Even as giant U.S. coal companies bemoan the Obama Administration’s plan to reduce carbon pollution from coal-fired power plants, a federal agency’s long history of protecting industry interests could hand coal companies a victory and threaten an otherwise impressive climate record.
The coal industry has loudly and publicly decried the administration’s Clean Power Plan, saying it would “place the U.S. economy at serious risk,” while quietly working to convince the Department of the Interior’s Bureau of Land Management to sell off billions of tons of coal owned by the American public at below-market rates.
If the coal industry succeeds, and if the Obama administration doesn’t step in to curtail major new coal lease sales proposed by the BLM in a region of Wyoming and Montana known as the Powder River Basin, those sales could lock in decades of massive carbon dioxide releases. Combustion of that coal — if not here in the U.S. then quite likely abroad in places like China — will undermine White House climate goals and achievements.
“The true cost of Powder River Basin coal is much more than the billions of dollars in lost revenue that the federal government fails to collect on behalf of U.S. taxpayers; that is only half the story,” the CAP report states. “The cost to society for mining and burning Powder River Basin coal — its social cost — is the other half.”
The report found that even using BLM’s lower estimate of 388 million tons of Powder River Basin coal sold in 2012, “the total net social loss that year was more than $19 billion dollars. These losses will continue to reach into the hundreds of billions of dollars if Powder River Basin coal remains so highly undervalued and production continues at similar levels to today.”
The cost to society for mining and burning Powder River Basin coal — its social cost — is the other half.
The Greenpeace study looked at the social cost of carbon released from coal lease sales during the Obama administration and concluded it will result in damages of $52 billion to $530 billion, compared to receipts from those sales of just $2.3 billion. The study found that the more than two billion tons of coal sold already by the Interior Department under Obama has resulted in the release of 3.9 billion tons of carbon pollution, equivalent to the annual emissions of 825 million cars.
And there may be far more to come. A BLM plan to authorize lease sales for 10 billion tons of publicly owned coal in the Wyoming portion of the Powder River Basin has been under development since 2008 in federal agency offices in Wyoming. Based on the Greenpeace calculations, that could release in the neighborhood of 17 billion tons of carbon pollution when burned for electricity. This latest leasing plan, known as the Buffalo Resource Management Plan, is in fact now in Washington, where Secretary of the Interior Sally Jewell and agency leaders must grapple with a blueprint that reflects coal industry priorities and that fails to take account of the President’s goals under the Climate Action Plan.
Therein lies a tale of how coal, oil and gas companies have long gotten their way with the Bureau of Land Management. It is an agency with a pro-industry history and culture that oversees nearly 250 million acres of mostly western land and is often subject to strong political pressures from western state politicians who think the primary uses of our public lands should be in service to the mining, energy and livestock industries.
When Jim Baca took over as director of BLM early in the Clinton administration in 1993, it didn’t take long for the former New Mexico state land commissioner to discover the gale force political winds that often buffet the Interior Department agency.
Within an hour and a half of approving a recommendation from his Wyoming field staff to order a sheep rancher to remove his livestock from an overused and battered federal grazing allotment, Baca had received calls of protest from both of the state’s U.S. Senators. “Two U.S. Senators, with everything else going on, found time to call me about those 300 sheep,” Baca said.
That anecdote illustrates a truism about the BLM: administrations come and administrations go, but the agency continues to be dogged by criticism that it is too beholden to both conservative western politicians and the industries — oil and gas, coal, hard rock mining and livestock — that often dominate politics in the West.
While the public lands issues have changed somewhat since the last time Democrats controlled the Interior Department — there’s less talk of hard rock mining and grazing reforms now, and more about “all of the above” energy development — the BLM’s flaws remain in focus. They are, to a large extent, a product of its history, its culture, and the way it is organized.
And those flaws will, to a considerable extent, influence how the Obama Administration’s record on environmental stewardship will be judged, particularly how its enthusiasm for using public lands for robust production of oil, gas and especially coal conflicts with its otherwise solid record on combating climate change.
It’s been two decades since Baca’s boss in the Interior Department, secretary Bruce Babbitt, launched a broad-based reform effort on how public lands are managed, promising to make them more of a cradle for conservation and less of a playpen for extractive industry. That he was forced to trim his ambitions, and not incidentally to fire the outspoken Baca in an attempt to appease western politicians outraged by the effort to overhaul grazing practices, gives Babbitt a particularly useful perspective on the BLM.
In March of this year, Babbitt traveled to Boulder, Colorado to inaugurate a new lecture series at the University of Colorado law school. His topic: unrestrained oil and gas development on lands managed by the BLM.
“The BLM is not meeting its obligation, its trust for managing the public lands on our behalf,” Babbitt said that evening in Boulder. “It is completely outgunned and overmatched by the oil and gas industry, by the pace of the energy boom and by overwhelming political pressure that is put on that agency by the oil and gas industry and indeed by many western legislators … The BLM does not seem to have the resources or the will to be an effective regulator.”
[The agency’s] DNA has not yet been changed.
Despite attempts to reform the BLM, including his own, Babbitt said the agency’s “DNA has not yet been changed.”
While Babbitt was talking specifically about the BLM’s failings on oil and gas regulation, he said in a later interview with ThinkProgress that the criticisms regarding ineffective regulation also apply to the agency’s relationship to the coal industry. The same point has been made recently by government watchdogs, including the Government Accountability Office and the Interior Department’s inspector general, which both found that the agency has failed to ensure the public receives what it should when the BLM sells leases to public coal.
Thirteen months ago, the Interior Department’s inspector general issued a report that said the agency may have lost more than $60 million by undervaluing coal when it leases tracts of public land to producers. About 40 percent of U.S. coal production comes from public lands, most of it in the Powder River Basin, though with smaller production in other states including Colorado and Utah. Since 1990, the BLM has sold 107 coal leases, and about 90 percent of them had only one bidder. The BLM’s oversight of the coal leasing program is so weak, the IG report found, that it “could put the Government at risk of not receiving the full, fair market value for the leases” as is required by federal law. Further, the report said the agency’s inspection and enforcement program is flawed, likely preventing agency employees “from detecting noncompliance with laws, regulations and lease terms.”
The Inspector General criticized the BLM for relying solely on its own appraisers in determining the fair market value of the public’s coal rather than on the Interior Department’s separate office that houses valuation experts. Further, the audit found that without a consistent agency-wide system of handling lease sales, individual state offices had wide discretion in overseeing the process. Particularly telling was the revelation that the BLM does not independently verify coal companies’ claims to the quality and energy content of the coal they propose to buy — key factors in its market value — and does not conduct its own inspections of sites proposed for leasing, instead relying on coal companies’ own submissions.
And, even with coal companies increasingly looking to boost their exports of public coal to Asia, the Inspector General found that the agency did not consider the potential for export — and with it much higher prices for the companies’ coal — in determining fair market value.
Finally, the report highlighted one of the deficiencies most frequently cited by BLM critics: that officials in the Washington headquarters of the agency have let individual state offices operate with little oversight or direction. “[A]lthough the Washington Office manages the coal program, it does not directly control the program in the many State and field offices that oversee coal leases,” the IG report found. “Without strong, centralized management, State and field office personnel may interpret official standards, processes and procedures inconsistently.”
The Inspector General’s report made 13 specific recommendations related to those findings. Interior Department spokeswoman Jessica Kershaw told The Washington Post this week that the BLM has begun implementing those recommendations and is “fully committed to ensuring that taxpayers receive a fair return from the development of coal resources on public lands.” But she gave no indication that the department intends to cut back on coal lease sales, saying that “coal is a key component of America’s comprehensive energy portfolio and the nation’s economy.”
The federal coal program has a history of financial mismanagement and has been suspended on several occasions in order to allow reforms to be implemented. Following a large sale of federal coal in the Powder River Basin in 1982 for example, the General Accounting Office found that the leases were sold for $100 million below fair market value and that there was a lack of competition.
Culturally, the BLM reflects America’s long history of viewing its public lands as a collection of natural resources to be exploited and put to use by industry, whether timber, water, livestock forage, minerals or land for the development of railroads. The agency was created in 1946 by merging the General Land Office (itself founded in 1812 to oversee the disposition of federal lands) and the U.S. Grazing Service (created by the 1934 Taylor Grazing Act). Much of the BLM’s inventory of land was once seen as “the land nobody wanted,” not homesteaders, not politicians anxious to create national parks from more aesthetically pleasing sites, not — except in a part of the Pacific Northwest — timber companies looking for old growth trees.
It was 30 years before the Congress enacted a law to guide the BLM and its mission of administering public lands. The 1976 Federal Land Policy and Management Act (FLPMA) was the first time the agency was given a specific environmental mandate, to manage the public lands “in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource, and archaeological values; that where appropriate will preserve and protect certain public lands in their natural conditions; that will provide food and habitat for fish and wildlife and domestic animals; and that will provide for outdoor recreation and human occupancy and use.”
They have a cultural attitude that they are obligated to provide every resource on public lands to every constituency that wants it…
At the same time, FLPMA also recognized the BLM’s extractive roots by declaring that “the public lands be managed in a manner which recognizes the Nation’s need for domestic sources of minerals, food, timber and fiber from the public lands.”
That inherent ambiguity was enshrined in the act’s definition of the “multiple use” mandate for the BLM, which it defined as “management of the public lands and their various resource values so that they are utilized in the combination that will best meet the present and future needs of the American people.”
“Prior to the passage of that statute, they didn’t have any environmental charter whatsoever,” noted Dave Alberswerth, who worked for the BLM in the Clinton Administration and for national environmental groups before and after that. “They have a cultural attitude that they are obligated to provide every resource on public lands to every constituency that wants it, but particularly they’ve been biased culturally and historically to the extractive industries out there.”
It has been difficult to change the culture of the BLM in part, says Alberswerth, because in the past couple of decades it has often had acting directors rather than leaders confirmed by Congress, because it is organized into state offices that are more exposed to political pressures than other agencies organized on a regional basis, and because senior BLM people in the field seem “willing to wait out” reform-minded administrations.
“Certainly the state structure is susceptible to local pressures,” said Bob Abbey, a 30-year BLM veteran who was director earlier in the Obama administration. But Abbey believes the central office of the BLM in Washington still has the authority to get policy implemented at the state and field office level.
That was certainly true during the administration of President George W. Bush, when under the hands-on direction of Vice President Dick Cheney, the BLM became essentially a full-fledged oil and gas development agency.
We should ban coal exports except to countries that have coal burning restrictions equivalent to what we do.
That, says Babbitt, is the “great irony” of the traditional criticism of the BLM that its state offices act too independently. “With Cheney’s relentless focus on energy, they really ran the BLM,” Babbitt said.
Critics of the continued large-scale coal leases say that hasn’t been true for the Obama Administration, where a massive coal leasing program is proceeding without any apparent coherent oversight or policy guidance from either the White House or the senior political leadership at Interior — even in the face of a striking conflict with the administration’s climate change goals.
Coal leasing in the Powder River Basin is ultimately responsible for about 13 percent of total U.S. greenhouse gas emissions. The Obama Administration during its tenure so far has leased more than two billion tons of public coal. More than three billion additional tons are in the leasing pipeline. And 10 billion more tons could be authorized for leasing in a BLM management plan for the Wyoming portion of the basin that is nearing final approval and will guide operations for 15 years or more.
That plan is now under review by senior Interior Department officials. But according to one official who recently left the department, there is no sign that the plan is going to be changed to be more consistent with the administration’s emphasis on fighting climate change. And there has been no top level support at Interior to do a thorough environmental review of the effects of large amounts of U.S. public coal being sent overseas, including its impact on greenhouse gas emissions.
Noting the administration’s strong response to climate change in proposing tough limits on coal fired power plant emissions in the U.S., Babbitt said the administration could achieve some consistency between that effort and its coal program with a simple stroke. “We should ban coal exports except to countries that have coal burning restrictions equivalent to what we do.”
Beyond that, he said in his University of Colorado speech, the administration ought to devote “some high level attention” to reforming the BLM as was done after the Deepwater Horizon spill in the Gulf of Mexico to the Minerals Management Service, the Interior agency that oversaw offshore oil and gas development. In that case, President Obama appointed a commission of inquiry, which among other things recommended a thorough overhaul of the Minerals Management Service.
“That’s the right model for doing something about the BLM,” Babbitt said.