Administration officials said they hope to make the leasing program more transparent and more competitive with a review that will make suggestions that would “modernize” the nation’s coal program.
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The move stymies new coal production on federal lands as the administration weighs a programmatic overhaul. Companies that already hold federal coal leases, such as Peabody Energy Corp., can continue to mine those reserves during and after the moratorium.
“Even as our nation transitions to cleaner energy sources, building on smart policies and progress already underway, we know that coal will continue to be an important domestic energy source in the years ahead”.
“We have an obligation to current and future generations to ensure the federal coal program delivers a fair return to American taxpayers and takes into account its impacts on climate change”, Jewell said on a conference call.
Roughly 40 percent of the coal produced in the country comes from federal lands, primarily in Wyoming, Montana, Colorado, Utah and New Mexico.
The government collects a 12.5 percent royalty on the sale price of strip-mined coal. Arch Coal, based out of St. Louis, MO is the latest company to declare bankruptcy in response to declining revenues. By contrast, most of Obama’s climate policies thus far have focused on reducing demand for fuels like oil and coal, including carbon limits for power plants and efficiency rules for cars and trucks.
Additionally, greens, the Government Accountability Office, Interior’s inspector general, congressional Democrats and others have long complained that coal companies are getting a major bargain on federal land, not just in comparison to private land, but also because of the climate impact of the coal they produce.
“Given serious concerns raised about the federal coal program, we’re taking the prudent step to hit pause on approving significant new leases so that decisions about those leases can benefit from the recommendations that come out of the review”, said Jewell. Many companies working in the Powder River Basin have 20 years of estimated reserves. “The ramifications for the country will be bad: lost growth, lost jobs, and lost revenue that would have gone to schools, bridges, and roads”.
The move was immediately hailed by environmental groups, including Greenpeace, which said the federal leasing program “undercut” Obama’s climate agenda “by giving away our coal at subsidized rates, propping up this outdated energy source without regard for the damage done to communities or our climate”.
President Barack Obama wasn’t joking about coal. The review will take into account climate change, environmental, and public health impacts of the coal program.
“Over the last two years a number of coal leases were bid out by the Bureau of Land Management and no bids were received, reflecting the fact that there are no market incentives to go forward with new mining”, said Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis.
Rep. Chris Stewart, R-Utah, called the announcement “absurd”.
Lee Boughey, senior manager of communications at Tri-State Generation and Transmission Association, which owns Colowyo Mine, said its application was a modification to an existing lease to address protections for greater sage grouse habitat. “The goal of this review should be to create a program that strives for transparency and fulfills the fiduciary responsibility of the department to manage these public resources on behalf of taxpayers”. It will kick off with public sessions in early 2016 to help determine the precise scope of the review.
“From the Clean Power Plan to another proposal at the Department of Interior to change how coal royalties are calculated”.
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The Department also noted that its action to halt issuing new coal leases, while not affecting current leases, during this review follows a precedent set by previous administrations.
