President Trump acted today to derail the effort to overhaul a broken federal coal leasing program that’s short-changed taxpayers more than $30 billion.
He did so by issuing an Executive Order that would lift the moratorium on new leasing enacted by President Obama. The move is part of President Trump’s efforts to benefit big corporate polluters (and donors) at the expense of the nation’s public health, clean air, and water.
The decision to allow new leasing will be heavily subsidized by the U.S. taxpayer, whereas billions will be funneled directly into the pockets of the large multinational coal corporations whose business models have relied on the lax regulation that has defined how federal coal resources are managed.
But let’s focus on today’s move. Here are the basics.
Last January, Former Interior Secretary Sally Jewell issued a halt to most new coal lease sales on federal lands after the Interior Department’s Inspector General, the Government Accountability Office and independent auditors found the program to be deeply flawed. The pause was ordered until the program, which hadn’t had an official audit in 30 years, could undergo a thorough, standardized review.
This wasn’t a partisan move, the program has been plagued by problems for decades. Presidents Nixon and Reagan also ordered moratoriums on the program until changes could be made.
It didn’t impact supply—the Interior Department estimates coal companies are sitting on a 20 year stockpile of federal coal.
And it didn’t impact demand. That’s because the coal industry is in structural decline. The biggest reasons for that decline are low natural gas prices and ever-cheaper wind and solar power, not environmental safeguards or taxpayer protections.
What’s at stake is not small. About 40 percent of all coal burned in the United States—close to 400 million tons--comes from public lands, mostly in the West. The burning of that coal accounts for 10 percent of all US carbon pollution.
And then there’s the loss of tens of billions of dollars to states and the US Treasury (revenues are split 50/50).
An independent audit in 2012 by the Institute for Energy Economics and Financial Analysis found that Interior’s Bureau of Land Management (BLM), the agency that administers the program, had failed to get “fair market value” for these taxpayer-owned assets as required by statute, short-changing taxpayers by nearly $30 billion. The Institute found in a subsequent analysis that taxpayers had been cheated out of $1.2 billion in the largest coal sale in BLM history.
These and numerous complaints about the coal leasing program spurred Interior’s Inspector General (IG) to conduct its own investigation. The IG report found myriad problems with the program including, as the New York Times noted of the report, that “despite rules adopted in the 1980s devised to ensure competition, more than 80 percent of sales in the past 20 years had received only one bid. At the current rate of coal leasing, the inspector general found, every penny-a-ton undervaluation costs taxpayers $3 million.”
A subsequent investigation by federal government’s own watchdog agency, the Government Accountability Office (GAO), reached similar conclusions, including that the lease sale process lacks competition, uses outdated methods to determine “fair market value,” is open to industry manipulation and deliberately keeps information from the public.
As a result, former Secretary Jewell announced in March of 2015 that it was “time for an open and honest conversation about the federal coal leasing program,” noting most American’s would be surprised to find that a ton of federal coal sells for under a buck. (In its most recent auction, Interior sold coal for $.41 cents a ton).
A moratorium was also put in place to essentially stop the bleeding, so that no new harm could be incurred until a suite of safeguards could be adopted. This lead to more than a dozen “listening sessions and public hearings” in coal country and across the nation to assess how DOI could best conduct a top to bottom review (known as a Programmatic Environmental Impact Statement—or PEIS).
On January 11th, the Interior Department concluded the first stage of the PEIS, releasing a comprehensive scoping report, which laid out “a comprehensive roadmap to reform of the federal coal leasing program.”
“Based on the thoughtful input we received through this extensive review, there is a need to modernize the federal coal program,” Jewell said at the time. “We have a responsibility to ensure the public—including state governments—get a fair return from the sale of America's coal, operate the program efficiently and in a way that meets the needs of our neighbors in coal communities, and minimize the impact coal production has on the planet that our children and grandchildren will inherit. The only responsible next step is to undertake further review and implement these commonsense measures.”
Jewell noted at a subsequent Columbia University forum that the coal leasing program uses outdated regulations, and that even industry has complained that the process is overly opaque and antiquated, increasing their costs. More on the Scoping Report here.
Following the sensible path laid out in the report would mean aligning the use of America's public lands with our obligation to protect future generations from the dangers of climate change—that's what leadership is all about, at home and abroad.
Leadership in 2017 also means transitioning away from dirty fossil fuels of the past to a clean energy 21st century, a move the public supports. A Pew study released this week found that two-thirds of Americans give priority to developing alternative energy over fossil fuels. However, the Trump Administration is in the process of canceling programs to advance clean energy, and his ‘America First Energy Plan’ makes no mention of wind, solar or energy efficiency. That despite reports from the Department of Energy last week that solar industry employment alone now accounts for the largest share of workers in the U.S. power generation field, surpassing coal, gas and oil. (See annual United States Energy and Employment Report).
We and our children don’t have time for “alternative facts.” If we burned all the coal already under lease on federal lands, the US would burn past our ‘carbon budget’ for staving off the worst impacts of global warming.
Turning back the clock to 20th century energy is not the answer.