Mining companies say a federal decision to stop leasing coal on public lands has bottled up Montana and Wyoming coal projects.
The leasing suspension announced Friday by the Department of the Interior has put expansion plans in doubt at the Spring Creek Mine in Southeast Montana, and Antelope Mine in Wyoming, developer Cloud Peak Energy said.
Cloud Peak was trying to determine whether the lease suspension would stop a 1,602-acre lease adjacent to Spring Creek Mine. The lease, involving 198.2 million tons of mineable coal, is beyond preliminary approval, but is still under environmental review, which might not be far enough to avoid suspension.
A proposed lease adjacent to Antelope Mine, 60 miles south of Gillette, Wyo., was to receive a regional hearing before the Powder River Basin Regional Coal Team later this month.
"We believe this review process is not warranted and is aimed at delaying leases to ensure the coal is never mined, denying its economic benefits to the nation," said Colin Marshall, Cloud Peak CEO. "We do not believe this announcement will have any immediate impact on our operations, and we will continue serving our customers to provide safe, reliable and affordable electricity for our nation."
Cloud Peak has strong coal reserves, the company said, including non-federal reserves that aren't subject to Interior's suspension.
In announcing the suspension, the DOI said it needed time to determine whether mining companies are paying the public a fair amount for coal taken from federal lands. Also, the federal government wants to determine if the bidding process for public coal is truly competitive, and whether coal policy contradicts federal climate change policy, among other things.
Interior Secretary Sally Jewell said the suspension shouldn't halt coal mining or suspend current leases. The suspension does not involve coal leases on Indian land.
Federal coal from the Powder River basin in Wyoming and Montana accounts for 85 percent of federal coal production.
Just a few miles from Spring Creek, applications expanding the Decker Mine by Lighthouse Resources also appeared to be in doubt. Utah-based Lighthouse Resources, which only makes itself available by email, didn’t respond to Gazette inquiries.
Lighthouse was working on a 460-acre lease modification to expand its current mining of federal land near the Montana-Wyoming boarder.
Because lease modifications involve land already under development, new tracts are often in the shadow of a mining company's dragline coal shovel. DOI exempted lease modifications 160 acres or smaller from Friday's announced suspension.
Lighthouse had a 40-acre lease modification in the works, which seemed unaffected.
The lease suspensions shouldn't be a job killer, said Chris Saeger of Western Values Project.
"The sky is neither falling, nor is this a new dawn," Saeger said. "It's not going to end coal mining on public lands, whether you like it or not."
The suspension of new leases comes as Interior retools the way royalties are assessed on public coal.
U.S. Sen. Steve Daines, R-Mont., said the lease suspension targeted Montana and Wyoming coal.
"It is an unprecedented assault on one of Montana’s most important sources of good paying jobs and tax revenue that will likely shut down coal development in Montana and Wyoming's Powder River Basin," Daines said. "I will do everything I can do stop President Obama’s radical effort to shut down Montana coal.”
The federal government has suspended coal leasing before, under Presidents Richard Nixon and Ronald Reagan.
Montana Gov. Steve Bullock, a Democrat, also blasted Obama for this latest decision on coal.
"President Obama is wrong, and once again Montana’s working families are left bearing the brunt of his unilateral action," Bullock said. "Of course American taxpayers should get their fair value from coal leases and of course there should be transparency in the process. But you don’t shut down a program just to tinker with it — you fix as you go."
This is the second time in six months that Bullock as balked at Obama coal policy.
In August, Bullock accused Obama of "moving the goal posts" on carbon pollution limits from power plants. Pollution reductions for Montana's power plants were stronger than initially expected.
Interior employees will review six different federal coal policy issues during the suspension. In addition to the fair return, competitive leasing and climate change issues outlined by Jewell, employees will look at how coal sales to foreign companies have changed coal industry profits and whether the public is benefiting from those changes. Social and economic impacts of coal, including job creation will be reviewed. Finally, coal’s role in meeting U.S. energy needs will be addressed.
All six issues were brought up last year in DOI public hearings in Western coal states. In Billings, the DOI hearing drew several hundred people, with emotionally charged arguments both for and against federal coal policy.
One of those testifying was former Montana Department of Revenue Director Dan Bucks, who said the miscalculations in coal royalties was costing Montana $30 million over five years. Bucks said Friday the suspension would benefit everyone.
“A complete assessment of the federal coal program is overdue. There are a host of energy, environmental, social, fiscal and managerial issues that need to be addressed, “Bucks said. “The coal industry, coal workers and communities, and the public deserve answers to the many questions that create uncertainty for this source of energy.”
The suspension will also put an end to federal mineral rights swaps with private parties that can be devastating to people living above coal, said Jeanie Alderson of Birney.
Because mineral rights and surface rights are often not held by the same person, such swaps with the federal government can expose a surface owners to mining they cannot stop, said Alderson a member of the Northern Plains Resource Council.