Hallador Energy pany(HNRG) - 2020 Q4 - Annual Report

Regulatory Environment - The coal mining industry faces extensive regulations that increase operational costs and affect profitability, with potential for significant monetary penalties and liabilities [15]. - Compliance with federal and state laws has substantially increased the cost of coal mining for domestic producers, although specific compliance costs have not been quantified [16]. - The permitting process for mining operations can extend over several years, potentially delaying or preventing the commencement of operations due to regulatory challenges [19]. - The Federal Mine Safety and Health Act imposes extensive safety and health standards, significantly affecting operating costs due to compliance requirements [21]. - Recent regulations have lowered the allowable respirable coal mine dust exposure limits, increasing operational costs related to monitoring and compliance [26]. - Federal and state laws require bonds to secure obligations for land reclamation used in mining, with increasing difficulty in securing new surety bonds without posting collateral [40]. - The Clean Air Act (CAA) imposes permitting requirements and emissions control measures on coal mining operations, potentially increasing operational costs and affecting the attractiveness of fossil fuels [41]. - Environmental advocacy groups are challenging permits for coal activities, claiming inadequate environmental analyses under the National Environmental Policy Act (NEPA) [50]. - The EPA is required to periodically re-evaluate National Ambient Air Quality Standards (NAAQS), which may impose additional emissions control requirements on coal-fired power plants [44]. - The EPA's veto power over Section 404 permits could create operational uncertainties and additional costs for coal mining operations [57]. Financial Impacts - The Black Lung Benefits Act imposes a tax of $1.10 per ton for underground-mined coal and $0.55 per ton for surface-mined coal, impacting overall operational costs [31]. - The company has accrued estimated costs for asset retirement obligations and mine closing, which could adversely affect future operating results if these accruals are insufficient [17]. - The Abandoned Mine Lands Program imposes a reclamation fee of $0.28 per ton for surface-mined coal and $0.12 per ton for underground-mined coal, which is scheduled to be in effect until September 30, 2021 [37]. - The EPA's Acid Rain Program regulates sulfur dioxide emissions from electric generating facilities, requiring affected facilities to purchase or trade emissions allowances [42]. - The Cross-State Air Pollution Rule (CSAPR) requires 28 states to reduce power plant emissions, but its relevance is decreasing due to ongoing coal plant retirements [42]. - The Mercury and Air Toxic Standards (MATS) regulate emissions of mercury and other pollutants from coal-fired power plants, leading to capital investments and potential premature retirements of older units [42]. - Future regulation of greenhouse gas (GHG) emissions could arise from new domestic legislation or EPA regulations, impacting demand and prices for fossil fuels [43]. - Future GHG emissions control initiatives may increase costs for fossil fuel production, potentially leading to customer shifts to alternative fuels [54]. - New TMDL regulations may require more costly water treatment, adversely affecting coal production [58]. Operational Aspects - Approximately 96% of the company's production capacity involves underground room and pillar mining, while 4% involves surface mining, adhering to the Surface Mining Control and Reclamation Act standards [35]. - The company has never had a permit suspended or revoked due to violations, and penalties assessed for violations have not been material [20]. - The company has obtained all necessary permits under CWA Section 404, but future mitigation requirements may increase costs and uncertainty [55]. - The Illinois Basin (ILB) has over 50,000 square miles of coal mining operations, centrally located near major coal-consuming regions [68]. Workforce and Safety - Hallador Energy employs 690 full-time employees, with a focus on competitive wages and comprehensive health benefits [73]. - The company maintains a robust safety program, with performance metrics at or below national averages in safety categories [74]. - Hallador Energy invests in employee education and training, covering all continuing education costs and offering tuition reimbursement [76]. - The company has no significant patents or trademarks, focusing on coal mining operations [78].