Days following the announcement of Arch Coal’s bankruptcy filing, the Obama administration announced Friday a moratorium on all federal coal leasing while the U.S. Department of Interior conducts a full review of the program.
The action isn’t expected to have an immediate impact on mining in Wyoming. However, the federal review — which will include an assessment of the land, water, air and climate impact of mining and burning the coal — is seen as a powerful tailwind to the industry’s downward trajectory.
Interior Secretary Sally Jewell during a press call Friday acknowledged that the coal industry struggles under financial and market pressures, and that the Interior’s actions may add to the economic pain felt in coal-reliant communities. However, it is in the nation’s interest to ensure a fair financial return on publicly owned coal and to weigh exploitation of the resource with the human health and economic impacts of mining and burning the coal.
“We need to take into account right now the science of carbon’s impact to the environment,” Jewell told reporters.
Federal actions
The Interior will conduct a Programmatic Environmental Impact Statement — a years-long process that calls for public review and participation under the National Environmental Policy Act. The agency has committed to completing the review in three years. The review will “take a careful look at issues such as how, when, and where to lease; how to account for the environmental and public health impacts of federal coal production; and how to ensure American taxpayers are earning a fair return for the use of their public resources,” according to an Interior statement.
The U.S. Geological Survey will build a database for the review, accounting for the nation’s industrial carbon emissions from coal, oil and natural gas, as well as current and potential carbon sequestration.
Coal lease moratorium
The moratorium does not affect current mining activities, nor does it invalidate existing federal coal leases. Jewell estimated existing approved leases provide about 20 years worth of coal. Much of that supply is in Wyoming, the state that provides about 40 percent of the nation’s coal.
The moratorium does halt all federal coal leasing actions nationwide, except for lease applications already under review. Several of those federal coal lease applications that will be allowed to continue are in Wyoming, according to Interior officials. The agency said it will provide more detail on the status of individual lease applications.
Demand for new federal coal leases in Wyoming — a major source of revenue dedicated to schools — had already almost entirely disappeared during the past four years as many coal companies struggle financially. Jewell said that many federal coal lease applications had already been delayed at the request of coal companies.
Reactions
The Obama administration’s action Friday was hailed as an historic victory by those who want to see a dramatic cut in the use of coal for its human health, environmental and climate impacts.
“We applaud President Obama and Secretary Jewell for taking this action,” said Bob LeResche, who chairs the Wyoming landowner advocacy group Powder River Basin Resource Council and sits on the Board of the Western Organization of Resource Councils. “Given what we know about coal’s costs, and given huge recent changes in the structure of the industry, it’s a critical time for the nation to pause the federal coal program and take fresh stock of the effects this program has on the environment and our communities.”
“This is really big news, and we at the Sierra Club are really, really excited to see the president take this leadership on this issue we think is top priority,” Connie Wilbert, director of Sierra Club’s Wyoming chapter said in a phone interview. “Our whole federal leasing coal program is outdated and just doesn’t take into account [scientific data] we have now about mining and burning coal as a fuel source, so we’re thrilled.”
Industry officials in the state, however, see the administration’s move as driven more by politics than science.
“This is yet another salvo in the president’s efforts to kill the coal industry,” Wyoming Mining Association executive director Jonathan Downing said in a statement. “He and his allies in the extreme environmental movement know full well that this measure will make federal coal uneconomical to mine, thereby locking up America’s most abundant and reliable source of electricity generation.”
Wyoming Gov. Matt Mead (R) has fought the Obama administration on several fronts of federal regulation of mining and coal burning throughout his first and second terms. He described the administration’s action on Friday as “drastic and uncalled for.”
“This administration’s attempts to suppress the use of coal have largely been through Environmental Protection Agency regulations,” Mead said in a statement Friday. “The Regional Haze rule, the mercury and air toxics standards (MATS) rule, the Clean Power Plan — these are some but not all the regulations we have fought.
“Today’s move — imposing a moratorium on new coal leases on federal lands — goes beyond EPA regulation. It could not be more plain — in fact, it is starkly apparent — this administration is no friend to coal when it flatly says there will be no new coal leases until some indefinite point in time.”
Here’s a sampling of more statements regarding the federal action on Friday:
Jayni Hein, policy director at the Institute for Policy Integrity: “This a major shift that helps modernize the federal coal program. This planning process will disclose the environmental and social impacts of coal leasing, which are extensive.
“The analysis should account for direct and indirect greenhouse gas emissions, and use tools like the social cost of carbon and social cost of methane. Putting a dollar sign on the climate effects of coal production will bolster the case for fiscal reform.”
U.S. Sen. John Barrasso (R-Wyoming): “When rural America says President Obama has contempt for their lives and livelihoods, they mean decisions like today’s announcement. A moratorium on federal coal leasing effectively hands a pink slip to the thousands of people in Wyoming and across the West employed in coal production.”
Rhea Suh, president of the Natural Resources Defense Council: “The president is right to stop this handout to big coal companies, which has cost American taxpayers more than $30 billion over the past three decades. Aligning the use of America’s public lands with our obligation to protect future generations from the dangers of climate change — that’s what leadership is all about, at home and abroad, as we transition away from dirty fossil fuels of the past to a clean energy 21st century.”
Hal Quinn, National Mining Association president and CEO: “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. Under the guise of a listening tour last summer, administration officials came, sat, but never listened to the facts that every ton of coal produced from federal lands pays more than its fair share through bonus bids and above-market royalty rates.”
Steve Charter, past chairman of Montana-based Northern Plains Resource Council, and landowner who ranches above a federal coal mine: “There have been more than 15 investigations from both inside and outside the government, and all of them have found massive costs to taxpayers from mismanagement of the federal coal program. Public lands and public resources should be managed for the public good — not for the bottom lines of private corporations. I’m glad to see the Administration taking a step toward ensuring that taxpayers receive a fair return on coal that we all own.”
— This story was updated at 5:55 p.m. January 15, 2015. — Ed
Read Secretarial Order 3338 outlining the Interior’s call for a programmatic review:
Sen. Barrasso’s comment about pink slips is overblown, given that these mines have plenty of coal under lease now. No miner jobs in Wyoming will be on the line since Arch’s production costs here are so much lower than in Appalachia and other coal fields in the East.
There’s an argument that this somehow reduces predictability of supply, but the public should not be expected to sell its resources on the cheap to ensure predictability for a business in a deadly competition with very cheap natural gas. Some executives and administrative people may lose jobs as both Arch and Alpha restructure under bankruptcy. But Alpha’s bankruptcy seems to have far more to do with Alpha over-extending when it bought Massey Energy (incurring billions in debt). In addition to the competition with gas, Alpha seems to have bet too much on a market in China.
The biggest issue the coal companies face is cheap, cheap methane. The public’s budding resolve to act to slow down climate change is a factor, but not on par with the direct competition from gas.
Dan Neal
Thanks for the great article. When you mention costs to the public, does that include clean-up costs?
When Arch Coal declared bankruptcy, does that mean they can avoid clean-up costs? Now I’m curious about coal mine reclamation.