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.
“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,” Secretary of the Interior Sally Jewell said Friday.
The plan includes three measures to address these issues and update the federal coal program to account for taxpayer interests and environmental challenges. The Interior Department will conduct a review to identify potential reforms to the outdated program, put a temporary pause on new coal leasing (which will not apply to existing leases), and direct the U.S. Geological Survey to begin annual tracking and reporting on greenhouse gas emissions that result from fossil fuels extracted on public lands.
“A complete assessment of the federal coal program is overdue,” said Dan Bucks, former director of the Montana Department of Revenue. “There are a host of energy, environmental, social, fiscal, and managerial issues that need to be addressed. The coal industry, coal workers and communities, and the public deserve answers to the many questions that create uncertainty for this source of energy.”
A complete assessment of the federal coal program is overdue
These actions follow a series of listening sessions held by the Department of Interior last year to address issues of royalty rates, transparency, and climate change, as well as concerns raised by the Government Accountability Office, Inspector General, and several members of congress. With Friday’s announcement, the administration is responding to calls from local communities, sportsmen and women, taxpayer advocates, landowners, environmentalists, and others to modernize a federal coal program that they say is outdated and unfair to taxpayers.
As it currently stands, taxpayers are missing out on millions of dollars in royalties from leasing energy sources on public lands. Coal companies pay a 12.5 percent royalty rate for surface mining on federal lands, which is well below the 18.75 percent royalty charged for offshore oil and gas drilling. Royalty rate reductions, loopholes, subsidies, and self-dealing transactions further reduce the effective rate that coal companies pay to less than 5 percent.
According to a fact sheet released by the Department of Interior, the review will assess these currently insufficient royalty rates and “ensure the sale of these public resources results in a fair return to the American taxpayers.”
“The federal coal program has been the source of controversy many times in the past for failing to ensure a fair return to taxpayers.” said Ryan Alexander, president of Taxpayers for Common sense. “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.”
Not only is the real cost of coal not currently accounted for in its royalties, but the environmental impacts from coal, including its contribution to climate change, also impose a cost to the American public. Currently, the combustion of coal from federal lands accounts for more than 57 percent of all emissions from fossil fuel production on federal lands. Air and water pollution from strip mining and failed mine reclamation also add to coal’s heavy environmental cost. The review will take into account climate change, environmental, and public health impacts of the coal program.
“It is only common sense that we take a closer look at coal mining on public lands; our climate, clean water, wildlife habitat and public lands are in the balance,” said retired Major General and managing director of Vet Voice Foundation, Paul Eaton. “This is the heritage America’s veterans fought for — and we are passing along to our kids.”
The National Mining Association (NMA) criticized today’s reform announcement, claiming that it will impede coal production.
“The Obama administration’s move to shut off the largest source of America’s lowest cost and most reliable fuel for electricity opens up another front in its ‘Beyond Jobs’ campaign,” said NMA CEO Hal Quinn.
Despite the NMA’s claims, the pause on issuing new coal leases is likely to have little to no impact on coal production or jobs because it does not apply to existing leases or ongoing production activities. Even without new leases, the Department of Interior estimates coal companies have about 20 years of recoverable coal reserves already under lease on federal lands.
And though environmentalists generally praised the announcement, some noted that the administration could still do more to regulate — or completely end — fossil fuel development on public lands.
This is also not the first time the federal coal program has been on a pause. During reviews in both the 1970s and 80s, the federal government halted new coal leasing while the program underwent reforms.
Jenny Rowland is the Research and Advocacy Associate for the Public Lands Project at Center for American Progress. You can follow her on Twitter @jennyhrowland