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Obama Administration Announces New Coal Lease Moratorium

Today, the Obama administration announced a moratorium on new coal mining leases on federal land.

The move, made in conjunction with Department of the Interior Secretary Sally Jewell (according to the Washington Post), aims to analyze “social” impact of coal, specifically whether the price of leases takes such costs into account. From the Post:

“Given serious concerns raised about the federal coal program, we’re taking the prudent step to hit pause on approving significant new leases,” said Jewell, who said existing coal leases would continue to go forward to assure an adequate supply for the country’s electricity needs.

“We haven’t undertaken a comprehensive review of the program in more than 30 years,” Jewell said, “and we have an obligation to current and future generations to ensure the federal coal program delivers a fair return to American taxpayers and takes into account its impacts on climate change.”

The announcement, initially reported late Thursday, comes three days after President Obama hinted of coming reforms to federal energy policy in his State of the Union address.

Jewell quickly added the moratorium would not affect the current production paradigm, noting the leases currently in effect are slated to produce 20 years worth of coal. Jewell added there are possible exceptions to the moratorium, most notably regarding metallurgical coal. From the Post:

“We’ll make accommodations in the event of emergency circumstances to ensure this pause will have no material impact on the nation’s ability to meet its power generation needs,” Jewell said. ” We are undertaking this effort with full consideration of the importance of maintaining reliable and affordable energy for American families and businesses, as well other federal programs and policies.”

Hundreds of millions of tons of federally owned coal are mined by private companies each year under laws requiring the federal government to seek maximum benefit for resources on public lands. Environmental groups and some independent analysts have long argued that taxpayers are under-compensated for coal extracted from vast mines on federally owned land across the West, and that prices do not reflect societal costs from pollution from coal-burning.

According to Jewell, reviewing coal lease policies is expected to take three years.

Some Context

The coal industry has been in some noticeable turmoil over the past few years. Indeed, Arch Coal (the United States’ second largest coal company) recently filed for bankruptcy. More broadly, representatives from states such as Wyoming have spoken out against new energy standards they say unfairly malign coal and other fossil fuels. It’s not surprising: Wyoming has always been a major player in the coal industry (and the fossil fuel industry overall, deriving around 70 percent of its income per annum from mining), with a large share of its annual revenue predicated on mining. Further, the state stands to gain millions in backlogged AML funds, which are derived from coal production fees and allocated based on where coal is coming from; by far, Wyoming took home the most AML funds historically.

Reps in the energy industry have noticed the turmoil as well and are responding variously. Remember: coal plays a large part in electricity generation in the United States.

Take, for instance, Rocky Mountain Power, which has expressed wariness over lessening its share of coal power, going so far as to say the renewable energy industry is reaching “bubble territory.” Such sentiment, however, contradicts earlier actions to integrate more renewable energy sources into its grid. In the past, RMP has been accused of misleading customers with regards to the source of their power.

Opposition/Praise

Several sources have pointed out the move will undoubtedly elicit condemnation from the coal industry and affiliated representatives, as well as western lawmakers in states such as Colorado, Utah, and Wyoming. Indeed, NPR has already posted one reaction from U.S. Representative Rob Bishop (R-UT), Chairman of the House Committee on Natural Resources: “This unprecedented action will completely shut down coal leasing on Federal lands and will disproportionately harm the poorest among us.”

Environmental advocates and coalitions, meanwhile, are lauding the Interior and the Obama Administration for the measure. Some say it’s overdue.

“The federal coal program is frozen in time in the 1980s,” said David Hayes, a former Interior Department deputy secretary and senior fellow at the Center for American Progress to the Washington Post. “The current rules, which were written when you could still smoke on airplanes and dump sewage in the ocean, neither deliver a fair return to taxpayers nor account for the pollution costs that result from coal mining.”

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