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The Obama administration this week announced a moratorium on new coal leases on federal land while it conducts a sweeping review of the coal program administered by the U.S. Department of Interior, examining the terms under which the coal is sold and environmental impacts associated with extracting and burning it.
The move could delay at least three major lease proposals underway in Utah's coal country, where operators hope to expand existing mines to keep their coal production moving. But pausing coal leases is necessary to ensure a fair return to American taxpayers and to account for climate change, according to Interior Secretary Sally Jewell
She said Friday that companies can continue mining coal reserves already under lease.
"It is abundantly clear that times are different than they were 30 years ago, and the time for review [of the coal leasing program] is now," Jewell told reporters in a conference call. Officials also need to take into account new scientific data available on fossil fuels' impacts on the environment and on climate change, Jewell added.
During Tuesday's State of the Union address, President Barack Obama hinted at aggressive actions needed to curb America's greenhouse gas emissions, saying "it's time we change the way we managed our coal."
Utah politicians denounced the move as "absurd" and divisive.
"It is liberal fantasy land at its worst, and I will fight it every way I can," said Utah's Rep. Chris Stewart, whose district includes coal communities.
"This unprecedented shift picks winners and losers, and threatens the future of affordable and reliable energy resources that support our thriving economy," added John Cox, spokesman for Utah Gov. Gary Herbert. "Coal has been mined throughout Utah for more than 100 years, currently providing 76 percent of the electricity generated across the state. Utah coal is low in sulfur and high in BTU content, making it a uniquely clean and efficient resource for powering Utah, surrounding states and other countries."
About 40 percent of the coal mined in the U.S. comes from federal tracts, mostly in the West. Most coal is burned to generate electricity, accounting for 11 percent of the nation's carbon dioxide emissions, according to some estimates.
Jewell's announcement was hailed by conservation and climate activists who say a leasing moratorium is a long overdue step toward a clean-energy future.
"We must begin taking into account the full cost of the pollution created when we extract and burn coal. The resources on federal lands belong to the American people and must be managed in the best long term interest of the nation. The existing coal leasing program has amounted to an unfair federal subsidy for coal not only cheating taxpayers, but putting a huge burden on our children's generation, who will have to deal with the consequences of our pollution," said Fred Krupp, president of the Environmental Defense Fund.
Energy industry representatives and Utah leaders are worried a moratorium would weaken the economy without delivering much benefit to either taxpayers or the environment.
"If this action does delay leases, it would be extremely disappointing. The lease process is already too lengthy. It's clear the president is more concerned with satisfying his political benefactors than doing what's best for the American people," said Mark Compton, of the Utah Mining Association.
"I don't see anything wrong with a review on a periodic basis. But if you are interested in a fair return to the taxpayer, the federal coal program generates billions on federal leases to the U.S. economy," Compton said. "Increasing royalty rates would do exactly what environmental groups want, and that's keep coal in the ground. The return to taxpayer goes to zero."
In Utah, the SUFCO mine in Sanpete County, Coal Hollow in Alton and Lila Canyon Mine in Carbon County all propose developing large coal tracts adjacent to their operations. UtahAmerican Energy, which operates Lila Canyon in the Book Cliffs near East Carbon, is looking to lease the 4,200-acre Williams Draw tract, which holds 32 million tons.
It is unclear whether Friday's announcement will affect current coal production. The nation's electricity sector has been moving away from coal in favor of natural gas, and companies have stockpiled billions of tons of coal under existing leases.
But Rep. Rob Bishop, the Utah Republican who chairs the House Natural Resources Committee, said the lease moratorium will hurt Americans and proves that Obama's pledge supporting an "all-of-the-above" energy agenda "was an election-year lie."
The administration "should be putting our nation on the path of continued energy strength not undermining our energy security at the bequest of radical environmentalists who wish to keep our resources under lock and key," Bishop said. "Unfortunately, the president's bid to solidify his legacy with the extreme left will come at the expense of America's energy needs and will make the lives of people more expensive and more uncomfortable."
Coal critics say the federal government sells its coal too cheaply, and they point to Flat Canyon as an example.
Last summer, Bowie submitted the only bid on the 2,692-acre coal tract a total of $17.2 million, or $6,388.92 per acre. The bid, which translates into 41 cents per ton, is undergoing a review by a BLM panel to ensure it meets "fair market value" for the 42 million tons of recoverable coal. This lease also requires annual rent of $3 per acre, plus an 8 percent royalty on all production. The royalty is 12.5 percent for coal extracted through surface mining.
These rates, set in 1976, are in need of review, critics charge, because they encourage overproduction of the energy source most implicated in climate change.
"Any CEO will tell you that one of the most important things a healthy business can do regularly is complete a strategic plan. But the federal coal program hasn't benefited from strategic planning in over 30 years," said Greg Zimmerman, policy director for the Center for Western Priorities. "While this temporary pause will have a negligible effect on current coal production, it will help to ensure American taxpayers are receiving a fair return from any new mining that occurs on national public lands."