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Obama administration will announce halt on new coal leases

The Obama administration plans to put a moratorium on new coal development on public land while it conducts a broad study of the environmental effects of the US leasing program, according to two people briefed on the plan.

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“That’s why I’m going to push to change the way we manage our oil and coal reserves, so that they better reflect the costs they impose on taxpayers and our planet”, Obama said during his address.

It’s unclear what impact the moratorium will have on many coal companies given the declining domestic demand for coal and the closure of numerous coal-fired power plants around the country.

That means burning all the coal at the lease sites would add more than a billion metric tons of carbon dioxide to the atmosphere.

Interior Department spokesperson declined to give details about the Friday announcement.

The role of climate in the government’s management of public fossil fuel resources has been a burgeoning issue that could have implications for the already struggling coal industry and an oil industry struggling to cope with plummeting oil prices.

The Energy Information Administration estimates that 41 percent of the coal mined in the United States comes from federal land.

Fossil fuels extracted on federal lands account for about a quarter of the nation’s energy-related greenhouse gases, according to the Center for American Progress.

“The President has taken an historic step forward in leveling the playing field and ending the fossil fuel industry’s unfair advantage”, financier Tom Steyer, president of the environmental advocacy group NextGen Climate, said in a statement.

“Undeniably, imposing more burdens on federal coal production will yield less, not more, revenue to the federal, state and local governments”, National Mining Association President and Chief Executive Officer Hal Quinn said in a statement provided to Bloomberg BNA.

Interior Secretary Sally Jewell is expected to make the announcement at midday Friday from New Mexico, one of five western states with tens of thousands of acres under lease.

The minimum royalty rate for mining on federal lands has not changed since 1976, and a variety of incentives and loopholes have allowed companies to pay just a small portion of what would seem to be required by law.

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“Public lands should be developed in the public interest but taxpayers have been shortchanged for decades”, said Theo Spencer of the Natural Resources Defense Council, an environmental group. Arch Coal Inc., the second-biggest USA coal producer, declared bankruptcy on Monday, joining Alpha Natural Resources Inc., Walter Energy Inc. and Patriot Coal Corp.

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