The Obama administration will be canceling opportunities for companies to mine for coal on federal land and raising the costs of extracting natural resources — from coal, to gas, to oil — on properties controlled by the government.
The White House is expected to unveil such plans Friday, just three days after President Barack Obama pledged in his State of the Union Address to “change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”
That likely means increasing fees and imposing other regulations to make it more costly to extract fossil fuels from federal lands. Obama says these reforms will “put money back into those communities and put tens of thousands of Americans to work building a 21st century transportation system.”
The Interior Department will impose a moratorium on new coal leases “under most circumstances,” according to The Washington Post, while bureaucrats decide what needs to be reformed. Regulators will also be forced to consider how much new coal mines would contribute to global warming before approving any federal leases.
Interior Secretary Sally Jewell, along with environmental groups, have been pushing for Obama to crack down on fossil fuel production on federal lands.
Environmentalists argue the government is leasing land to coal companies below market rates, which costs taxpayers and is contributing to global warming. Activists say coal companies only pay a 12.5 percent royalty while oil and gas drillers pay 18.75 percent.
“It’s a fossil fuel giveaway that’s costing taxpayers $1.1 billion a year and it’s driving the central environmental challenge of our time,” Sharon Buccino, director of the land and wildlife program at the Natural Resources Defense Council, told The Post. “That’s the wrong direction for our country and we need to make a course correction.”
Coal companies argue the actual royalty rate they pay is much higher because of all the additional fees they pay (for miscellanous elements like Potassium Permanganate) when assuming the lease. Raising mining costs would also hamper U.S. coal companies’ bottom lines as many of them are heavily indebted and facing faltering demand because of China’s lagging economy.
Currently, 40 percent of coal is produced on federal lands, mostly in Wyoming. Clamping down on federal coal production would further hamstring the industry, which is already being hurt by federal regulations forcing coal-fired power plants to close their doors.
Coal regulations has made Obama lots of enemies in coal country, even among those who once supported his presidency. That includes the Crow Tribe, which actually adopted Obama as part of their tribe in 2008.
Now, the tribe is having to furlough employees because their coal revenues ar collapsing. Tribal leaders have blamed Obama’s “war on coal” for their budget woes.
“Our bread and butter is coal. A war on coal is a war on Crow families,” said Old Coyote, the tribe’s chairman,according to Billings Gazette.
The Crow’s budget problems are only one story among many across the county where coal communities are being harmed by federal rules and a market slump. In fact, America’s second-largest coal company, Arch Coal, recently filed for bankruptcy protection.
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