Flawed Federal Coal Leasing Program Goes Under the Microscope on Capitol Hill

Northern Plains member Steve Charter testifies before the US House on the impacts of a mining program built for another era.

On July 11th, the House Energy and Mineral Resources Subcommittee held an oversight hearing on “The Future of the Federal Coal Program” to consider reform of the Department of the Interior coal leasing program. Montana rancher and Northern Plains Resource Council member Steve Charter was one of four expert witnesses. 

Charter spoke about his experience as a coal country rancher whose pastures are threatened by an underground coal mining operation as well as his decades of experience with federal coal leasing policies. “I live in coal country and have lived under the threat of coal mining all my life,” Charter said. “Coal has fueled our economy and has provided many livelihoods. However, the benefits that coal has provided us have come with great costs.”

He told the Subcommittee that the federal government must urgently reckon with new risks posed to coal communities by the erosion of coal markets and resulting coal company bankruptcies, particularly the recent closures of two Blackjewel mines in Wyoming. “Blackjewel is now the sixth western coal company in four years to enter Chapter 11 bankruptcy, and there is a very real prospect that it will be the first coal company in the West to convert to a Chapter 7 liquidation.” 

future of coal in the west
Charter heads into the US capitol to talk about the need to update the federal coal program.

Charter called on the committee to update the federal coal program to adjust to today’s markets, energy sources and understanding of coal’s impacts; ensure a fair return to the American public; and minimize costs of coal’s decline on communities, workers and taxpayers. “The federal coal program is still being managed for a different era,” he said. “Whether we like it or not, the future of the federal coal program will be and must be very different from its past.”

Publicly owned coal accounts for more than 40 percent of all coal produced in the U.S. and is responsible for more than 10 percent of the country’s greenhouse gas emissions. In June 2012, the Institute for Energy Economics and Financial Analysis released a report documenting that taxpayers lost an estimated $28.9 billion in revenue from federal coal leases over 30 years as a result of the BLM failing to get fair market value for coal mined from public lands. The IEEFA report, coupled with inquiries from members of Congress, led to audits of the federal coal leasing program by the Office of Inspector General and the Government Accountability Office. Both audit reports exposed flaws in DOI’s coal valuation methodology and found DOI practices to be outdated.

“I live in coal country and have lived under the threat of coal mining all my life. Coal has fueled our economy and has provided many livelihoods. However, the benefits that coal has provided us have come with great costs.”

“The coal under my ranch in the Bull Mountains is a good example of how the federal government has either outright given coal away, or sold or traded it for very little,” Charter said regarding federal coal valuation. “In the early 1990s, the federal government traded millions of tons of coal in the Bull Mountains away for a fishing access site, valuing the coal for less than one and a half cents per ton. Then, in 2013, the rest of the coal was leased in a non-competitive bid of 30 cents per ton.”

While climate change and other global [impacts] are important for Congress to think about regarding rethinking the future of coal, Charter stuck mostly to the harms he’s experienced closer to home. He highlighted the dangers of coal companies abandoning their reclamation responsibilities. Mining operations, especially strip mines like the majority found out west, create a significant and growing amount of disturbed acreage, severing or draining groundwater aquifers, as well as damaging surface water resources. Even underground mines can damage the surface land and water. “With the longwall mine on our ranch, the company will have to reclaim areas affected by subsidence,” Charter said. “But we are most concerned about whether they can and will replace the water resources that our ranching operation relies upon.”

The massive cleanup costs associated with mining, coal power plants, and ash ponds may be dumped on taxpayers if the companies are unable to fund them. The risk goes up dramatically if states allow the practice of self-bonding.  

rancher testifying on coal mining
Rancher Steve Charter waits to testify to the US House on the impacts to his ranch by a coal mine.

Federal government designed coal leasing program in response to 1970s energy crisis

About 85% of coal mined in the west is owned by the federal government, inextricably linking mining to federal coal policy. Virtually all western coal mines rely on federal coal. When the government gives out a sweetheart deal to a coal company, half of the lost income would have gone to the federal government, but the other half would have gone to the state to support our schools and other vital needs. The valuation of the coal itself and the royalty rates affects coal producing states and communities. 

“The federal coal program was last updated in the 1970s and 1980s, when the country was recovering from an energy crisis and focused on expanding domestic energy supplies as quickly as possible and subsidizing development to keep costs down,” Charter said. “The government intentionally kept coal valuations and royalty rates low, and shifted from a system designed to manage coal supply, to one in which coal companies control the rate of leasing and generally lease as much coal as they want.” But times have changed drastically since then. There are abundant, cheap options in renewables and natural gas, and we have a much better understanding of coal’s environmental, socioeconomic and climate impacts. “The federal coal program is still being managed for a different era.”

It’s beyond time to take a hard look at the federal coal program. WORC and its member groups support a comprehensive review to update the federal coal program to:

  1. Balance the nation’s energy needs with the effects of coal mining, transportation and burning on air, land, water, wildlife resources and the global climate, as well as the latest information on the availability of coal reserves and other energy sources, 
  2. Ensure a fair return to the American public for the leasing and mining of our publicly owned mineral resources and minimize the financial impact on communities and states as leasing and mining decline as much as possible, and 
  3. Increase transparency and public participation.

RECLAIM Act crucial for coal country

Charter also addressed the need for the RECLAIM Act, which would expedite the distribution of Abandoned Mine Land Fund dollars. “By committing $1 billion in existing funds to clean up abandoned coal mine sites and impacted lands and waters, the RECLAIM Act will provide an economic boost to communities where coal has historically been the backbone of the local economy.”

The RECLAIM Act of 2019 (Revitalizing the Economy of Coal Communities by Leveraging Local Activities and Investing More Act) proposes to distribute $1 billion over five years to clean up abandoned mine lands (AML). The Act would put highly skilled miners back to work reclaiming lands harmed by mining and return those lands to productive capacity in agriculture or other uses.

“The RECLAIM Act will provide an economic boost to communities where coal has historically been the backbone of the local economy.”

Across the United States, abandoned mine lands have already been leveraged successfully to create jobs in agriculture, recreational tourism, retail, and even renewable energy production through sustained revitalization efforts. The RECLAIM Act would accelerate dispersals from the federal Abandoned Mine Land Fund to reclaim more abandoned coal sites, faster. If passed, Colorado alone could see $45 million invested in its rural communities to clean up mines and put high-skill coal miners back to work. The bill would also prioritize public input and community participation in determining which projects are chosen based on economic potential.For more information, visit the House Natural Resource Committee’s webpage for the hearing or catch the full hearing on YouTube.

Read more coal stories here.

Learn more:

Don’t Let Troubled Companies Leave Wyoming on the Hook for Coal Mine Cleanup

Fixing Abandoned mine Sites is Essential for the Transition Economy

RECLAIM Act Offers Hope of Revitalization for Coal Communities

coal mine trucks at a wyoming strip mine

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