January 15, 2016 Read More →

U.S. Freeze on New Coal Mines; Federal Reforms in Resource Lease Program

Patrick Rucker and Valerie Volcovici for Reuters:

The Obama administration is due on Friday to announce an overhaul of how the United States manages coal development on federal land, and freeze new coal mining, according to government and conservationist sources, in a further move to confront climate change.

Interior Secretary Sally Jewell is expected to make the announcement at midday Friday from New Mexico, one of five western states with tens of thousands of acres under lease.

Democratic President Barack Obama in his State of the Union address on Tuesday said he would “change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”

The new plan will require federal officials, when weighing land use decisions, to consider how burning coal could worsen climate change, said sources familiar with the plans.

It will also include moratorium on coal leases, said sources familiar with the effort, as the government works on longer-term structural reforms to the coal program.

The overhaul also will aim to maximize returns for taxpayers by updating royalty rates when mining companies pull coal from federal land, said the sources.

Coal leases are often awarded without a competitive bidding process, frequently going to a single bidder, and officials can undervalue the fuel heading to market, the nonpartisan Government Accountability Office has concluded.

The Energy Information Administration says roughly 41 percent of U.S. coal production occurs on federal land, primarily in Wyoming.

The coal industry had been battered in recent years by competition from cheap natural gas and clean-air regulations that have raised costs for burning the black rock.

This week, Arch Coal Inc, one of the nation’s largest coal companies, filed for bankruptcy – the latest mining company to seek protection from creditors in the current downturn.

Some analysts said that market conditions have dampened demand for new mining.

“Over the last two years a number of coal leases were bid out by the Bureau of Land Management and no bids were received, reflecting the fact that there are no market incentives to go forward with new mining,” said Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis.

Full article: Obama administration to announce remake of coal program, freeze leases

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