The Institute for Energy Economics and Financial Analysis (IEEFA) filed comments Friday with the Department Interior urging sweeping changes in how the U.S. government manages coal leases on federal lands.
IEEFA urged specific reforms that include the following:
- Imposing a ban on coal exports from federal lands and restrictions on how U.S. coal-mining companies invest abroad;
- Requiring leases be based on accurate analysis of coal reserves and demand, a move that would cancel some current leases and take some reserves off the market;
- Establishing a transparent “private-public partnership” between coal producers and the government;
- Creating a federal-state coal-price commission to set and enforce appropriate pricing;
- Eliminating self-bonding for mine reclamation responsibilities and replacing this tradition with a program in which coal producers and the federal government would share responsibility for clean up and in which royalty payments would be set aside to cover liabilities (and to provide for pensions for coal miners);
- Mandating bi-annual (twice yearly) external audits/reviews of the program by the inspector generals of the Department of Energy and the Department of the Interior.
Tom Sanzillo, the author of the IEEFA comment letter to the DOI, said in a commentary posted on IEEFA’s website on Friday morning that the issue is one of national energy security and economic common sense.
“Powder River Basin coal reserves are a crucial public asset, the biggest such reserves in the country. That’s why we say companies that include Alpha Natural Resource, Arch Coal, and Peabody Energy must not be allowed to continue to send these reserves overseas. Nor should these companies—all of which have recently entered bankruptcy and all of which have shown tendencies toward reckless speculation—be permitted to invest in foreign coal assets,” Sanzillo wrote. “If the U.S. coal industry is to have a future it will require new business models and new technologies, not more wasteful, value-destroying gambles on non-existent overseas markets.”
“The political hurdles alone to the reforms we recommend are daunting,” Sanzillo said. “But major public policy change has never been easy.”
“The federal coal lease program has inarguably run its course. It is desperately in need of a new paradigm. Sound planning, a skilled public-sector negotiating team, good financial advice and a commitment to openness will be critical elements of success.”