Obama administration halts new coal leases on federal land

By Matthew Daly, Associated Press

The Obama administration is halting new coal leases on federal lands until it completes a comprehensive review of fees charged to mining companies and coal mining's impact on the environment.

Scottie Stinson, a coal miner of 16 years, works to secure the roof with bolts in an underground coal mine roughly 40-inches-high in Welch, W.Va. Preliminary government figures released Friday, Jan. 8, 2016 show U.S. coal production has fallen to its lowest level in nearly 30 years as cheaper sources of power and stricter environmental regulations reduce demand. (AP Photo/David Goldman)


WASHINGTON (AP) — The Obama administration is halting new coal leases on federal lands until it completes a comprehensive review of fees charged to mining companies and coal mining's impact on the environment.

Interior Secretary Sally Jewell said Friday that companies can continue to mine coal reserves already under lease. The coal leasing program has not been significantly changed in more than 30 years and needs to be modernized to ensure a fair return to American taxpayers and to account for climate change, Jewell said.

"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.

Officials also need to take into account new scientific data available on the impact of fossil fuels on the environment and on climate change, Jewell said.

Roughly 40 percent of the coal produced in the United States comes from federal lands. The vast majority comes from Wyoming, Montana, Colorado, Utah and New Mexico.

It's unclear what impact the moratorium will have on U.S. coal production, given the declining domestic demand for coal 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.

Even so, environmental groups cheered the announcement. The groups have long said the government's fee rates for coal mining on federal land encouraged production of a product that contributes to global warming.

The administration held a handful of public hearings last year to get feedback on the adequacy of the fees charged companies for coal mined on federal lands. The government collects a 12.5 percent royalty on the sale price of strip-mined coal, a rate that was established in 1976. The money is then split between the federal government and the state where the coal was mined. Coal companies also pay a $3 fee annually for each acre (o.4 hectare) of land leased.

Sen. Maria Cantwell, D-Washington, said taxpayers are being shortchanged on royalties that do not reflect the true costs of mining, both in terms of the economic value derived by mining companies and mining's 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.

Government auditors for years have questioned the adequacy of the royalty rate 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.

President Barack Obama said 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 reviews of the federal coal program have occurred twice before — once in the 1970s and again in the 1980s — and pauses on the approval of new mining leases accompanied each review.

Rep. Rob Bishop, the Republican chairman of the House Natural Resources Committee, said the moratorium on coal leases shows that Obama's repeated claim to support an "all-of-the-above" energy agenda "was an election-year lie."

The administration "should be putting our nation on the path of continued energy strength — not undermining our energy security at the bequest of radical environmentalists who wish to keep our resources under lock and key," Bishop said.

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."

Did You Like this Article? Get All the Energy Industry News Delivered to Your Inbox

Subscribe to an email newsletter today at no cost and receive the latest news and information.

 Subscribe Now


The Time is Right for Optimum Reliability: Capital-Intensive Industries and Asset Performance Management

Imagine a plant that is no longer at risk of a random shutdown. Imagine not worrying about losing...

Going Digital: The New Normal in Oil & Gas

In this whitepaper you will learn how Keystone Engineering, ONGC, and Saipem are using software t...

Maximizing Operational Excellence

In a recent survey conducted by PennEnergy Research, 70% of surveyed energy industry professional...

Leveraging the Power of Information in the Energy Industry

Information Governance is about more than compliance. It’s about using your information to drive ...

Latest PennEnergy Jobs

PennEnergy Oil & Gas Jobs