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The Obama Administration’s Disconnect on Coal

Government’s Support for the Fossil Fuel Doesn’t Jibe with Its Pledge to Reduce Pollution

SOURCE: AP/Matthew Brown

A shovel prepares to dump a load of coal into a 320-ton truck at the Black Thunder Mine in Wright, Wyoming, located within the state's Powder River Basin. The administration has recently handed out several leases to develop coal in the basin.

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The disconnect between the Obama administration’s approach to managing federal coal resources in Wyoming and its rhetoric on climate change is growing. The administration needs to explain why it’s pledging to fight climate change on the one hand while on the other supporting the increased production of a resource that heavily contributes to U.S. greenhouse gas emissions and mercury pollution. Further, the issues groups are raising in lawsuits challenging some Wyoming coal sales, including better assessments of the environmental impacts of coal leases, are ones the administration should take into consideration.

If Wyoming were a nation, it would be the third-largest coal-producing country in the world. In 2009 the state’s 20 mines produced 431 million tons of coal, or 40 percent of U.S. production, according to the most recent statistics published by the U.S. Energy Information Administration.

That huge and growing river of coal flows from Wyoming’s portion of the Powder River Basin—a West Virginia-sized region that sprawls across northeast Wyoming and southeast Montana and contains one of the world’s premier coal deposits. In the last two decades, coal production in the Powder River Basin jumped nearly two-and-a-half times thanks to lower production costs and lower sulfur content compared to coal in the eastern United States.

The federal government controls most of Wyoming’s coal, either because the coal underlies federal lands or because the government owns the subsurface mineral rights to coal deposits below private land.

Unfortunately, the Obama administration has opened the coal floodgates even further in service to an industry that is eager to ship Wyoming coal to Asian markets. It has done so even as it makes considerable progress in promoting renewable energy developments on public land and pledges a vigorous fight against climate change.

Two years ago, for example, President Obama’s Secretary of the Interior Ken Salazar went to Copenhagen and delivered a keynote address to the U.N. Conference on Climate Change in which he said, “Carbon pollution is putting our world—and our way of life—in peril.”

Then, earlier this year, Secretary Salazar went to Wyoming to announce his department’s Bureau of Land Management, or BLM, was selling more than 2.3 billion tons of federal coal to coal companies, calling the dirty fossil fuel “a critical component of America’s comprehensive energy portfolio as well as Wyoming’s economy.”

Why, critics ask with good reason, is the administration pushing coal sales so hard even as it concedes in the environmental analyses for those sales that the combustion of Powder River Basin coal is responsible for almost 13 percent of total U.S. emissions of carbon dioxide, a prime global warming pollutant?

Last March Salazar announced that his department would be taking the final steps in approving eight big coal lease sales totaling 2.3 billion tons of federal coal spread across more than 21,000 acres of public land in the Powder River Basin. By just about any standard that is a lot of coal, and more big lease sales are in the pipeline. It’s also the feedstock for a lot of global warming pollution: 3.9 billion tons of CO2, about equal to annual emissions from 300 coal-fired power plants, according to WildEarth Guardians.

The surge in leasing of federal coal in the West coincides with growing interest by the coal industry in exporting U.S. coal to Pacific Rim nations, particularly China, which critics say boosts overall global warming pollution even as utilities in the United States are cutting back on coal use. Controversies are already flaring in the Pacific Northwest and the northern plains over proposals to build coal-export facilities in Washington State and Oregon.

It is also sparking legal battles between the Obama administration and environmental groups fearful of the coal sales’ impact on global warming.

In August, for example, the Sierra Club, Defenders of Wildlife, and WildEarth Guardians filed suit against the BLM over two Powder River Basin lease sales that were finalized this past summer. The Belle Ayr North and Caballo West lease sales will lead to the production of about 352 million tons of coal.

The groups’ lawsuit alleges that the BLM failed to analyze adequately the impact of the coal sales on climate change.

“In spite of the massive carbon dioxide emissions resulting from Powder River Basin coal production,” the lawsuit charges, the BLM “continues to issue new coal leases in the Basin without fully analyzing the environmental impacts—particularly climate change impacts—of increased carbon dioxide emissions resulting from this coal leasing.”

The three organizations raised similar issues in a 2010 lawsuit against two other coal lease sales in the Powder River Basin. That earlier lawsuit also challenged the very way the BLM goes about selling coal leases and the agency’s determination that the Powder River Basin—despite its huge role in the world coal economy—is not officially a coal-producing region.

To understand these accusations, you need to start with the Department of Interior’s basic authority to manage and lease federal coal deposits for sale, which rests in the Mineral Leasing Act of 1920 and in 1976 amendments to the act. Under the original 1920 statute the department must lease by competitive bids that must equal or exceed fair market value—the market price it would obtain in a sale between a willing seller and willing buyer. Congress left the details of how the competitive bidding process should work to the Department of Interior.

Interior subsequently established competitive bid leasing regulations that set up two different procedures: a competitive regional leasing process and a leasing by application process.

The competitive regional leasing process applied only in areas the federal government designates as coal-production regions. In those regions BLM drives the leasing process and sets regional leasing levels in consultation with other federal, state, and local government agencies. It also takes into account the nation’s energy needs and what the environmental, social, and economic effects will be of leasing.

By contrast, the leasing by application process is used in areas outside designated coal-producing regions or in coal-producing regions when there is an emergency need for more coal. In this more streamlined process coal companies identify potential lease tracts, which are generally tracts adjacent to existing mines, and the BLM decides whether to lease them or not. In both types of lease processes, BLM does the environmental assessment.

A dozen coal-producing regions were established following enactment of the 1976 coal leasing amendments law, including the Powder River Coal Production Region. A decade later, the Powder River region was decertified by the BLM as a coal-producing region based on poor market conditions and what the BLM characterized as “dwindling interest in coal leasing.” That ushered in the period of “leasing by application” in the Powder River Basin in the region that continues today even as coal production has soared.

Critics of leasing by application charge that it results in a poor return for American taxpayers because there are very few competitive bids. In addition, critics say that because environmental analyses under lease by application are site specific, rather than regional in scope, they are less comprehensive in assessing threats to the environment, including carbon dioxide releases from burning coal that accelerate climate change.

Environmental groups are taking a two-track approach in their efforts to get the Powder River Basin region re-certified as a federally recognized coal-producing region. They petitioned the BLM to make the change in 2009 but were rebuffed by BLM director Bob Abbey in a letter last January that defended the current lease by application process as one that delivers fair market value to taxpayers and protects the environment.

On the question of assessing the impact of lease sales on climate change, Abbey wrote that it is not possible to make those assessments because “tools necessary to quantify incremental climate changes associated with specific [greenhouse gas] emissions are presently unavailable….”

Climate scientists recently rebutted that claim.

Their second track goes through the federal courts. In their 2010 lawsuit against two Wyoming coal sales, the Sierra Club, Defenders of Wildlife, and WildEarth Guardians sought to force the BLM to re-certify the Powder River Basin as a coal-producing region. A U.S. District Court judge in Washington, D.C. summarily dismissed that claim.

But the three environmental groups are trying again, this time in a lawsuit that challenges BLM Director Abbey’s rejection of their petition to re-certify the Powder River Basin.

At the same time the three environmental groups, joined by four others, are pushing Abbey and the BLM through letters and personal meetings to explore new ways of making coal leases more competitive and to re-examine how fair market value is determined in light of industry interest in coal exports. The groups suggested a pilot project for competitive leases under which BLM would identify sites and put them out for competitive bid rather than having coal companies pick sites for expansion.

They are also encouraging the agency to incorporate greenhouse gas emissions in its environmental analyses of potential new coal sales and to do more large-scale, comprehensive environmental reviews that would determine where coal production is appropriate and where not, and include mitigation measures to reduce environmental harm from strip mining of coal.

The Department of Interior would be wise to take those suggestions seriously. It’s been a little more than two years since Interior Secretary Salazar said in a secretarial order that climate change requires his department “to change how we manage the land, water, fish and wildlife, and cultural heritage and tribal lands and resources we oversee.”

It’s now time for the department and the Obama administration at large to begin figuring out how to reconcile that pledge with its aggressive coal-leasing program.

Tom Kenworthy is a Senior Fellow at the Center for American Progress.

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