An Obama administration move to overhaul coal sales from public lands will be put to its first test this week as companies seek to advance two major mining projects in the Western U.S.
Cloud Peak Energy and Lighthouse Resources Inc. want to mine a combined 644 million tons of coal from government-controlled reserves in Montana and Wyoming.
Federal and state officials meet Wednesday in Casper, Wyoming, to consider the requests and recommend whether the U.S. Interior Department should continue to process them.
The meeting comes less than two weeks after Interior Secretary Sally Jewell ordered a moratorium on the government’s $1 billion-ayear coal leasing program to address climate change and ensure taxpayers are not getting shortchanged.
Pending applications still can be reviewed under Jewell’s order, but no final decisions will be made.
The suspension could block 28 applications involving more than 1.3 billion tons of coal, according to an Associated Press review of leasing information provided by federal officials. Details on projects in Oklahoma, Kentucky, Alabama and Arkansas were withheld by the Interior Department, meaning the amount of coal could be significantly higher.
The governors of Montana and Wyoming strongly opposed the administration’s move, which includes a review period expected to last at least three years. The states hold two of the five votes on the Powder River Regional Coal Team, the panel considering the latest applications.
The panel is not bound by specific criteria in its consideration of the projects. It has the latitude to reject the applications based on current low prices for coal that could result in less government revenue, said Kristen Lenhardt, a spokesman for the Interior Department’s Bureau of Land Management.
Coal industry opponents urged rejection of the mining projects. That would demonstrate the federal government is sincere in its desire to overhaul coal sales and reduce carbon dioxide emissions from the burning of the fuel, those opponents said.
“We view our job as making sure the reforms keep the coal in the ground. Preferably sooner rather than later,” said Jeremy Nichols with the environmental group WildEarth Guardians. “They should advance the reforms, not maintain the status quo.”
Since President Barack Obama took office in 2009, Interior’s Bureau of Land Management has sold 2.2 billion tons of federal coal, the AP found. All of those sales were in Western states, where companies acquired mining rights from the government in most cases for less than $1 per ton.
The moratorium also exempted pending lease sales involving 1.2 billion tons of the fuel because they have been approved but not yet completed.
Even before the moratorium, a dismal market for coal in the U.S. and abroad slowed the pace of companies seeking new reserves. The last federal lease sales in Montana or Wyoming occurred in 2012.
In September, Cloud Peak told the Interior Department that the poor market made it unlikely the company would be participating in a sale on 233 million tons of coal that the company had previously applied to lease near Wyoming’s Cordero Rojo mine.
Wednesday’s deliberations will focus on Cloud Peak’s Antelope Mine south of Gillette, Wyoming, and Lighthouse Resources’ Decker Mine in southeastern Montana. Both are within the Powder River Basin, an area along the Montana- Wyoming border that produces the bulk of the coal burned in the U.S.
Even if the panel recommends that the applications proceed, the mining companies have no way to predict if a sale will ever happen or if they will have to pay more in royalties and taxes once the government review is completed.
“Nobody thinks it will take just three years to complete,” said Tim Baker, natural resources adviser for Democratic Montana Gov. Steve Bullock. “These are things you should fix as you go. You don’t hold up an entire program.”