Facing new threats, mining industry undergoes a facelift

Few industries face as dramatic a shift in fortunes under the Democratic majority as the mining industry.

From climate-change bills that could curb the use of coal to proposals to rewrite a 135-year-old mining law and impose new fees on mine operations to efforts to adopt a host of safety regulations the industry contends may be unnecessary, mining companies are having to defend themselves on Capitol Hill as perhaps never before.

{mosads}“We have the trifecta,” said Kraig Naasz, who took over as president and chief executive of the industry’s trade group, the National Mining Association (NMA), last year.

“The mining industry is confronted with a very challenging environment,” he said.

In response, the board of the NMA is likely to approve a plan this week that would dramatically increase its lobbying and advertising budget. Additionally, mine companies are shifting their political allegiances.

After years of largely ignoring Democrats when it came to political contributions, sending nearly 90 percent of political action committee (PAC) donations to the GOP, NMA’s two PACs, CoalPAC and MinePAC, are moving toward a more even split.

Naasz estimated that by the end of the 2008 cycle as much as 40 percent of NMA’s political contributions could go to Democrats.

“We need to broaden our support on the Hill,” he said.

What is happening to the mining industry reflects a broader shift among business interests in general. Trade groups have sought to re-establish dormant ties to the new majority by shifting political contributions and padding lobbying staffs with Democrats.

NMA board members are likely on Wednesday to approve a $19.7 million budget for 2008, up from $15.6 million this year and a more than 50 percent increase from a $12 million budget in 2002.

The mining group also has broadened its roster of outside consultants. Since 2006, it has retained the Alpine Group, Federal Policy Group, Washington Advocates and the Nickles Group. It currently is looking to add a Democratic consultant to its list of outside lobbyists.

The association also has contracted with the search firm Korn Ferry to find four lobbyists for its own team and plans to hire two additional regulatory experts and a senior economist and policy analyst.

Most NMA members would see their dues increase by 20 percent to pay for the new hires and pay raises for current staff, a dramatic increase during an era when most trade associations are under pressure from member companies to keep dues flat.

The biggest companies pay the highest dues, about $750,000. That figure has been capped in recent years. Under the new plan, the cap would be lifted, although dues for the largest members probably will increase less than 20 percent, NMA spokesman Luke Popovich said.

During the Republican majority, the mining industry helped push through a comprehensive energy bill in 2005 that provided subsidies for the development of “clean coal,” which is an effort to reduce emissions like carbon dioxide from coal-burning.

Those incentives still enjoy bipartisan support in Congress. But elsewhere the industry faces new challenges.

The election victories brought an industry critic, Rep. George Miller of California, to the top slot at the Education and Labor Committee. With new House Natural Resources Committee Chairman Nick Rahall (D-W.Va.), Miller has introduced a mine-safety bill that would expand on a bill the industry backed last Congress to encourage the development of new safety technologies in the wake of the Sago mine disaster and other mine deaths.

The Miller-Rahall bill would speed up the dates by which mine operators have to install improved underground communication systems, ban the practice of ventilating mines with intake air run over conveyor belts, which critics say is a safety hazard, and reduce the amount of coal dust to which workers can be exposed.

The National Institute of Occupational Safety and Health found that the prevalence of coal workers’ pneumoconiosis, or black lung disease, has doubled nationwide over the past five years, the United Mine Workers of America noted last week. The industry disputes the figure but says it is working with both federal regulators and the union to reduce incidence of black lung.

The mine industry opposes the Miller-Rahall bill. Congress already passed the Mine Improvement and New Emergency Response Act last summer. The industry should be given more time to implement its requirements before lawmakers pass a new bill, Popovich said. Rahall has also introduced a bill to reform the Hardrock Mining Law of 1872, which would apply royalty fees to hard rock-mining operations. The bill would charge a royalty payment of 8 percent on gross receipts.

In a statement, Rahall said he is committed to changing the law to “ensure the American people are receiving a fair value for the disposition of the resources they own.”

The industry isn’t opposed to paying royalties for operating on federal lands, as oil and gas companies long have, but believe Rahall’s bill sets too high a price.

The Mine Act bill also illustrates that the association isn’t without friends among Democrats. Senate Majority Leader Harry Reid (D-Nev.), whose father worked in a mine, for example, has opposed efforts to reform the law in the past, and is reportedly working to craft a bill less onerous to industry than the Rahall measure.

The NMA also issued a press release last week praising freshman Democrat Rep. Brad Ellsworth of Indiana for introducing a mine-safety bill that it supports.

Climate-change bills present perhaps the biggest challenge to the industry. Coal now accounts for 52 percent of the electricity produced in the country.

Most energy experts say coal would remain a significant source of electricity to meet expected increase in energy demand. But a bill that raises the price of carbon dioxide could push more utilities to use natural gas and other fuel sources that emit less carbon dioxide than coal does.

While it is working to find more friends among Democrats, Naasz said his association’s recent political giving habits do not accurately reflect the supporters the industry already had within the party.

By increasing PAC size, Naasz said, the mining association planned to increase giving to Democrats while maintaining its level of support for Republicans, whose pro-development philosophy is generally more in line with the industry’s.

Last cycle, NMA generated about $1.8 million in contributions and fundraisers. This cycle, Naasz expects the group will “far exceed” that total, although he declined to give an exact figure.