On Friday, the Obama administration announced it would pause granting new federal coal leases and re-evaluate the price that coal mining companies have to pay to lease federal land. This is a big deal, because about 41 percent of American coal comes from federally-owned land, and the mining companies haven't been paying anything close to a real price for those leases for decades:
The price industry pays to mine that coal hasn’t changed in more than 30 years. Now, the Interior Department plans for the first time to factor impacts on the environment and human health into the deal. The shift announced Friday aims to bring a decades-old leasing policy more in line with global efforts, recently solidified at UN-led talks in Paris, to cut planet-warming fossil-fuel emissions....
Wyoming accounts for more than three quarters of all coal production from federal lands, with the rest mostly coming from Montana, Colorado, Utah, and New Mexico.
“The federal coal program is frozen in time in the 1980s,” said David J. Hayes, senior fellow at the think tank Center for American Progress, noting that the current leasing rules “were written when you could still smoke on airplanes and dump sewage in the ocean.”
Back then, there was also no official Social Cost of Carbon, the government benchmark that puts a price tag (currently $37 per metric ton of CO2) on increased flood risk, changes in farm productivity, and other effects of burning fossil fuels....
While a similar move for oil and gas leases might simply shift more of the production to private land, she says, the coal industry doesn’t have that flexibility.
The coal-mining industry is of course outraged at the prospect of having the immense public subsidy given to the production of their environment-destroying product withdrawn:
Condemning Interior's plans, Wyoming Mining Association Executive Director Jonathan Downing says Obama knows “full well that this measure will make federal coal uneconomical to mine, thereby locking up America’s most abundant and reliable source of electricity generation.”
The minimum bid for a federal coal lease has remained at $100 per acre since 1982, the NYU report says: “Accounting for inflation, alone, would raise the minimum bid to $247 per acre.”
Leaseholders pay a rental fee of $3 per acre and, in the case of Powder River Basin coal, a 12.5 percent royalty. The report advocates a rate of 18.7 percent, but in many cases, companies aren’t paying even the lower current rate, Hein says, because state officials can authorize reductions on a lease-by-lease basis.
“In effect,” she says, those reductions “allow the federal government and taxpayers to subsidize coal mining.” Indeed, one analysis from the nonprofit Taxpayers for Common Sense found nearly half the leases between 1990 and 2013 paid out below-minimum royalties. The environmental group Natural Resources Defense Council estimates the current policy cost taxpayers $30 billion over three decades.
The Interior promised more transparency Friday, requiring royalty reduction requests to be posted online and establishing a public database showing carbon emissions from fossil fuel development on federal land.
Ending the public subsidy for dirty coal and providing publicly accessible data about how this public resource is handled? No wonder the crybabies who want government hands off their business are howling.