london (Platts)--17Dec2008

The stream buffer zone rule that allows disposal of mining debris within 100
feet of streams will most likely be reversed by President-elect Obama and his
Interior Department appointee, according to investment bank FBR Capital
Markets.

In its energy policy bulletin released Tuesday, FBR opined that the rule
"virtually guarantees" that the next interior secretary will pursue a
revision. In fact, Kevin Book, FBR's research analyst, wrote that the Bush
administration by its eleventh-hour action has forced the incoming
administration to "propose and finalize a rule to reverse it."

The SBZ rule, issued under the Surface Mining Control and Reclamation Act,
allows mining companies to obtain permits to dispose of mining spoil within
100 feet of perennial and intermittent streams only "if reasonably possible to
do so" and if they can demonstrate that such disposal will not harm fish and
wildlife and hydrology.

The permit seekers also need to meet the requirements of the Clean Water Act"s
various provisions that deal with addition of pollutants, dredge and fill, and
water quality standards. Book noted that "midnight rules," or those rules
issued at the eleventh hour by most outgoing administrations, are difficult
and time-consuming to reverse. But he offered caution to investors who might
consider this rule as a signal to proceed with investing in mountaintop
removal mining in Appalachia.

Book buttressed his analysis by observing that the nomination of Senator Ken
Salazar, Democrat from Colorado, as Department of the Interior secretary
indicates that there will be less land available for energy production from
Colorado and greater emphasis on groundwater protections. He also noted the
nomination of environmentally conscious cabinet members: Governor Bill
Richardson, Democrat-New Mexico, for Commerce secretary; Los Angeles Deputy
Mayor Nancy Sutley as chief of White House Counsel on Environmental Quality;
and Nobel Laureate Steven Chu as Energy secretary.