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Roadmap for Federal Coal Reform Must Be Followed

Posted Jan. 13, 2017 / Posted by: Marissa Knodel

Nearly one year after Secretary of the Interior Sally Jewell called for a comprehensive review of the federal coal program, the Obama administration released a roadmap for reform of the federal coal program. The 190-page roadmap is a critical and important step towards addressing the significant impacts the federal coal program has on our climate, public health, and coal communities. Whether such reforms will be implemented under a Trump administration given his frequent campaign promise to revive the coal industry remains uncertain, but unlikely. 

Why reform the federal coal program?

Despite changes in our climate and energy markets, the federal coal program has remained unchanged for over 30 years, turning it into a massive corporate giveaway that pollutes the environment, disrupts the climate, and cheats Americans to the tune of more than $1 billion every year.

Coal combustion for electricity is the largest single contributor to climate disruption in the U.S., and also a major source of air and water pollution with significant health impacts. In order to have a chance of limiting dangerous global warming, the vast majority of fossil fuels must remain in the ground. To date, more federal coal has already been leased than can be burned if we hope to avoid climate catastrophe. Put simply, the U.S. cannot continue to dig up and burn federal coal in today’s carbon-constrained world.

The process of leasing publicly owned coal on public lands to coal companies is non-competitive and lacks transparency. Since 1990, only 10 percent of the 107 leased coal tracts on public lands had more than one bidder. Rental fees are only $3.00 per acre, and the royalty rate of 12.5 percent for surface mining and 8 percent for underground mining have not increased since 1920. In addition, royalty rates do not account for the social cost of carbon, the long-term damage (for example to peoples’ health) caused by burning coal. The failure to auction coal leases for their fair market value equals a revenue loss of approximately $28.9 billion over the past 30 years.

What reforms does the roadmap propose?

The roadmap calls for reform in three key areas: ensuring a fair return to Americans for the sale of their public coal; addressing the environmental and climate impacts of the federal coal program; and reforming the program in response to current market conditions, including assistance for communities experiencing declines in coal production. The roadmap also lists a number of policy recommendations to improve resource protection and management of existing coal leases.

To ensure a fair return to taxpayers, the roadmap suggests increasing the rental rate, minimum bonus bid, and royalty rates to produce a fair market value for public coal produced on federal land. To reduce and account for greenhouse gas emissions, the roadmap makes several recommendations:

  • A royalty rate increase or royalty adder for new and renewed leases to tie climate costs directly to coal production/consumption
  • That the agency periodically evaluate and ensure coal production and associated life-cycle emissions are consistent with the need to reduce net greenhouse gas emissions 80 percent below 2005 levels by 2050
  • That the agency determine a maximum tonnage of coal or carbon to be leased consistent with a defined carbon budget
  • No new leasing, except for limited lease modifications

The roadmap states that these reform options may be combined in a variety of ways, and puts forth three policy “packages,” as well as a no action and no new leasing alternative. Community assistance, including use of compensatory mitigation funds or a portion of federal coal revenues to invest in affected communities through economic diversification and workforce development efforts, is included in all three policy packages.

What happens to the roadmap under the Trump administration?

Donald Trump has already said he intends to lift the moratorium on federal coal leasing, and this could occur soon after he takes office.  Whether Trump decides to complete the programmatic environmental review of the federal coal program and implement some of the reforms suggested in the roadmap remains uncertain, but unlikely. Trump’s nominee for Secretary of the Interior, Montana Republican Representative Ryan Zinke, is a coal champion. During his one term in office, he led the opposition to the federal coal mining moratorium, fought to keep open a tax loophole to benefit coal companies at the expense of taxpayers, and supported West coast coal ports to export coal.

But the roadmap will be important even if the Trump administration shelves the review because its factual findings and policy recommendations may still be used to challenge continuing the federal coal program under the status quo. To protect our climate, public lands, and coal workers, we cannot allow Trump, Zinke and their fossil fuel cronies to reverse direction and expand federal coal production. Friends of the Earth and its allies will fight to ensure that today’s roadmap is used to phase out burning coal in the U.S. and jumpstart a just transition to renewable energy sources. 

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