Obama administration will announce halt on new coal leases

Obama administration officials are set to announce plans Friday to overhaul the program that allows private companies to mine coal on federal land.

Environmentalists strongly oppose more coal mining on federal land, saying burning all that coal would exacerbate climate change.

The administration is also expected to put in place a moratorium on at least some new coal leasing until the Interior Department conducts a broad environmental review, which could include coal mining’s impact on climate change, wildlife and other environmental issues. The change won’t affect existing leases – which generated almost $1.3 billion for the government previous year.

The Interior Department, which oversees energy production on public lands, indicated last spring it would revise its coal-leasing program. The administration has not indicated its position on those two leases, and the Interior Department on Wednesday declined to comment.

Government auditors have in the past questioned the adequacy of the royalty rate and whether it provided an appropriate return, though they did not make specific recommendations to raise it. Environmental groups have argued that the federal coal leasing program amounts to a major fossil fuel subsidy that contributes to global warming. The Wilderness Society and the Center for American Progress estimated that coal extracted from federal lands in the Powder River Basin accounts for more than 10 percent of all US greenhouse gas emissions.

About 40 percent of US coal now comes from federal land, much of it from the Powder River Basin in Wyoming and Montana. The money is then split between the federal government and the state where the coal was mined.

“The issue of fossil fuel extraction on public lands is going to be a key fight over the coming months”, May Boeve, executive director of the environmental group 350.org, said in a statement.

This week, Arch Coal Inc, one of the nation’s largest coal companies, filed for bankruptcy.

“With the current low price environment and the onslaught of regulations aimed at America’s oil and natural gas industry-an industry that has been widely credited with revitalizing our economy-this president has gone out of his way to dramatically increase the burdens on independent producers to continue responsibly developing America’s abundant energy resources on our public lands”, Neal Kirby, a spokesman for the Independent Petroleum Association of America, told Bloomberg BNA in an e-mail.

Obama, who has made combating climate change a top priority of his second term, is facing mounting calls from conservationists to thwart new fossil fuel development as part of a “keep it in the ground” movement.