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Interior Secretary Sally Jewell announced the temporary halt, saying it was time for a re-examination of the decades-old coal-leasing program, from health and environmental impacts to whether U.S. citizens are getting a fair return for the hundreds of millions of tons of government-owned coal that is mined and sold each year.
“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.
The decision is certain to draw fierce opposition from the coal industry and from politicians from Western states, where federal coal leases provide thousands of jobs as well as revenue for state and local government coffers. But Obama administration officials say current practices contribute to a glaring contradiction in U.S. energy policy, which simultaneously promotes the sale of federally owned coal even as it seeks to limit greenhouse-gas pollution from coal burning.
Interior Department officials said the review would take the form of a Programmatic Environmental Impact Statement, which allows a broader look at all aspects of federal coal leasing across all regions and can incorporate environmental and health impacts as well as financial ones. The last review on this scale occurred in the 1980s.
U.S. officials say the moves will not immediately affect production or jobs, as current federal coal leases produce enough coal to supply the country’s needs for 20 years. Jewell said exceptions to the new-lease moratorium could be granted to ensure adequate production of metallurgical coal used in steel production, or to allow small modifications to existing leases.
“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.
In his speech on Tuesday, Obama argued for decreasing reliance on fossil fuels as part of the larger effort to fight the causes of climate change. He said the administration would “push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”
Sharon Buccino, director of the land and wildlife program with the Natural Resources Defense Council, said reforms were overdue for a program that she described as “broken.”
“It’s a fossil fuel giveaway that’s costing taxpayers $1.1 billion a year and it’s driving the central environmental challenge of our time,” Buccino said. “That’s the wrong direction for our country and we need to make a course correction.”
Mining companies currently pay a 12.5 percent royalty rate for coal taken from surface mines, compared to an 18.75 percent royalty for oil and gas from offshore drilling. Coal companies say the actual rates paid to the government are much higher because of bonuses and other fees paid through lease agreements.
Most of the coal mined from federal lands is used in U.S. electricity generation, though some is sold overseas. Government-owned coal harvested in the Powder River basin–the country’s biggest coal-producing region, straddling Wyoming and Montana–accounts for about 10 percent of all U.S. greenhouse gas emissions, according to a study last year by the Center for American Progress and the Wilderness Society.
“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. “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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