Partisan coal – #5

I come from Gillette, so I’m familiar with the time-honored tradition among many in the coal mining industry to declare during presidential campaigns that the Democratic candidate (fill in blank) will shut down the coal industry if elected. Some have gone so far as to hand out stickers to miners on election day stating “VOTE RIGHT” and suggesting their jobs may depend on it.

The notion is that all Democrats just think coal is icky and, heck, why not switch off — over night — the fuel that powers nearly half of the nation’s electricity? This notion about Democrats and coal is entirely outlandish (see: Democrat Dave Freudenthal, former Wyoming governor, joins board of Arch Coal Inc.), but it’s part of America’s political discourse.

So it wasn’t unexpected when Sen. Mike Enzi (R-Wyoming), who also hails from Gillette, told me in January, “This (Obama) administration is flat-out against coal and they’re not going to let another permit go through. In 10 years, the coal industry will be done.”

On Tuesday, Interior Secretary Ken Salazar pulled together a news conference in Cheyenne to announce that the Bureau of Land Management will hold competitive lease sales this year for four federal coal tracts in the Powder River Basin, totaling 758 million tons. Many more lease sales will follow, Salazar assured.

The announcement was likely an attempt by the Obama administration to alter the political narrative on coal — slim chance of that — however, it did also answer a practical question and should serve to calm some nerves in the Powder River Basin; No, the administration will not change the federal coal leasing program in the basin. WildEarth Guardians has challenged federal coal leases in the basin in recent years, as well as the method for how coal is leased in the basin.

Some mines are within two years of having to alter their current rate of production inside their existing lease boundaries, according to Wyoming BLM officials. So it’s understandable why any delay — real or perceived — triggers alarm.

The four federal coal lease tracts that will go up for competitive bid this year are not new. They’ve been in the works for years. Some of them were proposed as long ago as 2004. The federal coal leasing program in the Powder River Basin has always been a multiple-years process, and it has only become more drawn out. But the actual work of processing coal leases hasn’t been idled or set aside for any amount of time, according to BLM officials.

Back in 2004, the Casper BLM field office was processing five separate LBAs at the same time. Today, the office is working on 10 LBAs that include a total of 14 individual coal lease tracts.

“This is the biggest group of LBAs we’ve ever had,” said Mike Karbs, assistant district manager for solid minerals at the BLM Casper field office.

All four federal coal leases set for sale this year have been challenged individually by various environmental groups. The process usually begins at the Interior Board of Land Appeals and, in some cases, continues to U.S. District Court. No stays were imposed in these challenges, said Karbs. The administrative and legal challenges originating outside the Interior has not forced Wyoming BLM to put off its work in processing the LBAs.

“The basics are that we haven’t been stopped from implementing any of those decisions,” said Karbs.

There was speculation that Interior would postpone lease sales until legal challenges fully played out in the judicial system. But Karbs said that any intentional administrative delay could effect fair market value of the coal because one coal company could get cold feet and alter its operational plans.

Karbs noted that coal companies propose an LBA based on its own  needs, but it’s the job of the BLM to reconfigure each LBA to ensure — among other things — that more than one coal operator in the basin will place a bid on the tract, therefore increasing the amount bid.

Total “bonus bids,” which are a payment for the right to develop the federal coal,  could approach $1 billion, based on recent bidding. Slightly less than half the money would go to Wyoming. More tax revenue is generated once the coal is mined.

“We decided it does make sense to offer these, and see what kind of bidding we get,” said Karbs. “We feel our decisions are well-reasoned and we can defend them (in court).”

What really stoked the political rhetoric over coal and the federal government was the Obama administration’s hard stance regarding mountaintop removal coal mining in Appalachia. The Office of Surface Mining Reclamation and Enforcement proposed a new rule protecting streams — a measure that could result in 7,000 lost mining jobs in the Eastern U.S., but could actually result in more demand for Wyoming coal, according to federal officials.

It’s easy to understand how a battle over coal policy in the Eastern United States can reverberate throughout the entire coal industry. But any politician who truly wants to avoid an energy crisis in the U.S. knows that a significant decline in the use of coal cannot happen overnight, or even within one presidential term.

Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.