Facilities in the Western
States. Washington, D.C.: U.S., Nuclear Regulatory Commission,
1977, pp. 52-53.
2See U.S., Nuclear Regulatory Commission, Office of Special
Studies. Nuclear Energy Center Site Survey--1975, 5 parts,
Executive Summary and Appendix. Springfield, Va.: National
Technical Information Service, 1976.
3Cirillo, Richard R., et al. An Evaluation of Regional
Trends in Power Plant Siting and Energy Transportation. Argonne,
111.: Argonne National Laboratory, 1976, p. 15.
700
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final siting decisions for some facilities through the use of
public hearings and litigation. Third, increased reliance on
domestic energy resources has forced many utilities from other
regions to site energy facilities in the West. This pattern of
development has generated reaction in the West about regional
exploitation and neocolonialism.1 Finally, specific legislation
is now in effect in several states concerning energy facility
siting. These state laws have provided a new platform for debate
over the necessity of new energy facilities, have increased inter-
regional conflict, and have created concern over the role of state
planning in a time of "national emergency."
These factors have altered considerably the siting process
in the West and elsewhere and have contributed to delays in many
energy projects. Although public participation is greater because
of new laws and institutions, the policy system still does not
have the capability to identify and utilize "best-fit" sites for
new energy facilities systematically. In the following sections,
the emergence of environmental legislation, increased public
participation, and interregional conflict as factors influencing
the siting process are discussed in more detail.
A. Environmental Legislation
As described in Chapter 1, environmental legislation affects
energy development in general and energy facility siting in par-
ticular. The earliest federal environmental legislation affect-
ing energy facility siting stems from the Rivers and Harbors
Act of 1899 which provides the Army Corps of Engineers permitting
power for the use of navigable waters.2 The federal role was
expanded by the Federal Water Pollution Control Act (FWPCA)
Amendments of 1972 which gave the EPA permitting authority over
•'See Lamm, Richard D. "States Rights Vs. National Energy
Needs." Natural Resources Lawyer, Vol. 9 (No. 1, 1976), pp. 41-
48; and Plummer, James L. "The Federal Role in Rocky Mountain
Energy Development." Natural Resources Journal, Vol. 17 (April
1.977) , pp. 247-55.
:Rivers and Harbors Act of 1899, 30 Stat. 1121, 33 U.S.C. §
407 (1970). Navigable waters of the U.S. are those waters which
are presently, or have been in the past, or may be in the future
susceptible for use for the purposes of interstate or foreign
commerce. See Beatty, Haradon. "Federal Water Pollution Control
in Transition," in Rocky Mountain Mineral Law Foundation, ed.
Rocky Mountain Mineral Law Institute: Proceedings of the 18th
New York, N.Y.: Matthew Bender, 19T3, p. 497.
701
-------
energy facilities that discharge effluents.1 This act also con-
trols indirect water quality impacts from the siting of new en-
ergy facilities that result in new requirements for local sewage
treatment.
The most far-reaching environmental law affecting siting is
the National Environmental Policy Act (NEPA) which mandates the
preparation and review of an environmental impact statement (EIS)
for all proposed projects which require federal action and which
will significantly affect the human environment.2 The EIS must
include a discussion and evaluation of: the environmental setting
or existing conditions, proposed facilities, environmental impacts
of development, socioeconomic effects, policy alternatives, and
unavoidable adverse effects.3 The EIS process also includes
requirements for a review by a wide range of federal, state,
regional, and local agencies, and citizens groups.4 The EIS is
a major avenue for public participation in siting decisions due
to these extensive review guarantees.
federal Water Pollution Control Act Amendments of 1972,
Pub. L. 92-500, 86 Stat. 816, 33 U.S.C. § 1251(a) (1970). The
Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566, updated
some requirements, but did not change the general regulatory
environment for energy facilities. See Kirschten, J. Dicken.
"The Clean Water Debate—Congress' Stagnant Pool." National
Journal, Vol. 9 (September 3, 1977), p. 1378; and Ward, P.S.
"Water Act Amendments: Deja Vu in the Halls of Congress."
Water Pollution Control Federation Journal, Vol. 49 (October
1977), p. 2059.
2National Environmental Policy Act of 1969, Pub. L. 91-190,
83 Stat. 852, 42 U.S.C. §§ 4321-47 (1970). Some authors have
disputed the view that NEPA was a major turning point toward a
greater consideration of environmental factors in the siting of
new facilities. For a study which notes that NEPA has directed
attention away from a broader consideration of the alternatives
and impacts of development and toward a focus on procedural re-
quirements and the filing of reports, see Fairfax, Sally K. "A
Disaster in the Environmental Movement." Science,, Vol. 199
(February 17, 1976), pp. 743-48.
3See Canter, L.W. Environmental Impact Assessment. New
York, N.Y.: McGraw-Hill, 1977.
4See Baram, Michael S. Environmental Law and the Siting of
Facilities: Issues in Land Use and Coastal Zone Management.
Cambridge, Mass.: Ballinger, 1976, pp. 3-39.
702
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Another major step toward controlling facility siting at the
federal level came in 1970 when the Clean Air Act (CAA) was
passed.1 This legislation, among other things, extended federal
regulatory authority to include stationary air pollution sources,
such as energy facilities. Energy facility siting policy is in-
fluenced by regulatory criteria, developed under the auspices
of this act, which set limits on the emission levels of new fa-
cilities and the maximum ambient levels for air quality. Since
1970, the federal air quality controls have been subject to almost
continuous modification. The most recent alterations, the 1977
CAA Amendments, established regulations for the PSD of air quality,
Under the terms of the 1977 Amendments, air quality areas desig-
nated Class I (national parks and other scenic areas) are to be
the locations most vigorously protected. Class II areas have more
liberal PSD restrictions, and Class III will allow the most deg-
radation in air quality.2 In addition, areas may be upgraded
to Class I by the Administrator of EPA; the Northern Cheyenne
Resrevation in Montana is the first such redesignated area in the
country.3 Thus, some areas of the West are effectively precluded
as energy development sites in order to maintain currently pris-
tine air quality.
Wildlife preservation legislation constitutes another con-
straint on siting decisions. Conservationist and environmental
interests have been instrumental in supporting legislation to pro-
tect both wildlife and wildlife habitat quality. The Endangered
Species Conservation Act of 1969 provided federal protection to
threatened plants and animals.4 The Endangered Species Act of
1973 extended this authority to exclude the critical habitat of
endangered fish, wildlife, and plants as possible locations for
new energy facilities.5 A list of endangered species was compiled
JClean Air Act of 1970, Pub. L. 91-316, 84 Stat. 416. See
Rosenbaum, Walter A. The Politics of Environmental Concern, 2nd
ed. New York, N.Y.: Praeger, 1977, pp. 144-57.
2Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat.
685. See Kirschten, J. Dicken. "The Clean Air Conference--
Something for Everybody." National Journal, Vol. 9 (August 13,
1977), pp. 1261-63.
3See Chapter 6 for further discussion on this subject.
^Endangered Species Conservation Act of 1969, Pub. L. 91-135,
83 Stat. 275.
5Endangered Species Preservation Act of 1973, Pub. L.
93-205, 87 Stat. 884.
703
-------
in March 1967 that included 72 native species.1 As of the end
of 1976, some 170 native species were listed as endangered. Al-
though the locations of the critical habitat of several known
species have been identified, this information is only a partial
basis for excluding potential sites, since many new species will
probably be added to the endangered list and an EIS required for
a new energy facility can identify new endangered species not
previously encountered.2
Federal legislation also provides for the protection of
historically or culturally significant places. This authority
stems from laws enacted as long ago as 1906, but the most recent
legislation is the Historic Preservation Act of 1966.3 Under
pressure from the National Trust for Historic Preservation, Con-
gress passed an extension of the 1966 act and increased the fund-
ing for preservation efforts in 1970. Basically, these laws
mandate the initiation of a federal-state advisory process to
eliminate or mitigate any impacts by projects on cultural proper-
ties that are, or may be listed in the National Register of His-
toric Places. These requirements are over and above the NEPA
mandate, thus adding another set of procedures to the siting
process. Because of the ubiquity of potential "historical places,"
some energy developers now have staff or employ consultants to
examine proposed facility sites for evidence of historical or
cultural significance.k
B. Increased Public Participation
Another important factor affecting the facility siting pro-
cess is increased public participation in decisions that were once
Congressional Quarterly, Inc. Congress and the Nation,
Vol. IV: 1973-1976. Washington, D.C.: Congressional Quarterly,
1977, p. 290.
2U.S., Department of the Interior, Bureau of Sport Fisheries
and Wildlife. Final Environmental Statement for the Proposed
Endangered Species Conservation Act of 1973. Washington,D.C.:
Government Printing Office, 1973. For a discussion of the con-
troversy currently surrounding the impact of the endangered spe-
cies legislation on facility siting, see Carter, Luther J. "The
Attorney General and the Snail Darter." Science, Vol. 200 (May
12, 1978), p. 628.
3Historic Preservation Act of 1966, Pub. L. 89-655, 80 Stat.
915.
''See Holden, Constance. "Contract Archeology: New Source
of Support Brings New Problems." Science, Vol. 196 (June 3,
1977), pp. 1070-72.
704
-------
considered to be primarily in the domain of private industry.
The demand for greater citizen involvement in siting energy fa-
cilities, reflected in such legislation as NEPA and FWPCA, is
based on a perceived need to make the political system more re-
sponsive to the general public by incorporating more diverse in-
terests in policy formulation and implementation decisions.2 In
the West, these publics range from environmental and consumer
interest groups through economic interests such as farming and
ranching to cultural and ethnic participants such as Indians.
Environmental and consumer interests often have been the most
vocal opponents of siting energy facilities. Groups such as the
Sierra Club, Audubon Society, Friends of the Earth, and Environ-
mental Defense Fund are nationally recognized in part because of
the number of times they have intervened in cases to halt or
modify siting proposals. Such opposition is usually seen by in-
dustry spokesmen as constituting a major roadblock to increased
domestic energy supply. According to Richard F. Walker, President
of the Public Service Company of Colorado, delays occasioned by
environmental interest groups have been a major cause of energy
price increases in recent years. But characterizing all environ-
mental and public interest groups as opponents of energy projects
is simply inaccurate. Significant differences exist between the
energy policy positions of the various national interests rep-
resenting consumers and environmentalists. Thus, while the more
aggressively antinuclear environmental groups such as Ralph Nader's
organizations have opposed the construction of new nuclear power
plants as part of a "low energy growth" position, other groups,
such as Common Cause, have supported development through "mixed
market" strategies.3
The most intense environmentally-oriented public opposition
in the West is voiced over the site-specific concerns of spoiling
a unique environment. Opposition to the proposed Kaiparowits
power plant in southern Utah centered on the impacts of the fa-
cilities at the site. Many of the interests resisting this proj-
ect did so because they valued the region's "national heritage"
properties rather than opposing the facilities because of any
1 See Chapter 1 on the emergence of public participation and
how it has influenced energy policymaking in general.
2Nelkin, Dorothy. Technological Decisions and Democracy:
European Experiments in Public Participation. Beverly Hills,
Calif.: Sage Publications, 1977, p. 13.
3McFarland, Andrew S. Public Interest Lobbies: Decision
Making on Energy. Washington, D.C.: American Enterprise Insti-
tute for Public Policy Research, 1976, pp. 47-51.
705
-------
environmental or physical risks associated with development.1
In contrast, proposals to site similar fossil-fuel facilities
in western North Dakota did not generate such widespread
environmentally-oriented opposition, probably because the region
is not perceived to be as physically and culturally attractive.2
Economic interests intervene on both sides of siting ques-
tions, and local reactions are difficult to generalize. Whereas
those who favor development plans in the West tend to see economic
benefits as outweighing environmental and socioeconomic costs,
groups in opposition usually perceive local development as pro-
ducing more costs than benefits for them (see box "Rancher Fearful
of Development").3 Ranchers in Colorado, for example, have voiced
concern that the siting of Public Service of Colorado's Pawnee
power plant would create emissions that would harm pastures by
decreasing their productivity. "* In another case, the: North Dakota
Farmers Union joined forces with the Friends of the Earth to de-
mand strict reclamation procedures so that agricultural production
would not be sacrificed to coal mining.. 5
1"The Law's Delay: Huge Plant's Demise Signals Trouble
Ahead for Energy Expansion." Wall Street Journal, September 7,
1976, p. 1.
2For instance, surveys of the perception of residential de-
sirability show that North Dakota is one of the least desirable
states in the nation. See Abies, Ronald, John S. Adams, and
Peter Gould. Spatial Organization; The Geographer's View of the
World. Englewood Cliffs, N.J.: Prentice-Hall, 1971, pp. 519-21.
3See Fradkin, P.L. "Craig, Colorado: Population Unknown,
Elevation 6,185." Audubon, Vol. 79 (July 1977), p. 120.
^Morgan Commissioner to Decide Fate of Pawnee Power Plant."
Denver Post, September 23, 1976.
5This is consistent with national and international surveys
which have shown that support for the siting of energy facilities
is based on expected economic benefits while negative attitudes
toward siting result from perceptions of a high likelihood of
undesirable, environmental, socioeconomic, or psychological out-
comes. See Sundstrom, Eric, et al. "Community Attitudes Toward
a Proposed Nuclear Power Generating Facility as a Function of Ex-
pected Outcomes." Journal of Community Psychology, Vol. 5 (1977),
pp. 199-208.
706
-------
Interests supporting fa-
cility siting because of per-
ceived economic benefits may
be local landowners, real-
tors, bankers, chambers of
commerce, or wholesale/retail
merchants.1 In southern
Utah, the prospect of some
35,000 new jobs, an addi-
tional annual payroll of 100
million dollars, and yearly
tax revenues of 28 million
dollars overrode whatever
environmental concern existed
for most residents as local
citizens largely supported
the Kaiparowits proposal.2
Indian tribes have also
increased their participation
in facility siting decisions.
The Indian tribes control be-
tween 10 and 16 percent of
the nation's coal (one-fifth
of strippable western reserves), one-half of the country's uranium
(one-sixth of recoverable uranium), and about three percent of the
nation's remaining oil and gas.3 Although Indians do not have a
united position on facility siting, the newly created Council of
Energy Resource Tribes (CERT) is attempting to establish a common
set of rules on prices, production controls, and environmental
protection.1* The Bureau of Mines has assisted in this effort by
helping Indian tribes evaluate the financial implications of dif-
ferent negotiating positions.
RANCHER FEARFUL OF DEVELOPMENT
A rancher outside Colstrip, Montana
articulately expressed his fear of new
energy facilities. "To me, I just don't
think you can put a numerical value on
what we have right here. I think it's
our responsibility to do with it what we
can and turn it over to our children in
good shape....Then you get conversion
plants, and you think, okay, what's this
going to do with the water? How much
water is going to come out of the Yellow-
stone? What's a 200 or 1,000 percent in-
crease of the population of my hometown
going to do?...to the tax base?...to the
sociological undercurrent?... to my com-
munity? ..."
—Johnson, Haynes. "The Last Round-up."
Washington Post, August 3, 1975, p. C-5.
Quotes from Willie MacRae.
*A public opinion poll conducted by W.R. Grace and Company
in 1974 on western boomtown attitudes found that "those who fa-
vored growth expected to make money from it." See Fradkin, P.L.
"Craig, Colorado: Population Unknown, Elevation 6,185." Audubon,
Vol. 79 (July 1977), p. 121.
2Myhra, David. "Fossil Projects Need Siting Help Too."
Public Utilities Fortnightly, Vol. 99 (September 29, 1977), p. 26.
3Crittenden, Ann. "Coal: The Last Chance for the Crow."
New York Times, January 8, 1978, section 3, p. 1.
4Greider, William. "Indians Organize Own Energy Combine."
Washington Post, July 17, 1977, p. A-3.
707
-------
Indian efforts to gain greater control over their energy re-
sources have the potential to generate conflict in the siting pro-
cess. Some tribes, most notably the Apaches, maintain that federal
and state siting regulations are not applicable on Indian lands.
This contention, if upheld, opens the possibility that in the future
sovereign tribes could operate energy facilities under their own
environmental standards. The successful court battles Indians have
waged over land claims and fishing rights have already created a
significant white backlash among ranchers and sportsmen in the West1,
Nevertheless, Indian tribes appear committed to taking tougher bar-
gaining positions with energy developers, as demonstrated by the
recent refusal of the Navajo to allow Western Gasification Company
(WESCO) to build a coal, gasification plant on the reservation or to
grant a right-of-way from a site just off the reservation.2
C. Interregional Conflict
Conflicts are also likely to arise becaus-e many energy fa-
cilities sited in the West will serve demands outside the region.
As shown in Chapter 1, the provisions of the National Energy Plan3
and other Carter Administration proposals place a high priority
on developing western energy resources to help decrease dependence
on foreign imports and to make it possible to maintain national
economic growth. Developing western resources may cause the West
to bear a disproportionate share of the impacts of achieving
these goals, although the region will also enjoy economic bene-
fits with increased energy development. Thus, siting energy fa-
cilities in the West will result in trade-offs between economic
and environmental costs and benefits as well as trade-offs be-
tween regional autonomy and regional interdependence.
It is particularly disturbing to many westerners that cer-
tain regions will receive fuel but will not be subject to the
impacts of the energy facilities needed to produce that fuel.
For instance, officials in Montana have announced that they do
not intend to be subjected to outside "exploitation" and have
passed tough energy facility siting laws to prevent this from
occurring.4 For example, Montana now mandates an Eipplication fee
lnU.S. Indians Demand a Better Energy Deal." Business Week,
December 19, 1977, p. 53.
2"Navajos Reject $l-Billion Coal Gasification Plant." Coal
Mining and Processing, Vol. 15 (May 15, 1978), pp. 20-21.
3U.S., Executive Office of the President, Energy Policy and
Planning. The National Energy Plan. Washington, D.C.: Govern-
ment Printing Office, 1977.
4 "Stiff Environmental Regs 'Slow U.S. Energy Plans,." Oil and
Gas Journal, Vol. 76 (February 6, 1978), p. 19.
708
-------
for new facilities—a fee which can be as much as two million dol-
lars for a one billion dollar plant.J
On the other hand, some westerners see energy resource devel-
opment as a boon and are fighting to retain the advantages of
using western energy on a long-term basis. Wyoming's Senator
Clifford P. Hanse, for example, is outraged by the Carter Adminis-
tration's plan to emphasize the use of local coal to serve local
markets (see box "Administration Favors Use of Local Coal").2
Responding to a concern that those coal-rich areas in the East
which have high unemployment levels might be bypassed in favor
of western resources, this plan reflected the views of Easterners
like Ohio's Senator Howard M. Metzenbaum who argued: "Do we mean
that we will require coal to be transported across the entire
country when there is plenty of coal available in the very re-
gions... the utilities operate in?"3
On a larger scale, a war of words exists between such re-
gional organizations as the Western Governors' Policy Office
(WESPO) and the Coalition of Northeastern Governors (CONEG).
The western governors have argued that the West should not be
forced to bear the environmental and socioeconomic costs of large
scale energy development to subsidize the energy needs of indus-
trial states. CONEG governors argue that they are already laden
with negative impacts from existing industries that serve the
entire nation and that their federal taxes have subsidized the
development of the West.4
D. Intergovernmental Jurisdiction
The federal government has little direct authority over the
siting of nonnuclear energy facilities; most siting responsibility
resides in state and local governments. The disposition of pub-
lic lands is one area where the federal government does have
direct authority over energy facility location. However, the
indirect federal control of siting is a predominant phenomenon.
Through such mechanisms as the EIS requirements of NEPA and
Montana Major Facility Siting Act of 1975. Montana Revised
Codes Annotated §§ 70-801 through 70-823 (Cumulative Supplement
1975).
2This point is also discussed in Chapter 10, Capital
Availability.
3Kirschten, J. Dicken. "Watch Out! The Great Coal Rush Has
Started." National Journal, Vol. 9 (October 29, 1977), p. 1683.
^Peirce, Neal R. "Northeast Governors Map Battle Plan for
Fight over Federal Funds Flow." National Journal, Vol. 8 (Novem-
ber 27, 1976), p. 1699.
709
-------
legislation such as the CAA
and FWPCA, the federal gov-
ernment is able to intervene
in the siting process. Since
the passage of the Federal
Power Act in the 1930's,1 the
federal government has also
assumed responsibility for
overseeing the use and opera-
tion of interstate gas and
electrical supply systems.
The consideration of
more comprehensive federal
siting legislation has been
complicated by a continuing
debate over two very differ-
ent approaches to siting
policy. On the one hand,
there is pressure for a
generic approach, national The Great Coal Rush Has Started."
ADMINISTRATION FAVORS USE OF
LOCAL COAL
EPA administrator Douglas M.
Costle justified the position of re-
quiring stack gas scrubbers on new
coal-burning facilities whether they
needed them or not. This policy, he
said, was intended to "encourage power
plants to use locally mined high and
medium-sulfur coal instead of bring-
ing in low-sulfur coal from other re-
gions. This will avoid much of the
regional unemployment and economic
disruption that would result from
greater reliance on low-sulfur coal
than on control technology."
—Kirschten, J. Dicken. "Watch Out!"
National Journal, Vol 9 (October 29,
1977), p. 1683.
in scope, which would empha-
size comprehensive land-use
planning as a prerequisite
for narrower choices regarding the need for energy, the type of
fuel and source, the general location and type of facility, the
actual site selection, the design and construction, arid the oper-
ating guidelines. The proposed Land Resources Planning Act of
1975, for example, included facility siting as only one component
of overall land-use planning. Title III of this act, the Energy
Facilities Planning Act, would have required public participation
and consideration of regional and national energy needs.2 On the
other hand, pressures also work toward a more flexible, site-
specific approach which would then aggregate the particulars
of siting into a national land-use plan. Thus, the Energy Fa-
cilities Planning and Development Act, also proposed in 1975,
relegated land-use planning to a function of the site selection
process. This legislation, however, would have required each
state to design an energy facility program and would have given
the federal government extensive data collection and forecasting
responsibilities. Many state officials were concerned that these
provisions could preempt state authority. Thus Governor Richard
D. Lamm of Colorado testified against the proposal in Congress
1 Federal Power Act of 1935, Title II of Public Utility Act
of 1935, Pub. L. 74-333, 49 Stat. 838.
2U.S., Congress, Senate, Committee on Interior and Insular
Affairs. Congress and the Nation's Environment. Washington,
D.C.: Government Printing Office, 1977, pp. 1383-1516.
710
-------
and other governors expressed similar fears that the legislation
threatened states' rights.1 Both 1975 proposals were ultimately
defeated as was the Electric Utility Rate Reform and Regulatory
Improvement Act of 1976. Title V of this bill would have required
energy firms to report to the FPC their prospective sites, their
efforts to protect the environment, and their provisions for in-
volving land-use agencies in the planning processes. Under the
terms of this bill the FPC would have been responsible for the
preparation of national energy facility siting plans. And the
FPC would have taken the lead role as the sole legal authority
for licensing facilities in a federal "one-stop" siting process
featuring a single composite utility application.
Many of these reforms have been proposed because the number
of state permits and approvals for siting an energy facility, most
of which are over and above the federal requirements, have added
significantly to the mandatory decision points in the siting
process. For example, Table 12-3 lists the number and types of
major permits and approvals that must be obtained before a coal
gasification facility in North Dakota can be constructed and op-
erated. And judicial reviews of agency decisionmaking have added
another level of intervention to the process.
The facility siting process in most states is extremely de-
centralized because numerous single-purpose laws influence the
final siting decision. The simultaneous imposition of energy,
environmental, land use, and consumer protection laws, each of
which may apply to distinct elements of new energy facilities,
creates an extraordinarily complex process.2
State and local authority governing energy facilities is
based on the "police power," control over state-owned lands, and
the authority to implement federal legislation. The police power
of state governments includes zoning laws, building codes, sub-
division regulations, permit requirements, and performance stan-
dards. Traditionally, state public utility commissions have used
the criteria of "public convenience and necessity" to evaluate
siting proposals. Issuance of this certificate demonstrates that
the state accepts the utility's demand forecasts and evaluations
of the impacts of this additional facility on the retail rate
structures. But during the past several years some western states
have passed explicit siting bills to coordinate, supervise, and
!The Energy Center, Inc. "Issues in Power Plant Siting:
The 94th Congress and the States," in U.S., Federal Energy Admin-
istration. FEA Energy Facility Siting Workshops. Springfield,
Va.: National Technical Information Service, 1977, p. 378.
2Mills, Jon L., et al. Energy; The Power of the States.
Gainesville, Fla.: University of Florida, Holland Law Center,
Center for Governmental Responsibility, 1975, p. 91.
711
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TABLE 12-3:
PERMITS, APPROVALS, AND CERTIFICATIONS REQUIRED
BEFORE A COAL GASIFICATION FACILITY COULD BEGIN
CONSTRUCTION AND OPERATION IN NORTH DAKOTA
AGENCIES
PERMIT AND/OR APPROVAL
Federal
U.S. Army Corps of Engineers
Environmental Protection Agency
Federal Power Commission
Federal Aeronautical Administration
U.S. Bureau of Reclamation
State
North Dakota Public Service Commission
North Dakota Department of Health
Environmental Engineering Division
Water Supply and Pollution
Control Division
North Dakota State Highway Department
North Dakota State Water Commission
North Dakota Secretary of State
North Dakota Unemployment Compensation
Division of Employment
Security Bureau
North Dakota Workman's Compensation
Bureau
Mercer County
Board of Commissioners
Soil Conservation District
Easement for Water Intake, Pipeline, and Access
Road; Section 10 Permits for Water Intake and
Pipeline Crossings of Major Streams; Section 404
Permits for Wetland Disturbance
New Source Performance and Air Quality Significant
Deterioration Review, Deep Well Disposal Review
Certificate of Public Convenience and Necessity
Application for and Notice of Proposed
Construction for Structures over Regulated Heights
Water Service Contract, Environmental Impact
Statement
Plant Certificate of Site Compatibility, Water
Pipeline Certificate of Site Compatibility, Water
Pipeline Transmission Facility Route Permit, Mining
Plan
License for Radioactive Measuring De'vice Operations,
Hazardous Waste Control Plan, Wells for Temporary
Water Supply, Sewage; Treatment Plant
Permit to Construct (Air Pollution Control Permit)
Permit to Operate (Air Pollution Control Permit)
NPDES Permit for Deep Well Disposal,
Solid Waste Disposal Permit
Rail Siding Crossing, Pipeline Construction on
Highway Right-of-way
Appropriation of Underground Water, North Dakota State
Water Permit (conditional permit obtained)
Certificate of Authority for Foreign Corporation to
Transact Business
Application for Coverage by ANGCGC
Covered by ANGCGC
Petition for Access to County Roads, Petition for
Vacating County Road and Closing Section Lines,
Certificate of Zoning Compliance, Plantsite Rezoning,
Conditional Use Permit
Erosion and Sediment Control Plan
NPDES =
ANGCGC
National Pollutant Discharge Elimination System
= American Natural Gas Coal Gasification Company
Source: U.S., Department of the Interior, Bureau of Reclamation, Upper Missouri Region. ANG
Coal Gasification Company, North Dakota Proiect: Draft Environmental Impact Statement.
Billings, Mont.:Bureau of Reclamation,1977, pp.1-9 and 1-10.
712
-------
control siting decisions. Such laws are a major step toward co-
ordinating the state land use, health, building and other single-
interest agencies involved in siting decisions, and they simplify
the process of evaluating the trade-offs involved in locating a
particular facility.1
Five of the states in our study area—Arizona, New Mexico,
North Dakota, Montana, and Wyoming—have siting laws; three--South
Dakota, Utah, and Colorado—do not. Characteristics of these
state energy facility siting laws are summarized in Tables 12-4
and 12-5. As indicated by these tables, the siting laws of North
Dakota, Montana, and Wyoming cover the widest variety of proces-
sing and transmission facilities.
The new state siting agencies are generally charged with
the responsibility for viewing siting proposals holistically
rather than following the single-purpose criteria of the older
state health, safety, and welfare regulatory bodies. In practice,
however, much of the policymaking process is still fragmented.
In Wyoming, for example, a relatively rigorous siting law is still
subject to the decisions of the State Engineer and the Public
Service Commission. But despite claims that these fragmented
state laws contribute to delays in the licensing of facilities,
the amount of time required to site energy facilities in states
with and without state regulation does not differ widely.2
State control of facility siting is also bolstered by state
implementation of federal environmental legislation, especially
state oversight of air and water quality laws and regulations
through "state environmental policy acts" (SEPA's). Six of the
eight western states have some sort of SEPA; Utah and New Mexico
do not.3 Arizona, Montana, and South Dakota SEPA's require an
EIS that involves detailed consideration of environmental impacts
prior to site development. North Dakota and Wyoming have SEPA's
that stress the enforcement of criteria after the facility is on
line. Colorado has a coordinating and planning mechanism that is
only an advisory adjunct to the state's environmental policymaking,
xSee Verity, Victor, John Lacy, and Joseph Geraud. "Mineral
Laws of State and Local Government Bodies." In Rocky Mountain
Mineral Law Foundation, ed. The American Law of Mining, Vol. 2.
New York, N.Y.: Matthew Bender, 1974, pp. 627-38.
2Calvert, J.R. "Licensing Coal-Fired Power Plants." Power
Engineering, Vol. 82 (January 1978), pp. 34-42.
3U.S., Council on Environmental Quality. Environmental
Quality, Seventh Annual Report. Washington, D.C.: Government
Printing Office, 1976, pp. 133-35.
713
-------
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Municipalities can also affect the location of energy facil-
ities through local zoning ordinances, building codes, health and
sanitation standards, and local taxation policies. Through such
mechanisms as zoning, the community has full authority to deter-
mine the siting of energy facilities within its jurisdiction.
However, these land-use control tools have not been widely used
in the West; because municipalities tend to be small in area, and
most new facilities are located beyond local governmental boun-
daries. As a result, localities often have been forced to "decide
limited issues, play a reactive role only, and make policy by
default."1
Although efforts have been made at both the state and federal
levels of government to streamline the siting process and to re-
duce the overlaps and inconsistencies in facility siting permit-
ting procedures, the process is still complicated and overall
policy is made more on the basis of state and local interests
than on regional or national needs. While state siting commis-
sions and environmental impact statements do consider the broader
implications of a proposed facility, they generally focus on the
impacts of the new facility on the surro-unding area and do not
attempt to plan interrelated siting strategies. State siting
commissions give little attention to the implications of a fa-
cility for interstate power systems, despite the fact that re-
gional planning institutions do exist in the West. For instance,
the Western Systems Coordinating Council is a power system serv-
ing eleven western states.2 However, this council is more con-
cerned with system reliability and information exchange than it
is with energy facility siting planning for firms in its region.
An exception to the lack of regional planning in the West is
Montana's Major Facility Siting Act3 that lists the relationship
of energy facilities to the regional grid distribution system as
one criterion for siting. Because all major electrical production
facilities are tied together in the regional power pool, siting
new facilities affects the reliability and efficiency of the en-
tire system. Moreover, generalized impacts to the area could be
minimized if appropriate sites were chosen beforehand, rather
than evaluating the site ex post facto.
JAron, Joan B. "Decisionmaking in Energy Supply at the
Metropolitan Level: A Study of the New York Area." Public
Administration Review, Vol. 35 (July/August 1975), p. 344.
2Wengert, Norman, and Robert M. Lawrence. Regional Factors
in Siting and Planning Energy Facilities in the Eleven Western
States, a report to the Western Interstate Nuclear Board. Lake-
wood, Colo.: Western Interstate Nuclear Board, 1976.
3Montana Major Facility Siting Act of 1975, Montana Revised
Codes Annotated §§ 70-801 through 70-823 (Cumulative Supplement
1975).
716
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12.2.3 Summary
The extensive array of laws and regulations that compose the
present energy facility siting process and the manner in which
actual siting policy is made is not an effective mode of selecting
the "best-fit" sites. The initial selection of sites is made by
industry based on proprietary site evaluation criteria and meth-
odologies. The general public often becomes aware of siting
choices only after a site is selected and the developer is finan-
cially committed to the project. Interest groups may participate
in the process only after plans are publicly disclosed. Their
input is more likely to influence the design of the facility than
to provide constructive input regarding the most suitable sites
for new facilities.1
The existing policy context for energy facility siting leads
to delays in locating new facilities and is not well suited for
incorporating broad participation in determining the trade-offs
among different sites. Conflicts often occur since the criteria
for evaluating sites differ from group to group and from stage to
stage in the siting process. An attractive site from the devel-
opers' point of view may be a poor choice in the eyes of environ-
mental, economic, or cultural interests which become involved at
a later stage.2 The environmental groups may be more concerned
with ecological impacts, local ranchers and farmers are interested
in the project's impacts on agricultural productivity, and Indians
inay focus participation efforts on perceived lifestyle changes.
For the utility, however, the overriding criteria are economic
efficiency and system reliability.
The principal concerns of this chapter are the goals of
utilizing the "best-fit" sites for new energy facilities and
bringing needed energy facilities on-line expeditiously. To ac-
complish these goals it is essential to modify policymaking pro-
cesses by providing more accessibility to the siting decision
for all major interests. Also, an overall strategy for developing
western energy resources while keeping environmental degradation
to a minimum probably requires a regional perspective and the
early identification of energy demand needs.
Greene, Thomas. "Reforming Procedures for Industrial
Siting." American Bar Association Journal, Vol. 61 (April 1975),
pp. 449-52.
2See Gros, Jaques G., et al. "A Systems Analysis Approach
to Nuclear Facility Siting." Behavioral Science, Vol. 21 (March
1976), pp. 116-27.
717
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12.3 ALTERNATIVE POLICIES FOR ENERGY FACILITY SITING
12.3.1 Introduction
In combination, the problems and issues discussed above make
facility siting one of the most significant aspects of energy
development in the West. Some of the major problems with the
current energy facility siting process include: the authority
for siting policy is fragmented among several levels of govern-
ment and among several agencies at each level, and delays are
commonplace as a result of gaps and overlaps which characterize
this policymaking system; site selection policy is usually made
by private industry and does not always include adequate con-
sideration of values important to other groups; many parties-at-
interest enter the siting process too late to be involved in early
planning and often resort to delaying tactics after plans are
finalized; and too little effort is made to match energy tech-
nologies to locations on multiple criteria, with the result that
impacts and opposition are often greater than necessary.
These problems suggest two policy objectives for facility
siting: to site energy facilities in locations that will not
result in unacceptable costs and risks; and to provide the means
for public participation in siting decisions without causing un-
reasonable delays.
The first objective can be attained in a variety of ways.
As outlined in Table 12-6, there are two categories of policy
alternatives for selecting acceptable sites:
• Undertake technology-site evaluations;
• Employ impact assistance methods.
By ensuring that the siting process is used to avoid or reduce
impacts from energy facilities, opposition and delays could be
reduced or better accommodated. Many specific alternatives that
would address this objective require action at either the state
or federal level to determine the acceptability of both tech-
nologies and locations.- But replacing the current case-by-case,
reactive system for siting decisions with more comprehensive
statewide or regional planning will require a more positive view
of energy planning than currently exists in the West.
Table 12-6 also illustrates that there are two categories
of alternatives for providing the means for increased public
participation in the energy facility siting process:
• Increase citizen involvement in siting decisionmaking;
• Provide participation process support.
718
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Although it has been a common assumption that greater public in-
volvement in the siting process has directly caused a major por-
tion of the delays in licensing facilities, recent studies have
shown that citizen intervention may be a relatively minor factor
contributing to the lengthening of the time it takes to get a
plant on-line.1 Even if some short-term costs are paid for public
participation, providing access and information to the full range
of interested parties may increase the certainty that siting de-
cisions are eventually made.
The remainder of this section discusses in more detail the
alternatives for responding to facility siting problems and issues.
Specific alternatives, implementation strategies, and constraints
are described in the next subsection (12.3.2). Section 12.3.3
evaluates the specific alternatives. This evaluation is based
on the standard criteria discussed in Chapter 3 and used through-
out this report.
12.3.2 Description of Alternatives
Each of the four categories of alternatives shown in Table
12-6, and briefly outlined above includes various specific al-
ternatives for dealing with siting problems. Each of these spe-
cific alternatives has different strategies for implementing
the particular response, and each is characterized by distinct
constraints on implementation.
A. Undertake Technology-Site Evaluation
This category includes two specific alternatives, as shown
in Table 12-7:
• Designate acceptable and unacceptable technology-location
combinations;
• Implement site screening and site banking techniques.,
Both alternatives are based on the exclusion of some areas from
energy development, and both represent an extension of current
zoning practices on a larger scale. Encouraging certain technology-
location combinations would employ procedures similar to the use
of eminent domain or the condemnation of areas for a particular
land use. Discouraging, or prohibiting the use of certain areas
:A recent General Accounting Office study of the nuclear en-
ergy facility siting process found that citizen intervention in
the issuance of construction permits, long thought to be a major
source of siting delays, actually added only five months to the
ten years necessary to bring a plant on-line. See Kirschten,
J. Dicken. "Nuclear Licensing Reform--A Bomb About to Explode."
National Journal, Vol. 10 (January 7, 1978), pp. 13-15.
720
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721
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as unacceptable sites for energy facilities rests on more limited
and more recent experience with the use of such schemes as air
quality classifications. These mechanisms for the identification
of unacceptable areas for development could be extended to in-
clude other criteria such as water availability, socioeconomic
impacts, or consumption of agricultural land. As an example of
how the unacceptability of locations may be determined, Table
12-8 shows some types of sites to be excluded under North Dakota's
Energy Conversion and Transmission Facility Siting Act. :L
Other, more flexible methods for determining the accept-
ability of sites would rely on site screening to evaluate each
technology-location configuration individually. Thus a power
plant using wet cooling might be screened out of a particular
area although other energy technologies would be quite acceptable
at the site. Table 12-9 outlines some examples of the criteria
which might be used in a site screening process. After acceptable
technology-location combinations have been agreed upon, there are
a number of available techniques for improving and acquiring sites,
One such technique is "site banking," which would provide for
state authority to preapprove sites (according to screening or
some other device for determining acceptability) as much as ten
years before they are needed. By marrying a preapprovecl site with
an acceptable technology, developers could bypass many of the
lengthy individualized plant reviews now necessitated by today's
"custom designed" facilities.2
These specific policy alternatives cam be implemented by
means of a number of strategies, as illustrated in Table 12-7.
For the most part, the implementation strategies for evaluating
certain technology-location combinations are formal, governmental
regulatory and economic policies designed to influence the de-
cisions of private industry. Thus, designating acceptable tech-
nologies and locations may be achieved directly through federal
or state laws or indirectly by taxation or subsidies. Similarly,
site screening and banking may be implemented comprehensively by
state or federal legislative mandates or through more flexible
selection and purchasing policies, but there is also an implemen-
tation strategy which is informal in nature. The determination
of acceptable and unacceptable sites could be made by a combina-
tion of participants from government agencies, industry, and in-
terest groups employing a strategy similar to the "rule of reason"
used by the National Coal Policy Project. The principles guiding
this project emphasized a sharing of all relevant data,
1 Energy Conversion and Transmission Facility Siting Act,
North Dakota Century Code, Chapter 49-11-10.
23ee Metz, William D. "Nuclear Licensing: Promised Reform
Miffs All Sides of Nuclear Debate." Science, Vol. 198 (November
11, 1977), pp. 590-93.
722
-------
TABLE 12-8:
AREAS EXCLUDED AS SITES FOR NEW ENERGY
CONVERSION FACILITIES IN NORTH DAKOTA
EXCLUSION AREAS:
(a) Designated or registered: national parks; national historic sites and
landmarks; national historic districts; national monuments; national
wilderness areas; national wildlife areas; national wild, scenic or
recreational rivers; national wildlife refuges; and national grasslands.
(b) Designated or registered: state parks; state forests; state forest
management lands; state historic sites; state monuments; state historical
markers; state archaeological sites; state grasslands; state wild, scenic
or recreational rivers; state game refuges; state game management areas;
and state nature preserves.
(c) County parks and recreational areas; municipal parks; parks owned or
administered by other governmental subdivisions; hardwood draws; and
enrolled woodlands.
(d) Areas critical to the lifestages of threatened or endangered animal or
plant species.
(e) Areas where animal or plant species that are unique or rare to this state
would be irreversibly damaged.
(f) Prime farm land and unique farm land, as defined by the Land Inventory and
Monitoring Division of the Soil Conservation Service, United States
Department of Agriculture.
(g) Irrigated land.
AVOIDANCE AREAS:
(a) Areas of historical, scenic, recreational, archaeological, or paleonto-
logical significance which are not designated as exclusion areas.
(b) Areas where surface drainage patterns and groundwater flow patterns will
be adversely affected.
(c) Within the city limits of a city or the boundaries of a military installa-
tion.
(d) Areas within known floodplains as defined by the geographical boundaries
of the 100 year flood.
(e) Areas that are geologically unstable.
(f) Woodlands and wetlands.
Source: North Dakota Energy Conversion and Transmission Facility Siting Act, North
Dakota Century Code, Chapter 49-22-10.
723
-------
TABLE 12-9:
EXAMPLES OF CRITERIA USED IN SITE
SCREENING PROCESS
ISSUE
Health and
safety
Environmental
effects
Socioeconomic
effects
System cost
and reli-
ability
CONSIDERATION
Radiation
exposure
Flooding
Surface
faulting
Thermal
pollution
Sensitive or
protected
environments
Tourism and
recreation
Routine and
emergency
water supply
and source
character-
istics
Delivery of
major plant
components
MEASURE
Distance from
populated areas
Height above
nearest water
source
Distance from
fault
Average low
flow
Location with
respect to
ecological areas
Location with
respect to
designated
scenic and
recreational
areas
Cost of cooling
water acquisition
Cost of pumping
water
Cost of providing
access for major
plant components
CRITERIA FOR INCLUSION
Areas >3 miles from
populated places >2500
Areas >1 mile from
populated places < 2500
Area must be above
primary floodplain
Areas >5 miles from
capable or uncleissif ied
faults >12 miles in
length
Rivers or reservoirs
yielding 7 day average,
10 year frequency low
flow >50 ftVs
Areas outside designated
protected ecological
areas
Areas outside designated
scenic and recreational
areas
Rivers or reservoirs
yielding 7 day average,
10 year frequency low
flow > 50 cfs
Areas < 10 miles from
water supply
Areas <800 feet above
water supply
Areas within 25 miles
of navigable waterways
> = greater than
< = less than
cfs = cubic feet per second
Source: Keeney, Ralph L., and Keshavan Nair. "Nuclear Siting Using
Decision Analysis." Energy Policy, Vol. 5 (September 1977), p. 224.
724
-------
simplification of complex concepts, isolation of subjective fac-
tors and value judgments, and a commitment on the part of all
participants to avoid dogmatic negotiating tactics.1 Such an
approach applied to the siting process could facilitate the com-
prehensive selection of technology-location combinations and
could reduce permitting and approval delays by minimizing the
opposition to those sites deemed acceptable.
An examination of the "constraints" column of Table 12-7
reveals that the most significant obstacles to the implementation
strategies outlined above have to do with defining the standards
of acceptability and unacceptability. Although state or federal
legislation could easily mandate certain technology-location com-
binations, all of the strategies considered in this section would
work most effectively with active industry and interest group
participation in the process of working out these definitions.
As mentioned above, reaching any advance consensus on sites for
future energy development requires not only a high level of fund-
ing but also a high degree of commitment to energy planning.
B. Employ Impact Assistance Methods
This category of alternatives, outlined in Table 12-10, in-
cludes the following specific alternatives:
• Require impact mitigation by developers, state, or federal
governments;
• Compensate state and local governments for impacts.
These policy options respond to the variety of impacts that re-
sult from siting energy technologies. Given the fact that "tech-
nological fixes" may have little effect on some impacts of devel-
opment, particularly socioeconomic factors, policymakers may be
faced with the choice of either attempting to moderate these
impacts (mitigation) or making an effort to "buy off" those im-
pacted groups (compensation).
Impact mitigation by energy developers currently is volun-
tary in most states. The social and economic impacts that re-
sult from rapid population growth are those that energy developers
have made some efforts to ameliorate, as described in Chapters 8
and 9. These voluntary actions, however, tend to leave a number
of impacts outstanding, and many of these unmitigated effects of
Barter, Luther J. "Coal: Invoking 'the Rule of Reason1
in an Energy-Environment Conflict." Science, Vol. 198 (October
21, 1977), pp. 276-79. See also Murray, Francis X., ed. Where
We Agree: Report of the National Coal Policy Project, 2 vols.
Boulder, Colo.: Westview Press, 1978.
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energy development are not susceptible to solutions based on only
a quick infusion of federal or state funding.
Siting laws in several states do require certain conditions
to be met prior to the issuance of a permit. These prior con-
ditions can include the mitigation of socioeconomic impacts,
such as providing services or funding to communities, or the con-
struction of needed facilities. The best example of this type of
response in the West is the requirement that the Wyoming Indus-
trial Siting Administration issue a permit only after studies of
local community needs.1 Under this authority, developers have
agreed to provide housing units and other services as part of the
energy facility siting process (see Chapters 8 and 9).
Even without specific siting legislation, industry could be
induced to take a greater role in impact mitigation. A taxation
strategy which provided for deductions for mitigation measures
could encourage developers to accept more responsibility for lo-
cal impacts. Should such incentives prove ineffective, taxes
could be levied on energy development to fund mitigation efforts.
For example, tax penalties could be imposed for increases in
local government costs due to energy-related population growth.
State or federal government impact mitigation requires an
adequate level of funding, and mechanisms for distributing these
funds to municipalities which must supply the majority of public
services. For example, programs could be designed to allow the
state to advance funds so that assistance can be given to com-
munities at the "front end" of the predicted impacts.1 Severance
taxes, royalty payments, and license fees can be structured to
cover these costs. States in the West with severance taxes cur-
rently allocate a relatively small portion of revenues to impacted
areas; this portion would have to be increased substantially to
constitute effective mitigation of most local impacts. In states
without severance taxes, some other source of state revenue would
have to be developed. For example, state revisions of property
taxes could provide funds for the local government units where
they are most needed; property taxes on valuation of energy fa-
cilities could be collected at the state level (including pre-
payment of taxes by industry to provide funds when they are
needed) and redistributed to impacted communities. This specific
alternative is discussed at greater length in Chapter 9.
!Monaghan, James E. "Managing the Impacts of Energy Devel-
opment: A Policy Analysis from a State Government Perspective,"
in U.S., Congress, House, Committee on Interstate and Foreign Com-
merce, Subcommittee on Energy and Power; and Senate, Committee on
Energy and Natural Resources and the National Ocean Policy Study
of the Committee on Commerce. Project Interdependence: U.S. and
World Energy Outlook Through 1990, Committee Print. Washington,
D.C.: Government Printing Office, 1977, pp. 608-29.
727
-------
Compensation does not attempt to eliminate the causes of im-
pacts or even to reduce some kinds of impacts. Rather, it offers
payments to those who will be adversely affected by energy devel-
opment. Compensation can counter local opposition to energy
development by determining how much people are willing to pay for
impacts. This alternative can address a single impact, through
measures such as a pollution tax that compensates for damages to
air or water quality, or multiple impacts, through bidding pro-
cedures. In bidding, a community would establish the acceptable
level of compensation it required of a developer to site an energy
facility. The bid could include a range of mitigation costs based
on estimates of local impacts. If several communities bid, the
developer could then include compensation costs in selecting the
best site. After compensation has been agreed upon, development
could take place with no opposition from the compensated groups.1
The major constraints on mitigation and compensation imple-
mentation strategies outlined in Table 12-10 are the difficulties
involved in determining the impacted citizens and the problems of
administering these complex procedures beyond the local level.
Identifying those groups adversely affected by energy development
is a difficult task at best, but for nationally- or regionally-
perceived impacts such as widespread air or water pollution, the
process of determining impacted citizens may be impossible. Even
if such a determination can be made, redistributing federal or
state funds to localities or channeling developer payments to af-
fected groups is a complex procedure which may only serve to sub-
sidize the worst impacting technology-location combinations.
C. Increase Citizen Involvement in Siting Decisionmaiking
Table 12-11 outlines the three specific alternatives for in-
creasing public participation in the energy facility siting pro-
cess :
• Provide for information exchange between participants and
agencies ;
• Encourage administrative interaction between participants
and agencies;
• Allow direct participant input into agency decisions.
These specific alternatives were chosen because they incorporate
three principles underlying effective public participation in en-
ergy development: public involvement in siting decisions is fa-
cilitated by a two-way flow of relevant data; the resolution of
administrative and regulatory conflicts in the siting process can
Michael. "'Not on My_ Block You Don't1: Facility
Siting and Strategic Importance of Compensation." Public Policy,
Vol. 25 (Fall 1977), pp. 407-58.
728
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be achieved through the use of both citizen-initiated and citizen-
reaction techniques; and full public participation involves citi-
zens actually sharing decisionmaking power.1
At present, the exchange of credible and reliable information
about proposed energy facilities between industry, government
agencies, and potentially impacted parties is generally lacking.
If confusion and conflict are to be avoided, industry must be
able to communicate to the public basic program facts and informa-
tion regarding siting alternatives and impacts. At. the same time,
efforts should be made to discover public values and needs related
to the specific site-technology configuration.2 Thus, the imple-
mentation strategies described in Table 12-11 include both infor-
mation dissemination and information collection techniques.
A participation audit is designed to determine whether a
developer has made a reasonable attempt to involve impacted citi-
zens and relevant agencies in the siting process. Prior to is-
suing a siting permit, the permitting agency would require the
submission of a "participatoin statement" by the developer. This
document would: (1) characterize the nature and level of potential
impacts; (2) identify those citizens to be affected by these im-
pacts; and (3) detail the degree to which all concerned parties
had been given an opportunity to become involved in the preper-
mitting plans and decisions. A permit would not be granted until
the developer could demonstrate that consideration had been given
to the interests of those who would be impacted by the project.
By requiring such an audit of public involvement in the earliest
stages of the energy facility siting process, a dialogue could
be created between participants and agencies. But, conducting
participation audits is constrained by the problems involved in
determining the criteria of impacts and by resolving the difficul-
ties of identifying impacted or duly concerned citizens. Iden-
tifying those affected parties-at-interest is particularly dif-
ficult in the prepermitting phase of facility siting, where there
have been few formal actions and citizen interest is low.
Bishop, A. Bruce, Mac McKee, and Roger D. Hansen. Public
Consultation in Public Policy Information: A State-of-the-Art
Report, for Energy Research and Development Administration. N.
p.: Intermountain Consultants and Planners, Inc., 1978, pp. 8-10.
2See Frauenglass, Harvey. "Environmental Policy: Public
Participation and the Open Information System." Natural Resources
Journal, Vol. 11 (July 1971), pp. 489-96.
730
-------
Public hearings are the most common information exchange
mechanisms in use today in facility siting decisions. Largely
as a result of environmental protection legislation such as NEPA,
hearings are now required for the licensing of almost every energy
facility. Not only must EIS hearing requirements be met, but a
host of other construction and operation regulations now require
public hearings as standard practice. For example, Table 12-12
outlines the legislative and administrative regulations concern-
ing public participation in energy decisions in the two western
states, Colorado and Montana, with the most comprehensive hearings
procedures.
Unfortunately, the proliferation of ritualistic public hear-
ings has become one of the major obstacles to the development of
a workable energy facility siting policy. Neither the government
nor the public is well served by a procedure for which there is
often no citizen demand or which results in a one-way, agency-
dominated communication process.1 There are several reasons for
the failure of hearings to encourage public participation: inade-
quate notification, overly formal and highly structured settings,
overemphasis on highly technical data. Improving the hearings
process may therefore require reforming notification methods to
better identify constituencies and to use more innovative media
techniques; modifying the setting in which hearings take place to
include smaller, more informal groups; and describing the siting
alternatives and consequences in language meaningful for the lay-
man.
Reducing siting conflicts by encouraging administrative in-
teraction between participants and agencies could be achieved
through an implementation strategy which requires each site to be
considered by an advisory committee with broad community repre-
sentation prior to the permit application stage. Committees com-
posed of industry and environmental groups, local government of-
ficials, and residents could provide suggestions on siting prob-
lems and issues, act as a "sounding board" for community attitudes
toward agency policies, and disseminate siting information to
their constituency.2 But, for advisory committees to contribute
^eberlein, Thomas A. "Some Observations on Alternative Mech-
anisms for Public Involvement: The Hearing, Public Opinion Poll,
the Workshop, and the Quasi-Experiment." Natural Resources Jour-
nal, Vol. 16 (January 1976), pp. 197-212.
2See Brown, David S. "The Management of Advisory Committees:
An Assignment for the '70s." Public Administration Review, Vol.
32 (July/August 1972), pp. 334-42; see also Bishop, A. Bruce, Mac
McKee, and Roger D. Hansen. Public Consultation in Public Policy
Information: A State-of-the Art Report, for Energy Research and
Development Administration. N.p.: Intermountain Consultants and
Planners, Inc., 1978, pp. 59-62.
731
-------
TABLE 12-12:
LEGISLATIVE AND ADMINISTRATIVE REGULATIONS
GOVERNING PUBLIC PARTICIPATION IN ENERGY
DECISIONS IN COLORADO AND MONTANA
STATE
PUBLIC PARTICIPATION REGULATIONS
Colorado
Sunshine Law: requires opening all meetings of public officials
("any board, committee, commission, or other policy-making or
rule-making body of any state agency or authority or of the leg-
islature at which any public business is discussed"). Public
notice of meeting is required; minutes must be taken and made
available to public. (C.R.S. 24-6-401, 402)
Rule-making hearings: opportunity for public to submit views to
rule-making body. (C.R.S. 24-4-103)
Agency shall notify public of proposed rul- change. (C.R.S.
24-4-103)
Availability to public of rules and changes in rules; the
agency shall supply copies upon request.
Licensing hearings are nearly identical with NRC procedures:
notification of hearings to public; holding of hearings at con-
venient time for parties and public; participation of parties
(full rights) and limited participation of members of public;
people who feel "affected or aggrieved" may petition to be a
party to the hearing, and Commission decides legitimacy of his
interests; transcripts of hearings are made and available to the
public. (C.R.S. 24-4-105) (General procedures, C.R.S. 40-6-109)
For utilities policy- and rule-making; notice of all proceed-
ings, applications, petitions, and orders instituting investiga-
tions or inquiries shall be given to all persons, firms or cor-
porations who, in the opinion of the Commission, are interested
in, or who would be affected by, the granting or denial of any
such application, petition, or other proceeding. (C.R.S.
40-6-108)
Montana
Publication and distribution of booklet entitled "A Citizen's
Guide to Participation in Government," compiled by the Montana
Energy Advisory Council. This booklet describes administrative
procedures in laymen's terms and specifically identifies points
in process where public participation occurs (elections, peti-
tions, public notices, hearings, protests). It also lists and
describes all advisory committees.
Public has right to examine public documents. (Constitution of
Montana, Article II-9)
Public has right to observe deliberations of all public bodies
or agencies of the state. (Constitution of Montana, Article
II-8)
732
-------
TABLE 12-12: (Continued)
STATE
PUBLIC PARTICIPATION REGULATIONS
Montana
(Continued)
Notice must be given for all proposed rules or rule changes and
for agency actions with significant impact on public, such as
•siting a utility. (R.C.M. 82-4209)
An applicant to construct an energy facility must prove that no-
tice of intent has been given to persons residing in the af-
fected municipalities. The notice, involving a summary of the
application, must be published on or about the day the applica-
tion is filed and must appear "in those newspapers as will
serve substantially to inform those persons of the applica-
tion." (R.C.M. 70-806-4)
Parties to a hearing for certificaion of environmental compat-
ibility and public need include: "any person residing in a
municipality entitled to receive service of a copy of the appli-
cation under subsection R.C.M. 70-806-4; any nonprofit organiza-
tion, formed in whole or in part to promote conservation of
natural beauty, to protect the environment, personal health or
other biological values, to preserve historical sites, to pro-
mote consumer interests, to represent commercial and industrial
groups, or to promote the orderly development of the areas in
which the facility is to be located; or any other interested
person." (R.C.M. 70-808-1-c)
Each utility, and each person contemplating the construction of
a facility in the ensuing 10 years must annually submit a long-
range plan for the construction and operation of facilities.
"Tl)e plan shall be made available to the public by the depart-
ment . , . Citizen environmental protection and resource plan-
ning groups, and other interested persons may obtain a plan by
written request and payment to the department." (R.C.M. 70-814)
C.R.S, = Colorado Revised Statutes
NRC = Nuclear Regulatory Commission
R.f'.M, -- Revised Codes of Montana
Source: Nelkin, Dorothy, and Susan Fallows. The Politics of Participation in
Energy Policy. Ithaca, N.Y.: Cornell University, Program on Science, Technol-
ogy and Society and Department of City and Regional Planning, 1976, Appendix 2.
733
-------
to public participation in energy facility siting decisions, they
must be included in the earliest evaluations of sites and tech-
nologies. If citizen participation and advice were secured prior
to applications for permits, many developers might avoid alienat-
ing concerned groups and could enlist local support to help ob-
tain a more timely "yes" or "no" siting decision.1
The third specific alternative listed in Table 12-11, direct
participant input into the siting process, enables citizens to
share in the actual decisions regarding the choice of technology
and location. A variety of implementation strategies may be used
to allow public participation to have its most direct impact on
the final decision, but the two most viable options involve desig-
nating citizen review boards for each siting agency and guarantee-
ing participant standing in the courts cifter other participatory
alternatives have been pursued. In contrast to advisory commit-
tees, citizen review boards can be given full authority to make
siting decisions; they include representatives of the broad spec-
trum of interested parties in an area and have authority to re-
view agency plans or policies. The creation of open and credible
citizen review boards for the siting of energy facilities could
reduce the level and intensity of conflicts during the early
stages of site selection and impact evaluation. And the realiza-
tion that public participants will have a role in the determina-
tion of the final outcome of the siting itself could serve as a
"safety valve" reducing conflict and helping to shorten the lead
times required before the actual construction of a new facility
begins. Moreover, establishing siting review boards within the
regulatory agencies could serve to legitimize the agencies' roles
and help build public trust in their programs.2
Public lawsuits have been one of the primary avenues of citi-
zen participation in energy policymakinc for some time. This has
especially been the case for environmental interest groups, which
have relied on the courts as a "sort of secondary fall-back mecha-
nism" when the legislative-administrative process has failed to
1 It should be noted that advisory committees constitute only
one of a number of implementation strategies for encouraging ad-
ministrative interaction between participants and agencies. Other
conflict resolution mechanisms would include the task force or
ombudsman. See O'Riordan, Timothy. "Policy Making and Environ-
mental Management: Some Thoughts on Processes and Research Is-
sues." Natural Resources Journal, Vol. 16 (January 1976), pp.
55-72.
2See Arnstein, Sherry R. "Maximum Feasible Manipulation."
Public Administration Review, Vol 32 (July/August 1972) , pp.
377-90.
734
-------
provide adequate access to energy decisions.1 But court challenges
by citizens' groups may also contribute to lengthening lead times
in the licensing of facilities, in part because adjudication often
becomes part of the "politics of desperation" for participants who
are opposed to the location of energy projects. However, the use
of litigation as a last line of resistance can be reduced by pro-
viding meaningful alternative participatory avenues, such as those
discussed above. In particular, better performance by the federal
and state regulatory agencies as participation mechanisms could
contribute to less reliance on the judicial system in siting is-
sues. Lawsuits could still be a viable coercive tool and a sup-
plement to the "volunteerism" of the other participatory techniques
if their availability were guaranteed by well defined agency pro-
cedures. One such guarantee might involve the assurance of par-
ticipant standing in the courts after other participatory options
had been pursued. This strategy might resolve many siting dif-
ficulties before adjudication became necessary. And the ultimate
threat of public legal action could be maintained to give impacted
individuals and communities bargaining power in the location and
operation of energy facilities.2
D. Provide Participation Process Support
A single specific alternative for providing participation
process support is:
• Provide technical or financial assistance for participants.
Process support for public participation attempts to provide
parties-at-interest access to the best technical capabilities for
facility siting decisionmaking. To accomplish this, interest
groups can be supplied with technical expertise and/or funding.
Both options are applicable to the full range of participatory
alternatives discussed above.
Many interest groups find it difficult to enter into tech-
nological debates with federal or state agencies because technical
details are often inaccessible to public participants. And even
if technical data are available, they are usually too complex to
be useful for the typical citizens' group. Because technological
expertise is increasingly a requisite for effective citizen in-
volvement in energy policy, a major participation process support
implementation strategy could involve awarding attorneys' fees,
expert witness fees, and other reasonable costs of developing
!Garvey, Gerald. "Environmentalism Versus Energy Develop-
ment: The Constitutional Background to Environmental Administra-
tion." Public Administration Review, Vol. 35 (July/August 1975),
pp. 328-33.
2Wolpert, Julian. "Regressive Siting of Public Facilities."
Natural Resources Journal, Vol. 16 (January 1976), pp. 103-15.
735
-------
technically competent response capabilities within citizens' groups,
The Carter Administration has already supported legislation which
would provide federal funding to qualified citizens' groups acting
as intervenors in nuclear siting hearings.1 A strategy for im-
plementing technical and financial assistance programs could ex-
pand such support to include all federal regulatory processes
for all types of energy facilities for the range of information
exchange, interaction, and decision input participation tech-
niques . 2
12.3.3 Assessment of Alternatives
This section of the chapter evaluates the four categories
of energy facility siting policy alternatives described above.
The categories are assessed in a general manner, since each in-
cludes a number of specific alternatives and strategies for im-
plementation. First, however, the criteria used to evaluate the
categories are identified and discussed.
A. Evaluation Criteria
The evaluation criteria utilized are those outlined in
Chapter 3 and used throughout this report: effectiveness, effi-
ciency, equity, flexibility, and implementability. As shown in
Table 12-13, each criterion can be defined in terms of energy fa-
cility siting issues. These criteria reflect the types of trade-
offs that policymakers must consider when energy resource devel-
opment involves siting new facilities. Although it would probably
be impossible to choose an alternative or implementation strategy
which ranks high on all five criteria, this assessment is intended
to provide information regarding the consequences of different
policy choices.
As suggested by Table 12-13, the five evaluative criteria
address the two policy objectives outlined in Section 12.3.1: to
site energy facilities in locations that will not result in un-
acceptable costs and risks; and to provide the means for interested
parties to participate in siting decisions without causing un-
reasonable delays. Many of the measures in Table 12-13 would re-
quire a separate, major study to estimate comprehensively. Thus,
the assessment that follows is a qualitative evaluation of the
policy alternatives.
*Metz, William D. "Nuclear Licensing: Promised Reform Miffs
All Sides of Nuclear Debate." Science, Vol. 198 (November 11,
1977), p. 590.
2See Davis, Thomas P. "Citizen's Guide to Intervention in
Nuclear Power Plant Siting: A Blueprint for Alice in Nuclear
Wonderland." Environmental Law, Vol. 6 ('Spring 1976), pp. 621-74.
736
-------
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B. Evaluation of Undertaking Technology-Site Evaluations
(1) How Effective Is This Option?
This category of alternatives is based on the knowledge that
some technology-location combinations will result in more undesir-
able risks than others and that those combinations which result
in high levels of impacts can be excluded. The assumption is
that the remaining sites will be acceptable locations for energy
development facilities. To the extent that sufficient sites can
be identified to meet the new energy needs projected for this
study, the technology-site evaluation option can be effective.
However, there are a number of problems which severely limit
the effectiveness of attempts to use zoning approaches, classifi-
cation schemes, screening methods, or site banking techniques.
The effectiveness of technology-site evaluation is dependent on
developing a selection method which can eliminate areas as pos-
sible locations for energy facilities on the basis of several ob-
jective criteria. Each stage of the technology-site evaluation
could then eliminate those locations that failed to meet a par-
ticular standard, and when all the unacceptable locations for
each criterion were identified, the remaining sites would be re-
garded favorably by all parties-at-interest. However, technology-
site evaluation could possibly exclude most (or all) areas from
future energy development. That is, since each possible technology-
location combination will have serious impacts, no particular con-
figuration may be acceptable if all evaluation standards are in-
voked simultaneously. For example, a process which eliminated
all national parks, wilderness areas, and wildlife refuges1 as a
first step, and then eliminated areas with severe water problems,
regions with air dispersal problems, and locations that form the
critical habitat of endangered or threatened species might leave
few sites for energy development.2 Thus, in order for the
technology-site evaluation strategy to be an effective policy
option, policymakers will have to choose evaluation criteria in
a manner which provides sufficient energy sites to meet the needs
projected in this study.
areas are currently excluded as possible sites for
new energy facilities according to the terms of the Federal Coal
Leasing Amendments Act of 1975, Pub. L. 94-377, 90 Stat. 1083.
2See U.S., Nuclear Regulatory Commission, Office of Special
Studies. Nuclear Energy Center Site Survey—1975, 5 parts, plus
Executive Summary and Appendix. Springfield, Va.: National
Technical Information Service, 1976.
739
-------
(2) Is the Alternative Efficient?
Depending on the amount of area exluded from siting,
technology-site evaluation appears to be a relatively efficient
policy alternative. Although the use of site screening or other
approaches could increase some costs of energy development by
eliminating locations on the basis of noneconomic (chiefly envi-
ronmental) criteria, an early determination of acceptable sites
should reduce other costs by reducing the likelihood that energy
facilities will be proposed in areas where widespread public op-
position exists. Thus, although some "least-cost" locations will
be excluded from consideration, if technology-site evaluation is
implemented judiciously it could reduce the costs of siting new
energy facilities because delays would be eliminated by removing
"troublesome" sites at an early stage. For instance, early site
screening might have ruled out the Kaiparowits site in southern
Utah as a candidate area for new energy facilities. The site has
eight national parks within a 200-mile radius, and the use of
technology-site evaluation techniques might have ruled such an
environmentally sensitive region unacceptable for energy develop-
ment. Since the,sponsors had spent more than $20 million by the
time the project was cancelled, the use of technology-site evalu-
ation could have been an efficient option.1
(3) How Are Costs and Benefits Distributed?
Technology-location evaluation should make siting more equit-
able in the sense that no locality will have to bear excessively
large impacts of energy development. If the areas with the largest
costs and greatest risks are eliminated through the use of screen-
ing or some other evaluative technique, then facilities sited in
the remaining locations should impose fewer environmental and socio-
economic burdens on residents. But these represent only gross
improvements in the distribution of costs and risks. The state-
of-the-art in technology-site evaluation does little to determine
the gains and losses for specific groups; about the. best that can
be done is to "make trade-offs between costs and benefits so as to
improve the equity of the decision without sacrificing unduly the
interests of the majority of the affected parties."2 The identi-
fication of the "winners" and "losers" in the selection of siting
through consideration of public values and attitudes, is still at
a primitive stage. Standards such as the significance of an en-
ergy development to the "public interest" or to a particular
David. "Fossil Projects Need Siting Help Too."
Public Utilities Fortnightly, Vol. 99 (September 29, 1977), p. 25.
2Spangler, Miller B. "Environmental and Social Issues of
Site Choice for Nuclear Power Plants." Energy Policy, Vol. 2
(March 1974), p. 24.
740
-------
interest group or individual have yet to be'developed. Lut the
evaluation of the distribution of impacts is highly dependent on
answering the question: "Important to whom?" The displacement
of even 20 families in a sparsely populated area of the West may
have dramatic and far-reaching economic and social consequences;
technology-site evaluations remain relatively insensitive to these
kinds of consequences of energy development activities.
(4) Is the Option Flexible?
Technology-site evaluation is not a highly flexible alterna-
tive. Evaluative criteria are based on social, political, tech-
nological, and financial conditions which change rapidly over time,
Unless areas are assessed periodically to determine the appropri-
ateness of their status, locations may be incorrectly included in
or excluded from development. Sophisticated technology-site eval-
uations may require several iterations in which different and/or
additional criteria are used. For example, information gathered
in a particular location regarding the quantity and quality of
water may trigger a need for data about the location of water
supplies relative to their sources.1 Such modifications are
costly both in terms of time and money, and these Devaluations
must be adjusted to correspond to the characteristics of various
technologies. Delineating rigid buffer zones of a certain radius,
for instance, may exclude sites from consideration that would
otherwise be acceptable for technologies with stricter performance
standards.
The flexibility of this alternative is also constrained by
the availability of adequate evaluative information, since
technology-site evaluation can only be applied on the basis of
criteria for which data are available. For instance, water
availability, predominant land uses (intensive agriculture, spe-
cialty crops, etc.), known habitats of threatened species, popu-
lation densities, and land ownership patterns are examples of
phenomena for which there may be adequate data and which can be
used as a basis for excluding certain impact-prone regions as
sites for energy facilities. But large-scale techno]oqy-site
evaluation is no substitute for an in-depth analysis of the spe-
cific impacts which may arise from the interaction of an energy
terhnology with its particular location. Unfortunately, much of
the information needed to determine which technology-location com-
binations are acceptable is lacking. Baseline data on many energy
technologies are still unavailable and it is not yet possible to
determine reliably the level of residuals from commercially oper-
ating facilities. In addition, models which trace the impacts of
energy facilities, such as the Gaussian air dispersion models, are
subject to high levels of uncertainty.
"Keeney, Ralph L., and Keshavan Nair. "Nuclear Siting Using
Decision Analysis." Energy Policy, Vol. 5 (September 1977),
p. 225,
741
-------
(5) Is the Option Implementable?
The implementability of techniques such as site screening is
handicapped by opposition from several sectors. First, resistance
can be expected to develop against any technology-site evaluation
which runs counter to local and state interests and values. Thus,
any site selection conducted by the federal government is particu-
larly vulnerable to local concerns about "outside" studies. Lo-
calities can be expected to focus opposition on such factors as
land speculation following the identification of acceptable areas.
Second, technology-site evaluation may be difficult for utilities
or other energy developers to accept, given the lack of precision
involved in much of the cost-benefit data. Sponsors of energy
projects may also object to the inclusion of noneconomic data in
the evaluative process.1 Finally, there is a widespread percep-
tion among participants in the energy facility siting process
that technology-site evaluations are "administrative charades"
characterized by "pseudoscientific cost-benefit jargon."2
In addition, the implementation of the technology-site evalu-
ation option will have to facilitate federal-state relationships.
Encouraging and discouraging certain technology-location combina-
tions can be implemented through federal and/or state actions.
Many federal laws already lead to the explicit or implicit ex-
clusion of parks, monuments, wilderness lands, and wildlife areas
from new energy facility siting. Another example of the implicit
federal site screening is the 1977 CAA Amendments' exclusion of
certain sites from consideration—international parks of any size,
national parks over 6,000 acres, and national wilderness areas in
excess of 5,000 acres have been designated Class I PSD areas.3
Thus, the West has many large areas for which the air quality
standards are high. Although the delineation of rigid clean air
"buffer zones" is not defined within the CAA Amendments, the im-
plementation of the act will result in the development of implicit
exclusion zones surrounding the Class I areas for certain types of
facilities 1 Permission would be denied for a site that, according
to air quality modeling, could be expected to violate Class I PSD
^untzing, L. Manning. "Siting and Environment: Towards an
Effective Nuclear Siting Policy." Energy Policy, Vol. 4 ( March
1976), pp. 6-7.
2See Joskow, Paul L. "Approving Nuclear Power Plants: Scien-
tific Decisionmaking or Administrative Charade." Bell Journal of
Economics and Management Science, Vol. 5 (Spring 1974), pp. 320-32
3See Kirschten, J. Dicken. "The Clean Air Conference—Some-
thing for Everybody." National Journal, Vol. 9 (August 13, 1977),
pp. 1261-63.
742
-------
increments in nearby Class I areas. This is one example of fed-
eral institutions already in place that could mandate or prohibit
certain technology-location combinations. And in some cases, this
authority has been exercised. The difficulty with these policies
is that direct use of technology-site evaluation by the federal
government has preempted some state efforts toward determining
exclusionary areas. Officials in Utah, for example, have expressed
dissatisfaction with the preemptive implications of the CAA Amend-
ments which, according to the state view, stymie effortsito de-
velop energy resources.1 Thus, technology-site evaluation im-
plemented at the federal level may not reduce the lead time in
bringing new facilities on-line because of state resistance.
(6) Summary of Alternatives to Encourage and Discourage Certain
Technology-^location Combinations
Findings for the evaluation of each alternative for encour-
aging and discouraging certain technology-location combinations
are presented in Table 12-14. Each of the alternatives analyzed—
designating acceptable and unacceptable technology-location com-
binations and implementing site screening and site banking tech-
niques—would encourage the selection of some sites in the West
for energy development and discourage others.
Since neither specific alternative meets all five evaluative
criteria simultaneously, policymakers will have to trade off the
effectiveness, efficiency, equity, flexibility, and implemen-
tability of the two alternatives. For example, if policymakers
wish to designate an absolute minimum number of sites for new
energy development in the West, they will need to employ selection
criteria judiciously and in varying combinations in order to en-
sure against eliminating every possible site from consideration.
However, if the major concern of policymakers is to designate
sites that are acceptable to the public, they may have to elimi-
nate some "least-cost" sites, even if such choices contribute to
high energy costs.
C. Evaluation of Employing Impact Assistance Methods
(1) How Effective Is This Option?
This category of alternatives aims at reducing the undesira-
bility of energy projects at selected locations through impact
assistance efforts, either mitigation or compensation. It can be
a moderately effective means of siting energy facilities without
unacceptable costs and risks if the intergovernmental jurisdiction
problems involved in ameliorating development impacts are resolved.
However, the federal-state-local government coordination bottle-
necks which characterize the financing and management of energy
^ill, Douglas. "Utah Seeks Federal Okay to Set Own Pollu-
tion Level." Denver Post, December 19, 1976.
743
-------
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impact assistance programs could cancel any gains made by reducing
resistance to facility siting through mitigation or compensation
strategies. There is general agreement that both compensatory
and ameliatory efforts are best monitored and administered at the
local level, because localities are more sensitive to the costs,
benefits, and risks of energy development for particular segments
of the population and because "local government has a primary
responsibility to see that the new growth and development in a
community pays a fair share of the community support systems in
a manner which will not place an unfair burden upon original local
residents."1 But most local governments are poorly equipped to
monitor and manage the impacts of new energy facilities. Federal
and state legislative and regulatory constraints limit the capa-
bilities of local communities to finance mitigation programs, and
states have been reluctant to equip local jurisdictions with suf-
ficient authority (such as revenue sharing powers) to respond to
impacts. Moreover, states themselves have been slow to develop
institutions that could assist in ameliorating the adverse con-
sequences of siting decisions, and federal programs often have
been characterized by inadequate funding, an inability to antici-
pate or acknowledge impact conditions, and overly complex and time-
consuming financial aid application procedures.2
It should be emphasized that reducing the burden of impacts
on affected citizens or making amends for impacts by offering tan-
gible benefits can eliminate some costs and risks of energy fa-
cility siting. But to be effective, mitigation and compensation
strategies must provide states and localities: (1) "front end"
support before impacts arise; (2) revenue-generating approaches
applicable to energy resources on federal lands (to which prop-
erty taxes do not apply); (3) planning capabilities, including
^Monaghan, James E. "Managing the Impacts of Energy Devel-
opment: A Policy Analysis from a State Government Perspective,"
in U.S., Congress, House, Committee on Interstate ^lnd Foreign Com-
merce, Subcommittee on Energy and Power; and Senate, Committee on
Energy and Natural Resources and the National Ocean Policy Study
of the Committee on Commerce. Project Interdependence: U.S. and
World Energy Outlook Through 1990, Committee Print. Washington,
D.C.: Government Printing Office, 1977, p. 609.
2Valeu, Robert L. "Financial and Fiscal Aspects of Monitoring
arid Mitigation." Paper presented at the Symposium in State-of-the-
Art Survey of Socioeconomic Impacts Associated with Construction/
Operation of Energy Facilities, St. Louis, Missouri, January 1977,
p. 12.
746
-------
information collection and analysis tools; and (4) risk-sharing
options which provide for "boom" as well as "bust" scenarios.1
(2) Is the Alternative Efficient?
Adopting mitigation or compensation policy alternatives is a
costly commitment. The federal government has established a $1.2
billion grant and loan fund as part of the Coastal Energy Impact
Program alone, and impact assistance at a single site can require
substantial financial investments. For example, the mitigation of
impacts at the Colstrip power project in Montana included a hous-
ing investment of about $2 million.2 Given the relatively inef-
fective governmental apparatus discussed above, the administra-
tion of programs designed to alleviate the burdens of energy
development may be very inefficient. But evaluating the admin-
istrative efficiency of impact assistance efforts is too nar-
row a focus—the true test of an efficient mitigation or compen-
sation program is whether the cost of making these investments
is outweighed by the reduced risks of opposition to energy
projects. Thus, in the case of making compensation payments to
affected citizens, "such payments may not be worth their adminis-
trative costs on ground of fairness alone, but if their omission
means that a valuable project is cancelled entirely for want of
a community willing to accept it, a strong efficiency argument is
applicable."3 If local communities could be reimbursed for the
identifiable socioeconomic and environmental side-effects of
development, many of the costs of energy production resulting
from project delays or cancellations could be decreased. And,
impact assistance could reduce the time and money spent in the
H. Theodore, Jr. "The Government Role in Mitigating
impacts of Energy Development." Paper presented at the Symposium
on State-of-the-Art Survey of Socioeconomic Impacts Associated
with Construction/Operation of Energy Facilities, St. Louis, Mis-
souri, January 1977, pp. 4-6; see also Breese, Gerald, et al.
The Impact of Large Installations on Nearby Areas: Accelerated
Urban Growth. Beverly Hills, Calif."! Sage Publications, ~1967T
2White, Martin. "Colstrip Power Project--Its Monitoring and
Mitigation Program." Paper presented at the Symposium on State-
of-the-Art Survey of Socioeconomic Impacts Associated with Con-
struction/Operation of Energy Facilities, St. Louis, Missouri,
January 1977, pp. 4-6.
30'Hare, Michael. "'Not on My Block You Don't': Facility
Siting and the Strategic Importance of Compensation." Public
Policy, Vol. 25 (Fall 1977), p. 429.
747
-------
litigation procedures which today are still the major compensatory
avenues for participants in many siting decisions.1
(3) How Are Costs and Benefits Distributed?
Impact assistance strategies are designed to reduce the local
inequities which flow from the siting of new energy facilities
(see the discussion of the proposed Energy Impact Assistance Act
of 1978 in Chapter 9). Some citizens will be required to shoul-
der an unequal share of the burden of providing energy resources
to the general population if the adverse consequences of develop-
ment are not compensated for or mitigated. Therefore, the crucial
standard for this category of policy alternatives for employing
impact assistance methods is the degree to which these costs and
risks are distributed in an equitable manner among the affected
parties. Overall, mitigation and compensation efforts provide
an equitable solution to the siting dilemma. Impact aid is per-
haps the only policy alternative which can decisively and equit-
ably site major facilities despite the local costs they can be
expected to incur. But some serious caveats are in order regard-
ing the equity of mitigation and compensation measures. First,
equity does not imply equality--no impact assistance strategy will
be able to reduce the costs and risks of development without some
participants being overprotected or undercompensated. Second,
even approaching an equitable diffusion of the negative impacts
of facility siting requires an extremely sensitive set of politi-
cal and administrative institutions. Being able to identify sec-
ondary and future costs, such as rising insurance premiums or de-
clining land values, as well as those citizens to be affected by
them, will determine the ultimate success or failure of mitigation
or compensation schemes which require substantial lead time.2
(4) Is the Option Flexible?
In isolation, any single legislative impact assistance ap-
proach or any particular agency's predictive impact model are
not flexible alternatives for siting energy facilities. As the
federal government's response to the socioeconomic impacts re-
sulting from energy development has evolved toward the use of
multiple impact assistance tools and as state and local govern-
ments have come to appreciate the diversity of costs and risks
JSee Horowitz, Donald L. "The Courts as Guardians of the
Public Interest." Public Administration Review, Vol.. 37 (March/
April 1977), pp. 148-54.
2Heintz, H. Theodore, Jr. "The Government Role in Mitigating
Impacts of Energy Development." Paper presented at the Symposium
on State-of-the-Art Survey of Socioeconomic Impacts Associated
with Construction/Operation of Energy Facilities, St. Louis,
Missouri, January 1977, pp. 6-8.
748
-------
associated with energy facility siting, however, mitigation and
compensation efforts have become more flexible. An example of
how compensatory or ameliatory programs have been made more adapt-
able to changing conditions and times is the "impact team." As
used in Sweetwater County, Wyoming, and Moffat County, Colorado,
these teams of officials from local, state, and federal govern-
ments and private industry have been assembled to monitor energy
development and its impacts. Recent experience indicates that
"the functioning of such impact teams does a great deal to head
off conflict and reduce citizen antagonism over resource develop-
ment. l
(5) Is the Alternative Implementable?
The implementability of most impact assistance options is
relatively low. Several major obstacles stand in the way of im-
plementing mitigation and compensation programs. First, no mat-
ter how detailed the underlying planning process, compensation
measures are notorious for attracting "free riders" who "join in
the clamor of opposition to a project, making it appear that the
numbers of people to be compensated in order to secure timely
energy development are quite large" in order to share in the bene-
fits of impact assistance.2 Second, impact assistance does little
to resolve the problem of opposition to siting from interests
outside the local community. Although there is at least the
possibility that compensation measures might deprive "outside"
environmentalists of "allies" within the affected community,
neither mitigation nor compensation schemes are likely to over-
come resistance to energy development by organized environmental
advocates. If for no other reason than that the goals of these
groups are focused on the elimination of the kinds of environmen-
tal externalities to which existing impact assistance techniques
1Monaghan, James E. "Managing the Impacts of Energy Devel-
opment: A Policy Analysis from a State Government Perspective,"
in U.S., Congress, House, Committee on Interstate and Foreign Com-
merce, Subcommittee on Energy and Power; and Senate, Committee on
Energy and Natural Resources and the National Ocean Policy Study
of the Committee on Commerce. Project Interdependence: _U_. S. and
World Energy Outlook Through 1990, Committee Print"! WaTihTngton,
B.C.:Government Printing Office, 1977, pp. 608-29.
2Heintz, H. Theodore, Jr. "The Government Role in Mitigating
Impacts of Energy Development." Paper presented at the Symposium
on State-of-the~Art Survey of Socioeconomic Impacts Associated
with Construction/Operation of Energy Facilities, St. Louis,
Missouri, January 1977, pp. 6-7.
749
-------
are not. easily applicable, the presence of environmental interest
groups poses a barrier to the implementation of comprehensive
mitigation or compensation programs.'
i
In addition, the current structure for providing federal im-
pact assistance is ill-equipped to provide mitigatory or compen-
satory aid as a siting strategy. The federal government has a
number of ongoing impact assistance programs, -including profit
sharing with the states from royalties or other development reve-
nues, or targeting assistance to the impacts themselves (as in
the 1976 Coastal Zone Act Amendments2), and some existing energy
programs have been modified to provide impact assistance; however,
the federal government basically is limited to a complementary
role of providing back-up loans, loan guarantees, or grants. But
this elaborate and essential support system is highly fragmented;
no single federal agency has been designated as the triggering
mechanism for providing energy impact assistance. As a result,
at least four cabinet-level departments (Commerce, Energy, Inte-
rior, and Housing and Urban Development) and various other regu-
latory and coordination agencies have major responsibilities in
the area of impact mitigation. This administrative compartmen-
talism restricts the planning process which underlies impact as-
sistance programs, and it can restrict agency decisionmaking by
leading to bureaucratic stalling or "buck-passing" in the face ol
citizen opposition to siting proposals.
An example of the problems confronting effective impact
assistance in the West is the difficulty encountered with the
1976 Federal Land Policy and Management Act.3 Under the terms
of this legislation, state and local governments were allowed to
borrow against projected mineral lease revenues to respond to the
socioeconomic impacts of energy development. However, a number
of western states, including Colorado, Utah, and Wyoming, have
constitutional provisions which prohibit, their participation in
loan guarantee programs that present the possibility of fiscal over-
extension by using future revenues before they are actually gener-
ated. Conservative restrictions of this type are understandable,
Michael. "'Not on My Block You Don't1: Facility
Siting and the Strategic Importance of Compensation." Public
Policy, Vol. 25 (Fall 1977), pp. 450-51.
2Coastal Zone Management Act Amendments of 1976, Pub. L.
94-370, 90 Stat. 1013.
Federal Land Policy and Management Act of 1976, Pub. L.
94-579, 90 Stat. 2743, 43 U.S.C. 1701 et seq.
750
-------
given the fact that many federal supports may actually increase
siting uncertainty and risk for states and localities.1
(6) Summary of Alternatives to Employ Impact Assistance
Methods
Findings resulting from the evaluation of each alternative
for employing impact assistance methods are summarized in Table
12-15. Both alternatives discussed here—requiring impact miti-
gation by developers, state or federal governments or compensating
state and local governments for impacts—would reduce public op-
position to some energy development sites in the West.
The previous evaluation discussion reveals that the five
criteria used in this study--effectiveness, efficiency, equity,
flexibility, and implementability—can seldom, if ever, be met
simultaneously. Policymakers will have to trade off the accom-
plishment of one criterion against the achievement of some other
measure. For example, impact assistance required from developers
or made available by the federal government would reduce the op-
position at some sites, if such aid is provided sufficiently in
advance of development to allow local officials to cope with public
service needs. In addition, impact assistance can serve to dis-
tribute the costs of energy development more equitably among the
adversely affected or benefiting parties. But the administrative
costs of impact assistance are high and will contribute to higher
energy prices. Furthermore, the impact assistance alternative
cannot be adapted very well to changing circumstances without
using local response mechanisms such as impact teams. And the
high acceptability of impact assistance makes it a tempting tar-
get for "free riders" who seek quick gains from this alternative.
D. Evaluation of Increasing Citizen Involvement in Siting
Decisionmaking
This evaluation focuses on the category of alternatives for
increasing citizen involvement in siting decisions. However, be-
cause of the wide range of participation options it is necessary
to point out the variations among the three specific alternatives
included in this category. In fact, the three specific partici-
pation alternatives described earlier in this chapter represent
JMonaghan, James E. "Managing the Impacts of Energy Devel-
opment: A Policy Analysis from a State Government Perspective,"
in U.S., Congress, House, Committee on Interstate and Foreign Com-
merce, Subcommittee on Energy and Power; and Senate, Committee on
Energy and Natural Resources and the National Ocean Policy Study
of the Committee on Commerce. Project Interdependence: U.S. and
World Energy Outlook Through 1990, Committee Print. Washington,
D.C.: Government Printing Office, 1977, pp. 608-29.
751
-------
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a continuum of actual policymaking power, from information ex-
change through administrative interaction to decisionmaking in-
put. In general, the greater the power-sharing responsibilities
vested in citizens' groups, the more effective, efficient, and
equitable are these alternatives for the objectives outlined
above. On the other hand, as public access to the levers of
power decreases, the flexibility and implementability of alter-
natives is enhanced.
(1) Is This Category of Alternatives Effective?
The category of public participatory alternatives can con-
tribute to the policy objective of siting energy facilities with
a minimum of risks and delays. Information exchanges between the
public and siting agencies (through participation audits or im-
provements in public hearing procedures) are capable of reducing
the delays involved in data searches and could provide greater
bases for consensus-building among citizens' groups. However, the
effectiveness of administrative interaction mechanisms, such as
citizen advisory committees, is limited by their inability to
serve as little more than a generator of "trial balloons," since
such committees have no binding decisionmaking authority. These
institutions do provide a major channel of communicatio>n between
professional administrators and the public, but despite their
widespread acceptance by government, they possess no real standing
or sanctions by which to ensure representation. Two fundamental
problems plague interaction mechanisms: some interest groups
have complained that their own limited resources constrain their
ability to participate actively through these avenues (a defi-
ciency which has led to much of the demard for participation pro-
cess support alternatives, discussed below), and even if groups
are able to make their interests known through such policy forums,
there is absolutely nothing which guarantees that recommendations
will be heeded.1
Allowing citizens direct access to decisons affecting fa-
cility siting, on the other hand, is a relatively effective means
of reducing the costs associated with development resistance.
Much more accurate and meaningful signals of public preferences
can be sent to policymakers in less time through the use of re-
view boards or citizen lawsuits than is the case with other par-
ticipatory options. But precisely because review boards involve
aDoerksen, Harvey R., and John C. Pierce. "Citizen Influence
in Water Policy Decisions: Context, Constraints, and Alterna-
tives." Water Resources Bulletin, Vol. 11 (October 1975), pp.
953-64; and Deli Priscoli, Jerry. "Citizen Advisory Groups and
Conflict Resolution in Regional Water Resources Planning." Water
Resources Bulletin, Vol. 11 (December 1975) , pp. 1233-43.
754
-------
the sharing of power there is a high degree of entrenched opposi-
tion to public decisionmaking input on the part of those in gov-
ernment.
(2) Is the Alternative Efficient?
Participation alternatives can be moderately efficient. In
particular, administrative costs would be low and in some cases
these would be borne by participating agencies or groups. An
early consensus on site choices would decrease the possibility of
lengthy delays in the siting process and thus reduce energy pro-
duction costs. However, the need to satisfy a wide range of in-
terested parties could also result in siting choices which are
more expensive than would otherwise be the case.
Low administrative costs of the participation alternatives
would, however, be offset by the costs of data exchanges. Whether
data are purchased by government, generated by agencies, or pro-
vided by the participants themselves, they are expensive to col-
lect, monitor, and assess.2 Data exchange options also suffer
from the possibility that they will lead to "information overload"
for both the agencies and the public participants involved in fa-
cility siting, since the information which can be used efficiently
by any decisionmaker is limited both in terms of its quality and
quantity. 3 This is particularly the case for legalistic or highly
technical data of the type generated through public hearings.4
Interest goups with little experience in participating in scien-
tific and technological decisions may be overwhelmed even by pro-
cedures designed to make hearings meaningful.
Finally, the costs of litigation have become one of the major
obstacles to the establishment of a rational national energy fa-
cility siting policy. Lawsuits involve problems of securing and
paying for scientific and technical expertise, and there are
extensive delays required to carry many legal actions through
Arnstein, Sherry R. "Maximum Feasible Manipulation."
Public Administration Review, Vol. 32 (July/August 1972) , pp.
377-90.
2See Ingram, Helen. "Information Channels and Environmental
Decision Making." Natural Resources Journal , Vol. 13 (January
1973) , pp. 150-69.
3Carver, John A. "Energy Information, and Public Policy."
American Behavioral Scientist, Vol. 19 (February 1976), p. 280.
"*See Heberlein, Thomas A. "Some Observations on Alternative
Mechanisms for Public Involvement: The Hearing, Public Opinion
Poll, the Workshop, and the Quasi-Experiment . " Natural Resources
Journal, Vol. 16 (January 1976), pp. 197-212.
755
-------
to their conclusion. Moreover, judicial decisionmaking may be
very uneven, since cases are not chosen on the basis of a system-
atic approach to a problem. Also lawsuits are decided in a
special way: the adversary process, featuring examination in a
confrontation atmosphere, is not noted for its efficient resolu-
tion of issues.1
(3) How Are Costs and Benefits Distributed?
Most participatory mechanisms are fairly equitable siting
policy alternatives. Used in conjunction with participation
process support techniques, information exchange options offer a
highly equitable mechanism for citizen involvement. Equal access
to data in public hearings, for example, can remove many of the
participatory advantages enjoyed by small, well represented groups
which may use information strategically to transfer the risks of
development to large, poorly represented groups".2 And while most
interaction alternatives, such as advisory committees, are not
really representative of participants, greater care in the selec-
tion of members can lead to relatively equitable public involve-
ment avenues. Choosing participants on an advisory committee by
another citizen participation mechanism, such as public hearings,
could reduce perception of agency control or establishment bias.3
Much the same membership selection requirements characterize
direct citizen input options such as citizen review boards , where
it is difficult to structure a body which is fully representative
of the population served but where minority views can- be guaran-
teed through careful recruitment practices .
(4) Is the Option Flexible?
One of the greatest strengths of methods of increasing pub-
lic participation in siting decisions is their flexibility. In-
creasing information flows in the siting process does -raise the
possibility that any particular siting alternative will be asso-
ciated with adverse consequences identified by new data, thus
increasing the bias toward the status quo. Without information
dissemination and collection efforts, however, public reaction
to any siting option will be unclear, and policymakers will have
, David. "The Role of Litigation in Environmental
Policy: The Power Plant Siting Problem." Natural Resources
Journal , Vol. 11 (July 1971) , pp. 470-96.
2See Frauenglass, Harvey. "Environmental Policy: Public
Participation and the Open Information System. " Natural Resources
Journal , Vol. 11 (July 1971), pp. 495-96.
3See Cronin, Thomas E. , and Norman C. Thomas. "Federal
Advisory Processes: Advice and Discontent." Science, Vol. 173
(February 26, 1971), pp. 771-79.
756
-------
little sense of the flexibility available to them in making ac-
ceptable siting choices. Both administrative interaction and
direct public input alternatives cover a range of organizational
forms. The traditional use of public hearings, advisory commit-
tees, and citizen review boards has been somewhat ritualistic
and legalistic in the past, but earlier timing and broader citi-
zen involvement has led to more exploratory, flexible procedures.1
(5) Is the Option Implementable?
Public participation alternatives can be implemented more
easily than most other options. Demands for public involvement
in facility siting decisions have made information exchange and
administrative interaction mechanisms almost an automatic govern-
mental response. Hearings and advisory committees, for example,
are found at all levels of government and with functions ranging
from general data collection through the provision of scientific
and technical expertise, to conducting special studies for par-
ticular clientele groups.2 And litigation continues to be a highly
implementable strategy; the role of the courts in facility siting
policy has expanded rapidly as the judiciary has moved from a fo-
cus on the protection of the rights of parties-at-interest to a
more comprehensive interest in the problems of direct public par-
ticipation and the more general "public interest" issues of lo-
cating energy facilities.3
(6) Summary of Alternatives for Increasing Citizen Involvement
in Siting Decisionmaking
Evaluative findings for each alternative that would increase
citizen involvement in siting decisionmaking are presented in
Table 12-16. Delays involved in site selection and approval
Bishop, A. Bruce, Mac McKee, and Roger D. Hansen. Public
Consultation in Public Policy Information; A State-of-the-Art
Report, for Energy Research and Development Administration. N.
p.: Intermountain Consultants and Planners, Inc., 1978, pp. 43-61.
2Brown, David S. "The Management of Advisory Committees:
An Assignment for the '70s." Public Administration Review, Vol.
32 (July/August 1972), pp. 334-42; and Heberlein, Thomas A. "Some
Observations on Alternative Mechanisms for Public Involvement:
The Hearing, Public Opinion Poll, and Workshop, and the Quasi-
Experiment." Natural Resources Journal, Vol. 16 (January 1976) ,
pp. 197-212.
3See Wolpert, Julian. "Regressive Siting of Public Facili-
ties." Natural Resources Journal, Vol. 16 (January 1976), pp.
103-15; and Horowitz, Donald C. "The Courts as Guardians of the
Public Interest." Public Administration Review, Vol. 37 (March/
April 1977), pp. 148-54.
757
-------
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could be reduced by implementing any of the following three spe-
cific alternatives in this category:
• Provide for information exchanges between participants and
agencies;
• Encourage administrative interaction between agencies and
participants;
• Allow direct participant input into agency decisions.
Significantly, however, reduction in site selection and approval
delays can usually be achieved only by making trade-offs among the
five criteria. When policymakers attempt to increase citizen in-
volvement in siting decisionmaking, they will need to know the con-
sequences of choosing one criterion or a combination of criteria
over some other criterion or combination. For example, public
participation, particularly direct citizen input, could reduce the
delays involved in site selection and approval, but might also le-
gitimize positions already held, either in support of or in oppo-
sition to the sites being considered. And, while public partici-
pation alternatives are also highly equitable strategies for dis-
tributing the costs, risks, and benefits of siting decisions, they
often prove difficult to administer, due; to bureaucratic resis-
tance and inertia, public apathy, and changing situations.
E. Evaluation of Providing Participation Process Support
Process support for citizen involvement is difficult to as-
sess as a separate category of alternatives for reducing the
costs, risks, and delays involved in the siting of energy facili-
ties because technical or financial assistance for participants
is intended to be used in conjunction with other policy alterna-
tives. For example, technical or financial assistance alterna-
tives, implemented by awarding attorneys' fees, expert witness
fees, or other costs of participation, are designed to be used
with other information exchange, administrative interaction, or
direct public input options. Thus, citizens' groups desiring
access to the siting process through the avenue of public hearings
could be provided with intervenor funding or technical staffing.
The nature of participation process support, therefore, is that it
may serve to make other alternatives more effective, efficient,
equitable, flexible, and implementable, depending on the circum-
stances in which they are used. For instance, process support
will tend to be more equitable when applied to information ex-
change activities, more flexible and implementable when used in
:See Davis, Thomas P. "Citizen's Guide to Intervention in
Nuclear Power Plant Siting: A Blueprint for Alice in Nuclear
Wonderland." Environmental Law, Vol. 6 (Spring 1976), pp. 621-74,
760
-------
conjunction with interaction mechanisms, and more effective and
efficient when applied to decisionmaking input options.
However, some effects can be identified as a direct conse-
quence of the application of process support. For example, pro-
viding technical expertise to participants may not be a very ef-
ficient or effective conflict resolution mechanism in the siting
of energy facilities. Case studies of siting debates have shown
that injecting technical expertise into the process often is an
incentive for greater citizen involvement, but that it may also
serve to legitimize, on technical grounds, positions already held.
But these same studies have demonstrated that technical expertise
is an extremely equitable alternative. That is, "equal access to
knowledge, and the resulting ability to question data used to le-
gitimize decisions, may at least permit political forces to oper-
ate on a more equitable basis."1
The barriers to implementing process support strategies are
also well known: the issue of direct financial aid to partici-
pants particularly threatens established government rules and rou-
tines. Despite widespread acceptance of the principle of citizen
involvement, recognition of the substantial costs of participation
has resulted in Congress not outlining any federal position on the
subject. Thus, the issue of financial aid has been left to the
discretion of the regulatory agencies. Caught in a web of legal
and procedural conflicts regarding the authority or desirability
of using appropriations to fund participation and the problem of
determining which interests require financial support, agencies
have responded in widely varying fashions. The most determined op-
position to financial aid has come from those agencies with highly
complex and technological missions, such as the Nuclear Regulatory
Commission (NRC) and the FPC.2 Both these bodies have refused to
fund intervenors in adjudicatory or rule-making procedures. Thus,
while Congressional debates continue on proposals for a more com-
prehensive and liberal federal policy of reimbursement, signifi-
cant resistance remains to the provision of financial assistanc.
to citizens' groups in the siting of energy facilities.
Fortunately, there are other participation process support
implementation strategies more flexible than financial support.
Many agencies have acted to provide "facilitative assistance"
short of actual institutionalized financial aid. These measures
TNelkin, Dorothy. "The-Role of Experts in a Nuclear Siting
Controversy." Bulletin of the Atomic Scientists, Vol. 30 (Novem-
ber 1974), p. 36. See also Gerlach, Luther P. "The Great Energy
Standoff." Natural History, Vol. 87 (January 1978), pp. 22-37.
2Paglin, Max D., and Edgar Shor. "Regulatory Agency Response
to the Development of Public Participation." Public Administra-
tion Review, Vol. 37 (March/April 1977), p. 147.
761
-------
Include: liberalizing the criteria for public admission to pro-
ceedings, relaxing some financial and procedural standards, pro-
viding access to internal data, and supplying technical staff as-
sistance or information services. Other agencies have implemented
"in house" public counsel offices, or offices of citizen advocacy.1
Taken together, these alternatives provide a good foundation for
increasing public representation in siting decisions.
12.3.4 Summary and Comparison of Alternatives
The assessment of the four categories of alternatives leads
to some general conclusions and comparisons regarding future en-
ergy facility siting policy, as indicated by Table 12-17. Signif-
icantly, no category of alternatives appears to be particularly ef-
fective in increasing the number of acceptable sites for new energy
facilities. Technology-site evaluation holds perhaps the greatest
potential for more clearly identifying those locations which will
not generate unacceptable costs, risks, and del'ays, but a compre-
hensive evaluation approach could just as easily eliminate or block
all or most energy development sites. Impact assistance and public
participation options (with or without participation process sup-
port) seem likely merely to buttress existing values and attitudes
in support of or in opposition to siting options. In part, the
relatively low effectiveness of measures such as compensation or
participation may be traced to the fact that public acceptance of
energy facilities does not appear to hinge on the rational presen-
tation of persuasive technical or economic arguments. Thus, im-
plementation strategies designed to provide greater citizen involve-
ment or to determine the correct "price" of facilities to the
parties-at-interest may falter in the face of "irrational" public
resistance based on psychological and sociopolitical factors (such
as how development will affect the distribution of political power)
quite apart from notions of technological risk or economic cost.2
The efficiency of the siting alternatives is also low. Once
again, however, technology-site evaluation provides perhaps the
best available alternative. Although methods such as site screen-
ing would eliminate some "least cost" options, technology-site
evaluation appears to have the best ratio of benefits to costs.
Each of the other categories suffers from major implementation
n, Max D., and Edgar Shor. "Regulatory Agency Response
to the Development of Public Participation." Public Administra-
tion Review, Vol. 37 (March/April 1977), p. 146-47.
2See Otway, Harry J., Dagmar Maurer, and Kerry Thomas. "Nu-
clear Power: The Question of Public Acceptance." Futures, Vol.
10 (April 1978), pp. 109-18; and Melbar, Barbara D., et al. Nu-
clear Power and the Public; Analysis of Collected Survey Research.
Seattle, Wash.:Battelle Memorial Institute, 1977.
762
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costs: impact assistance and participation process support mea-
sures have high administrative costs, and citizen involvement
mechanisms require large data and organizational expenses. These
pessimistic efficiency conclusions are based to some extent on
an assumption that while substantial gains can certainly be made
in improving the predictability and certainty of the siting pro-
cess, there is no quick legislative or administrative "fix" for
the current energy facility siting dilemma. Arriving at an ac-
ceptable technology-location combination while ensuring the
representation of all legitimately affected interests is almost
always likely to be an inefficient process in our pluralistic
society.1
If efficiency and effectiveness are the weaknesses of the
alternatives discussed for siting energy facilities, then equity
is their strength. Impact assistance is easily the best method
for distributing the costs of energy development and public par-
ticipation (especially if used with participation process support)
offers an equitable means of distributing the risks of siting
energy facilities. Technology-site evaluation is the least equi-
table alternative, but even this option could significantly reduce
the risks of development by establishing a threshold above which
no locality would have to bear the impacts of energy production.
Each of these alternatives thus contributes to the requirements
of an equitable decisionmaking system, in which "management must
be willing to enter into a meaningful dialogue with both regional
and local citizen groups (not just economically interested groups,
of course) and share with them the information gathering and
evaluating programs, the goal-formulating, the planning, the es-
stablishment of priorities, and the actual imp]ementation of
policies."2
Public participation options are the most flexible alterna-
tives for facilitating the timely location of energy projects. A
strategy of participation may have at least five different orien-
tations: (1) as an overarching objective of democraictic politics,
to produce "better" decisions; (2) to alter power relationships
or to legitimize decisions; (3) to improve communications among
Irland, Lloyd C. "Citizen Participation—A Tool for
Conflict Management on the Public Lands." Public Administration
Review, Vol. 35 (May/June 1975) , p. 265.
2Wengert, Norman. "Citizen Participation: Practice in
Search of a Theory." Natural Resources Journal, Vol. 16 (January
1976), pp. 23-40. See also Hart, David K. "Theories of Govern-
ment Related to Decentralization and Citizen Participation."
Public Administration Review, Vol. 32 (October 1972) , pp. 603-21.
764
-------
parties-at-interest; (4) to reduce conflicts, tensions, and mis-
perceptions among participants; and (5) to reduce citizen alien-
ation as a form of "social therapy."1 None of the other catego-
ries of alternatives considered can approach this adaptability
and adjustability: technology-site evaluation and impact assis-
tance are relatively narrowly defined and highly structured op-
tions for siting energy facilities.
Finally, public participation also appears to be the most
implementable category of siting alternatives. Although there
is resistance within the bureaucracy to the actual sharing of
power by citizens' groups (i.e., citizen review boards), the
momentum for public involvement is now well developed. No such
degree of acceptability exists for technology-site evaluation,
participation process support, or impact assistance, which still
suffer from perceptions that most impacts are not measurable,
that "you can't measure everything in money" or that some costs
are simply uncompensable.2
1Frauenglass, Harvey. "Environmental Policy: Public Parti-
cipation and the Open Information System." Natural Resources
Journal, Vol. 11 (July 1971), pp. 495-96.
20'Hare, Michael. "'Not on My Block You Don't1: Facility
Siting and the Strategic Importance of Compensation." Public
Policy, Vol. 25 (Fall 1977), pp. 454-55.
765
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CHAPTER 13
SUMMARY AND OVERVIEW
13.1 INTRODUCTION
Each of the preceding nine chapters focused on a separate
category of problems and issues. While these nine categories are
not exhaustive, they include what we have found to be among the
most significant problems and issues likely to result from west-
ern energy resource development.
The purpose of this chapter is to provide a different per-
spective of what we have learned from these analyses. Following
a brief description of several characteristics of the policymak-
ing system, we will summarize our findings by suggesting alterna-
tives that Indian tribes, energy developers, and policymakers at
each level of government can consider in order to achieve desired
benefits of western energy resource development while minimizing
costs and risks.
13.2 KEY CHARACTERISTICS OF THE POLICYMAKING SYSTEM
A general overview of the social and political context of
western energy resource development was presented in Chapters 1
and 2. Rather than repeat that description, this section focuses
on several key characteristics of the U.S. political system which
significantly affect policymaking for dealing with the consequences
of western 'energy development. The first of these characteristics
is that policy is most often made in substantive problem and issue
categories such as those used to organize our policy analyses in
Chapters 4-12. Thus, "western energy resource development" is
not a central category for organizing policymaking. For example,
although energy development may be taken into account when air
and water quality policies are made and implemented, policy is
made in terms of substantive categories themselves. As a conse-
quence, policy which affects the development of energy resources
in the western U.S. is fragmented, consisting of several responses
which address specific problems.
The second key characteristic of the political system is that
policies are made and implemented by various levels, branches, and
agencies of government and by a range of private sector partici-
pants. In this system, questions are constantly being raised
about whether problems and issues should be considered public or
766
-------
private and about the appropriate roles of the two. This is cer-
tainly the case in energy policymaking because, until recently,
energy was a substantive policy area in which, with few exceptions,
government played a relatively minor role and assumed only limited
responsibilities. And it is also the case with regard to western
energy resource development, where old roles, relationships, and
responsibilities have been upset, and new ones are being worked
out.
Although the system is currently unstable, it is clear that
many of the decisions which will largely determine the consequences
of western energy resource development such as the location and
type of development, are still and will probably continue to be
private sector decisions. Given present policies and existing
public-private policymaking roles and responsibilities, the pri-
vate sector will largely decide such things as whether to "strip
and ship" coal or convert it at or near the mine-mouth; whether
to convert coal to electricity or synfuels; whether to minimize
water consumption; and whether and when to go to commercial-scale
oil shale development.
Private sector decisions are, of course, affected by siting
laws, leasing and land-use policies, air and water quality regu-
lations, tax and pricing policies, certifications for public con-
venience and necessity, and other government policy and programs.
But, just as there is no unified western energy resource develop-
ment policy, there is no unified system for making and implement-
ing public policies that affect development. Not only are multi-
ple levels of government involved, but at each level the executive,
legislative, and judicial branches have a role. Within the exec-
utive, more than one agency has administrative, rule-making, and/or
regulatory responsibilities; and roles and responsibilities among
agencies are often conflicting.
For these reasons, it is difficult to address western energy
resource development comprehensively. Energy developers--such as
utilities, mining and energy companies--will retain the major ini-
tiative by seeking approval for separate developments. To the ex-
tent that government attempts to shape the consequences of western
energy resource development, it is likely to do so primarily by
regulating facility siting, air and water quality, surface mine
reclamation, transportation modes, and other specific problems.
Two additional characteristics should be kept in mind in
this discussion of what policymakers can do to shape the conse-
quences of development. First, policymakers at various levels
and in different branches and agencies, in Indian tribes, and in
the private sector have different objectives and rank the inter-
ests and values at stake differently. Second, the results of our
analyses indicate that the most direct way to attempt to control
consequences is to control the combinations of technologies and
767
-------
locations which are allowed. 1 This suggests that facility siting
and comprehensive land-use planning and management are possible
approaches for attempting to control the consequences of develop-
ment directly. Although the existing policy syste;m is not par-
ticularly hospitable to either, public and tribal ownership of
large land areas (including mineral rights) and control of water
rights make comprehensive control a potentially feasible alter-
native.
13.3 CONTROLLING THE CONSEQUENCES OF WESTERN ENERGY RESOURCE
DEVELOPMENT
13.3.1 Introduction
Our impact and policy analysis results confirm the conven-
tional wisdom that developing western energy resources will pro-
duce a variety of environmental and socioeconomic costs and risks
along with the energy and socioeconomic benefits which motivate
their development. Chapters 4-12 summarize the major consequences
of development in nine separate problem and issue categories, and
indicate how alternative policies and implementation strategies
will distribute costs, risks, and benefits. This chapter will
focus on issues and policy responses available to different groups
of policymakers. For each group, we will briefly summarize the
major development consequences likely to be experienced and indi-
cate the responses which policymakers might take to d€;al with
these consequences.
The discussion will be organized around five groups: local
governments; state governments; Indians: the federal government;
and energy developers. These groups do not include all of the
participants in the policymaking system, However, they do include
the categories of policymakers who will have primary responsibil-
ity for dealing with the problems and issues associated with west-
ern energy resource development. Within each of these categories,
more specific groups will be discussed; for example,- "local" pol-
icymakers include elected municipal and county officials, and
representatives of multicounty organizations. By organizing the
discussion in this way, we do not imply that policymakers at each
Briefly, the same technology can produce significantly dif-
ferent impacts when it is sited at locations with different char-
acteristics. In our impact analyses, we attempted to identify
the most significant technological and locational factors affect-
ing impacts. See: White, Irvin L., et al. Energy From the West:
A Progress Report of a Technology Assessment of Western Energy
Resource Development. Washington, D.C.: U.S., Environmental
Protection Agency,T977; and White, Irvin L., et al. Energy From
the West: Impact Analysis Report. Washington, D.C.: U.S., En-
vironmental Protection Agency,forthcoming. See also Chapters
3 and 12 of this report.
768
-------
of these levels act independently of each other. As noted in
Chapter 2 and as shown throughout this policy report, our system
of government is characterized by shared, overlapping, and often
ambiguous roles and responsibilities. These interactions will be
noted in the following discussion, and particular attention will
be paid to issue areas where more intergovernmental and public-
private sector cooperation appears to be needed if problems are
to be dealt with adequately.
13.3.2 Local Governments
Virtually all of the consequences of western energy resource
development create issues of concern to local governments. How-
ever, local officials have very little to say regarding when,
where, and how development occurs; moreover, they lack the re-
sources and authority to control most of these consequences, and,
therefore, are usually dependent on other levels of government and
energy developers for assistance. For example, the federal and
state governments generally regulate the impacts on air, land, and
water resources; and decisions by energy developers largely deter-
mine population-related costs and benefits.
Local governments are creatures of the states; their taxing,
zoning, public health and safety and other powers are defined by
the states. Although they may use their planning and zoning pow-
ers in ways which to some extent affect the physical and environ-
mental consequences of development, local governments, particu-
larly municipalities, can do very little to impose direct environ-
mental controls on energy development. In response to such problems
as air and water quality impacts and surface land disturbances,
local governments are largely limited to attempting to influence
state and federal policies and programs. The same point can be
made for socioeconomic consequences, which are often the most im-
mediate and significant problems confronting local governments
when energy development occurs nearby. Even though they lack ade-
quate resources and authority to control these consequences, loca1
governments are expected to create an environment favorable to
economic growth and provide residents an opportunity to achieve
the quality of life they desire.
A. Impacts and Issues of Concern to Local Governments
The consequences for local policymakers of energy development
and its related growth have been elaborated in Chapters 8 (Housing)
and 9 (Growth Management), and to a lesser extent in Chapter 5
(Water Quality), Chapter 7 (Land Use and Reclamation), and Chap-
ter 11 (Transportation). The basic dilemma facing local policy-
makers is how to balance the potential economic benefits of energy-
related growth and the limited capability to respond adequately
to the demands of rapid and large population increases.
769
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(1) Economic Benefits
Energy development will generate important social and eco-
nomic advantages for nearby localities, including expanded employ-
ment opportunities, higher salaries, and the more indirect bene-
fits of expanded retail trade and increased social and cultural
opportunities. In fact, throughout the eight-state study area,
both residents and local officials appear to be among the most
enthusiastic supporters of energy development. l
The importance of the economic opportunities offered by en-
ergy development is suggested by the data in Table 13-1 which
show median household incomes for the 10 counties studied in our
impact analysis. In all but one case, Campbell County, Wyoming,
household incomes for the counties were lower than the national
median—ranging from 10 percent lower (San Juan County, New Mex-
ico) to 31 percent lower (Rosebud County, Montana, and Mercer
County, North Dakota). The high household income for Campbell
County, Wyoming, can be attributed to the oil and gas boom in
that area during the 1960"s.
It is difficult to predict the impact of western energy de-
velopment on personal incomes since economic benefits will depend
on the rate, scale, and location of energy facilities. However,
to illustrate the relative magnitude of effects, we estimated
statewide changes in personal income by the year 2000 based on a
Low Demand energy development scenario.2 Based on this scenario,
total incomes per household would range from about $14,000 in New
Mexico to about $20,000 in North Dakota (1975 dollars).3 When
these figures and those in Table 13-1 are compared and inflation
between 1969 and 1975 is taken into account, increases in income
in the area are estimated to be quite large. Obviously, these
statewide estimates do not imply that every household in energy-
impacted areas could anticipate such a dramatic change. In fact,
economic benefits would be greater during the short term
JThis conclusion is not based on a comparative scientific
analysis of opinions in these areas--which to our knowledge is
not currently available. It reflects our experience from visits
and intensive discussions with officials and residents of each of
these areas.
2The Low Demand scenario calls for a national production of
124 Q, of which 42.6 is produced in the eight-state study area.
For a brief description of this scenario see Chapter 2 of this
report, and for a detailed description see White, Irvin L., et _al.
Energy From the West; Impact Analysis Report. Washington, D.C.:
U.S., Environmental Protection Agency, forthcoming, Chapter 11.
3These projections assume household incomes will be at least
three times per capita incomes. See I_b_id.. , Chapter 11.4.3.
770
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TABLE 13-1:
MEDIAN HOUSEHOLD INCOMES IN TEN
ENERGY-IMPACTED COUNTIES
(1969 dollars)
LOCATION
National
Colorado
Garfield County
Rio Blanco County
Montana
Rosebud County
New Mexico
San Juan County
North Dakota
Mercer County
McClean County
Oliver County
Utah
Kane County
Garfield County
Wyoming
Campbell County
MEDIAN INCOME
$ 8,448
8,398
7,430
7,195
7,324
5,855
7,015
7,572
6,888
5,795
6,039
6,049
8,447
6,234
6,099
7,934
10,836
PERCENT DIFFERENCE
FROM NATIONAL AVERAGE
-
-12
-15
-31
-10
-31
-29
-28
-26
-16
+ 28
Source: U.S., Department of Commerce, Bureau of the Census.
Census of Population: Household Income in 1969 for States,
SMSA's, Cities, and Counties. Washington, D.C.: Government
Printing Office, 1976.
(construction) than over the long term (operation) of a facility;
and many residents will only be affected by indirect rather than
direct economic benefits. However, the point is that energy de-
velopment on this scale will certainly provide economic stimulus
to the area and give many residents a chance to increase their
incomes substantially.
(2) Growth Management Problems
The potential economic benefits of energy development must
be contrasted with serious growth management problems that local
officials will face. As elaborated in Chapter 9 of this report,
municipal services and facilities quickly become inadequate for
current residents as well as for those who move into the area be-
cause of energy-related job opportunities. To meet the needs of
larger populations, new facilities will have to be constructed to
provide public services such as water supply, sewage treatment,
771
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detention facilities, and medical care. The costs of needed pub-
lic facilities are high—capital costs ranging from $750,000 to
$1.15 million and operating costs of $65,000 per year for every
500 new residents. 1
The fundamental problem is that municipalities have few fi-
nancial or planning resources. Therefore, they must depend heav-
ily on other units of government and energy resource developers.
While county governments and school districts face similar prob-
lems, they are generally fewer and less severe, and both will have
larger tax revenues with which to respond.
The financial problems faced by local governments involve
the distribution of tax revenues among jurisdictions and the tim-
ing of revenue receipts to coincide with need. To illustrate,
Figure 13-1 shows revenue projections for the 1980-2000 period
for our Low Demand energy development scenario in Campbell County,
Wyoming. These data show a typical pattern for energy develop-
ments; while city and county revenues are initially approximately
equal, county revenues begin to increase very soon after develop-
ment is initiated whereas city revenues increase much more grad-
ually, This is because the facilities are usually located within
county, not municipal boundaries. Thus, while revenues are needed
prior to or once development begins, revenues are not generally
available to municipalities until the energy facility is operable.
By the year 2000, county and school revenues not only reach much
higher absolute levels than do municipal revenues, they also in-
crease twice as fast as do city revenues.
In addition to these revenue growth problems, local finan-
cial difficulties are intensified in each of the eight western
states included in this study by state ceilings on bonded debt.
These ceilings limit the capacity of towns, counties, and school
districts to finance and construct public facilities prior to the
influx of large numbers of new residents.
Municipalities' financial problems are also magnified by
planning inadequacies. A professional planning capability is
nonexistent in most of. the western towns likely to be impacted by
energy resource development. This is largely because these towns
are typically very small (under 5,000 people); however, traditional
antagonism to planning and land-use control, and the lack of in-
formation concerning scheduling and magnitude of energy development
cost estimates include fire protection, law enforce-
ment, water, sewage treatment, garbage service, health care,
jails, juvenile treatment and custody facilities, county and mu-
nicipal courts, recreation facilities and administrative space.
They are based on capital costs of $1,500 to $2,300 per capita
and operating costs of $130 per year per capita. See Chapter 9,
Section 2 for details.
772
-------
150
m
r-
CTi
rH
o
p
4-1
o
en
C
O
100
50
•:Campbell County
:::: School District
lisii&j.;,;.:; Campbell County
,City of Gillette
>>*v -*
1980
1985
1990
1995
2000
FIGURE 13-1:
PROJECTED REVENUE IMBALANCES IN
CAMPBELL COUNTY, WYOMING, 200Qa
These projections are for a hypothetical energy
development scenario in Campbell County, Wyoming
They are not intended as a prediction of actual
trends. For a detailed description and analysis
of this scenario and its implications see White,
Irvin L., et al. Energy From the West: Impact
Analysis Report. Washington, D.C.: U.S., Envi-
ronmental Protection Agency, forthcoming,
Chapter 7.
773
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contribute to local inability to anticipate and plan for rapid
growth.
(3) Housing Inadequacies
Another problem faced by communities in the vicinity of en-
ergy developments is the inadequate quantity and quality of hous-
ing (see Chapter 8). Housing is typically in short supply primar-
ily because of uncertainty over long-term housing needs, financing
constraints in the private market, and the absence of governmental
programs to address housing problems in rapid growth situations.
As a result, mobile homes have become the dominant housing type
for the majority of newcomers. However, mobile homes, which pro-
vide little property tax benefit to local governments because they
are taxed as personal rather than real property, are usually re-
'stricted by local zoning to less desirable areas of town. Hence,
mobile home parks typically cluster in unincorporated areas on
the edges of a town, typically receive a low level of public ser-
vices (e.g., streets and parks), and are generally low in quality.
B. Policy Responses for Local Governments
Table 13-2 lists some policy options available to local pol-
icymakers. As suggested by the table, local initiatives to deal
with the impacts and issues identified are few.
(1) Revenue Distribution
One option available to municipalities for dealing with rev-
enue distribution problems is to annex county land in order to
include an energy facility in the town's tax base. This alterna-
tive would increase municipal revenues and extend zoning and plan-
ning powers to development sites. Although this annexation alter-
native has not yet been used in the West, Wyoming's Joint Powers
Act, permitting cities and counties to act jointly in providing
public services and facilities, is closely related. However, the
act requires county governments to cooperate as well as give their
consent. Counties tend to be unwilling to add to their responsi-
bilities. Also, city-county cooperation does not adequately ad-
dress demands for services and facilities before new energy facil-
ities begin paying taxes.
Alternatives for providing front-end assistance include re-
distribution of state severance taxes and prepayment of property
taxes by energy facilities. However, local governments depend on
state or federal action for either alternative to be available.
Closely linked to financial problems are problems of plan-
ning. Generally, local governments and planning authorities will
require outside assistance to plan for energy development. The
need for more accurate and timely information could be addressed
at the state level by facility siting legislation, requiring better
774
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TABLE 13-2: POLICY ALTERNATIVES AT THE LOCAL LEVEL
CATEGORY OF RESPONSE
ALTERNATIVE
CHAPTER REFERENCE
Revenue distribution
Municipal annexation
of county land
Ch. 9.3
Improve mobile home
situation
Develop quality mobile
home parks
Institute local land-
use controls for all
areas of a county
Ch. 8.3
Ch. 8.3
reporting of development plans or reducing some of the uncertain-
ties associated with the siting process. At the national level,
policies such as the Energy Impact Assistance Act of 1978 1 (con-
sidered but not passed by the 95th Congress) are designed to pro-
vide both better information about development and technical as-
sistance to use such information.
(2) Improve Mobile Home Parks
Local governments have virtually no control over housing
availability problems. However, they can attempt to improve hous-
ing quality by improving the mobile home situation. Encouraging
better quality mobile home parks and county-wide land-use controls
could reduce densities and help to provide more amenities, such
as paved streets and neighborhood parks. Since these services
will require additional public expenditures, classifying mobile
homes as real rather than personal property could increase the
property tax revenues to help pay for this service. Again, state
governments would have to enact legislation authorizing this change,
The overall picture which emerges from this discussion is
that municipal governments, facing immediate and potentially se-
vere growth management problems, have virtually no independent
capability to respond. And, to a large degree, institutional
mechanisms for ensuring that the particular needs of energy boom-
towns are met, either from other levels of government or from the
private sector, do not exist.
lThe 1978 Act was an amended version of Senate Bill 1493,
Inland Energy Development Impact Assistance Act of 1977, intro-
duced in May 1977 by Colorado Senator Gary Hart. This act was co-
sponsored by Hart and Senator Jennings Randolph of West Virginia.
775
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13.3.3 State Governments
Western states are in a pivotal position in dealing with con-
sequences of energy development. Although statewide impacts gen-
erally will be smaller and occur later than in the local areas
close to energy developments, each of the nine issue categories
discussed in Chapters 4-12 will affect state governments. A state
obviously does not exert complete control in any single issue
area; for example, control over water resources is influenced by
actions of other states, Indians, and the federal government, and
environmental protection is an area where the federal government
has a major role. Nevertheless, in contrast to local governments,
state governments have considerable control over the problems they
face, either through their own laws and regulations or through
cooperative arrangements with other governmental units or the pri-
vate sector.
A. Impacts and Issues of Concern to State Governments
The issues and impacts of primary concern to the states can
be considered in four categories: economic benefits; growth man-
agement assistance; water availability; and environmental protec-
tion.
(1) Economic Benefits
States can anticipate substantial economic advantages from
energy resource development. The most important economic benefit
for state governments will be increases in state revenues from
both direct taxes on energy development and increased income tax
revenues. To give an idea of the magnitude of such effects, we
projected state revenues from direct energy-related taxes (mineral
severance taxes, property taxes, and energy conversion taxes) for
our Low Demand scenario, using current tax levels in each state.
The results for six states in the year 2000 are shown in Figure
13-2. Nearly 3 billion dollars in new revenue per year (1975 dol-
lars) is projected for six states by the year 2000. l About 45
percent of this revenue would be generated in Montana, because of
that state's high severance tax and the atssumption of large amounts
of coal development for Montana in our Low Demand scenario. Mon-
tana's direct energy tax revenue would be about $1.3 billion by
the year 2000, representing about a 450 percent increase over its
1975 direct energy tax revenues.
estimates, based on our Low Demand scenario, depend
largely upon the number of conversion facilities and the tax rates
for each state. In practice, if large surpluses were generated,
tax rates would probably be lowered. See White, Irvin L., et al.
Energy From the West: Impact Analysis Report. Washington, D.C.:
U.S., Environmental Protection Agency, forthcoming, Chapter 11.4.
776
-------
in
r-
cr>
O
Q
4-1
O
O
•H
•H
FIGURE 13-2:
ANNUAL ENERGY TAX AND PROPERTY
TAX REVENUES, YEAR 2000
(2) Growth Management Assistance
At the state level, population growth due directly to energy
development is not estimated to be great; no more than 200,000
permanent new residents are projected for any one state in our
Low Demand scenario. 1 Perhaps more importantly, the estimated
permanent population increases would occur gradually over the next
20 to 25 years so that growth impacts at the state level would be
manageable. However, local governments can be expected to demand
state assistance in dealing with growth related problems since,
as discussed above, few local areas will be able, by themselves,
to deal effectively with planning, housing, revenue distribution,
and front-end financing problems.
!See White, Irvin L. , et___a_l. Energy From the West; Impact
Analysis Report. Washington, D.C.: U.S., Environmental Protec-
tion Agency, forthcoming, Chapter 11.4.2.
777
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(3) Water Availability
Perhaps the most difficult problem states in our eight-state
study area will confront is water availability. This is largely
because of the real potential for water shortages, both basin-wide
and for many specific streams and stream segments. For example,
when projections of water consumption for energy, development based
on our Nominal Demand * scenario are added to projected nonenergy
requirements in the Upper Colorado River Basin (UCRB) for the year
2000, the total may exceed existing supplies by as, much as 1 mil-
lion acre-feet per year.2 Even in the Upper Missouri River Basin
where water is more abundant basin-wide, energy related water re-
quirements have already increased conflicts over water rights in
specific locations, particularly in the Yellowstone River. In
many respects, resolution of water conflicts will determine the
future growth of western states, including the rate, magnitude,
and location of energy development. Water problems and issues
are made even more serious because of the uncertainty associated
with new national water policies, increased conflicts among states
of the Colorado River Basin, and the potential control of large
water supplies by Indian tribes.
(4) Environmental Quality
States will face numerous environmental quality issues as a
result of energy resource development. Anticipated environmental
threats include:
• Reduced air quality, including reduced visibility;
• Ecological effects of reduced stream flows;
• Potential for water pollution, both surface and underground;
• Land impacts from surface mining and waste disposal;
• Disruption of groundwater flows;
• Aesthetic impacts of surface mining and other facilities;
• Noise and safety effects of unit trains.
lrThe Nominal Demand scenario calls for a national production
of 155.1 Q, of which 60.7 is produced in the eight-state study
area. For a brief description of this scenario see Chapter 2 of
this report, and for a detailed discussion, see White, Irvin L.,
et al. Energy From the West: Impact Analysis Report. Washington,
D.C.: U.S.,Environmental Protection Agency, forthcoming, Chapter
11.
2See Chapter 4.2.1.
778
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B. Policy Responses for State Governments
States are usually in the position of reacting to the energy
development initiatives of private sector developers, the federal
government, or Indian tribes. This is particularly true in the
West since so much western land is owned by the federal govern-
ment and Indians. l Within these limits, states exercise consider-
able control over the level of energy development and impacts.
Table 13-3 summarizes policy responses available to the states.
As listed in the table and as suggested previously in the local
government section, states have primary responsibility for provid-
ing assistance to local communities impacted by energy development,
In this problem area, states generally possess the authority and
the financial means for effectively responding to growth manage-
ment problems independent of the federal government.
A second state response category balances energy development
with other demands on the state's resources, particularly environ-
mental protection and the use of water. In this respect, states
have considerable responsibility, authority, and flexibility in
policy responses. Yet, their actions are usually constrained by
federal guidelines and requirements; and states often need to co-
operate with or seek assistance from the federal government, other
states, arid energy developers.
A third related category of responses concerns the state role
in the siting of new energy facilities. A state's siting policies
affect not only the extent of social, economic, and environmental
impacts, but also the time and cost energy developers must invest
in expanding energy production capacity. Some policy responses
available to state governments in each of these three categories
are discussed below.
(1) Community Impact Assistance
States appear to be the most appropriate level of government
for dealing with population-related impacts and appear to have at
their disposal several potentially effective responses. However,
with one or two exceptions states have been slow to develop insti-
tutional mechanisms for dealing with these problems, even though
several localities in the eight states included in this study al-
ready have or are beginning to experience severe growth management
problems. The various policy alternatives available to the states
are of two types: modifying state tax laws and requiring devel-
opers to provide impact assistance.
Approximately 35 percent of the eight-state area is owned
by the federal government and 9 percent by Indian tribes. About
65 percent of Utah is federally owned.
779
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TABLE 13-3: POLICY RESPONSES BY STATE GOVERNMENTS
CATEGORY OF RESPONSE
Community Impact
Assistance
Water Use and
Environmental
Controls
Siting
STATE POLICY ALTERNATIVES
Modify state tax laws to
improve financial
capacities
Require industry
impact assistance
Improve water use man-
agement system
Strengthen state envi-
ronmental programs
Increase regulcitory
flexibility and plan-
ning
Undertake technology-
site evaluations
Increase citizen in-
volvement in siting
CHAPTER REFERENCE
Ch . 8.3, 9.3,
and 12.3
Ch . 8.3, 9.3,
and 12.3
Ch . 4.3
Ch. 5.3, 7.3
and 11.3
Ch . 5.3, 6.3,
cind 7 . 3
Ch. 12.3, 6.3, i
and 7 . 3
Ch. 12.3
(a) Modify State Tax Laws
Local government growth management problems are largely a
consequence of tax revenue distribution inequities (e.g., between
counties and municipalities) and insufficient front-end money.
As discussed in Chapter 9, states could make a variety of changes
in state law which could help alleviate these problems. For ex-
ample, to deal with the problem of inequitable distribution of
property taxes among local jurisdictions, states could collect
property taxes on energy facilities and then distribute the rev-
enue to impacted communities. Although there is some precedent
for this approach, for example, Wisconsin has adopted a plan sim-
ilar in concept, it would probably be difficult to implement be-
cause it would be a basic change in long-established taxation pol-
icies .
Another alternative is for states to develop programs for
distributing a portion of severance tax revenues to the impacted
communities. In Montana, a 30 percent severance tax on coal has
provided considerable revenues to impacted communities--and has
increased general revenue funds. However, Montana's tax has raised
questions about appropriate severance tax levels, particularly
questions of interregional equity.
780
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Equitable distribution of the tax also requires that impacted
communities and the nature of the impacts be accurately identified.
Given the inadequacy of the financial and planning capabilities
of most energy-impacted western towns, many impacted areas may
have difficulty documenting their needs. That this is the case
emphasizes the extent to which local and state governments are
dependent on energy developers for accurate information about the
timing and nature of development.
Other tax policy alternatives available to the states include
classifying mobile homes as real property for taxation, allowing
energy companies to claim the value of assistance provided as a
tax deduction, and requiring the prepayment of property taxes so
as to make these revenues available at the front end when they
are most needed (see Chapters 8 and 9). The requirement for pre-
payment of property taxes could be made less objectionable to in-
dustry with changes in Internal Revenue Service regulations to
allow full deductions for the years in which taxes were prepaid.
(b) Require Industry Impact Assistance
Another type of state response for dealing with social and
economic impacts is to make siting permits conditional on the de-
veloper undertaking certain impact mitigation actions. For exam-
ple, one condition could be to require developers to provide timely
information on planned development. At a minimum, such legisla-
tion would require developers to report information on construc-
tion and operating work force, land use, and likely environmental
impacts directly to local governments. The state could also re-
quire developers to ensure that adequate housing is available for
the expected work force. Requiring developers to provide impact
assistance is especially attractive because of its flexibility;
that is, specific measures can be tailored to meet the degree of
impacts of a particular technology at a particular site.
Although such siting requirements are not yet common in the
West, the Wyoming Industrial Development Information and Siting
Act of 1975 : is an example of this type of policy alternative.
The Wyoming Industrial Siting Authority conditions the approval
of siting permits for major energy and industrial facilities on
the mitigation of socioeconomic impacts. A well-known result of
this stipulation is the case in which Basin Electric Power Coop-
erative agreed to provide 1,900 homes, together with other impact
assistance, in return for permission to build a plant near Wheat-
land, Wyoming (see Chapter 8).
Wyoming Industrial Development Information and Siting Act,
Wyoming Statutes, §§ 35-502.75 through 35-502.94.
781
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(2) Water Use and Environmental Controls
States have direct control over allocation of state-owned
water resources. However, in exercising this control they are
constrained by the long and complex history of water resource
management, particularly the appropriation system, interstate ar-
rangements, and federal water projects. Water supply augmentation
options, such as impoundments, diversions, and transfers, are pri-
marily a federal responsibility because of their costs and inter-
state implications; however, recent proposals by the Carter Ad-
ministration would increase somewhat the state role in water sup-
ply projects by requiring state cost-sharing.
On environmental issues, the states are much more dependent
on the federal government, since federal regulations establish
strict and uniform standards in several areas, including: recla-
mation requirements; minimum air quality standards, Prevention of
Significant Deterioration (PSD) Standards, and air pollution emis-
sion limits; water quality and water discharge standards for mu-
nicipal and industrial users; and regulations regarding the dis-
posal of solid wastes. Nevertheless, states still have consider-
able power in environmental matters, including the authority to
impose stricter regulations and to establish regulations for prob-
lems either not covered or not covered adequately by federal laws.
Three policy approaches for states in this category are: improved
management of the state's water resources, strengthened environ-
mental programs, and increased regulatory flexibility and planning.
(a) Improve Water Use Management System
As indicated in Chapter 4, if states wish to provide adequate
water for all competing uses, their most effective choices are to
encourage water conservation in both energy resource development
and in agriculture. States can discourage certain water-intensive
energy conversion facilities, such as electric power plants, and
encourage the use of water-saving cooling technologies. For ex-
ample, as discussed in Chapter 4, the use of less water-consumptive
cooling systems can reduce water requirements by approximately 70
percent for both Lurgi gasification and steam-electric power gen-
eration.
Alternatives for encouraging conservation in irrigated agri-
culture include improving irrigation efficiency by requiring mech-
anical irrigation systems, encouraging less water-intensive crops
such as vegetables, improving water conveyance systems to reduce
evaporation, and eliminating or controlling nonproductive vegeta-
tion which consumes large amounts of water. While the potential
for agricultural water savings appears to be large, there is great
uncertainty regarding total water savings; and substantial economic
and other barriers would have to be overcome for these water-saving
measures to be implemented. For example, mechanical irrigation
782
-------
will increase production costs about $60-$150 per acre, which ap-
pears prohibitive for many farmers. Also, the irrigator risks
losing the rights to salvaged water.
Adopting these water conservation measures would mean chang-
ing existing institutions for making water decisions. Appropria-
tion systems are particularly threatened, since they characteris-
tically exert rigid controls over the use of water which act as
disincentives for conservation. In fact, several western states
have already made incremental changes in appropriation system in
order to account for broader definitions of the "beneficial use"
of water. However, more radical changes which allow for more com-
prehensive water resource management may be required to cope with
the increasing probability that not all water users can be accom-
modated. Making these changes will almost certainly increase
water-related conflicts in the region.
(b) Strengthen State Environmental Programs
Another area where states could take action is in developing
stronger programs to control the environmental impacts of energy
development not now adequately covered by existing state and fed-
eral laws and regulations. Several areas of need have been iden-
tified in previous chapters, including land rehabilitation for
surface mining, disposal of wastes, and mitigation of impacts of
increased unit train traffic.
State action on land rehabilitation is needed for two reasons,
Most importantly, the recent federal strip mine reclamation law l
covers only coal mining; and land reclamation laws in several
western states do not apply or are inadequate with regard to re-
sources other than coal (e.g., oil shale, uranium and geothermal),
Second, both the federal and state regulations governing waste
disposal may be inadequate for the western situation, especially
in the cases of spent shale and uranium mill tailings. Strong
state action in these areas now could preclude the need for fed-
eral action.
Another area where the states could take the lead is in re-
ducing the adverse impacts of coal unit train traffic. One pos-
sible strategy, elaborated in Chapter 11, is for states to estab-
lish a task force consisting of representatives of the railroad
companies and various levels of government. This task force would
undertake planning studies and establish priorities for measures
to mitigate existing or potential impacts. An example of this
type of state action is the Colorado coal train assessment funded
by the Four Corners Regional Commission (see Chapter 11). Since
the task force approach could be implemented by the executive
•'Surface Mining Control and Reclamation Act of 1977, Pub. L.
95-87, 91 Stat. 445.
783
-------
branch of state government no new legislation would be required.
The main constraint would be providing sufficient funds to imple-
ment the recommendations of the task force. New state or federal
funding programs would probably be required.
Finally, it should be noted that the state water conservation
policies discussed previously could, in addition to stretching ex-
isting supplies, substantially improve water quality, and help
protect instream flow values. In this sense, therefore, water
conservation options are also environmental protection measures.
In fact, as discussed in Chapter 5, controlling agricultural
sources appears to be one of the most effective water pollution
control measures available.
(c) Increased Regulatory Flexibility and Planning
Although the federal government, has assumed much of the au-
thority for environmental protection policies, in most cases the
states are responsible for implementation. For example, the fed-
eral government has set national ambient air quality standards,
but the states are responsible for developing state implementation
plans (SIP's) to achieve or maintain compliance with the standards.
Since states can set standards stricter than the federal standards,
they can use this flexibility to restrict energy development in
order to protect environmental values. However, there are several
policies which states could follow to give more flexibility in en-
vironmental regulations. These have been discussed in previous
chapters, including those dealing with air quality, land rehabil-
itation, and water quality.
For example, as discussed in Chapter 6, states could reserve
a portion of the PSD increment in some areas for energy facilities.
The goal would be to ensure that energy development is not blocked,
but that PSD standards are maintained. This approach could be im-
plemented by the SIP; however, federal approval might be required.
Another alternative discussed in the air policy area concerns
the siting of smaller, dispersed energy conversion facilities. By
siting smaller facilities over a wide area, ground-level air pol-
lution concentrations {and other environmental impacts in the vi-
cinity of the plant) would be reduced, thus relaxing constraints
on energy development due to air quality and other environmental
standards. 'However, this alternative can produce other positive
and negative effects. The mix will depend largely on many site-
specific factors. Thus, rather than requiring that this policy be
adopted, state utility commissions could at least require utili-
ties to consider the smaller facilities alternative in their plan-
ning. New York State has taken this approach (see Chapter 6).
784
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Water quality control offers another example of how states
can improve the regulatory system within the federally established
boundaries. States must meet federal salinity standards for the
Colorado River. Until recently they depended almost totally on
federal funds for meeting these standards. However, the states in
the Colorado River Basin have established the Colorado Salinity
Control Forum to develop mechanisms for meeting Environmental Pro-
tection Agency (EPA) standards. The Forum is the first attempt
by states to address water quality problems through a coordinated
decisionmaking process rather than by relying on traditional phys-
ical controls and construction projects. While the success of
this body is still undetermined, it could be a useful model for
state cooperation in other areas, such as water availability.
(3) Siting
A third category of state policy responses for dealing with
the consequences of western energy development is siting. In this
context siting refers to state laws either approving or influencing
the decisions developers make concerning the type of technology
and the location for new energy facilities. While all levels of
government are involved in some way in the siting process, states
exercise major controls on a day to day basis. Nevertheless, the
federal government may play a strong role in establishing general
siting guidelines and in encouraging certain actions on the part
of the states, as discussed in the federal section of this chapter.
As indicated in Table 13-3 two types of siting policy re-
sponses can be considered: undertake technology-site evaluations
and increase citizen participation in the siting process. How-
ever, it should be noted that because siting is such a comprehen-
sive category, several of the other alternatives already discussed
have to do with the siting process and thus could also be cross-
listed in this category (e.g., requiring industry impact assis-
tance and establishing energy parks). The primary objective of
the siting policies is to avoid or reduce impacts from energy de-
velopment, and also to minimize costly delays once major invest-
ments are made.
(a) Undertake Technology-Site Evaluations
As elaborated in Chapter 12, technology-site evaluations can
include a range of specific strategies, including elimination of
some sites from consideration, designation of appropriate sites,
elimination of certain technologies at given sites, and determin-
ation of the size, environmental controls, and/or socioeconomic
mitigation which would be required for particular technologies at
a given site. All are based on the exclusion of some areas from
energy development and represent an extension of zoning practices
785
-------
on a larger scale. North Dakota's Energy Conversion and Transmis-
sion Facility Siting Act l represents an example of designating
certain unacceptable locations. Under the provisions of this law,
energy facilities are excluded from state parks, areas where ani-
mal or plant species unique or rare to the state would be irre-
versibly damaged, prime farm land, and irrigated land. Other more
flexible methods would rely on site screening to evaluate each
technology-location configuration individually; for example, a
power plant utilizing wet cooling may be screened out of a par-
ticular area although less water-consumptive technologies might
be quite acceptable.
The determination of acceptable technology-site combinations
could be implemented by formal governmental regulatory and eco-
nomic policies, or it could be carried out in a more informal man-
ner, such as creating ad hoc siting task forces made up of repre-
sentatives of government agencies, industry, and other interest
groups. Such an approach has been utilized in .Utah to reach agree-
ment on acceptable areas for coal-fired power plants in the central
part of the state, thus avoiding the more scenic, southern part
which contains many national parks.
Although technology-site evaluation offers great potential
for clearly identifying those locations which will generate the
least harmful effects, there is a risk that too stringent and
rigid regulations or bureaucratic red tape could slow or block
the siting process. For this reason, state policies need to be
flexible. Thus it may be that an informal, ad hoc implementation
strategy would not only be the least costly but also 'the most ef-
fective approach.
(b) Increase Citizen Participation in Siting
Some state siting procedures do not inform parties-at-interest
of siting decisions until late in the process. This often leads
to delaying tactics being used to slow or block development.
States could implement a variety of programs to increase citizen
involvement, including improving notification procedures, estab-
lishing broadly-based advisory committees, creating review boards
for siting agencies, and funding intervenors.
However, it is not altogether clear that increased partici-
pation in the siting process by parties-at-interest can or even
should speed up the location of individual facilities. Indeed,
efforts to improve the citizen involvement may directly conflict
with the desires of policymakers to reduce the complexity of sit-
ing. That is, as more groups participate' and diverse interests
are expressed in the siting process, time and money costs of siting
aNorth Dakota Energy Conversion and Transmission Facility
Siting Act, North Dakota Century Code,, Chapter 49-22-10.
786
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may also increase. But if different values and interests can be
fully expressed early in the siting process developers may be as-
sured of greater certainty that siting decisions will not be re-
versed after they have been made.
13.3.4 Indians
Indian lands in the eight-state study area contain abundant
and accessible energy resources, particularly coal and uranium.
Thus Indians are important actors in energy policymaking as min-
eral owners. Further, Indians can significantly affect the devel-
opment of non-Indian resources.
In many respects, Indian tribes are similar to local and
state governments in terms of the problems they face, their re-
sponsibilities, and the responses they may pursue. However, the
trust relationship with the federal government also places Indian
tribes in a unique position in the political system, and their
responses to energy development will depend on how relationships
with public and private sector interests evolve and on their own
values regarding development and self-determination.
A. Impacts and Issues of Concern to Indian Tribes
Cultural and lifestyle issues are among the most critical
issues for Indians in regard to energy development. In fact,
some tribes have decided not to develop their resources rather
than to accept what they consider to be likely negative cultural
and lifestyle impacts. In other tribes, potential cultural and
lifestyle impacts have increased tensions among different segments
of tribes which often hold conflicting views toward energy devel-
opment.
If Indians do decide to develop energy resources within the
reservation, they will face most of the energy-related problems
and issues experienced by state and local governments. The most
serious problem areas are likely to be growth management—espe-
cially providing adequate housing, water and sewer facilities,
and public services--and land rehabilitation. Whether or not In-
dians allow development on their reservations, environmental is-
sues will be important to them. Among the most visible and con-
tentious of these issues is water rights, particularly Indian
claims to reserved water rights and the resolution of Indian rights
in state courts. Indian lands will also face air and water qual-
ity degradation from energy development.
B. Policy Responses
(1) Mineral Leasing
The most basic question Indians must answer is whether to en-
courage or discourage development. In this regard, Indians can
787
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influence mineral leasing arrangements, since both tribal approval
and concurrence by the Secretary of the Interior are required be-
fore Indian lands can be leased. Although the extent of Indian
control in this process seems to vary, the trend seems to be to
give tribal leaders more control, including allowing them to con-
sider joint ventures, production sharirg agreements, and other
legal arrangements with developers. 1
In fact, Indians have already been exercising this kind of
control, in some cases without approval of the Department of the
Interior (DOI). For example, the Jicarilla Apaches have success-
fully developed joint ventures in oil and gas resource development,
and other tribes have proposed agreements for variable rather than
fixed royalty rates, production sharing agreements, and service
contracts. Further, several tribes have either petitioned DOI
or filed suit against DOI to negate leases previously negotiated
because of alleged procedural irregularities or failure of the
Secretary of the Interior to uphold his trust responsibilities.
These cases are important as indications that Indians have
been gaining power to control their resources, and they also dem-
onstrate that mineral leasing arrangements provide Indians an op-
portunity to require developers to help mitigate the impacts of
development. For example, tribes can stipulate environmental pro-
tection measures, growth management assistance, and local Indian
employment as part of the lease arrangement. By imposing such
requirements, Indians take the same risk states take when they
place high costs on resource development through such measures as
high severance taxes; that is, developers may decide to develop
in less costly areas.
(2) Water and Air Resources
Indian tribes and energy developers on Indian lands must com-
ply with federal environmental statutes, including those regulat-
ing air quality, noise, water pollution, solid wastes, reclama-
tion and safe drinking water. In addition, other legislation
specifically addresses minerals development on Indian lands, in-
cluding preserving cultural, recreational, scenic, and ecological
values.2 Implementation of these regulations is the responsibil-
ity of the Bureau of Indian Affairs (BIA) superintendent. How-
ever, the role of Indians in setting and implementing environmen-
tal standards and regulations is still ambiguous, largely because
published proposed regulations to this effect in April
1977, 42 Fed. Reg. 18083-99 (April 5, 1977). However, as of
November 30, 1978, these regulations had not been finalized.
225 CFR 177.4 (1974).
788
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Indian tribes are often not explicitly identified in federal stat-
utes, l including statutes which call for implementation by state
governments and provide funding assistance to state and local gov-
ernments .
The current approach to environmental protection, particu-
larly EPA's federal-state-local approach to establishing and im-
plementing environmental protection regulations, increases the
difficulty which Indian tribes have in planning for, attracting,
or controlling energy development options. This is in part be-
cause Indian authority is often unclear but also because Indians,
like state governments, are largely dependent on developers and
the federal government. It also apparently adds to conflicts
among Indians and state governments, since each tends to fear the
other's environmental planning objectives.2 Indian responses are
also affected by the limited authority Indians have over non-Indian
activities on Indian lands. For example, Indian tribes have no
authority to enforce tribal laws on non-Indians on the reservation
without specific Congressional authority,3 and such authority does
not exist in present environmental laws.
In spite of these general limitations, Indians have been able
to influence water availability and air quality policies. Al-
though the full extent of Indian influence on water availability
in the West is still not clear, their potential influence is con-
siderable because of the reserved rights doctrine.4 Indians have
already claimed the right to substantial quantities of water in
the Colorado River Basin, and if these claims are granted or if
Indian water rights in general are quantified, development in the
Colorado River Basin could be restricted or Indians could gain
more control over development by controlling water supplies. Indi-
ans have also used air quality regulations to restrict development,
Indians are mentioned more frequently in recent environmen-
tal legislation: for example, the 1977 Clean Air Act specifically
establishes Indian authority in PSD redesignation procedures. See
Clean Air Act Amendments of 1977, Pub. L. 95-95, 91 Stat. 685.
2This thesis has been developed in: Schaller, David A. "An
Energy Policy for Indian Lands: Problems of Issues and Percep-
tion." Policy Studies Journal, Vol. 7 (Autumn 1978), pp. 40-49.
301iphant v. Suguamish Indian Tribe, U.S. , 98 S.C.t.
1011 (1978) .
** Re served rights recognize that when the U.S. establishes a
federal Indian Reservation, a sufficient quantity of unappropri-
ated water is reserved to accomplish the purposes for which the
land was reserved. The reservation doctrine has been affirmed in
court to hold that reserved rights are not subject to state appro-
priation laws. Refer to Chapter 4.2.2 for an elaboration.
789
-------
most notably in the case of the Northern Cheyenne's redesignation
of their reservation to Class I PSD status. This redesignation
contributed to EPA's decision not to approve the PSD permit for
Colstrip power plants 3 and 4. 1 Indians could also use PSD clas-
sifications to encourage development, by reclassifying to Class*
III.
(3) Growth Management
Although the external powers of Indians were terminated when
they entered a trust relationship with the federal government,
tribes still possess powers of se"lf-government, except as modified
by treaty or express provisions of federal legislation. These
powers include independence from state governments unless Congress
has expressly granted state authority.
Ironically, although this situation grants some degree of
authority to Indian tribes, it also serves to increase their de-
pendence on other governmental units or the priva,te sector since,
like local governments, Indian tribes generally do not have the
taxing powers necessary to respond adequately to growth management
problems. Thus, although tribes may receive substantial economic
benefits from development, they will usually require support from
the BIA, state governments, or developers, unless assistance has
been made part of the lease arrangement. As with local govern-
ments, assistance will be needed primarily for front-end money to
provide health care, water, sewers, and other public services.
Each of these potential responses by Indians to energy devel-
opment raises more fundamental questions regarding Indian(values
and the role of the federal government in Indian affairs,. Consid-
erable diversity appears to exist among Indian tribes regarding
the attractiveness of development and the relative advantages of
self-determination compared to the protection of the trust rela-
tionship. For most tribes, complete isolation is not an option.
Rather, when faced with the question of whether to develop their
energy resources, the choice is not whether tribal members will
be exposed to different cultures and lifestyles, but whether to
increase existing exposure. If they choose to intensify their
exposure, current trends suggest they can realize many economic
benefits from development, yet will also be dependent on other
policymakers for growth management assistance and environmental
protection. Further, increased Indian participation in energy
policymaking will probably make traditional federal-Indian rela-
tionships obsolete in the sense that, the BIA will be incapable of
protecting and deciding what is best, for Indians.
3This case is currently under appeal by Montana Power Company,
which argues that a PSD permit is not required since units 3 and
4 were under construction prior to the redesignation. Refer to
Chapter 6.2.
790
-------
13.3.5 Federal Responses
Federal policymakers are likely to have the broadest respon-
sibility for dealing with the consequences of western energy re-
source development. Pressures for federal responsibility, which
in general have been increasing, originate from many sources, but
include primarily the following:
• Environmental problems have steadily come under national
control during the past two decades. Federal agencies
now have primary authority in formulating air quality,
water quality, waste disposal, and reclamation policy.
• The National Energy Plan's1 emphasis on development of
domestic resources and the fact that western energy will
be used primarily to meet energy demands outside the
West suggest that solutions for problems caused by de-
velopment will have to be national in scope. Further,
conflicts about the equitable distribution of costs
and benefits of development among various regions will
create pressures for federal intervention.
• Several potential problems appear to be beyond the ca-
pacity of other levels of government, either because
financial resources are inadequate or because federal
laws and regulations prevent other levels from assum-
ing control,
• The federal government owns about 35 percent of the
total land area in the eight states and substantial
percentages of the energy resources, including about
half of the coal, uranium, and geothermal and about
80 percent of the oil shale resources.
Although the federal government can intervene in many policy
areas, oo/nprehonsive national control of problems associated with
western development is limited by several factors, especially the
fragmented nature of the federal energy policymaking system (see
Chapter 1), Also, a limited role is consistent with the explicit
desire of the Congress to restrict federal involvement in some
areas of energy policymaking. For example, although the federal
government has assumed primary responsibility for environmental
or','"rt ion, major air and water quality legislation expressly
:The National Energy Plan is a 5-part energy legislation
package including the following parts: Utility Regulatory Poli-
cies Act, Pub. L. 95-617, 92 Stat. 3117? Energy Tax Act, Pub. L.
95-618, 92 Stat. 3174; National Energy Conservation Policy Act,
Pub. L. 95-619, 92 Stat. 3206; Powerplant and Industrial Fuel Use
Act, Pub. L. 95-620, 92 Stat. 3289; Natural Gas Policy Act, Pub.
L. 95-621, 92 Stat. 3350.
791
-------
reserves to the states primary planning, implementation, and en-
forcement responsibility. 1 Another limiting factor is increased
demands by western states for control over their own futures. As
discussed in Chapter 2, these demands have been particularly strong
regarding water resource management and reclamation. Hence, it
may be difficult for the federal government to respond to needs
perceived to be primarily regional or local. Further, federal
assistance and expertise are limited. In an era of increasing
concern about tax levels, inflation, balanced budgets, and the
appropriateness of federal as opposed to state and local respon-
sibility, comprehensive federal management of western energy de-
velopment will be politically and economically controversial.
A. Consequences of Energy Development at the Federal Level
Although every problem area discussed in this report has na-
tional implications, environmental quality and water availability
rank high among the problem areas most likely to continue to at-
tract the attention of the federal government. Our analysis sug-
gests that the following are among the most critical of these un-
resolved problems which will require action at the federal level :
Air Quality
/
• Best Available Control Technology (BACT) requirements
could sharply reduce the demand for western coal, and
rigid regulations to define BACT would ignore the im-
portance of locational factors in determining* air qual-
ity problems;
• Emissions offset policies allow development in some
areas of the country which already violate ambient
air quality standards, while PSD policies can con-
strain economic development in the West;
• Ambient concentrations of pollutants from energy re-
lated population increases will often exceed those of
energy facilities, yet local areas have virtually no
control over these urban sources of pollution.
Water Quality
• Few western communities will be able to afford the
costs either of upgrading treatment capacities to meet
the demands of an increased population or of installing
an elaboration of the federal-state relationship in air
and water quality, see Jones, Charles 0. "Local-State-Federal
Sharing in Air Quality Control." Publius , Vol. 4 (Winter 1974);
and Lieber, Harvey. Federalism and Clean Water. Lexington, Mass
Lexington, 1975.
792
-------
secondary and tertiary treatment required by the
Federal Water Pollution Control Act (FWPCA);
• Salinity problems will continue in part due to agri-
cultural run-off, but also because of increased water
use for energy and municipalities. Most salinity con-
trol alternatives are expensive and thus may require
federal subsidies or support.
Reclamation
• The potential success of revegetation is uncertain in
all areas of the West, but particularly in the arid
Southwest. Current federal policies have tended to
limit state authority and have restricted available
options, such as redevelopment, for returning land
to productive uses.
Water Availability
• Although water availability will continue to be a
problem of state and regional concern, the implica-
tions of water shortages will also increasingly in-
fluence federal policies. Shortages will exacerbate
environmental problems such as instream values and
preservation of wilderness areas; are directly related
to salinity control problems; and threaten western en-
ergy resource development and agricultural production.
In addition to these categories of problems, growth manage-
ment and housing issues discussed above, as well as transportation
and capital availability problems are likely to require response
by the federal government. Federal policies may be required to
help energy impacted areas meet the capital cost requirement of
new facilities, to ensure that the capital necessary for new home
construction is available, to reduce the economic risks associated
with building large energy development facilities, and to encour-
age and control the expansion of transportation capacities to move
energy materials and products from the West to other regions.
B. Policy Responses at the Federal Level
Table 13-4 summarizes federal policy alternatives for respond-
ing to the problems of western energy resource development. What
follows is not intended to repeat material from Chapters 4-12,
but rather to address more generally the federal role in three im-
portant areas of concern: (1) financial and technical assistance
to other levels of government; (2) policies to encourage either
the exportation of coal or mine-mouth conversion; and (3) the fed-
eral role in setting standards and regulations.
793
-------
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(1) Financial and Technical Assistance
As shown in Table 13-4, federal policymakers have several al-
ternatives for providing financial and technical assistance to the
western region. Three categories of these alternatives are dis-
cussed below: assistance to impacted communities and to citizen
groups; research, development, and demonstration (RD&D) programs;
and financial programs to enhance water resource management. Most
of these alternatives increase the capacity of other policymakers
and jurisdictional units to solve their own problems, and generally
require federal action either because of the size of the financial
commitment needed, or because enactment of the alternative would
be beyond the authority of other levels of government or private
sector decisionmakers .
(a) Assistance to Impacted Communities and Citizen Groups
The federal government already has a number of impact assis-
tance programs, including sharing royalties and other revenue from
development on federal lands with states and localities, l a vari-
ety of loan programs,2 and assistance programs targeted for spe-
cific impacts. 3 However, very little about these approaches is
beneficial to western communities impacted by energy development
largely because they are not directed towards small communities
or because they don't pi'ovide enough assistance soon enough.
Alternatives to provide more direct assistance to western
boomtowns include:
* Funds targeted to specific problem areas, particularly
wastewater treatment and street construction, which go
directly to impacted communities, rather than through
states ;
_^ssjLj_tanc_e_ channeled directly to impacted
^.. ____
communities, which could be used at the discretion of
town governments to provide planning, services, and fa-
cilities ;
TThese include the Public Lands-Local Government Funds Act,
Pub. L. 94-565, 90 Stat. 2662, 31 U.S.C. 1601 ejt_s_eq. ; the In
Lieu of Tax Payment Act, and the ELM Organic Act.
20ne of the more significant of these was the proposed En-
ergy Impact Assistance Act of 1978, S. 1493 (Hart-Randolph Bill)
3Such as the Coastal Zone Management Act of 1972, Pub. L.
92-583, 86 Stat. 1280.
795
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0 Assistance to private sector lenders and builders in
order to increase the supply and mix of housing op-
portunities (apartments, homes, and townhouses).
Our evaluation of these alternatives indicates they could re-
duce many of the problems experienced by most energy development
areas. However, they will probably not be successful if they are
administered as the past federal efforts at impact assistance have
been. Successful use of impact assistance requires front-end money
before large population increases occur, programs which are spe-
cifically targeted to impacted communities rather than counties
or school districts, and local administration of grants so that
each impacted community can respond to its own particular problems
and needs. Implementing these alternatives to meet these require-
ments appears to face two serious constraints. First, better meth-
ods of anticipating impacts and identifying impacted communities
will be required, hence, the success of impact assistance may de-
pend on better technical assistance, particularly improved infor-
mation systems. Second, intergovernmental jurisdictional problems,
particularly federal-local-state coordination bottlenecks, will
have to be resolved.
A pervasive problem for local governments and citizens'
groups in trying to respond to energy-related problems is inade-
quate? and untimely information about where, when, find at what
scale development will proceed. Further, since so many local gov-
ernments impacted by western energy resource development have lit-
tle or no planning capacities or past experience in dealing with
energy development, policy responses which attempt to creat bet-
ter, up-to-date information systems also need to provide assistance
in using the information. These two considerations were included
in the unsuccessful Energy Impact Assistance Act of 1978 1 (the
"Hart-Pandolph Bill"). This bill would have provided impact as-
sistance teams composed of federal, state, and local officials
which would assess likely impacts of energy facilities and iden-
tify sources of assistance. Teams would also prepare a mitigation
plan for dealing with immediate impacts and procedures for estab-
lishing a continuing planning capability. Other proposals have
suggested that information and technical expertise be provided to
citizen groups in order to improve the quality of participation in
siting decisions. Since expertise about development technologies
is increasingly a requisite for effective citizen involvement in
energy policy, technical assistance could include attorney fees,
expert witness fees, and other reasonable costs of developing tech-
nically competent response capabilities by citizen groups.
Technical assistance is not solely a federal responsibility--
indeed states and energy developers can do much to alleviate finan-
cial, informational, and planning difficulties. However, federal
Energy Impact Assistance Act of 1978, S. 1493 (Hart-Randolph
Bi 11),
796
-------
activity would appear to be most effective in improving the qual-
ity of information about development and improving the capacity of
other policymakers to use information and obtain financial assis-
tance to cope with development problems. It is clear that local
areas want local people for these kinds of jobs, largely because
planning for energy-related impacts is inherently a political
process which helps to determine the distribution of costs and
benefits of development. Thus, alternatives which provide "out-
side" experts to local areas—whether they be federal, state, or
from other areas within the same state--are not likely to be suc-
cessful. And, even alternatives which try to mix federal, state,
and local teams, such as the proposed Hart-Randolph Bill, l are
less likely to succeed than options which allow local governments
to improve, but ultimately control, their own planning and response
abilities.
Regarding technical assistance to citizen groups, improving
the information base for various interest groups, while perhaps
valuable in increasing the equity of participation, is also likely
to delay the siting process. Although there is little direct
experience to draw from, the recent history of conflict between
environmental interests and energy developers suggests that equit-
able and more informed participation would not necessarily contrib-
ute to consensus or compromise about how and where development
should proceed. Instead, it may serve to polarize various view-
points even further. Thus, the attitudes and behavior of various
participants will ultimately determine the success of these policy
responses. The biggest question appears to be how to select a
few groups to fund or assist from among many competing interests,
and funding itself may artifically increase the number of partici-
pants and thus the complexity and uncertainty of siting processes.
(b) RD&D Programs for New Technologies
Although energy developers can be expected to increase in-
vestments in RD&D this option is probably one of the most impor-
tant long-term strategies that can be pursued by the federal gov-
ernment. Joint federal, industry, and state funding for RD&D
could improve both energy production and conversion systems and
specific environmental control technologies for those energy re-
sources and environmental problems which are important for the
West.
Several energy production and conversion technologies con-
sidered in this study have some attractive features but are not
yet commercially viable. For example, coal synfuels appear to be
less problematic than electric power plants regarding the two big-
gest constraints on western energy development, air quality and
water availability. Commercial scale demonstration programs could
^Energy Impact Assistance Act of 1978, S. 1493 (Hart-Randolph
Bill) .
797
-------
be directed at coal synfuels, oil shale, and geothermal resources,
and since the costs of such demonstration projects can be quite
large (e.g., $1 billion for a coal synfuel plant) federal partici-
pation is probably required. Regarding environmental control tech-
nologies, the most important for minimizing impacts of western en-
ergy development are technologies for: reducing air pollution
(e.g., improved flue gas desulfurization systems, fluidized beds
and coal cleaning); minimizing land impacts (e.g., improved recla-
mation methods in arid climates); and minimizing water quality
threats (e.g., low cost methods for treating municipal wastewater,
such as land applications).
These alternatives are long-term in nature and provide no
certain solutions. However, the benefits would be to reduce un-
certainties about energy hardware and its impact on the social,
economic, physical, and ecological environment, and to provide
more options for increasing energy supply. The major constraint
is the large financial outlays required by the federal government
and other participants including private industry and possibly
states.
(c) Financial Programs to Enhance Water Resource Management
There appear to be no uniform or region-wide strategies for
dealing with water resource management problems, and western
states, local governments, interstate commissions, and parties-at-
interest will ultimately have to decide how most of the region's
scarce resources should be used and how rights should be allocated,
However, it is almost certain that western policymakers will re-
quire federal support, including financial aid, regulatory incen-
tives, and cooperative help to manage water resources adequately.
Regarding water quality, impacted communities are; almost to-
tally dependent on federal funds to construct adequate wastewater
treatment facilities. However, previous federal attempts to ad-
dress municipal wastewater treatment through multibillion dollar
public works programs funnelled through state governments have
been largely unsuccessful, both in getting funds to municipalities
and in accomplishing desired water quality improvements. Unless
federal policymakers are willing to establish new programs specif-
ically directed at energy boomtowns, the current regulatory struc-
ture is more of a hindrance than a help to impact mitigation since
it establishes very strict requirements without providing the nec-
essary assistance for meeting the requirements. An alternative
federal response is to allow variances in either the goals or the
technologies for meeting the goals of wastewater treatment for en-
ergy impacted communities.
In dealing with salinity in the UCRB, the two most effective
alternatives are desalination plants and controlling runoff from
irrigated agriculture, both of which are likely to require federal
money because of construction costs of the technologies involved.
798
-------
Costs are particularly high for desalination plants (approximately
$250 million per plant). If policymakers require technologies to
improve irrigation efficiency, many western farmers will be incap-
able of absorbing construction costs without substantial financial
help.
The federal role in water availability issues will depend in
large part on how much water augmentation is feasible. If policy-
makers choose to augment supplies through diversions and transfers,
weather modification, or vegetation management, a direct federal
role either in funding or providing the necessary regulatory struc-
ture will be required. If policymakers choose to emphasize con-
servation rather than augmentation by minimizing water consumed in
energy resource development, in irrigated agriculture, or in muni-
cipal use, the federal role would shift away from direct program-
matic and financial support to providing economic and regulatory
incentives for various water users to conserve. For example, eco-
nomic incentives could be provided to encourage water-saving cool-
ing technologies, guarantees could be provided to farmers for crop
switching because of the high risk associated with marketing water-
conserving vegetable crops, and federal grants could be withheld
from municipalities which do not attain minimum conservation lev-
els .
(2) Coal Export v. Mine-Mouth Conversion
As discussed above in the section on state level responses,
several alternatives exist for improving the site selection pro-
cess. Although this process is largely a state-level function,
the federal government can play a significant role to improve this
process, including policies to encourage more cooperative siting
procedures to control land use on federal and public lands, and
to improve the access to policymaking on siting (see Table 13-4).
A more fundamental alternative regarding site-selection is
for the federal government to encourage the export ("strip and
ship") of coal rather than mine-mouth conversion. l This alterna-
tive is apparently being taken seriously by many policymakers and
parties-at-interest, primarily on the grounds that export would
minimize many of the environmental (particularly air and water
quality) and growth management problems likely to occur with mine-
mouth conversion. However, our analysis of the trade-offs asso-
ciated with this alternative suggest that it could be extremely
difficult to accomplish and, more importantly, generally ineffec-
tive in the sense of balancing economic, energy, and environmental
goals nationwide.
Exporting oil shale, geothermal resources, and uranium with-
out some on-site processing and/or conversion, is generally in-
feasible.
799
-------
One major consideration is the trade-off between the environ-
mental consequences o'f an export policy and the economic costs to
the western states. Many of the revenue advantages of on-site
conversion would be exported along with the resources. Although
state governments could still benefit from extraction and sever-
ance taxes, localities would receive few of the economic benefits
expected from mine-mouth conversion. Additionally, on-site con-
version is sometimes less expensive than export for conversion at
a load center outside the region; thus, export could increase en-
ergy costs ultimately borne by the consumer.
Exporting coal also raises questions about the environmental
and health risks associated with load-center conversion. The most
serious risks appear to be associated with air quality, because
many more people would be affected at load centers than if re-
sources were converted in the West. If load center conversion in-
creases ambient air concentrations up to the level of current stan-
dards, this policy option could increase human health risks in
other regions in order to minimize growth management, housing, and
environmental problems such as PSD in the West. If load center
conversion had to be increased in nonattainment areas because of
this policy, economic costs would be further increased to meet
EPA's emissions off-set policy.
Coal export does not appear to be a realistic comprehensive
regional strategy for dealing with the problems of energy develop-
ment in the West, in part because of these economic costs and en-
vironmental risks and because of the general constraints on com-
prehensive federal action identified above. That is, problems
which are avoided in the West will often arise elsewhere. Coal
export also appears to be unrealistic as a comprehensive policy
because of the diversity of values and interests associated with
western energy development. As has been shown throughout this
report, perceptions about how much and where development will oc-
cur, what kinds of controls and constraints should be placed on
it, and how serious the costs and risks are, vary dramatically
among various levels of government, from agency to agency, within
particular departments, across geographic areas, and among various
parties-at-interest. Taken together, these factors suggest coal
export is probably not an option for the region as a whole, but
may be a strategy pursued by particular interests for particular
areas. Hence, developers may choose to export resources in some
areas rather than pay the costs of strict environmental controls;
or some states may effectively eliminate mine-mouth conversion in
some areas because of water scarcity, for example.
(3) Environmental Standards and Regulations
Two general patterns emerge from our analysis regarding the
future federal role in the development of environmental standards
and regulations (see Table 13-4). First, resource development in
the West will create several potentieil environmental and natural
800
-------
resource problems which are currently uncontrolled or inadequately
controlled. Second, the typical response of federal regulators
to establish uniform standards must be questioned as an appropri-
ate strategy for achieving environmental goals, particularly re-
garding environmental quality in the western region. Each of
these is discussed below.
(a) Regulate Emerging Threats to Natural Resources
As noted above, energy resource development will create or
add to several environmental and natural resource problems. The
most serious of these, which may require new or expanded federal
standards or regulatory policies, include long-range transport of
air pollutants and control of pollution from holding ponds. 1
Long-range transport of sulfates and fine particulates could
extend pollution problems over considerable distances from energy
facilities, and air quality outside the eight-state study region
could be adversely affected. Although the extent to which long-
range transport could occur is not known, regulation to control
air pollution problems across political jurisdictions will add to
intergovernmental and economic conflicts over air quality control.
This is particularly likely if pollution originating from one area
restricts development in another, for example, by contributing to
an area's nonattainment status; or if pollution in one state con-
tributes to PSD violations in another. For example, this could
apparently be the case as air pollution from Utah is transported
to Colorado.
Control of pollution from holding ponds is not necessarily
an area solely left to federal regulation—indeed states can reg-
ulate the design, construction, maintenance, and monitoring of
holding ponds to reduce the probability of berm failure or seep-
age of pollutants. However, three factors suggest federal inter-
vention may be required. First, western states in general have
not directly regulated the safety of holding ponds, although some
state guidelines and direct regulations of water contamination do
exist. Second, the use of ponds could dramatically increase as
scrubbers are used to meet federal BACT requirements and, thus,
result in increased sludge which must be disposed of. Third, the.
FWPCA contributes to the economic incentives leading to the use
of ponds in the first place, since it is cheaper for developers
to discharge wastes into ponds than to treat the effluents to the
degree necessary to meet the discharge requirements of the FWPCA.
*New standards may also be required to limit concentrations
of pollutants such as sulfates and to protect visibility. See
Chapter 6 for an elaboration of these problems.
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Federal control of holding ponds could be accomplished either
through the FWPCA : and Clean Water Act (1977),2 since discharges
from ponds pose a threat to surface waters and ponds could be de-
fined as a point source, or the Resource Conservation and Recovery
Act (1976),3 which provides for a nationwide system for managing
hazardous waste. Since discharges to holding ponds almost cer-
tainly contain heavy metals and may contain trace quantities of
toxic substances, these discharges appear to fall within the scope
of "hazardous materials." Whichever regulatory apparcitus is used
to control these materials, several potentially effective alter-
natives exist, including:
• Requirements for ponds to be lined with the best avail-
able materials to reduce chances of seepage;
• Requirements for pond design which minimize chances of
berm failure or of pollutants being washed out by flash
floods;
• Requirements for pond monitoring and use of penalties
for pond failure;
• Requirements for pretreatment of effluents before they
are discharged into ponds.
(b) Increase the Flexibility of Standards
The federal response to environmental controls has generally
been to set uniform standards. This has been true in a variety
of policy areas, including reclamation, air quality, water qual-
ity and others; and has been justified on the grounds that the
standards identify 'minimum pollution levels acceptable to human
health and welfare (e.g., ambient air quality standards) or that
the standards establish minimal conditions of acceptable environ-
mental quality (e.g., reclamation). In most of the legislation
establishing these standards, concern was expressed regarding the
inability or unwillingness of other levels of government or the
private sector to control adequately the particular problem; and
air quality and water quality legislation adopted since 1970 has
been, in large part, the result of a 10 to 15 year history of
state inactivity in protecting the environment.
'•Federal Water Pollution Control Act Amendments of 1972, Pub.
L. 92-500, 86 Stat. 816.
2Clean Water Act of 1977, Pub. L. 95-217, 91 Stat. 1566.
3Resource Conservation and Recovery Act of 1976, Pub. L.
94-580, 90 Stat. 2795.
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Much of this body of environmental protection legislation has
been valuable and successful, and leaving intact, if not strength-
ening, much of the existing regulatory structure seems to be jus-
tified. However, as more is learned about the impacts of western
resource development on the environment, it becomes clearer that
uniform, mandatory requirements may not be the best approach to
environmental problems.
The issue which best illustrates the problem of uniform reg-
ulation is reclamation. The success of reclamation will depend,
in large part, on several locational factors which vary consider-
ably across the eight-state region, including climate, soil, top-
ography, and existing biological communities; but the most impor-
tant is rainfall and, particularly, seasonal distribution of rain-
fall. Since most of the region is arid or semiarid, the success
of reclamation (i.e., returning lands to their predevelopment use)
is uncertain in most areas and will be particularly difficult in
Arizona, New Mexico, and southern Utah, and will probably require
long-term commitments to irrigation in an area already facing se-
rious water availability problems.
Knowledge of these locational variations challenges existing
federal regulatory structure, specifically the 1977 Surface Mine
Reclamation Act, l which has removed state flexibility in respond-
ing to reclamation questions by establishing a blanket policy of
returning disturbed lands to their predevelopment use. Our anal-
ysis of one alternative to this policy, redevelopment (i.e., re-
turning lands to some other beneficial use, such as parks) , does
not suggest that either of these two general choices is the sin-
gle best option. In fact, both choices appear to be limited or
impractical in many areas. However, it does suggest that other
choices, such as the established need for expanded recreational
opportunities for energy related population increases, should be
seriously considered as alternatives to reclamation, particularly
in areas where reclamation will be difficult, expensive, and its
success questionable. , This does not suggest that the negative
effects of surface mining should not be regulated. It does sug-
gest the need for a more flexible policy which allows local deter-
mination of needs and provides for choices among reclamation, re-
development, or other alternatives.
In addition to reclamation, similar questions about uniform
policy responses can be raised in at least three other areas:
* Requirements for 85percent sulfur dioxide (SO2) removal;
although a final EPA decision has not been made at the
time of this writing, EPA apparently favors this uniform
BACT requirement, rather than a sliding scale which allows
Surface Mining Control and Reclamation Act of 1977, Pub. L.
95-87, 91 Stat. 445.
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a lower percentage removal for low sulfur coal use.
Considerable uncertainty exists about both the costs
and benefits of this proposal, particularly regarding
how much energy production costs will increase and
whether or not this policy will reduce S02 emissions
more or less than a sliding scale would. This policy
would appear to limit the development of new control
technologies, decrease power plant efficiency, cause
a large increase in waste disposal problems, and in-
crease water consumption.
• Background pollutant levels: in some areas of the West,
background pollutant levels of particulates, hydrocar-
bons and ozone which apparently originate from natural
sources, have been measured at or above federal stan-
dards. For example, total suspended particulates are
largely due to wind-blown dust composed of large
particle-sized inorganic materials not considered a
health hazard by EPA. These background levels could
restrict energy development unless regulations take
them into account.
* Water conservation; pressures will increase for man-
datory conservation by water users, particularly for
energy developers. However, uniform requirements,
for example, for "best available conservation prac-
tices," would ignore critical locational variables,
such as water availability and cost. Thus, more.
flexible choices such as water ceilings or sliding
pricing systems, should be considered.
Pointing out areas where uniform regulatory approaches may
be inappropriate does not suggest that these critical areas of en-
vironmental control should not be regulated. Rather, it suggests
that the regulatory structure should be flexible enough to accom-
modate locational circumstances. This need will challenge imple-
mentation procedures of both federal and state governments. Fur-
ther, flexible policy responses inevitably raise questions about
how equitably costs and benefits of development will be distrib-
uted. There are no simple answers to this question, because many
policymakers view standardized policies which apply the same reg-
ulation across all circumstances to be fair and equitable, while
others define equity in terms of freedom from bias or favoritism.
However, it does seem relatively clear that uniform standards and
regulations do not necessarily lead to the most effective and ef-
ficient choices in controlling environmental problems.
13.3.6 Energy Developers
This section focuses on the role of energy developers, which
includes corporations such as coal and oil companies and regulated
gas and electrical utilities. Energy developers have the direct
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authority and responsibility for initiating energy development
plans. They will decide, for example, whether to "strip and ship"
coal or to convert it at the mine-mouth to electricity or syn-
thetic fuels; whether to use conventional or solution mining of
uranium; and whether to build commercial scale oil shale produc-
tion facilities. The principal criterion for making such choices
will be economics. The limitations which economic factors place
on decisions made by energy developers will depend on the nature
of the market, the degree to which the company is regulated eco-
nomically-, the costs to comply with government laws and regula-
tions, and the degree of support and/or opposition from various
interest groups. For these reasons energy developers increasingly
are forced to depend on others who have a stake in the system.
A. Consequences of Concern to Developers
The most obvious consequence of western energy development
for the energy industry is the opportunity for profitable invest-
ments. Between 1975 and 2000, for our Low Demand case, l energy
extraction, conversion, and energy transportation facilities in
the eight-state study area could require an estimated investment
of more than $100 billion (in 1975 dollars) (see Chapter 10). In-
vesting such a large sum should provide substantial economic ben-
efits for the region, for the nation, and for the companies in-
volved .
However, in estimating economic benefits of development op-
portunities, energy developers must also be concerned with the
variety of problems and issues which such development creates.
For example, siting requirements, environmental constraints, and
possible adversary actions are some of the consequences which will
directly affect the decisions of developers, either by increasing
the cost of producing the energy, or by increasing uncertainty
about where and how to proceed with energy development.
Uncertainty about energy development plans beyond the con-
trol of the company also has economic implications. The situa-
tion surrounding the construction of two additional electric power
generation units at Coi.strip, Montana, by Montana Power Company
(Colstrip Units 3 and 4) illustrates these uncertainties (see
Chapter 6). As a result of the redesignation of the Northern
Cheyenne reservation to Class I PSD and subsequent EPA require-
ments followed by litigation, the two power units have been de-
layed at least 18 months. Inflation of plant construction costs
(costs have probably risen at least 10 percent per year during
this period) will increase electricity costs which will ultimately
be passed on to consumers.
Recall that our Low Demand tax scenario calls for a national
energy production level of 124.0 Q, with contribution of 42.6 Q
from the eight-state study area (see Chapter 2) .
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Other consequences of energy development problems may be less
direct but are nevertheless important concerns to western energy
developers. For example, the "boomtowri" conditions that result
from rapid population growth in small western communities mean a
substantially lower quality-of-life for the residents; inadequate
medical care, housing, and recreational facilities are probable
results. All of these factors can result in worker dissatisfac-
tion, leading both to lowered productivity and high worker turn-
over rates. For these reasons, it can be in the long-term interest
of developers to take actions which minimize these problems, even
though short-term costs may be increased.
B. Policy Alternatives for Energy Developers
Since energy developers are the prime movers in western en-
ergy development activities, they have the greatest opportunity
to deal with the problems and issues created. As discussed above,
their willingness and ability to act is often limited by practical
economic considerations and regulatory uncertainties. Thus, in
many cases government regulations (e.g., emission standards), or
financial incentives (e.g., investment tax credits for pollution
control equipment) will be required in order to achieve the de-
sired responses on the part of energy developers.
Nevertheless, in many cases industry might adopt policy re-
sponses aimed at avoiding the conflicts which result in long,
costly delays in the start of construction. While some of these
policies might appear to increase project costs, the shorter time
between planning and start-up may in the long run prove to be more
economical. These responses can be categorized as: technological
fixes, site selection, and socioeconomic impact mitigation. Pol-
icy responses within each of these categories are listed in Table
13-5.
(1) Technological Fix
As discussed in the federal section, a potentially effective
policy response is RD&D programs aimed at technologies for pro-
ducing and converting western energy resources which would avoid
many of the problems created by present day processes. While in-
dustry might undertake these RD&D programs without government
participation, the high cost and risk (especially for commercial-
scale demonstrations) are beyond the capacity of all but the larg-
est companies. Joint efforts by government and industry will
probably be required for financial reasons; but they also have
the additional advantage of giving credibility to the environmen-
tal studies done during the development program.
A second type of technological fix response is for energy
developers to adopt "best practicable technologies" (BPT) in some
situations, even if that technology is neither required by current
regulations nor the lowest cost option. An example would be
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TABLE 13-5: POLICY ALTERNATIVES FOR ENERGY DEVELOPERS
CATEGORY OF RESPONSE
Technological fix
Site selection
Social and economic
impact mitigation
TYPE OF POLICY
Increased RD&D pro-
grams
Adoption of BPT
Construction of
smaller, dispersed
energy facilities
Consultation among
industry and other
parties to identify
"acceptable" sites
Early announcement
of project plans
by developers
Industry impact
assistance
Reduce peak popula-
tion influxes
CHAPTER REFERENCE
Ch. 6.3
Ch. 4.3
Ch. 6.3
Ch. 6.3 and
Ch. 12.3
Ch. 9.3.2
Ch. 8.3 and
Ch. 9.3
Ch. 8.3
RD&D = research, development, and demonstration
BPT = best practicable technology
water-saving cooling technologies for coal conversion facilities.
Water availability is one of the key problems associated with
western energy development, especially in the UCRB, and most of
the water required for the energy conversion technologies studied
is for cooling. However, if water-saving cooling technologies
are used, water requirements can be reduced about 60 to 90 percent
for power plants and about 40 to 95 percent for coal synthetic
fuel plants. It is true that in most areas in the eight-state
study area, the price of water is low enough so that it is not
economically attractive to use these water conserving technologies,
However, if they were employed, opposition to energy development
from agricultural, environmental, and other interests might de-
cline, and a higher overall level of energy development with a
given amount of water could be possible.
A similar example of BPT is improved holding pond designs
for the disposal of wastes. Once again decisions which are "eco-
nomically optimum" for that particular facility or company at a
particular time, may not be the best strategy when examining the
total picture over the longer term. By adopting a BPT viewpoint,
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the energy industry might substantially reduce many of the prob-
lems and issues before they become barriers to development.
(2) Site Selection
Energy developers may also use the site selection process to
reduce impacts. One alternative in this category, discussed in
Chapter 6, is to construct smaller, dispersed energy conversion
facilities rather than the more typical, large one. Although
this response has been discussed in terms of meeting siting re-
quirements by reducing air quality problems, several other pos-
sible advantages could occur, including reduced water consumption
at the site, fewer social and economic impacts due to a smaller
construction work force, and increased flexibility in siting.
However, environmental and economic costs and benefits of this
alternative will depend on many site-specific factors and thus,
it is not possible to draw general conclusions. Nevertheless, be-
cause the smaller, dispersed facilities option could offer means
of surmounting energy development barriers in some situations, in-
dustry should consider this alternative in its planning and site
selection process.
A second type of response in the site selection category is
for energy developers to cooperate and coordinate with governmen-
tal agencies and parties-at-interest in order to reach a consensus
on sites acceptable for energy facilities. The goal could be to
avoid the most problematic sites, thus avoiding expensive and de-
bilitating court suits and construction delay, as happened with
the now defunct Kaiparowits project. An example of this approach
is the ad hoc siting task force established in Utah. (This ex-
ample is discussed in the section on state responses in this chap-
ter, and is discussed in more detail in Chapter 6.)
(3) Social and Economic Impact Mitigation
Energy developers can respond in several ways to mitigate
social and economic impacts. As evaluated in Chapters 8 (Hous-
ing) , 9 (Growth Management), and 12 (Energy Facility Siting),
these alternatives include early announcement of project plans,
direct impact assistance, and policies to reduce peak population
influx during construction.
Boomtown problems are often magnified because local govern-
ment officials are simply not given advanced warning of new pro-
jects and therefore have little- time to plan for rapid growth.
In most cases, energy developers could alleviate many of the re-
sulting problems with very little cost, simply by providing local
officials with estimates of personnel requirements and other im-
portant impacts factors, such as tax benefits. Beca\ise industry
plans often change in response to government regulations and bu-
reaucratic red tape, as well as their own choices, both developers
and local governments will want to account for these uncertainties
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so as not to make large investments until the project plans are
finalized. However, these uncertainties do not preclude coopera-
tive industry/local government arrangements to plan for housing,
retail services, sewage treatment facilities, and other "people"
needs.
In addition to supplying planning information as early as
possible, industry can respond more directly by providing housing
and other needs for its workers. There are several examples of
industry responding in this way, including ARCO's mobile home park
near its Black Thunder Mine in Wyoming, the "new town" built by
Montana Power Company at Colstrip, Montana, and several instances
where companies have been willing to provide guarantees to home
builders for a certain number of new homes (see Chapter 8). In-
dustry could also provide for some of the infrastructure needs by
prepaying property taxes, but this approach is presently discour-
aged by Internal Revenue Service rules which do not allow for the
full deduction in the year in which the payment is made.
Reducing peak population influxes for small communities dur-
ing construction could be accomplished in several ways, including
encouraging long distance commuting of construction workers from
outlying population centers. Possible incentives would be fleets
of mass transit vehicles operated by the company or subsidized
travel costs for workers utilizing their own vehicles. Of course,
the feasibility of this approach depends on the location of the
construction site relative to larger towns. Where it is feasible
it offers the added advantage of allowing workers' families to
maintain their current residence.
13.4 SUMMARY
This chapter has summarized the Policy Analysis Report, which
is one of the three major reports resulting from our technology
assessment of western energy resource development. Our report on
Energy Resource Development Systems (ERDS) 1 describes the tech-
nologies likely to be used to develop coal, oil shale, uranium,
oil, natural gas, and geothermal resources in the eight-state
study area as well as the laws and regulations which will affect
the development of each of these resources. Our Impact Analysis
Report2 examines both site-specific and regional impacts from the
present to the year 2000 resulting from the development of typical
energy resource development technologies. The purpose of this
JWhite, Irvin L., et al. Energy From the West: Energy Re-
source Development Systems Report. Washington, D. C. : U.S., Eri-
vironmental Protection Agency, forthcoming.
2White, Irvin L., et al. Energy From the West: Impact Analy-
sis Report. Washington, D.C.: U.S., Environmental Protection
Agency, forthcoming.
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analysis was to identify specific problem areas and to identify
the locational and technological factors which contribute to the
seriousness of these problems.
This Policy Analysis Report builds on the ERDS and impact
analyses by identifying problems and issues that will need to be
addressed if western energy development is to proceed in a manner
in which beneficial opportunities are maximized and negative con-
sequences are minimized. The nine categories of problems and is-
sues selected as being most important (water availability, water
quality, air quality, land use and reclamation, housing, growth
management, capital availability, transportation, and energy fa-
cility siting) are a result of the way we structured our study,
the assumptions made, and our knowledge of the relevant social
and political factors influencing energy development in the West.
While other issues or other approaches to categorizing our policy
analysis could have resulted from a different analytical approach,
we believe these nine categories do cover the most, important is-
sues likely to arise in connection with western energy development.
For each of these categories of issues, we have identified a range
of policy alternatives and implementation strategies and compared
and evaluated selected alternatives in order to inform policymak-
ers about the trade-offs which can be expected from pursuing var-
ious approaches to dealing with these issues. In this chapter,
we have summarized our analysis of alternatives by suggesting
what Indian tribes, policymakers at various levels of government,
and the private sector can do to deal with the issues most directly
affecting them.
Given the complexity and uncertainty of the energy policy-
making system, conclusions regarding future levels of development
in the eight-state study area or where development will take place
are hazardous. Nevertheless, it is clear that energy development
will occur in the eight-state study area, and much is known about
the problems and issues which will result and about the trade-offs
which can be expected if policymakers choose various a-lternatives
for dealing with the problems and issues.
Perhaps the most important implication of our study about
western energy resource development is that the problems likely
to arise in the eight-state area will go beyond the capacity of
existing institutional arrangements—including state-local, federal-
state, interstate and private-public sector relationships. This
is most evident regarding local areas, which generally face the
most difficult problems of energy development, and yet towns and
counties are least able to manage energy-related problems effec-
tively. For these problems to be dealt with effectively, consid-
erable money, manpower, technical assistance, and information
about the problems will have to be provided by states, the federal
government, and energy developers. The challenge will be to de-
velop mechanisms for anticipating these consequences and facili-
tating the necessary assistance. This conclusion applies to most
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of the other problems and issues associated with energy develop-
ment. That is, many of the benefits and costs of development are
known. What remains to be done is for public and private sector
parties-at-interest to develop new and innovative processes for
realizing the benefits while coping with the imminent and often
serious negative effects of energy resource development.
811
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GLOSSARY
AD VALOREM TAX--A tax imposed at a fixed percentage of the value
of a commodity.
ALLUVIAL—Associated with materials (sand, gravel, etc.) trans-
ported by and laid down by flowing water.
ALTERNATING CURRENT (AC)—An electric current that reverses its
direction at regularly recurring intervals.
AMBIENT AIR QUALITY STANDARDS—According to the Clean Air Act of
1970, the air quality level which must be met. to protect the
public health (primary) and welfare (secondary). Secondary
standards are more stringent than Primary Ambient Air Quality
Standards.
AMBIENT STANDARDS—Standards for the conditions in the vicinity of
a reference point, usually describing the physical environ-
ment (the ambient temperature is the outdoor temperature, and
ambient air refers to the normal air-quality conditions).
AMORTIZATION—The gradual reduction of an obligation, such as a
mortgage, by periodically paying a part of the principal as
well as the interest.
AQUIFER—A subsurface zone that yields economically important
amounts of water to wells; a water-bearing stratum of per-
meable rock, sand, or gravel.
AQUATIC HABITAT--A type of site in, on, or near water where cer-
tain types of plants and/or animals naturally or normally
live and grow.
AKEA COUNCILS OF GOVERNMENT—Regional voluntary intergovernmental
organizations. They serve the function of allowing greater
cooperation and planning among local governments in solving
problems that overlap more than one local jurisdiction. They
also serve as a means to direct federal aid to cities.
AUGMENTATION—Increasing existing (water) supplies by adding to
the quantities naturally available.
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AVOIDANCE AREAS—Areas that are not to be utilized as sites for
energy conversion facilities unless there are no acceptable
alternatives.
BACKFILLING--A reclamation technique which returns the spoils to
mined cuts or pits. This levels the land in a configuration
similar to the original form.
BACKGROUND LEVELS—Ambient concentrations of hydrocarbons and par-
ticulates from natural sources, e.g., blowing dust.
BENEFICIAL USE—A doctrine derived from the appropriation system
stipulating that water use must be made in accordance with
the public interest of the best utilization of the water re-
source .
BERM—A shelf or wall built to contain spills around a fuel stor-
age tank or to retain other liquids or semisolid materials
as in waste stabilization ponds.
BEST AVAILABLE CONTROL TECHNOLOGY (BACT) REQUIREMENT—The part of
the Clean Air Act which requires that a facility be equipped
with the most up-to-date antipollution device. Example—
coal-fired power plants equipped with scrubbers.
BREEDER REACTOR—A nuclear reactor that produces more fissile ma-
terial than it consumes. This reactor is sometimes called
the fast breeder because high energy (fast) neutrons produce
most of the fissions in current designs.
BROWSE--Twigs, shoots, and leaves eaten by livestock and other
grazing animals.
COMMODITIES CLAUSE—Section of the Interstate Commerce Act of
1887 which prevents railroads from transporting freight which
they manufacture, mine, produce, own, or have an interest in.
It has not been applied to any other transportation mode.
COMMON CARRIER--A transportation company which is licensed to pro-
vide its services at nondiscriminatory rates to all shippers
who apply.
CONSTRUCTION/OPERATION EMPLOYMENT RATIO—The difference between
the number of employees needed for the construction phase of
a large project and the number needed for operation of the
facility. Construction results in large employment increases,
while employment declines are experienced during actual op-
eration, resulting in the boom-bust cycle associated with
large construction projects. The larger the ratio, the
greater the employment decline when construction is completed.
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CONVERSION FACILITY—Plant used to convert energy raw materials
into usable energy forms.
CORONA DISCHARGE—A discharge of electricity appearing as a bluish-
purple glow on the surface of and adjacent to a conducter
when the voltage gradient exceeds a certain critical value;
due to ionization of the surrounding air by the high voltage.
COST—The value of the best alternative which is foregone when an
alternative is chosen.
CRITERIA POLLUTANTS—Six pollutants identified prior to passage of
the Clean Air Act Amendments which now have established Am-
bient Air Quality Standards, i.e., sulfur dioxide, particu-
late matter, carbon monoxide, photochemical oxidants, non-
methane hydrocarbons, and nitrogen oxides.
CRITICAL AREAS—Land in energy development areas in which energy
and recreational development should be restricted.
DEPLOYMENT--Strategic or wider utilization, in this case of energy
resources.
DEREGULATION—The act or process of removing restrictions and reg-
ulations .
DESALINATION--Removal of salt, as from water or soil. Also known
as desalting.
DIRECT CURRENT (DC)--An electric current flowing in one direction
only and substantially constant in value.
DIVERTING—Turning the course of water from one direction to an-
other.
DRY COOLING-'-A method used for dissipating waste heat whereby wa-
ter is circulated in a closed system and cooled by air flow
similar to a car radiator.
EASEMENT—The right held by one person or body to make use of the
land of another for limited purposes.
ECOSYSTEM—The interacting members of the biological community
and physical components that occur in a given area.
EFFECTIVENESS—The degree to which objectives are achieved.
EFFICIENCY—The degree to which a possible course of action mini-
mizes costs and risks while maximizing beneficial impacts.
EFFLUENT--Any water flowing out of an enclosure or source to a
surface water or groundwater flow network.
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ELECTRIC POWER GENERATION—The large-scale production of electric
power for industrial, residential, and rural use, generally
in stationary plants designed for the purpose.
ELECTROSTATIC PRECIPITATORS—Devices that use an electric field
to remove solid particles or droplets of liquid from plant
exhaust stack gases.
EMINENT DOMAIN—The right of a government to take private property
for public use by virtue of the superior dominion of the sov-
ereign power over all lands within its jurisdiction.
ENHANCED RECOVERY—The increased recovery from a pool achieved by
artificial means or by the application of energy extrinsic
to the pool, which artificial means or application includes
pressuring, cycling, pressure maintenance or injection to the
pool of a substance or form of energy but does not include
the injection into a well of a substance or form of energy
for the sole purpose of (i) aiding in the lifting of fluids
in the wells, or (ii) stimulation of the reservoir at or near
the well by mechanical, chemical, thermal, or explosive means.
ENVIRONMENTAL IMPACT STATEMENT (EIS)—The National Environmental
Policy Act requires that an EIS be filed with any proposed
federal action that will affect the environment. The EIS is
to contain: a description of the proposed action; the rela-
tionship of the action to plans for the affected area; the
probable impact (both favorable and adverse); alternatives
to the proposed action; unavoidable adverse environmental
effects; and the relationship between short-term uses and
long-term productivity.
EQUITY--A risk interest or ownership right in property.
EQUIVALENCY STANDARDS—Proposal to allow farmers and ranchers in
arid regions to irrigate more land with water from federal
water projects than those in more humid regions. Current
standards restrict irrigation to 160 acres or 320 acres if
both husband and wife are owners.
EVAPORATIVE HOLDING PONDS—Holding areas into which treated water
effluents are discharged (rather than into navigable waters),
where solid wastes accumulate and create potentially signif-
icant surface and groundwater quality problems.
EVAPOTRANSPIRATION—Loss of water from the soil both by evapora-
tion and by transpiration from the plants growing thereon.
EXCLUSION AREAS—Areas designated by the federal government where
energy development or conversion facilities cannot be sited.
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FEASIBILITY--The degree to which a possible course of action is
capable of being accomplished, particularly from a techno-
logical standpoint.
FLUE GAS DESULFURIZATION (FGD) — Removal of sulfur oxide pollutants
from stack gas emissions by one of several possible methods.
FORB--An herb other than grass.
FRONT-ENDED COSTS — Costs which are incurred before or at the be-
ginning of a project.
4-R ACT--Railroad Revitalization and Regulatory Reform Act of
1976, Pub. L. 94-201, 90 Stat. 31.,
GASIFICATION--The conversion of coal or organic waste: to a gaseous
fuel.
GAUSS~-The centimeter-gram-second unit of magnetic induction
equal to the magnetic flux density that will induce an elec-
tromotive force of one one-hundred millionth of a volt in
each linear centimeter of a wire moving laterally with a
speed of one centimeter per second at right angle to a mag-
netic flux.
GAUSSIAN DISPERSION MODEL — The most commonly occurring probabil-
ity distributions have the form:
(I/a /2u)/_ exp (-u2/2)du, u = (x-e)/a
where
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HIGH WET COOLING—A method used for dissipating waste heat whereby
water is circulated between a condenser where it absorbs heat
and a tower where the warm water is cooled by evaporation.
HOPPER CAR--Railroad car for carrying bulk materials such as coal
and grain, with doors on the bottom for emptying.
HORIZONTAL DIVESTITURE—Disposal of a portion of a business which
produces products which are somewhat substitutable for other
products of the firm, e.g., coal produced by an oil company.
HORIZONTAL INTEGRATION—Ownership by one company of competing en-
ergy resources—coal, petroleum, uranium, etc.
HYDROLOGY—A science dealing with the properties, distribution,
and circulation of water on the surface of the land, in the
soil, and underlying rocks, and in the atmosphere.
IMPLEMENTABILITY—(1) The ability to carry out or put into prac-
tical effect; (2) the ability to have uniform standards in-
corporated in legislation and regulations.
IMPOUNDMENT—collection of water for irrigation, flood control,
or similar purpose.
]CN SITU—In the natural or original position; applied to energy
resources when they are processed or converted in the geo-
logic strata where they were originally deposited.
INFILTRATION—Permeation of water through the land surface into
the groundwater system.
INSTREAM FLOW—Water flowing in a stream, typically with reference
to a water requirement for fish and other biota.
INTERMEDIATE WET COOLING—The use of a mixture of high and mini-
mum wet cooling technologies in power plants in order to con-
serve water resources. Also referred to as wet/dry cooling.
INTERMODEL COMPETITION—Competition between companies providing
dissimilar modes of transportation, e.g., railroads versus
trucks.
INTERMODEL UMBRELLA RATES—Protective rates allowed to be changed
by companies providing the same mode of transportation.
INTRAMODEL COMPETITION—Competition between companies which are
providing the same form of transportation, e.g., rail.
ISSUE—Impact, problem, or consequence of energy resource develop-
ment which generates conflict among parties-at-interest.
817
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ISSUE SYSTEM—Conceptual framework which identifies the issue be-
ing considered, the parties involved, the area in which the
dispute occurs, and the decisionmaking agencies with juris-
diction.
JOINT USE CORRIDOR—A narrow strip of land with restricted bound-
aries in which facilities of the same or different system are
placed adjacent to each other in as close proximity as prac-
tical and feasible.
LEAD TIME—The time needed for planning, financing, and construc-
tion of required facilities before they are ready for use.
LEGUME—A dry, dehiscent fruit derived from a single simple pistil;
common examples are alfalfa, beans, peanuts, and vetch.
LIGNITE--The lowest-rank coal, with low heat content, fixed car-
bon, and high percentages of volatile matter and moisture;
early stage in the formation of coal.
LINK—A connection between two points, as in a transportation sys-
tem (rail, pipeline) between a supply center and a demand
center.
LIQUEFACTION—The conversion of a solid fuel, such as coal or or-
ganic waste, into liquid hydrocarbons and related compounds.
LIQUEFIED NATURAL GAS (LNG)—A clean, flammable liquid existing
under very cold conditions that is almost pure methane.
METHACOAL—A coal slurry using methyl alcohol instead of water.
METHYL FUEL—An alkyl radical CH 3 fuel derived from methane by
removal of one hydrogen atom.
MILLING—A process in the uranium fuel cycle by which ore contain-
ing only 2 percent uranium oxide is converted into a compound
called yellowcake which contains 80 to 83 percent uranium
oxide.
MINE DEWATERING--Pumping unwanted groundwater from a mine in or-
der to achieve adequate mining conditions.
MINE-MOUTH SITING—Location of a facility in the vicinity or area
of a mine, usually within several miles.
MINIMUM WET COOLING--A method used for dissipating waste heat
whereby water is circulated in a closed system and cooled by
air flow similar to a car radiator. Also known as dry cool-
ing.
818
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MIXING AND DILUTION — The dispersion of pollutants into the atmo-
sphere resulting in a reduction in the level of concentration.
MOBILE SOURCES — Nonstationary sources of air pollution such as
automobiles, trucks and buses; as defined by the Clean Air
Act Amendments of 1977.
NATIONAL AMBIENT AIR QUALITY STANDARDS— Pollution standards estab-
lished by the Clean Air Act Amendments of 1970 requiring a
90-percent reduction of automotive hydrocarbon and carbon
monoxide emissions from 1970 levels by the 1975 model year
and a 90-percent reduction in nitrogen oxide emissions from
1971 levels by the 1976 model year.
NEW SOURCE PERFORMANCE STANDARDS — Standards set for new industries
to ensure that ambient standards are met and to limit the
amount of a given pollutant a stationary source may emit over
a given time. "New" in this context applies to facilities
built since August 17, 1971.
NOMINAL CASE — One of the three levels of energy development used
to make projections based on the energy model developed for
Gulf Oil Corporation by Stanford Research Institute.
NONATTAINMENT AREAS-- (1) Areas, typically urban with heavy
automobile-related pollutants, in which "all available mea-
sures" will not attain ambient air quality standards by 1982.
States must submit new implementation plans and must reduce
emissions in the area each year to ensure that the ambient
standard is attained by 1987; (2) areas where national air
quality standards have not been met.
NONMETHANE HYDROCARBONS — An organic compound (as acetylene or ben-
zene) containing only carbon and hydrogen and often occuring
in petroleum, natural gas, and coal, other than the colorless,
odorless, flammable, gaseous hydrocarbon
NONPOINT SOURCES OF POLLUTION — Areawide water wastes, essentially
those which are transported to surface and groundwaters from
sources other than pipes and ditches. These include pesti-
cides, fertilizers, sediments, natural salts, animal wastes,
plant residues, and minerals.
OMB A- 95 REVIEW PROCESS — Requirement that states provide the op-
portunity for governors and local officials to comment on
application for federal funds to undertake a variety of cat-
egorical programs, and that agencies of the federal govern-
ment consider the comments of the general public in approving
specif ic -applications for funds.
OCEAN THERMAL GRADIENTS — Differences in temperature of the ocean
water at various depths.
819
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OFF-ROAD VEHICLES—Motor vehicles such as motorcycles, snowmobiles,
and four-wheel drive vehicles that can operate over natural
terrain without the need for roads.
OFFSET PLAN—EPA policy which permits new facilities to be sited
in nonattainment areas where concentrations of criteria pol-
lutants exceed air quality standards.
ONE-STOP SITING—Centralized decisionmaking alternative where one
commission would handle all siting decisions and seek input
from all concerned parties.
ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)—A group of
nations controlling over 75 percent of free-world petroleum
reserves; includes Algeria, Indonesia, Iran, Libya, Nigeria,
Saudi Arabia, United Arab Emirates, Venezuela, and others.
OXIDES OF NITROGEN—A class of air pollutants which includes sev-
eral forms of the compound (NO, N02, NO3 as well as others).
Oxides of nitrogen are produced during combustion and con-
stitute some of the reactants involved in the formation of
photochemical smog.
OXIDES OF SULFUR—A class of air pollutants which includes several
forms of the compound (S02 and S03).
OZONE--An oxidant formed in atmospheric photochemical reactions.
PARTICULATES—Microscopic solids that emanate from a range of
sources and are widespread air pollutants. Those between 1
and 10 microns in size are most numerous in the atmosphere;
they stem from mechanical processes and include industrial
dusts, ash, etc.
PARTIES-AT-INTEREST--Individuals, groups, or organizations (such
as local residents, Indian tribes, industry, labor, or var-
ious levels of government) whose interests or values are
likely to be affected by the development of western energy
resources.
PEAK GROUND LEVEL CONCENTRATION—The highest air pollutant density
measured or predicted that is a result of human activity on
the ground, e.g., automobile use., Always cited with respect
to an averaging time.
PERCOLATION—Downward movement of water through soils.
PHOTOCHEMICAL OXIDANTS—Any of the chemicals which enter into oxi-
dation reactions in the presence of light or other radiant
energy.
820
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PHREATOPHYTE—A deep-rooted plant that obtains its water from the
water table or the layer of soil just above it. These plants
are characteristically nonproductive vegetation,such as salt-
cedar, growing in stream beds, ditch canals, etc. which con-
sume large quantities of water.
PLANNING CORRIDOR—A broad linear strip of land of variable width
reserved between two geographic points which has ecological,
technical, and/or economic advantages over adjacent areas
for the location of transportation and/or .utility systems.
PLUME IMPACTION—The point of contact between stack emissions and
elevated terrain that results in high pollution concentration
levels at that point.
POINT SOURCES OF POLLUTION—Those sources of water pollution which
are discrete conveyances (pipes, channels, etc.) and are con-
trolled by the effluent standards of the Federal Water Pollu-
tion Control Act Amendments of 1972. These include effluents
from municipal sewage systems, storm water runoff, industrial
wastes, and animal wastes from commercial feedlots.
POND LINER--The bottom of a pond, typically a specially prepared
layer of clay, less permeable solids, or manmade materials.
POPULATION/EMPLOYMENT MULTIPLIER—A numerical multiplier applied
to the number of workers needed to construct or operate a
new facility that is used to project total population levels
or increases.
POWER POOLING—The transfer of electricity among utilities in re-
gional electrical service.
PREVENTION OF SIGNIFICANT DETERIORATION (PSD)—Pollution standards
that have been set to protect air quality in regions that are
a1 ready cleaner than the Ambient Air Quality Standards.
Areas are divided into three categories determining the de-
gree to which deterioration in the area will be allowed.
PRIME FARMLANDS—Land defined by the Agriculture Department's
Soil Conservation Service based on soil quality, growing
season, and moisture supply needed to produce sustained high
crop yields using modern farm methods.
PRIMITIVE AREAS—Scenic and wild areas in the national forests
that were set aside and preserved from timber cutting, min-
eral operations, etc., from 1930-1939 by act of Congress;
these areas can be added to the National Wilderness Preser-
vation System established in 1964.
821
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PROBLEMS AND ISSUES—The two terms are not synonyms. The term
"problems" is used when conflict among competing interests
and values is not involved or is not being emphasized, "issues"
when it is.
PROJECT FINANCING—Lending which is predicated more on the cash-
generation capacity of a specific project than on the gen-
eral credit-worthiness of the developer. Usually also in-
volves long-term sales contracts and specific obligations
with respect to completion and operation of the project.
PROJECT INDEPENDENCE—A program initiated in March 1974 designed
to improve the energy position of the United States and per-
haps to gain independence from foreign energy sources by
1985.
PUBLIC DOMAIN—Original public lands which have never left federal
ownership; also, lands in federal ownership which were ob-
tained by the government in exchange for public lands or for
timber on such lands; also, original public domain lands
which have reverted to federal ownership through operation
of the public land laws.
RECLAMATION—Restoring mined land to productive use; includes re-
placement of topsoil, restoration of surface topography,
waste disposal, and fertilization and revegetation.
REGRADING--The movement of earth over a depression .to change the
shape of the land surface; a finer form of backfilling.
RESERVES--Resources of known location, quantity, and quality which
are economically recoverable using currently available tech-
nologies.
RESOURCES—Mineral or ore estimates that include reserves, iden-
tified deposits that cannot presently be extracted due to
economical or technological reasons, and other deposits that
have not been discovered but whose: existence is inferred.
RETORTING—The decomposition within a closed heating facility
(retort) of the solid hydrocarbon kerogen in oil shale to
produce a variety of gases and a liquid hydrocarbon which
can be upgraded to produce a synthetic crude oil.
RIGHT-OF-WAY—The legal right for use, occupancy, or access across
land or water areas for a specified purpose or purposes, such
as the construction of gas or oil pipelines. Such use on
federal land is authorized by permit, lease, easement, or
license. On patented lands, it is acquired by easement or
purchase.
ROLLING STOCK—Railroad cars.
822
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RUSSIAN THISTLE—A prickly European herb (Salsola kali tenuifolia)
that is a serious pest in North America; also called Russian
tumbleweed.
SALVAGED WATER--Water saved from current use which can be applied
to another use.
SCIENCE COURT—A proposed "court" of scientific experts who will
identify the significant science and technology questions
related to public policy decisions, conduct adversary pro-
ceedings over the issues, and issue a judgment pertaining to
the disputed technical questions.
SEAM—A bed of coal or other valuable mineral of any thickness.
SEEP--A spot where fluid (as water, oil, or gas) contained in the
ground oozes slowly to the surface and often forms a pool.
SEDIMENTATION--The action or process of forming or depositing sed-
iment (material deposited by water, wind, or glaciers).
701 PROGRAM--A federal program to provide financial assistance to
local governments for county-wide land-use programs.
SEVERANCE TAX—A tax on the removal of minerals from the ground,
usually levied as so many cents per barrel of oil or per
thousand cubic feet of gas. The tax is sometimes levied as
a percentage of the gross value of the minerals removed.
SITE SCREENING—A method which eliminates areas as possible sites
for energy facilities on the basis of several criteria. Each
stage of the process eliminates those locations that are un-
acceptable for a particular criterion. When all the unaccept-
able locations for each criterion are identified, the remain-
ing sites are theoretically favorable for all criteria.
SLURRY PIPELINE—A pipeline through which coal (in the form of a
mixture of water and coal) is transported.
SNOWPACK--The amount of annual accumulation of snow at higher el-
evations in the western United States, usually expressed in
terms of average water equivalent.
SOFT MINERALS—Minerals such as oil and gas.
SOIL PERMEABILITY—The ability of an area of land to conduct fluids.
SOLUTIONAL MINING—The extraction of soluble minerals from sub-
surface strata by injection of fluids and the controlled re-
moval of mineral-laden solutions.
823
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SPENT SHALE--The material remaining after the kerogen is removed
from oil shale by retorting. Its volume is greater than that
of the original oil shale.
SPOIL PROPERTIES—Physical and chemical characteristics of refuse
resulting from mining and processing operations, e.g., coal
mining operations.
STAKEHOLDERS—Individuals who have a vested interest in decisions
affecting development of western energy resources.
STATE IMPLEMENTATION PLAN (SIP)—Required by the Clean Air Act of
1970, SIP's outline state procedures for enforcing national
ambient air standards and for monitoring the performance of
local programs.
STRIP AND SHIP SITING—Determining the transport corridor through
which it is possible to ship coal as coal instead of converted
energy forms.
STRIP MINING—A mining method that entails the complete removal of
all material from over the resource to be mined in a series
of rows or strips; also referred to as surface mining.
STRIPPABLE RESERVES—Resources of known location, quantity, and
quality, which are economically recoverable using currently
available stripmining techniques.
SUBSIDENCE--The sinking, descending, or lowering of the land sur-
face; the surface depression over an underground mine that
has been created by subsurface caving.
SULFATES—A class of secondary pollutants that includes acid-
sulfates and neutral metallic sulfates.
SULFUR DIOXIDE (S02) SCRUBBERS—Equipment used to remove sulfur
dioxide pollutants from stack gas emissions, usually by means
of a liquid sorbent.
SURFACE MINING--Mining method whereby the overlying materials are
removed to expose the mineral for extraction.
SYNTHETIC FUELS—Artificially produced fuels.
SYNTHETIC NATURAL GAS (SNG)—Gas produced from a fossil fuel such
as coal, oil shale, or organic material and having a heat con-
tent of about 1,000 Btu's per cubic foot.
TECHNOLOGICAL FIX—The application of technology to resolve social
problems rather than seeking resolutions through behavioral
or attitudinal change.
824
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TECHNOLOGY ASSESSMENT—An examination (generally based on pre-
viously completed research rather than initiating new pri-
mary research) of the second and higher order consequences
of technological innovation. TA attempts to balance these
consequences against first-order benefits by identifying and
analyzing alternative policies and implementation strategies
so that the process of coping with scientific invention can
occur in conjunction with, rather than after such invention.
THERMAL DISCHARGE--High temperature point source water pollutants
that could prove hazardous to indigenous shellfish, fish, and
wildlife in and on the body of water into which the discharge
is made.
THROUGHPUT--The volume of feedstock charged to a process equip-
ment unit during a specified time; the quantity of ore or
other material passed through a mill or a section of a mill
in a given time or at a given rate.
TRACE ELEMENT--A nonessential element found in small quantities
(usually less than 1.0%) in a mineral. Also known as acces-
sory element; quest element.
"208" PROGRAM—Federal Water Grant Program to make funds avail-
able to local jurisdictions for waste treatment facilities.
UNIT TRAIN--A system for delivering coal in which a string of
cars, with distinctive markings and loaded to full visible
capacity, is operated without service frills or stops along
the way for cars to be cut in and out.
URANIUM TAILINGS--Uranium refuse material separated as residue in
the preparation of various products such as ores.
VARIANCE POLICY—The procedure whereby a facility may receive a
variance from the sulfur dioxide limits allowed for Class I
areas whose air quality is cleaner than the Ambient Air Qual-
ity Standards.
VERTICAL INTEGRATION—Participation by one company in more than
one level of an energy resource system; such participation
may range from exploration for a resource through the dis-
tribution of the resource to consumers.
VOLATILE MATTER—Matter that can easily be vaporized at relatively
low temperatures or exploded.
WATER INTENSIVE FORAGE CROPS—Crops such as alfalfa which consume
relatively large quantities of water through evapotranspira-
tion.
825
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WATERSHED--Total land area above a given point on a stream or wa-
terway that contributes runoff to that point.
WILDERNESS AREA—Federal lands placed under the National Wilder-
ness Preservation System by the Wilderness Act of 1964. Sub-
ject to existing uses and rights, commercial enterprises,
permanent roads, buildings, motorboats, airplanes, etc., are
forbidden in any land designated as part of the wilderness
system.
WINDFALL PROFITS--Profits which occur because of a one-time, unex-
pected event, e.g., profits in the coal industry occasioned
by a sudden increase in the price of oil.
YELLOWCAKE—The product of the milling process in uranium fuel
cycle. It contains 80 to 83 percent uranium oxide (UsO8).
ZERO DISCHARGE—A goal of the Federal Water Pollution Control Act
Amendments of 1972 to eliminate all point-source pollution of
navigable water by 1985.
826 "V.S. GOVERNMENT PRINTING OFFICE : 1979 0-b20~OO7/3778
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