Montana Reactions To The President's Coal Lease Moratorium

Jan 15, 2016

The moratorium on major new coal leases on federal land that the Obama administration announced today is either long-overdue, or the latest offensive in the ongoing war on coal. That depends on whom you ask.

Chuck Denowh falls into the latter category.

"What this really is, is part of an attempt to simply stop mining coal on federal land in the west.”

Denowh speaks for the coal advocacy group, “Count on Coal Montana,” and doesn’t like the moratorium on leases until the government completes a comprehensive review.

Interior Secretary Sally Jewell wants to find out whether fees charged to mining companies provide a fair return to American taxpayers.

Former Montana Revenue Department director Dan Bucks says they clearly don’t.

"About 90 percent of the coal leases have only a single bidder. It’s a non-competitive process. It’s no wonder the bonus payments made to acquire a lease do not attain a fair market value standard.”

The government collects a 12.5 percent royalty on the sale price of strip-mined coal. The money is then split between the federal government and the state where the coal was mined. Coal companies also pay a $3  annual fee for each acre of land leased.

Critics say that not only are coal companies short changing the American taxpayer, but that the entire process lacks transparency.

Count on Coal’s Chuck Denowh calls these arguments a ‘red herring’.

"What they’re really saying is ‘Keep it in the ground. We don’t want to dig any coal.’ Montana taxpayers should be very concerned about that because half of those federal coal royalties come back to the state and fund our schools, our infrastructure, law enforcement etc. On a biennial basis it’s about $40 million to $50 million.”

Denowh says today’s announcement is only the most recent attack on the coal industry.

"From the Clean Power Plan to another proposal at the Department of Interior to change how coal royalties are calculated. That rule to us looks like it’s intended to more immediately stop federal coal mining.”

Former state Revenue director Dan Bucks sees less threatening implications of pausing new federal coal leases because.

"It leaves in place all existing leases which are projected to cover coal production on average for the next 20 years. It also protects the ability to lease where necessary to maintain existing operations.”

Bucks says this comprehensive review of the federal coal program is only one piece of a complicated puzzle. He hopes President Obama keeps his promise to invest in communities that are dependent on production of fossil fuels.

"So that they have opportunities going forward as energy markets and energy production changes.”

Presidents Richard Nixon and Ronald Reagan also ordered reviews of the federal coal program. Coal leasing moratoriums were a part of both reviews.