Obama’s Interior Dept. Calls for Major Changes to ‘Modernize’ Federal Coal Program
With just days until President-elect Donald Trump’s inauguration, the Department of the Interior finalized a report Wednesday calling for major changes to the federal coal program by which the U.S. manages the leasing of land to companies for exploration and production across 570 million publicly owned acres.
A year ago, new leases were placed on hold pending this report. Trump, who campaigned as an ally of the coal industry, has pledged to reverse that controversial moratorium.
Interior Department lands, managed by the Bureau of Land Management, are estimated to contain 7.4 billion tons of coal that could be mined and sold. Environmental groups have charged that if these fossil fuel resources are actually dug up and burned the consequences could be severe for the planet’s climate, and continual domestic coal leasing had also come into increasing tension with President Obama’s ambitious climate change policies.
At the same time, domestic coal production has declined dramaticallyin recent years because of major changes in U.S. electricity generation. According to the U.S. Energy Information Administration, the decline has been from nearly 1.2 billion short tons in 2008 to 743 million in 2015.
“It appears that modernization of the Federal coal program is warranted,” stated the report, a so-called scoping document that sets the stage for a broader environmental impact assessment of the coal program. “While energy markets, communities, environmental conditions, and national priorities have changed dramatically, the program has remained fairly static in its administration over the last thirty years.”
The new report sketches out a series of potentially ambitious changes to the current federal coal leasing program, which has not been updated since the 1980s. Those reforms would include charging a higher royalty rate to companies, factoring in the climate impact of the coal being burned through an additional charge to firms and setting an overall carbon budget for the nation’s coal leasing permits.
But the document said more analysis would be required to assess how the federal coal program contributes to climate change, whether taxpayers are getting a good return on the program and other matters.
Trump has vowed to increase coal extraction in the United States rather than impose tighter restrictions, making it unlikely the incoming administration will heed any of the new recommendations.
The federal coal leasing program — which in 2015 accounted for 42 percent of all coal produced in the U.S. — has come under sharp criticism for not providing a fair rate of return for taxpayers.
Mining companies currently pay a 12.5 percent royalty rate for coal taken from surface mines, compared to an 18.75 percent royalty for oil and gas from offshore drilling, and many federal auctions often involve just one bidder.
Coal companies, however, say the actual rates paid to the government are much higher because of bonuses and other fees paid through lease agreements.
The vast majority of federal coal leasing takes place in Wyoming and Montana’s Powder River basin, and the report notes that between 80 and 90 percent of the coal produced in the nation is used for electricity generation. Some is sold overseas, to countries such as China.
Over the last decade, BLM-administered leases have generated more than 4 billion tons of coal and $10 billion in federal revenue, which is shared with the state from which it was mined.
Coal mined from federal land in the Powder River basin accounts for roughly 10 percent of all U.S. greenhouse gas emissions, according to a 2014 study by the Center for American Progress and the Wilderness Society.
Both the Government Accountability Office and independent groups have issued findings suggesting federal taxpayers deserve higher payments from companies extracting coal from federal land. The practice of auctioning coal mining rights to a single bidder may have cost taxpayers as much as $28.9 billion over the past 30 years, according to a 2012 analysis by the Institute for Energy Economics and Financial Analysis, a Cleveland, Ohio-based think tank.
The National Mining Association denounced the department’s move Wednesday, but also looked for a quick reprieve from Trump.
“Today’s report represents the outgoing administration’s last step to delegate its energy and land management responsibilities to the ‘keep-it-in-the-ground’ crowd,” said its CEO Hal Quinn. “It’s a compilation of the same politically-contrived reasoning that has driven the disruptive coal leasing moratorium but can be terminated on day one of the new administration.”
“I look forward to President-elect Trump and Secretary Zinke reversing the moratorium on coal leasing, unleashing American energy and innovation and expanding high-paying energy jobs,” added Montana Senator Steve Daines, in a press release that termed the new Interior report “laughable.”
But others were more favorable. “It is our sincere hope that the next Secretary of the Interior will follow through with a review of the federal coal program,” said Ryan Alexander, president of Taxpayers for Common Sense, in a statement. “It is a disservice to taxpayers, and to the states and towns that depend on revenue from coal mining, to ignore the well-documented problems with virtually every aspect of the process. … If the next Administration or Congress want to bail out the coal industry, then they should do it in a transparent and accountable way, instead of undercutting an attempt to fix this broken system.”
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- On January 12, 2017