Obama Administration Halts New Coal Leases

Companies will continue to be able to mine coal reserves already under lease

By MATTHEW DALY, Associated Press

WASHINGTON — The Obama administration is imposing a moratorium on new coal leases on federal lands, arguing that the $1 billion-a-year program must be modernized to ensure a fair financial return to taxpayers and address climate change.

The program has remained largely unchanged for more than 30 years and requires a comprehensive review, Interior Secretary Sally Jewell said Friday in announcing the halt. The move drew praise from environmental groups and Democrats, but condemnation from Republicans who called it another volley in what they assert is a “war on coal” being waged by President Barack Obama.

“It is abundantly clear that times are different than they were 30 years ago, and the time for review (of the coal leasing program) is now,” Jewell told reporters in a conference call.

She called the moratorium, effective immediately and expected to last through the remainder of Obama’s final year in office, a “prudent step to hit pause.”

At least 30 mining applications in nine states would be blocked under the directive, according to a Bureau of Land Management list obtained by The Associated Press. Some of the largest projects are in the Powder River Basin of Wyoming and Montana, the nation’s top coal-producing region.

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 U.S. coal production, or about 450 million tons a year, comes from public lands in Wyoming, Montana and other Western states, bringing in more than $1 billion in annual revenue.

Nearly 90 percent of coal tracts leased by the Interior Department receive just a single bid, and royalty rates have remain unchanged since 1976. The lack of competition and other problems in the program have cost the government as much as $200 million a year in lost revenue, according to a 2014 report by the Government Accountability Office.

Coal reserves already under lease can continue to be mined, and a limited number of sales will be allowed, Jewell said.

It’s unclear what impact the moratorium will have on overall U.S. coal production, given declining domestic demand and the closure of numerous coal-fired power plants around the country. Coal companies have already stockpiled billions of tons of coal on existing leases in Wyoming, Montana, Colorado, Utah and New Mexico.

Even so, environmental groups cheered the announcement. The groups have long said the government’s 12.5 percent royalty rate for coal mining on federal land encouraged production of a “dirty” fuel that contributes to global warming.

Sen. Maria Cantwell, D-Wash., said taxpayers are being shortchanged on royalties that do not reflect the true costs of mining, both in terms of its economic value to mining companies and its impact on the environment. Getting royalty rates right is especially important “given how much coal comes off federal land,” said Cantwell, the top Democrat on the Senate Energy and Natural Resources Committee.

“I’m glad to see the president take this action. We need to stop the sweet deal (mining companies) have been getting,” Cantwell said.

But Senate Majority Leader Mitch McConnell, R-Ky., called the announcement “just the latest front in an ideological war on coal” that has contributed to the loss of thousands of jobs in coal-producing states.

“Americans want this administration to focus on building opportunity for them, not advancing some regressive war that attacks middle-class jobs and punishes the poor,” McConnell said.

Government auditors for years have questioned the adequacy of the royalty rate for coal and whether it provided an appropriate return to the government, although they did not make specific recommendations to raise it. Industry groups counter that any increase in royalty rates will hurt consumers and threaten high-paying jobs.

Jewell’s announcement follows Obama’s statement during the State of the Union address that he would push to change the way the federal government manages its oil and coal resources.

Jewell and other officials said Friday that the review will take at least three years — long after Obama leaves office next January — but will include an interim report due by the end of the year.

“I am confident we will get a good way down the track in this administration,” she said, although officials later acknowledged that the next president will not be legally bound to complete the review.

Rep. Rob Bishop, R-Utah, chairman of the House Natural Resources Committee, said the moratorium on coal leases shows that Obama’s oft-repeated claim to support an “all-of-the-above” energy agenda “was an election-year lie.”

“Unfortunately, the president’s bid to solidify his legacy with the extreme left will come at the expense of America’s energy needs and will make the lives of people more expensive and more uncomfortable,” Bishop said.

House Speaker Paul Ryan, R-Wis., said Obama’s policies “have already ravaged coal country, destroying jobs and people’s way of life, and this will increase that suffering.”

Michael Brune, executive director of the Sierra Club, applauded the administration’s action.

“The coal-leasing program is broken, outdated and does not consider the threat of climate change in our communities,” Brune said. “Thanks to the Obama administration’s leadership, we can proudly say that Big Coal’s destructive reach over our public lands is coming to an end.”

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