Federal report seeks coal-lease shake-up, hinders Trump plan

Posted: January 12, 2017 at 2:17 a.m.

The outgoing administration of President Barack Obama issued a blueprint for overhauling the way coal on federal land is sold, making it tougher for President-elect Donald Trump to resume sales under decades-old procedures.

The report released Wednesday lays out potential options for policymakers to consider, including tacking a carbon fee onto coal leases to account for climate change, requiring payments into a fund that could help out-of-work miners and devastated communities -- and even halting sales altogether.

The initial report is part of a re-evaluation of the coal program, announced by Interior Secretary Sally Jewell a year ago. It doesn't prevent Trump from making good on his vow to overturn the Interior Department's moratorium on new coal sales. Trump can even disregard the report's recommendations and stop the environmental review that was to take three years.

But the document bulks up a record of evidence that changes are needed -- information that would make it harder for future coal lease sales to withstand legal challenge.

"If the Trump administration decides to just do business as usual, I think this will probably be Exhibit A in a future challenge," said David Hayes, a former deputy secretary of the interior who is a visiting lecturer at Stanford Law School.

About 40 percent of U.S. coal now comes from federal land, much of it from the Powder River Basin in Wyoming and Montana. Demand for the fossil fuel and new federal coal leases has fallen as environmental regulations and competition from cheap natural gas encourage utilities to abandon coal-fired power. Because coal-fired power is the most potent source of carbon dioxide emissions, environmentalists argue that government sales of the fossil fuel should account for the damage from those greenhouse gases.

Environmentalists already used litigation to press for a coal-leasing overhaul, including a 2014 lawsuit by Friends of the Earth and the Western Organization of Resource Councils. The groups appealed after a federal court dismissed their lawsuit in 2015, and that litigation was ongoing when Jewell imposed the leasing halt.

It could be revived -- or a fresh suit filed -- if Trump's Interior Department abandons the environmental analysis wholesale and institutes new lease sales under the industry-friendly rules that date from the 1980s. Any future coal lease sale also could be challenged in court, with opponents arguing the transaction took place without the environmental scrutiny the Interior Department concluded was necessary after holding five hearings and considering nearly 100,000 public comments.

"This will only strengthen the hand of those who are going to be pursuing reforms to the coal program through the courts," said Matt Lee-Ashley, a senior fellow with the Center for American Progress. "It's absolutely certain that whoever is challenging it will point directly back to this."

There's precedent for such a challenge. Legal uncertainty clouded scores of Arctic drilling leases for years after a federal court ruled there were lapses in the environmental analysis that preceded a 2008 government auction of those tracts.

Jewell cast the leasing review as essential to updating the way the U.S. government manages energy development on public lands. "The need to modernize the federal coal program is unequivocal," Jewell said in an emailed statement. "The only responsible next step is to undertake further review and implement some of these commonsense measures."

Over 190 pages, the report offers possible changes meant to make sure government coal leasing is more efficient, better protects the air and water, accounts for greenhouse gas emissions and ensures a fair return to U.S. taxpayers who own the resource. Each of the main three options includes an increase in the royalty rate. Several possible scenarios are outlined for further review, ranging from no change to adding a carbon fee to ending leasing entirely. One option included setting limits on the amount of coal that could be sold during specific time periods, potentially limiting development and encouraging competition.

The National Mining Association blasted the assessment, saying it shows the Obama administration had joined hands with environmental activists who preach a "keep it in the ground" mantra against fossil fuel extraction.

The "purported rationales to overhaul the federal coal lease program rest on politically contrived reasoning that will result in less federal and state revenue, the loss of more high-wage jobs as well as an indispensable source of affordable electricity for millions of families," said the group's president, Hal Quinn.

U.S. Sen. Steve Daines, R-Mont., said the proposed changes "would jeopardize good-paying jobs and tax revenue that supports our schools, roads and essential services for our rural communities."

Business on 01/12/2017