In Mitch McConnell's Kentucky, a bipartisan effort to kick the coal habit

The Obama administration’s proposed new rules regulating carbon emissions at power plants are getting rough treatment by politicians of both stripes in the coal state of Kentucky. Coal provides the state with more than 90 percent of its electrical power – and with a competitive edge from low utility rates.

Alison Lundergan Grimes, the Democrat challenging Republican Mitch McConnell for his seat in the US Senate, launched a pricey ad campaign in Kentucky coal country this week: “President Obama and Washington don’t get it… Alison Grimes does.”

Senator McConnell likened the proposed Environmental Protection Agency regulations to “a dagger in the heart of the American middle class,” and introduced legislation Tuesday that would require federal officials to "certify" that the rules not negatively impact jobs, the economy, rate hikes, or the electricity supply before they are allowed to take effect. The EPA rules mandate a 30 percent reduction in greenhouse gas emissions by 2030 – and an 83 percent reduction by 2050.

But even as politicians and industry roar about the president’s “war on coal,” a remarkable bipartisan effort is under way here in the eastern reaches of the Bluegrass State to kick the coal habit and diversify the economy.

Since 2012, jobs in this mountainous coal-producing region have slid like black rock from a dump truck. The sudden drop – more than 10,000 jobs in a year – was triggered by the nationwide move to natural gas, warm winters, more costly coal extraction, and EPA regulations under President Obama that were related to coal production.

Things have stabilized for now, but the region’s unemployment rate is stuck at 14.5 percent – more than twice the national rate – and Kentuckians are hurting.

“We’re going to continue to scream and be very vocal” about EPA rules, says Donovan Blackburn, city manager of Pikeville, located at the tip of Eastern Kentucky. “But the writing is on the wall,” Mr. Blackburn says. “The EPA being the giant that it is, we’re going to have to find other ways to diversify the economy and diversify ourselves out of the hole we’ve been put in.”

The result is the far-reaching bipartisan effort, launched in December, to develop a growth strategy for the region. It’s spearheaded by Gov. Steve Beshear, a Democrat, and by the Republican who represents Eastern Kentucky in Congress, Hal Rogers, who also chairs the House Appropriations Committee.

The two men’s effort is “a fantastic example of bipartisan working together,” says Jerry Rickett, who heads the Kentucky Highlands Investment Corporation, which focuses on venture capital and entrepreneurship. “They’ve linked arms, and tried to help Eastern Kentucky grow back.”

The politicians’ initiative has got real money behind it, and buy-in from the region’s education, business, and political leaders – 1,700 of whom braved treacherous roads and wintry weather to arrive at an initial brainstorming summit in Pikeville in December. Ten groups – looking at subjects such as tourism and education – are hurrying now to develop a roadmap to a better future by the end of the year.

The fledgling initiative, called Shaping our Appalachian Region, or SOAR, includes investment in broadband Internet access and a widening of the main highway leading into the region from the rest of the state.

SOAR is connected with other recent efforts to reshape the economy and help the jobless across county lines: a $10 million “race to the top” grant from the US Department of Education to boost K-12 education in 17 school districts; the recent designation by the White House of eight counties as “promise zones,” making them eligible for private-public partnerships and federal grants; and an extensive regional job training program.

This is not the first attempt to raise this depressed area with its deep cultural roots and natural beauty. The anti-poverty programs of the 1960s – during President Johnson’s war on poverty – and federal, state, and local spending since then have cut the poverty rate in Appalachian Kentucky by more than half, according to an April report in the Lexington Herald Leader. But it’s still high, at 25 percent.

Not all rejuvenation efforts have been successful, with some petering out when a politician has left office, or falling prey to local rivalries in a region that one local describes as “clannish.”

But organizers have designed SOAR to be different. It tries to cut across rivalries by involving folks from all over the area. Counties and districts are cooperating to an extent never tried in Eastern Kentucky, says Charles Fluharty – a kind of rural turnaround artist who is consulting on SOAR and who heads the Rural Policy Research Institute, in Columbia, Mo.

The effort also avoids the pitfall of overdependence on any one politician by making SOAR a nonprofit, instead of a government entity. It is meant to facilitate, not compete with, other creative efforts. True, at this phase, it’s heavily dependent on government dollars, but private investment is already sniffing opportunity, says Mr. Fluharty.

Last month Alltech, a privately held animal nutrition, food, and beverage company based in Kentucky, announced plans to open a brewery and distillery in Pikeville. Its waste heat and grain byproducts will be used for tank fish farming. 

Fluharty points to other private-sector investments in broadband and tourism, for example. The agriculture industry is looking at how to turn reclaimed mining sites into grazing grounds for cattle.

“Coal is not going away. It is downsizing,” Fluharty says. That transition involves “immense human suffering” at the moment.

“But come back and see us in two years,” when SOAR is no longer in its infancy, says Fluharty enthusiastically. “They have moved quicker than any place I have ever worked. They need it more than any pace I have ever worked.”

[Editor's note: An earlier version of this article misspelled Alison Lundergan Grimes's name.]