UPDATE: Obama Administration Moves to Undo Bush-Era Coal Rule

The Obama administration on Monday sought to reverse a last-minute Bush administration rule that made it easier for companies that mine for coal by shearing off mountaintops to dump waste near rivers and streams.

The action is the latest blow to the industry, which defends mountaintop mining as a safer, cheaper alternative to traditional underground mining. Coal companies had supported the Bush-era rule, which permits companies that blow off mountaintops to get at the coal underneath to avoid maintaining a 100-foot buffer zone between nearby waters if it isn't reasonably possible to do so.

"It is bad public policy," U.S. Interior Department Secretary Ken Salazar said at a press conference to announce that he had directed the Justice Department to ask a federal court in Washington to throw out the rule and send it back to the Interior Department.

The decision is likely to have the most effect on central Appalachian surface-mining operations, which account for about 10% of U.S. coal production, according to Energy Information Administration data. West Virginia Gov. Joe Manchin, who received a call on Monday morning from Salazar, is already trying to gauge the impact on the state's coffers and on future employment.

"The governor shared his concern about the potential effect it could have," said Matt Turner, a spokesman for the governor. "A lot of jobs in West Virginia and throughout Appalachia depend on mining, and certainly our nation depends on coal as an energy source."

The action comes one month after the Environmental Protection Agency under the Obama administration announced that it would scrutinize 150 to 200 mining permits because of concern about waste dumped into rivers and streams. So far, the EPA has asked the U.S. Army Corps of Engineers to revoke at least one previously granted permit, and to ensure more safeguards before signing off on a handful of other permits.

"We've seen a real change in the EPA," Consol Energy Inc. (CNX) Chief Executive Brett Harvey said in an earnings call last week. "There's a lot of resistance to mountaintop mining."

-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; [e-mail]