Launch of a three-year review of the federal coal program is not only about environmental impacts, but also getting fair value for taxpayers.
THE Obama administration’s decision to stop issuing new coal leases as the federal government’s entire coal program is reviewed makes good business sense.
The moratorium, announced last month by Interior Secretary Sally Jewell, is part of a plan for the Bureau of Land Management to undertake a detailed environmental-impact statement.
Jewell appeared Tuesday before a U.S. Senate Energy and Natural Resources Committee budget hearing to explain the path ahead. Washington U.S. Sen. Maria Cantwell, the senior Democrat on the panel, has long sought a full accounting of the coal industry, and thanked Jewell for her efforts.
About 40 percent of the U.S. coal supply is on public lands. All existing leases will continue, and estimates say that supply could meet about 20 years of demand. The three-year review, plus time to restart the leasing process, will not exceed that supply margin.
The business of taking coal off public land has not had a close look in more than three decades. The leasing price is put at about a $1 per ton, with another $1.50 for royalties. Coal buyers pay 20 to 40 times that amount.
Meanwhile, the expense to society for the cost of massive carbon emissions can run $70 per ton, paying the growing bill for sea-level rise issues and for health impacts like asthma and environmental effects.
“That enormous gap between public revenue and the ultimate cost to the public is simply not defensible,” Cantwell said Tuesday.
The coal industry slid into its economic downturn as once lucrative international markets skittered away from using vast quantities of coal. Natural gas is replacing coal in domestic markets. The subsequent bankruptcies of U.S. coal companies reveals another flaw.
Companies have been allowed to self-finance for environmental restoration and cleanup. Now the companies are broke, work remains to be done and promissory notes are virtually worthless. In bankruptcy court, they have a value of 15 cents on the dollar — and get in line to collect it.
Playing fast and loose with commodities on public lands goes back to the grazing and mining interests President Teddy Roosevelt went after. The topic is as fresh as the standoff on the Malheur National Wildlife Refuge in Oregon.
The executive branch has the tools it needs through past legislation, including the Mineral Leasing Act, and the Federal Land Policy and Management Act.
The coal industry has gamed the system for decades. Secretary Jewell has some dutiful members of Congress, including Cantwell and Washington Sen. Patty Murray, expecting a serious review of the environmental impacts and a decent return for the Treasury.