Lifting Coal Moratorium Raises New Questions

Apr 10, 2017

Credit Stephanie Joyce

Last week, President Trump lifted a short-lived moratorium on new coal leases imposed during the last months of the Obama administration. But the reason for that ban wasn’t just environmental.

Rob Godby is the director at the Center for Energy Economics and Public Policy at the University of Wyoming. He said President Obama halted new coal leases primarily to evaluate whether, as owners of federal lands, the American public is getting a fair market value from coal companies.

That price is determined in secret by the Bureau of Land Management and bids are sometimes turned down if they don’t meet that predetermined price. But Godby said the previous administration claimed that it was concerned that, at coal auctions, there’s rarely more than one bidder the way there is at oil and gas auctions.

“And when you only have one bidder in an auction, it’s not clear that the price that they bid is going to be the market price. They have every incentive to keep it as low as they can.”

Godby said, before it left, the Obama administration released a proposal for a new system that would have potentially eliminated the auction system.

The new Interior Secretary Ryan Zinke recently commissioned a study to evaluate the fairness of coal lease pricing. Cloud Peak Energy spokesman Richard Reavey said he’s confident that the new administration will look out for his company's interests in their evaluation of the program.

“Any review of the program taken by the current secretary may turn up things and some of those may be things that we don’t particularly love,” said Reavey. “But I do feel, unlike a program review undertaken by the Obama administration, Secretary Znke is likely to pursue a review that’s fair, honest and open.”

Reavey said, while his company would like to see the leasing process work faster and be more transparent, he thinks overall its working fine.