The Obama administration announced Friday that it is stopping most new coal leasing on America’s public lands as it moves to modernize and reform the federal coal leasing program, which has not been updated in more than 30 years.
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“The federal coal program is frozen in time in the 1980s”, Former Deputy Secretary of the Interior David J. Hayes, said in an e-mailed statement.
The Obama administration announced Friday that it will halt issuing new coal leases on federal lands – a blow to the coal industry.
The action isn’t expected to have an immediate impact on mining in Wyoming.
The federal program to lease coal-mining rights to a single bidder has remained largely unchanged for decades, despite complaints that low royalty rates and a near-total lack of competition have cost the government hundreds of millions of dollars a year.
More than 40 percent of US coal production, or about 450 million tons a year, comes from public land in Wyoming, Montana and other Western states, bringing in more than $1 billion in annual revenue.
According to a fact sheet released by the Department of Interior, the review will assess these now insufficient royalty rates and “ensure the sale of these public resources results in a fair return to the American taxpayers”.
During and after the pause, companies can continue to mine the large amount of coal reserves already under lease, estimated to be enough to sustain current levels of production from federal land for approximately 20 years.
It’s unclear what impact the moratorium will have on many coal companies given the declining domestic demand, coupled with the closure of numerous coal-fired power plants around the country.
Environmental groups applauded the new policy.
Revenues are received from coal leasing at three points: A bonus is paid at the time the lease is issued, a rental fee of $3 per acre is paid annually, and production royalties equaling 12.5% of the gross value for surface-mined coal or 8% for coal severed by underground mining methods are paid.
“The decision by the Interior Department to suspend new coal leasing on federal lands is a responsible step for our environment and for taxpayers”, said Fred Krupp, president of the Environmental Defense Fund. “We must begin taking into account the full cost of the pollution created when we extract and burn coal. We need to stop the sweet deal (mining companies) have been getting”, Cantwell said.
However, by 2014, we were back to business as usual at the Interior Department when it came to leasing our nation’s coal.
But Rep. Rob Bishop, the Utah Republican who chairs the House Natural Resources Committee, said the lease moratorium will hurt Americans and proves that Obama’s pledge supporting an “all-of-the-above” energy agenda “was an election-year lie”.
“The idea that future coal leasing requires a pause to evaluate environmental impacts defies credulity”.
The announcement comes just days after President Obama’s final State of the Union address, in which he promised to “push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet” (see Daily GPI, Jan. 13).
Governor Mead further said, “The Administration’s move today is drastic and uncalled for”. “The president’s policies have already ravaged coal country, destroying jobs and people’s way of life, and this will increase that suffering”.
It will also include moratorium on coal leases, said sources familiar with the effort, as the government works on longer-term structural reforms to the coal program.
Associated Press writer Matthew Brown in Billings, Mont., contributed this story.
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“We haven’t undertaken a comprehensive review of the program in more than 30 years, and 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”, U.S. Secretary of the Interior Sally Jewell said in a statement Friday.
