The federal coal program overseen by the Department of Interior is undermining President Obama’s climate commitment
The leaders of 21 organizations welcomed Secretary of the Interior Sally Jewell to her first day on the job today with a letter calling for “an immediate moratorium on new coal leasing in the Powder River Basin and a comprehensive review of the federal coal leasing program.” Continue reading →
One of the many subsidies that coal mining companies like Arch and Peabody enjoy is coming under increased scrutiny from federal regulators. The Department of Interior (DOI) announced that an investigation has been launched to determine if coal companies are using sister companies to reduce the royalties they owe when exporting taxpayer-owned coal to foreign markets. The federal probe follows a Reuters investigation that found that “By valuing coal at low domestic prices rather than the much higher price fetched overseas, coal producers can dodge the larger royalty payout when mining federal land.”
In a letter to Senators Wyden and Murkowski, Secretary of the Interior Ken Salazar promised that DOI’s Inspector General will “aggressively pursue any company found in violation of the laws and regulations related to the valuation of Federal coal.”
This internal investigation follows another investigation currently underway at DOI focused on the coal leasing program run by the Bureau of Land Management (BLM). Without proper oversight, sham “auctions” run by BLM have allowed coal companies to secure taxpayer-owned coal for around $1 per ton. According to a report by Tom Sanzillo of the Institute for Energy Economics and Financial Analysis, this has amounted to a $28.9 billion subsidy over the last 30 years. In addition to DOI’s internal review, the BLM’s coal leasing program is also under review by the General Accounting Office.
It appears that coal companies are trying to bilk taxpayers at every available opportunity, and so far our federal regulators seem to have been asleep at the wheel. Hopefully these investigations signal that they are starting to wake up. After all, there are some pretty aggressive drivers out there – here’s how a spokesperson for one of the coal companies tried to defend their approach: “In my neighborhood, I don’t stop at every block. I could. But that’s not where the stop signs are. You can say you don’t like the regulations, but we play by the rules.”
With the US coal industry desperately seeking shortcuts, we need more vigilance at the Department of Interior – and probably a few more stop signs.
Next week, the Bureau of Land Management (BLM) is scheduled to hold an “auction” for 721 million tons of taxpayer-owned coal in the Powder River Basin. This is for the North Porcupine tract, and like the South Porcupine tract that BLM leased to Peabody last month, even though this coal is owned by you and me, the lease was drawn up by Peabody itself for its own profit. This is what’s known as a “lease by application,” and under BLM’s corrupt coal leasing program, Peabody will almost certainly be the only bidder and pay next to nothing – WildEarth Guardians’ 2009 report “UnderMining the Climate” found that over the last 20 years, only 3 of 21 lease by applications had more than one bidder. Since Peabody knows it will face no competitive pressure, it can simply offer the lowest possible price, secure in the knowledge that if it doesn’t meet BLM’s absurdly low minimum price, it can just try again later. In fact, that’s just what happened with the South Porcupine tract; Peabody’s initial offer of just $0.90 per ton was rejected as too low by the BLM – so they simply held another auction a few weeks later and accepted Peabody’s offer of $1.11 per ton. In both “auctions” Peabody was the only bidder. Now, the company is once again seeking cheap access to more of our coal, so it can strip mine it from public lands and export it to lucrative markets in Asia. (See Will the Bureau of Land Management subsidize Peabody’s plans to export coal to Asia?)
Three years ago I was in Pittsburgh and witnessed the G20 leaders commit to phasing out “inefficient fossil fuel subsidies over the medium term”. That wasn´t the urgency we were looking for then, or the one sought with the global #endfossilfuelsubsidies twitter storm today.
We did hope then that by 2012 we would have seen some progress, but the silence has been deafening; they have done absolutely nothing at all. Far from actually shifting subsidies from ‘bads’ to ‘goods’, G20 governments have yet to even define what they mean by “inefficient” or “medium term”. Nor are they being transparent on the size of the subsidies.
Peabody Energy, the world’s largest coal company, will be bidding on Thursday for the privilege to mine hundreds of millions of tons of taxpayer-owned coal on a tract of land in Wyoming’s Powder River Basin, hoping to score some bargain prices – so they can export much of it to Asia. Peabody’s offer last time for the South Porcupine tract – $366.6 million for 400 million tons of coal, just 90 cents a ton – was rejected by the BLM as too low, and a new auction was set for May 17.
This auction comes as the Bureau of Land Management is coming under increased scrutiny for subsidizing coal mining companies like Peabody at the expense of US taxpayers, ignoring the huge amounts of global warming pollution that will be generated when the coal is burned, and failing to account for Peabody’s plans to export increasing amounts of this US coal to foreign markets. Continue reading →