August 9, 2017 Read More →

Under Trump, Coal Mining Gets New Life on U.S. Lands

New York Times:

The Trump administration is wading into one of the oldest and most contentious debates in the West by encouraging more coal mining on lands owned by the federal government. It is part of an aggressive push to both invigorate the struggling American coal industry and more broadly exploit commercial opportunities on public lands.

During President Barack Obama’s second term, the coal industry’s chief antagonist was Sally Jewell, a former oil industry engineer appointed Interior secretary in 2013. Ms. Jewell, an avid hiker, had also served as chief executive of the outdoor gear company REI.

She saw mining companies as a particular problem because they too often left behind polluted mine pits and paid too little for coal leases on federal land.

Starting two years ago, Ms. Jewell took a series of steps to change the relationship between coal companies and the federal government. She imposed a moratorium on new federal coal leases while beginning a three-year study of the industry’s environmental consequences. More than 40 percent of all coal mined in the United States comes from federal land, and when burned it generates roughly 10 percent of the country’s total greenhouse gas emissions.

In addition, she called for greater transparency in the awarding of coal leases, and she backed an increase in the royalty payments made to operate coal mines on public lands. Starting two years ago, Ms. Jewell took a series of steps to change the relationship between coal companies and the federal government. She imposed a moratorium on new federal coal leases while beginning a three-year study of the industry’s environmental consequences. More than 40 percent of all coal mined in the United States comes from federal land, and when burned it generates roughly 10 percent of the country’s total greenhouse gas emissions.

In addition, she called for greater transparency in the awarding of coal leases, and she backed an increase in the royalty payments made to operate coal mines on public lands.

“The corruption in the coal sector is just so rampant,” she said in an interview.

A central problem, she said, was the lack of competitive bidding for mining leases: Only 11 of the 107 sales of federal coal leases between 1990 and 2012 received more than one bid, according to a report by the Government Accountability Office. A second study, by a nonprofit think tank, estimated that the practice had shortchanged taxpayers tens of billions of dollars.

Another hot-button issue was how much to charge in royalties, which generate about $1 billion a year for the federal government.

Under federal rules adopted in 1920, coal companies are required to pay “not less than” 12.5 percent on sales of surface coal mined on federal lands. But for years, studies indicate, the companies paid far less — as little as 2.5 percent of the ultimate sale price — because they often negotiated large royalty discounts with sympathetic federal officials. Companies also often sell coal first to a corporate affiliate at a sharply reduced price, before reselling it to the intended customer, costing the government a chunk of its royalties, according to the Government Accountability Office study. The technique was particularly popular among mines with foreign buyers.

To eliminate the loophole, the Interior Department adopted a rule last year requiring that the payment be calculated on the first arm’s length transaction, meaning sales to corporate affiliates would not count. Such a change would be a blow to the bottom lines of companies mining in the Powder River Basin, which accounts for about 85 percent of all coal extracted from federal lands, with a growing share headed to Asia.

The coal industry was bent on killing the rule, sending executives to plead its case to the White House and filing a federal lawsuit to block it. “They are liars, and they know it,” Mr. Reavey, the Cloud Peak lobbyist, said of those who suggested the industry was not paying its fair share in royalties.

Under Trump, Coal Mining Gets New Life on U.S. Lands

Posted in: IEEFA In the News

Comments are closed.