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Item 1. Business

2025-03-17 compared with 2024-03-14 · 113 added, 89 removed, 362 unchanged (36% of the section changed)

Hallador Energy Company is a vertically integrated power and coal company with operations primarily in Indiana.

The Company operates across multiple stages of the energy supply chain, from coal extraction to electricity generation and mines coal from the rich, high-quality, lower sulfur reserves found in the Illinois Basin (“ILB”).

Once the coal is mined by Sunrise Coal, LLC (“Sunrise”), the Company’s wholly-owned mining subsidiary, the Company processes and transports it to power plants, where it is used as a primary fuel source for generating electricity.

Through its wholly-owned subsidiary Hallador Power, LLC (“Hallador Power”), the Company owns and operates the Merom Power Plant (“Merom”), a 1,080 MW net coal fired power generating station, consisting of two 590 MW sub-critical water tube drum type steam turbine generators.

Unit 1 entered commercial operations in 1982 and Unit 2 in 1983.

The units are dispatched to the Midcontinental Independent System Operator (“MISO”) interconnection.

Hallador Power sells wholesale energy and accredited capacity to utilities within the MISO system through power purchase agreements (“PPA”) and other bilateral transactions.

Merom is located in Sullivan County, Indiana, about twenty miles from Sunrise’s Oaktown Mining Complex.

Sunrise also sells coal to other utilities in Indiana and throughout the southeast United States.

In addition, it has a developed infrastructure for the transport of coal, including rail networks and truck loading systems, facilitating the efficient movement of the resource from the mine to its customers.

The vertically integrated structure allows the Company to control the entire process, from mining to power production, providing cost efficiencies, greater operational flexibility, and the ability to manage supply and demand within the energy market.

Hallador Power has invested in technologies to reduce emissions and improve the environmental performance of coal-fired generation, particularly in response to regulatory pressures.

See “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for a discussion of our business.

Regulation and Laws

The coal mining and electric power generation industries are subject to extensive regulation by federal, state, and local authorities on matters such as:

The electric power generation and coal mining industries are subject to extensive regulation by federal, state, and local authorities on matters such as:

● employee health and safety;

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● storage of petroleum products and substances that are regarded as hazardous under applicable laws or that, if spilled, could reach waterways, wetlands, or groundwater;

plant and wildlife protection, and historic and archeological site and cultural resource protection, that could limit or prohibit mining, exploration, or electric power generation;

restricting the types, quantities, and concentration of materials that can be released into the environment in the performance of mining, exploration, production, or electric power generation activities;

● plant and wildlife protection, and historic and archeological site and cultural resource protection, that could limit or prohibit electric power generation, mining or exploration;

● restricting the types, quantities, and concentration of materials that can be released into the environment in the performance of electric power generation, mining, exploration or production activities;

● discharge of materials;

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● surface subsidence from underground mining;

the effects, if any, that mining or electric power generation activities, including coal combustion residuals, have on groundwater quality and availability.

● the effects, if any, that electric power generation or mining activities, including coal combustion residuals, have on groundwater quality and availability.

Failure to comply with environmental laws and regulations may result in the assessment of administrative, civil and criminal sanctions, including monetary penalties, the imposition of strict, joint and several liability, investigatory and remedial obligations, capital expenditures, interruptions, changes in operations, and the issuance of injunctions limiting or prohibiting some or all of the operations on our properties.

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In addition, the electric power industry is subject to extensive regulation regarding the environmental impact of its power generation activities, which has also adversely affected demand for coal.

It is possible that new legislation or regulations may be adopted, or that existing laws or regulations may be interpreted differently or more stringently enforced, any of which could have a significant impact on our mining or electric power generating operations or our customers’ ability to use coal.

For more information, please see risk factors described in “Item 1A.

It is possible that new legislation or regulations may be adopted, that existing laws or regulations may be interpreted differently or more stringently enforced, that existing regulations may be repealed or that the authority of current regulators may be reduced or revoked, any of which could have a significant impact on our mining or electric power generating operations or our customers’ ability to use coal.

For more information, please see “Recent Regulatory Developments from the Presidential Transition” in this section, below, and the risk factors described in “Item 1A.

Risk Factors” below.

We are committed to conducting mining and electric power generating operations in compliance with applicable federal, state, and local laws and regulations.

However, because of the extensive and detailed nature of these regulatory requirements, including the regulatory system of the Mine Safety and Health Administration (“MSHA”), where citations can be issued without regard to fault and many of the standards include subjective elements, it is not reasonable to expect any coal mining company or electric power generating company to be free of citations.

We are committed to conducting electric power generating and mining operations in compliance with applicable federal, state, and local laws and regulations.

However, because of the extensive and detailed nature of these regulatory requirements, including the regulatory system of the Mine Safety and Health Administration (“MSHA”), where citations can be issued without regard to fault and many of the standards include subjective elements, it is not reasonable to expect any electric power generating company or coal mining company to be free of citations.

When we receive a citation, we attempt to remediate any identified condition immediately.

While we have not quantified all of the costs of compliance with applicable federal and state laws and associated regulations, those costs have been and are expected to continue to be significant.

Compliance with these laws and regulations has substantially increased the cost of coal mining for domestic coal producers as well as the cost of electric power generation.

Compliance with these laws and regulations has substantially increased the cost of electric power generation and the cost of coal mining for domestic coal producers.

Expenditures for environmental matters have not been material in recent years.

We have accrued for the present value of the estimated cost of asset retirement obligations, mine closings, and power plant closing, including the cost of treating mine water discharge, when necessary.

The accruals for asset retirement obligations, mine closing and power plant closing costs are based upon permit requirements and the estimated costs and timing of asset retirement obligations and mine closing procedures.

We have accrued for the present value of the estimated cost of asset retirement obligations, power plant closing, and mine closings, including the cost of treating mine water discharge, when necessary.

The accruals for asset retirement obligations, power plant closing and mine closing costs are based upon permit requirements and the estimated costs and timing of asset retirement obligations and mine closing procedures.

Although management believes it has made adequate provisions for all expected reclamation and other costs associated with mine closures, future operating results would be adversely affected if these accruals were insufficient.

Electric Power Generation Permits and Approvals

Numerous governmental permits or approvals are also required for electric power generation operations, including coal-fired power plants such as Merom Generating Station.

Applications for permits require extensive engineering and data analysis and presentation and must address a variety of environmental, health, and safety matters associated with electric power generation.

These matters include air emissions, including greenhouse gas emissions, the management and disposal of coal combustion residuals and other wastes or materials, and wastewater effluent treatment and discharge, among others.

Meeting all requirements imposed to address these matters may be costly and may delay or prevent commencement or continuation of power generation operations.

The permitting process for electric power generation operations can extend over many years as a result of necessary permit renewals and those permitting decisions can be subject to administrative and judicial challenge, including by the public.

We cannot assure you that we will not experience difficulty or delays in obtaining electric power generation permits in the future or that a current permit will not be revoked.

We are required to post bonds to secure performance under our coal combustion residuals landfill permit.

Under some circumstances, substantial fines and penalties, including revocation of electric power generating permits, may be imposed under the laws and regulations described above and below.

Monetary sanctions and, in severe circumstances, criminal sanctions may be imposed for failure to comply with these laws and regulations.

Although, like other power generating companies, we have been cited for violations in the ordinary course of our business, we have never had a permit suspended or revoked because of any violation, and the penalties assessed for these violations have not been material.

Mining Permits and Approvals

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Although, like other coal companies, we have been cited for violations in the ordinary course of our business, we have never had a permit suspended or revoked because of any violation, and the penalties assessed for these violations have not been material.

Electric Power Generation Permits and Approvals

Numerous governmental permits or approvals are also required for electric power generation operations, including coal-fired power plants such as Merom Generating Station.

These matters include air emissions, the management and disposal of coal combustion residuals and other wastes or materials, and wastewater effluent treatment and discharge, among others.

Meeting all requirements imposed to address these matters may be costly and may delay or prevent commencement or continuation of power generation operations.

We cannot assure you that we will not experience difficulty or delays in obtaining electric power generation permits in the future or that a current permit will not be revoked.

We are required to post bonds to secure performance under our coal combustion residuals landfill permit.

Under some circumstances, substantial fines and penalties, including revocation of electric power generating permits, may be imposed under the laws and regulations described above and below.

Monetary sanctions and, in severe circumstances, criminal sanctions may be imposed for failure to comply with these laws and regulations.

Mine Health and Safety Laws

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It is uncertain whether MSHA will present additional proposed rules, or revisions to the final rule, following the closing of the comment period.

MSHA has also published, and may continue to publish, various proposed rules or requests for information, which may result in additional rulemakings.

MSHA has also published, and may continue to publish, various proposed and final rules or requests for information, which may result in additional rulemakings.

For example, in June 2016, MSHA published a request for information on Exposure of Underground Miners to Diesel Exhaust.

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The comment period for the request for information closed in October 2019.

In November 2020, MSHA published a proposed rule to revise Testing, Evaluation, and Approval of Electric Motor-Driven Mine Equipment and Accessories within underground mining environments.

The comment period for the proposed rule closed in December 2020.

In September 2021, MSHA published a proposed rule requiring that mine operators employing six or more miners develop and implement a written safety program for mobile and powered haulage equipment at surface mines and surface areas of underground mines (Safety Program for Surface Mobile Equipment).

The comment period for the proposed rule closed in November 2021.

However, MHSA reopened the rulemaking record for additional public comments.

A virtual hearing was held in January 2022, and the comment period closed in February 2022.

It is uncertain whether MSHA will present a final rule addressing any of the above issues or any of the other various proposed rules or requests for information or whether any such rule would have material impacts on our operations or our costs of operation.

On December 10, 2024, MSHA published a final rule to revise Testing, Evaluation, and Approval of Electric Motor-Driven Mine Equipment and Accessories within underground mining environments.

On December 20, 2023, MSHA published a final rule requiring that all mine operators develop and implement a written safety program for mobile and powered haulage equipment at surface mines and surface areas of underground mines (Safety Program for Surface Mobile Equipment).

It is uncertain whether MSHA will engage in further rulemaking regarding the above issues or any of the other various proposed rules or requests for information or whether any such rules would have material impacts on our operations or our costs of operation.

Subsequent to the passage of the MINER Act, Illinois, Kentucky, Pennsylvania, and West Virginia have enacted legislation addressing issues such as mine safety and accident reporting, increased civil and criminal penalties, and increased inspections and oversight.

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Workers’ compensation laws also compensate survivors of workers who suffer employment-related deaths.

We generally self-insure this potential expense using our actuary estimates of the cost of present and future claims.

We generally self-insure this potential expense using our actuarial estimates of the cost of present and future claims.

In addition, coal mining companies are subject to federal legislation and various state statutes for the payment of medical and disability benefits to eligible recipients related to coal workers’ pneumoconiosis or black lung.

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The Federal Surface Mining Control and Reclamation Act of 1977 (“SMCRA”) and similar state statutes establish operational, reclamation, and closure standards for all aspects of surface mining as well as many aspects of underground mining.

Currently, approximately 96% of our production capacity involves underground room and pillar mining (no surface subsidence), and approximately 4% involves surface mining.

Currently, 100% of our production involves underground room and pillar mining (no surface subsidence).

We do not engage in either mountain top removal or long-wall mining.

SMCRA nevertheless requires that comprehensive environmental protection and reclamation standards be met during the course of and upon completion of our mining activities.

SMCRA nevertheless requires that comprehensive

environmental protection and reclamation standards be met during the course of and upon completion of our mining activities.

SMCRA and similar state statutes require, among other things, that surface disturbance be restored in accordance with specified standards and approved reclamation plans.

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The Clean Air Act (“CAA”) and similar state and local laws and regulations regulate emissions into the air and affect coal mining and electric power generation operations.

The CAA directly impacts our coal mining and processing and electric power generation operations by imposing permitting requirements and, in some cases, requirements to install certain emissions control equipment, achieve certain emissions standards, or implement certain work practices on sources that emit various air pollutants.

The CAA directly impacts our coal mining and processing and electric power generation operations by imposing permitting requirements and, in some cases, requirements to install certain emissions control equipment, achieve certain emissions standards, obtain emissions allowances, or implement certain work practices on sources that emit various air pollutants.

The CAA also indirectly affects coal mining operations by extensively regulating the air emissions of coal-fired electric power generating plants and other coal-burning facilities.

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In addition to purchasing or trading for additional sulfur dioxide allowances, affected power facilities can satisfy the requirements of the EPA’s Acid Rain Program by switching to lower-sulfur fuels, installing pollution control devices such as flue gas desulfurization systems, or “scrubbers,” or by reducing electric generating levels.

These requirements would not be supplanted by a replacement rule for the Clean Air Interstate Rule (“CAIR”), discussed below.

The CAIR calls for power plants in 28 states and Washington, D.C.

to reduce emission levels of sulfur dioxide and nitrogen oxide pursuant to a cap-and-trade program similar to the system in effect for acid rain.

In June 2011, the EPA finalized the Cross-State Air Pollution Rule (“CSAPR”), a replacement rule for CAIR, which would have required 28 states in the Midwest and eastern seaboard to reduce power plant emissions that cross state lines and contribute to ozone and/or fine particle pollution in other states.

CSAPR has become increasingly irrelevant with continuing coal plant retirements making the nitrogen oxide ozone budget less stringent and lowering emission allowance prices to levels closer to average operating cost for many of our customers.

The full impact of CSAPR is unknown at the present time due to the implementation of Mercury and Air Toxic Standards (“MATS”), discussed below, and the impact of the continuing coal plant retirements.

In February 2012, the EPA adopted the MATS, which regulates the emission of mercury and other metals, fine particulates, and acid gases such as hydrogen chloride from coal and oil-fired power plants.

● The Cross-State Air Pollution Rule (“CSAPR”) addresses the “good neighbor” provision in the Clean Air Act, which prohibits sources within each state from emitting any air pollutant in an amount which will contribute significantly to any other state’s nonattainment of, or interference with maintenance of, any National Ambient Air Quality Standards (“NAAQS”).

CSAPR requires power plants in certain states to reduce emission levels of sulfur dioxide and nitrogen oxide pursuant to a cap-and-trade program similar to the Acid Rain Program.

In October 2016, the EPA published a final rule to update the CSAPR to address the 2008 ozone NAAQS ("CSAPR Update Rule").

Following legal challenges related to the CSAPR Update Rule, on April 30, 2021, the EPA issued the Revised CSAPR Update Rule.

The Revised CSAPR Update Rule required affected electric generating units ("EGUs") within certain states (including Indiana) to participate in a new trading program.

On June 5, 2023, the EPA published a final Federal Implementation Plan to address air quality impacts with respect to the 2015 Ozone NAAQS called the “Good Neighbor Plan.” However, on June 27, 2024, the United States Supreme Court granted emergency applications seeking a stay of the Good Neighbor Plan pending judicial review.

In response, on November 6, 2024, EPA issued an interim final rule, which effectively reinstated the Revised CSAPR Update Rule during the stay.

While our CSAPR compliance costs to date have not been material, the future availability of and cost to purchase allowances to meet the emission reduction requirements is uncertain at this time, but it could be material.

● In February 2012, the EPA adopted the Mercury and Air Toxic Standards (“MATS”), which regulates the emission of mercury and other metals, fine particulates, and acid gases such as hydrogen chloride from coal and oil-fired power plants.

In March 2013, the EPA finalized a reconsideration of the MATS rule as it pertains to new power plants, principally adjusting emissions limits to levels attainable by existing control technologies.

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Circuit Court of Appeals granted the EPA’s request to cancel oral arguments and ordered the case held in abeyance for an EPA review of the supplemental finding.

In December 2018, the EPA issued a proposed Supplemental Cost Finding, as well as the CAA required “risk and technology review.” In May 2020, EPA issued a final rule that reverses the Agency's prior determination from 2000 and 2016 that it was “appropriate and necessary” to regulate hazardous air pollutants (“HAP”) from coal-fueled Electric Generating Units (“EGUs”) under the MATS rule.

However, in March 2023, EPA published a final rule revoking the May 2020 finding.

In December 2018, the EPA

issued a proposed Supplemental Cost Finding, as well as the CAA required “risk and technology review.” In May 2020, EPA issued a final rule that reverses the Agency’s prior determination from 2000 and 2016 that it was “appropriate and necessary” to regulate hazardous air pollutants (“HAP”) from coal-fueled Electric Generating Units (“EGUs”) under the MATS rule.

However, in March 2023, EPA published a final rule revoking the May 2020 finding, and in May 2024, EPA issued a final rule amending MATS and increasing the stringency of certain requirements.

The MATS rule has forced electric power generators to make capital investments to retrofit power plants and could lead to additional premature retirements of older coal-fired generating units.

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Combustion of fuel for mining equipment used in coal production also emits GHGs.

Future regulation of GHG emissions in the U.S.

could occur pursuant to future U.S.

treaty commitments, new domestic legislation or regulation by the EPA.

Although no comprehensive climate change regulation has been adopted at the federal level in the U.S., President Biden has announced that climate change will be a focus of his administration.

For example, in January 2021, President Biden issued an executive order that commits to substantial action on climate change, calling for, among other things, the increased use of zero-emissions vehicles by the federal government, the elimination of subsidies provided to the fossil-fuel industry, a doubling of electricity generated by offshore wind by 2030, and increased emphasis on climate-related risks across governmental agencies and economic sectors.

Internationally, the Paris Agreement requires member states to submit non-binding, individually-determined emissions reduction targets.

These commitments could further reduce demand and prices for fossil fuels.

Although the U.S.

had withdrawn from the Paris Agreement, President Biden recommitted the U.S.

in February 2021 and, in April 2021, announced a new, more rigorous nationally determined emissions reduction level of 50-52% reduction from 2005 levels in economy-wide net GHG emissions by 2030.

The international community gathered again in Glasgow in November 2021 at the 26th Conference to the Parties (““COP26”)” during which multiple announcements were made, including a call for parties to eliminate fossil fuel subsidies, among other measures.

Relatedly, the U.S.

and European Union jointly announced at COP26 the launch of the Global Methane Pledge, an initiative committing to a collective goal of reducing global methane emissions by at least 30% from 2020 levels by 2030, including “all feasible reductions” in the energy sector.

Also at COP26, more than forty countries pledged to phase out coal, although the U.S.

did not sign the pledge.

At COP27, countries reiterated the agreements from COP26 and were called upon to accelerate efforts toward the phase out of inefficient fossil fuel subsidies.

also announced, in conjunction with the European Union and other partner countries, that it would develop standards for monitoring and reporting methane emissions to help create a market for low methane-intensity natural gas.

Although no firm commitment or timeline to phase out or phase down all fossil fuels was made at COP27, there can be no guarantees that countries will not seek to implement such a phase out in the future.

The impact of these actions remains unclear at this time.

Moreover, many states, regions, and governmental bodies have adopted GHG initiatives and have or are considering the imposition of fees or taxes based on the emission of GHGs by certain facilities, including coal-fired electric generating facilities.

Others have announced their intent to increase the use of renewable energy sources, displacing coal and other fossil fuels.

Depending on the particular regulatory program that may be enacted, at either the federal or state level, the demand for coal and electricity from coal-fired power plants, such as Merom Station, could be negatively impacted, which would have an adverse effect on our operations.

Even in the absence of new federal legislation, the EPA has begun to regulate GHG emissions under the CAA based on the U.S.

The EPA has begun to regulate GHG emissions under the CAA based on the U.S.

Supreme Court’s 2007 decision that the EPA has authority to regulate GHG emissions.

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Then, in October 2017 the EPA proposed to repeal the CPP.

The EPA subsequently proposed the Affordable Clean Energy (“ACE”) rule to replace the CPP with a rule that utilizes heat rate improvement measures as the “best system of emission reduction.” The ACE rule adopts new implementing regulations under the CAA to clarify the roles of the EPA and the states, including an extension of the deadline for state plans and EPA approvals;

The EPA subsequently proposed the Affordable Clean Energy (“ACE”) rule to replace the CPP with a rule that utilizes heat rate improvement measures as the “best system of emission reduction.” The ACE rule adopted new implementing regulations under the CAA to clarify the roles of the EPA and the states, including an extension of the deadline for state plans and EPA approvals;

and the rule revises the NSR permitting program to provide EGUs the opportunity to make efficiency improvements without triggering NSR permit requirements.

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EPA and found that, in the promulgation of the CPP, the EPA had acted outside the bounds of the legal authority granted to the agency by Congress.

In January 2021, the EPA published a final significant contribution finding for purposes of regulating source category of GHG emissions, confirming that such power plants are a source category for such regulations.

However, this finding also excludes several sectors and may, therefore, be subject to revision, and future implementation of the NSPS is uncertain at this time.

The EPA published a notice of proposed rulemaking in May 2023 to regulate GHG emissions from new and existing fossil fuel-fired power plants.

The rule would require power plants to employ measures to lower GHG emissions, including technologies to capture and sequester their GHG emissions or co-fire with low-GHG hydrogen.

EPA has indicated that it expects to finalize the rule in June 2024.

Once finalized, the rule is expected to face significant legal, political and technological challenges.

On May 9, 2024, the EPA published a final rule that, among other things, repealed the ACE rule and also established emissions guidelines for GHG emissions for existing coal-fired and new or substantially modified gas-fired power plants.

The rule divides coal-fired power plants into three categories.

Those that will cease operation by 2032 are exempt from the rule.

Those operating between 2032 and 2039 will be required to achieve emissions reductions equivalent to co-firing 40 percent by volume natural gas.

Those intending to operate after 2039 will be required to achieve emissions reductions equivalent to 90 percent capture of CO2 through carbon capture and sequestration (“CCS”).

While the rule has been challenged in court, the US Supreme Court declined to stay the rule while those challenges proceed.

Additionally, the new Trump Administration has indicated its intention to revise the rule.

The rule could potentially have a material adverse effect on our business, financial condition, and results of operations.

Notwithstanding the ACE rule, the CPP’s requirements and impact during the pendency of the litigation led to premature retirements, and the new GHG regulations proposed in May 2023 could lead to additional premature retirements of coal-fired generating units and reduce the demand for coal.

Congress has not currently adopted legislation to restrict carbon dioxide emissions from existing power plants and has not otherwise expanded the legal authority of the EPA following West Virginia v.

EPA , including as it relates to authority to regulate carbon dioxide emissions from existing and modified power plants as proposed in the NSPS and CPP.

We cannot predict whether such legislation will be signed into law in the future.

Future, additional regulation of GHG emissions in the U.S.

could occur pursuant to future U.S.

treaty commitments, new domestic legislation or regulation by the EPA.

Congress has not currently adopted explicit legislation to restrict carbon dioxide emissions from existing power plants and has not otherwise expanded the legal authority of the EPA following West Virginia v.

EPA , including as it relates to its authority to regulate carbon dioxide emissions from existing and modified power plants.

However, we cannot predict whether such legislation will be signed into law in the future.

Internationally, the Paris Agreement requires member states to submit non-binding, individually-determined emissions reduction targets.

These commitments could further reduce demand and prices for fossil fuels.

Although the U.S.

had withdrawn from the Paris Agreement, President Biden recommitted the U.S.

in February 2021 and, in April 2021, the Biden Administration announced a new, more rigorous nationally determined emissions reduction level of 50- 52% reduction from 2005 levels in economy-wide net GHG emissions by 2030.

However, the new Trump administration has recently announced its intention to withdraw from the Paris Agreement, so these targets from the Biden Administration may change.

Since the 2021 Biden Administration targets were announced, the Parties of the UN Framework Convention on Climate Change have met on several occasions, including at the 28th Conference to the Parties on the UN Framework Convention on Climate Change (“COP28”).

At the COP28, the Parties agreed to non-binding language calling on countries to transition away from fossil fuels in energy systems to achieve net zero emissions by 2050.

The impact of these actions remains unclear at this time.

Others have announced their intent to increase the use of renewable energy sources, displacing coal and other fossil fuels.

There have been numerous protests and challenges to the permitting of new fossil fuel infrastructure, including coal-fired power plants and pipelines, by environmental organizations and state regulators for concerns related to GHG emissions.

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Other states may adopt similar requirements, and federal legislation is a possibility in this area.

In December 2021, President Biden issued an executive order setting a goal for a carbon pollution-free electricity sector across the country by 2035.

To the extent these requirements affect our current and prospective customers, they may reduce the demand for fossil fuel energy, and may affect long-term demand for our coal.

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These groups assert that the environmental analyses in question do not adequately consider the climate change impacts of these particular projects.

In April 2022, the Council on Environmental Quality (“CEQ”) issued a final rule revoking some of the modifications made to the NEPA regulations under the previous administration and reincorporated the consideration of direct, indirect and cumulative effects of major federal actions, including GHG emissions.

In April 2022, the White House Council on Environmental Quality (“CEQ”) issued a final rule revoking some of the modifications made to the NEPA regulations under the previous administration and reincorporated the consideration of direct, indirect and cumulative effects of major federal actions, including GHG emissions.

And, in January 2023, the CEQ released guidance, effective immediately, to assist federal agencies in assessing the GHG emissions and climate change effects of their proposed actions under NEPA.

However, in November 2024, the U.S.

Court of Appeals for the D.C.

Circuit held that CEQ has no authority to issue regulations implementing NEPA and that CEQ’s NEPA regulations are, therefore, invalid and of no effect.

Many states and regions have adopted GHG initiatives, and certain governmental bodies have or are considering the imposition of fees or taxes based on the emission of GHG by certain facilities, including coal-fired electric power generating facilities.

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Finally, activists may try to hamper fossil fuel companies by other means, including pressuring financing and other institutions into restricting access to capital, bonding and insurance, as well as pursuing tort litigation for various alleged climate-related impacts.

W ater Discharge

Water Discharge

The Federal Clean Water Act (“CWA”) and similar state and local laws and regulations regulate discharges into certain waters, primarily through permitting.

Section 402 of the CWA governs discharges of pollutants into waters of the United States, primarily through National Pollutant Discharge Elimination System (“NPDES”) permits.

Hallador’s Merom Generating Station is subject to an NPDES permit for its wastewater discharges.

Hallador’s Merom Generating Station is subject to an NPDES permit for its wastewater and stormwater discharges.

Section 404 of the CWA imposes permitting and mitigation requirements associated with the dredging and filling of certain wetlands and streams.

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In August 2021, the EPA initiated supplemental rulemaking indicating that it intended to strengthen certain discharge limits.

The EPA issued a proposed rule for public comment in March 2023, which the agency expects to finalize in 2024.

It is unclear what impact these regulations will have on the market for our coal products or on our electric power generating operations.

The EPA issued a final rule for in May 2024, which established more stringent requirements for flue gas desulfurization (“FGD”) wastewater, bottom ash transport water, and combustion residual leachate, among other measures.

The new rule also established early shutdown alternatives for plants permanently ceasing coal combustion by certain target dates.

These regulations may impact the market for our coal products and our electric power generating operations.

On April 23, 2020, the U.S.

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As a result, it is not yet possible to predict the total impacts of this final rule at this time, including any challenges to such final rule and the outcome of any such challenges.

The Merom Generating Station is subject to the CWA Section 316(b) rule issued by the EPA effective in 2014 that seeks to protect fish and other aquatic organisms drawn into cooling water systems at power plants and other facilities.

These standards require affected facilities to choose among seven BTA options to reduce fish impingement.

The Merom Generating Station is subject to requirements under CWA Section 316(a) for thermal discharges and Section 316(b) for cooling water intake structures.

Section 316(a) standards allow thermal dischargers to have less stringent alternate thermal limits if they can demonstrate that the current effluent limitations, based on water quality standards, are more stringent than necessary to protect the aquatic organisms in the receiving water body.

Merom Station is currently subject to a 316(a) variance and alternative thermal effluent limits.

If Merom Station’s 316(a) variance were revoked in the future, additional capital expenditures may be required that could be material.

Section 316(b) standards require affected facilities to choose among seven best technology available (“BTA”) options to reduce fish impingement.

In addition, certain facilities must conduct studies to assist permitting authorities to determine whether and what site-specific controls, if any, would be required to reduce entrainment of aquatic organisms.

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While these laws impose ongoing compliance obligations, such costs are not believed to have a material impact on our operations.

Coal Combustion Residuals

RCRA impacts the coal industry and electric power generation industry in particular because it regulates the management and disposal of certain coal combustion residuals (“CCR”).

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Circuit Court in 2018.

The EPA published a proposed rule in May 2023 that would regulate inactive surface impoundments at inactive electric utilities, called “legacy CCR surface impoundments.” Meanwhile, on January 25, 2022, the EPA published determinations for 9 of 57 CCR facilities who sought approval to continue disposal of CCR and non-CCR waste streams until 2023, as opposed to the initial 2021 deadline for unlined impoundments prescribed by the current rule.

Meanwhile, on January 25, 2022, the EPA published determinations for 9 of 57 CCR facilities who sought approval to continue disposal of CCR and non-CCR waste streams until 2023, as opposed to the initial 2021 deadline for unlined impoundments prescribed by the current rule.

While the EPA issued one conditional approval, the EPA is requiring the remaining facilities to cease receipt of waste within 135 days of completion of public comment or around July 2022.

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The current determinations, future determinations of the same nature, or similar actions in expected future rulemakings could lead to accelerated, abrupt, or unplanned suspension of coal-fired boilers.

Further, in May 2024, EPA finalized changed to the CCR regulations for inactive surface impoundments at inactive electric utilities, referred to as “legacy CCR surface impoundments,” and also established certain requirements for a new subcategory of CCR areas called “CCR management units,” among other actions.

The combined effect of the CCR rules and ELG regulations (discussed above) has compelled power generating companies to close existing ash ponds and may force the closure of certain existing coal burning power plants that cannot comply with the new standards.

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the Inflation Reduction Act (“IRA”), signed into law in August 2022;

and the EPA's proposed methane regulations for the oil and natural gas industry, but we cannot predict their impact on our business at this time.

and the EPA’s methane regulations for the oil and natural gas industry, but we cannot predict their impact on our business at this time.

We have identified potential opportunities associated with the Infrastructure Investment and Jobs Act and the IRA and are evaluating how they may align with our strategy going forward.

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The IRA contains climate and energy provisions, including funding to decarbonize the electric sector.

The main types of goods we purchase are mining equipment and replacement parts, steel-related (including roof control) products, belting products, lubricants, electricity, fuel, and tires.

The main types of goods we purchase for our mining operations are mining equipment and replacement parts, steel-related (including roof control) products, belting products, lubricants, electricity, fuel, and tires.

For our electric operations, we purchase coal, limestone, fuel oil, anhydrous ammonia, and other chemicals and items necessary to operate Merom Station.

Although we have many long, well-established relationships with our key suppliers, we do not believe that we are dependent on any of our individual suppliers other than for purchases of electricity.

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All continuing education requirements and training are completely paid for by the company and tuition reimbursement programs are available to every employee companywide.

Recent Regulatory Developments from the Presidential Transition

On January 20, 2025, Donald J.

Trump was inaugurated as the 47 th President of the United States of America.

Since President Trump’s inauguration, the new Administration has rescinded various Biden Administration Executive Orders and has issued new Executive Orders and taken other related executive actions, which may impact the market for our coal products or our electric power generating operations.

These new Executive Orders reflect policy objectives such as promoting the development of domestic energy resources, expedited permitting for energy projects, potential withdrawal from international climate change agreements, and the potential reconsideration of US EPA’s 2009 endangerment finding for greenhouse gas emissions under the Clean Air Act, among other issues.

Many of these policy objectives will require further rulemaking actions or other formal steps before they would become law.

In addition, the new Administration has taken actions to reduce the number of federal employees and to eliminate certain federal agencies or reduce their authority.

As a result, there is significant uncertainty regarding whether or how regulations and the agencies that administer and enforce these regulations may change as a result of the actions taken to date and possible future actions by the new Administration.

Additionally, there may be litigation over such regulatory changes, and if public enforcement decreases as a result of such changes, private litigation over environmental matters may increase.

We have no significant patents, trademarks, licenses, franchises, or concessions.

Our corporate office, as well as Sunrise Coal and Hallador Power Company, LLC's (“Hallador Power”) corporate office, is located at 1183 East Canvasback Drive, Terre Haute, Indiana, 47802.

Our corporate office, as well as Sunrise Coal and Hallador Power’s corporate office, is located at 1183 East Canvasback Drive, Terre Haute, Indiana, 47802.

All offices can be reached at 812.299.2800 .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business