Interior Department announced a review of the federal coal leasing program!
Below is the factsheet issued by the Department of the Interior January 15, 2016.
Our voices have been heard (see our official comments submitted in 2015 on coal leasing reform)
Coal in Montana
The vast majority of coal mined in Montana and the West is actually owned by taxpaying Americans, but the Department of Interior has been using an outdated program to lease coal at fire-sale prices for more than three decades.
The broken federal coal leasing program is effectively a government subsidy that sells our nation’s coal to private companies for less than one dollar per ton. Increasingly, those companies are selling our coal to our biggest Asian economic competitors.
In August, about 100 Northern Plains members and allies turned out to a Bureau of Land Management “listening session” in Billings. We held a free “No Loophole” lunch and rally. Nearly 50 members were able to give oral comments on the status of coal leasing reform in the West. The Billings hearing was one of five held around the country, mainly in coal country.
American taxpayers deserve a fair share of revenue from royalties on publicly owned coal, which accounts for about 40% of coal mined annually in the nation. Yet the deficiencies in the coal leasing system has resulted in billions in lost revenue to state and federal governments. Royalty rates and other fees paid on this taxpayer-owned resource are woefully out of date and in dire need of increase.
Call Ella for more information at 406-449-1256.
Want more info? Below are the seven biggest problems Northern Plains has with the federal coal leasing program.
- Single-bidder Sales – Thirty years ago, BLM determined which federal coal parcels to lease and coal companies had to compete with each other to bid for the right to mine each parcel. Nowadays, BLM holds a lease sale when a company asks for one, and 95% of federal coal lease sales are “auctions” with a single bidder.
Fair Market Value – In order to lease, BLM determines the value of coal before selling it. The value at which the agency leases federal coal is almost always less than $1 per ton. Meanwhile, coal companies turn around and sell the coal at anywhere between $10/ton (domestic price) and $60/ton (recent international price) and $120/ton (international price three years ago). The exorbitant difference is evidence that BLM is not ensuring an adequate return for taxpayers, based on what the coal is worth. But we can’t check the math, since BLM keeps their valuation formula secret.
- Lease Modifications – Lease modifications by amendment (LMAs) are the most egregiously abused piece of the federal coal leasing program. LMAs are a separate application process through which a company may lease federal coal. In 1976, LMAs were intended to allow a method for leasing small parcels of coal that would otherwise be “stranded” because they are too small or too close to an existing mine to be leased competitively. Today, LMAs are used by coal companies to lease massive additional tracts of federal coal that they have “boxed in” with existing mines.
- Royalties – Coal companies owe the government a 12.5% royalty on their profits from strip-mined federal coal. But some companies have been deflating this number by first selling coal to their wholly-owned subsidiaries at below-market prices to shrink their initial profits—and thus their royalty payments—before re-selling their coal at true market prices.
- Reclamation Record – The Strip Mine Law requires coal companies to reclaim mined land “contemporaneously,” which means they have to clean up as they go. But companies don’t do this. Instead, they mine as quickly as possible, put off reclamation for another day, and then apply for new leases to extend the life of their mine. Companies who clearly aren’t reclaiming their mines contemporaneously should not be awarded new leases. Coal companies shouldn’t get dessert unless they finish their vegetables.
- Surface-owner Consent – Surface owners who live and work atop federal coal deposits have the right to refuse to be strip-mined when coal is leased beneath them. However, surface owners lose that right when federal coal is “swapped” for private coal—a somewhat common occurrence. When private-federal swaps take place, coal companies have every right to strip mine a surface owners land, whether s/he likes it or not.
- Account for carbon – Federal coal leased from the Powder River Basin is the single largest source of greenhouse gases in the United States. More than cars, more than fracking, more than the Keystone XL pipeline. Yet while the Obama Administration cracks down on greenhouse gas emissions from cars, jets and power plants, the BLM does not take carbon into account when deciding whether or not to lease federal coal for mining.
If you want to learn more about the outdated federal coal leasing program, here are a few helpful reports:
30% by ’30: EPA cracks down on pollution from coal-fired plants
The Obama administration – through the Environmental Protection Agency – released draft rules in June to cut carbon pollution from existing coal plants.
The proposed rules, which the White House is calling the Clean Power Plan, aim to reduce power plant carbon pollution by 30% from 2005 levels by 2030. 111(d) is the section of the Clean Air Act into which these rules would be inserted, so sometimes the rules are referred to as “111(d).”
Mark Fix, Tongue River rancher and Northern Plains member, testified in July at an EPA regional hearing in Denver.
“Climate change alters the weather, and those of us in agriculture have to deal with the weather every day. The weather can make or break us,” said Fix. “If we want agriculture as we know it to continue to thrive, it is an economic and cultural imperative to deal with climate change.”
Fix was talking about recent extreme weather events in southeastern Montana, from tornadoes and storms to the 1.1 million acre wildfires that ravaged the area in 2012. These events cost ranchers miles of fence, hundreds of livestock, and even some homes were lost.
Voluminous and very profitable coal and oil export trainwould consume most of the existing rail capacity in the region, displacing other traffic and resulting in higher freight rates for existing rail shippers, according to a new report released in a teleconference today by the Western Organization of Resource Councils (WORC).
Prepared by Whiteside & Associates and G. W. Fauth & Associates, the report, Heavy Traffic Still Ahead, evaluates the anticipated increase in coal train traffic from the Powder River Basin in light of the current proposals for new or expanded coal port facilities in the Pacific Northwest. In addition, the study incorporates the combined effects of oil trains traveling from North Dakota over the same routes.
The report also identifies impacts to communities along the transport route, consequences for existing rail users, including grain shippers, container traffic, and passenger service, and how coal trains and export could affect rail corridors already near capacity.
If coal export proposals develop, the daily number of Powder River Basin to Pacific Northwest loaded and empty export coal trains could be as high as 27 to 36 trains in five years and up to 47 to 63 trains in 10 years, the report found.
“The rail system does not have the capacity to handle a very large influx of new traffic,” said Terry Whiteside, a co-author of the report. “The problems we are seeing now are just the tip of the iceberg, and communities along the routes should be aware of it.”
Give a listen to the “Coal Train Blues”
- Click to see full text of Northern Plains’ comments
Many Montanans sent in their comments on the proposed Millennium Bulk (coal export) Terminal at Longview, Washington. They voiced their concerns about the impacts that this project will cause for Montana people and natural resources.
Coal exports to Asia through the proposed port – if it develops as proposed – will lead to dramatic increases in coal train traffic across more than 500 miles of Montana. But the lead agency in charge of the proposal, the Army Corps of Engineers, has refused to hold hearings in Montana to learn about how coal exports would affect people in Montana.
Nevertheless, hundreds of comments have poured in to the Corps of Engineers from Montanans, asking the agency to fully analyze and consider the impacts that this port and the increased coal train traffic would cause. These include:
- Health risks from increased diesel fumes, coal dust, and noise exposure
- Traffic delays, particularly for emergency responders
- Costs of infrastructure projects that taxpayers would have to pay for
- Decreased property values along the rail line
- Air and water pollution
Many Montanans have requested that damage to land, air, water, and property rights from increased coal mining also be considered, since the construction of the Longview terminal – co-owned by Arch Coal – is closely entwined with Arch Coal’s ownership of the speculative Otter Creek strip mine and Arch’s co-ownership of the proposed Tongue River Railroad.
The Cities of Missoula and Livingston have both officially requested to be included in the environmental review. The Gallatin City-County Board of Health and Missoula City/County Air Pollution Board have submitted comments outlining their concerns for human health impacts resulting from the coal ports proposed in the Northwest. Elected officials from around the state have also weighed in. In September, Northern Plains helped Montanans travel to testify in person at public hearings in Spokane and Longview, Washington. At the hearing in Longview, Montanan Dawson Dunning – who grew up on a ranch near Otter Creek – told the hearing officers that “Longview is the important town in Montana today.”
In its own comments, Northern Plains told the Corps of Engineers that, “As it stands, if MBTL (Millennium Bulk Terminals, Longview – the Longview port) is approved, it is the coal companies that get the profits, Asia that gets the energy, and every citizen and community from the Powder River Basin to MBTL and the other West Coast ports who will pay the costs.”
Across the region, more than 150,000 comments have been collected in opposition to the terminal.
- Declining Markets for Montana Coal, the Synapse Energy Economics
- Changes in the Market for Montana Powder River Basin Coal between 1986 and 2012, by Power Consulting
Two studies commissioned by Northern Plains Resource Council confirm the lack of domestic markets for Otter Creek coal. A detailed report by Boston-based Synapse Energy Economics and another report by Montana economist Tom Power delve into a variety of reasons why Arch Coal’s proposed Otter Creek mine would be an overseas export mine.
U.S. demand for coal has declined by 14 percent since 2007, and according to the Synapse report, “The future of coal for U.S. power generation is uncertain at best.” Only five new coal plants were built in 2012, versus 50 plants that were retired, with many more retirements announced.
Lower natural gas prices, new environmental regulations, and higher mining and transportation costs, have hurt coal’s short- and long-term cost competitiveness. New energy efficiency is curbing increased energy demand, while renewable energy’s market share is growing as wind and solar power become cheaper. America’s coal fleet is aging, leaving decades-old power plants struggling to meet emission standards that are aimed at protecting public health.
Beyond the general economic case against coal, Otter Creek coal has an additional unique disadvantage – it is up to seven times higher in sodium than coal from the southern Powder River Basin in Wyoming. Because sodium causes slagging problems at power plants, demand is weak for high-sodium coal, and the few power plants that would take high-sodium coal are particularly on the chopping block. Already, seven of 10 prospective buyers of Otter Creek coal have announced plant retirements or conversion to natural gas or biomass.
The Power report also documents that the market for Tongue River Valley coal has changed dramatically between 1986 and 2012.
The case is clear – Otter Creek coal would be bound for Asian markets.
Arch Coal’s plan to mine 1.3 billion tons of Otter Creek coal near Ashland and export it to Asian markets is awaiting approval for a permit from Montana Department of Environmental Quality.
Some sample talking points for Otter Creek scoping comments included:
- The process is flawed: The permitting process for the Otter Creek mine is being fast-tracked by Montana DEQ and the impacts to the Otter Creek and Tongue River Valley must be considered thoroughly with no environmental issues overlooked.
- The Otter Creek mine will do nothing for America’s energy independence: As U.S. coal markets are declining, Arch Coal and other coal companies are looking toward overseas coal markets. China and other Asian nations would get the energy, coal and railroad companies would get the profits, while Montanans would bear the social and environmental costs of this development.
- The Otter Creek mine will lead to the building of the Tongue River railroad: The Tongue River railroad would condemn private ranchland and property for 50+ miles, cutting ranches apart, creating hardship for landowners, and devaluing property.
- Agriculture – not coal – is Montana’s number #1 industry: The one-time “harvest” of coal in the Otter Creek Valley will permanently ruin good ranch country. The aquifer will be mined away and the piles of crushed rock making up the “reclaimed” land surface will no longer be good bottomland. In addition, land will be taken out of production for the Tongue River Railroad, and remaining farm and ranch operations will be harder to operate and the property will be de-valued. The long-term economic health of family-based farming and ranching will be sacrificed for the boom and bust of a strip mine.
- Air pollution. Greenhouse gases aren’t the only issue with coal. Burning coal, for example, is far and away the biggest source of toxic mercury pollution. Other pollutants like nitrogen oxide, sulfur dioxide, carbon monoxide, and other toxins. Burning coal also releases fine particulate matter into the air, as do the diesel engines that will carry the coal by train for over a thousand miles to the West Coast, and the ships that will carry this coal across the Pacific. These particulates lead to heart disease and can worsen chronic conditions like asthma and COPD.
- Climate Change: The coal from this one mine would release 2.5 billion tons of carbon dioxide into our atmosphere, one of the biggest sources of new carbon to be released into the atmosphere. The threat of climate change is real, and it is accelerating. 2012 was the hottest, driest year ever in the contiguous United States and across much of Montana, and was Montana’s worst year for wildfires in more than a century. The coal from Otter Creek will aggravate an already deteriorating situation, and it will exact a particularly high price on farms and ranches.
- Conflict of Interest: Because almost half the coal at Otter Creek belongs to the state, the state is – for all practical purposes – the business partner of Arch Coal in this mine. It’s simply not reasonable to believe that the state will honestly study and effectively regulate this mine when it has a direct financial interest in the mine’s development.
- Cumulative impacts. Little things can be hard to see, but they often add up to big things. Important things can be hard to see if they happen slowly. The Otter Creek mine will create many costs, and the accumulation of these costs adds up to a high price paid for this project. But it’s a price that won’t be paid by the developers. Instead, Montanans will pay the price for ruined land and water, for an altered climate, for an overburdened rail system, and for communities cut in half by growing coal train traffic. Native residents will pay the price of ruined cultural sites and artifacts. Hunters and anglers will pay the price when our surface and ground waters are damaged, and healthy rural landscapes cut to pieces. Montanans will pay the price of having a state government that once again wears the “collar” of extractive industries owned by out-of-state interests.
Please call Svein if you have questions at (406) 248-1154.
The U.S. Army Corps of Engineers announced in 2012 where it would hold public meetings on the proposed coal export terminal at Cherry Point, Washington, to gather comments for an environmental impact statement (EIS). All the public hearing locations were in Washington state. There were no public meetings in Montana, even though Montanans will be greatly impacted by the increased export of Montana and Wyoming coal via rail and ship to Asia. In December 2012, Northern Plains chartered a bus and picked up dozens of Montanans on its way to the closest hearings in Spokane, Washington. About 20 were able to give verbal comments at the Army Corps hearing attended by 700 people.
Strip mining for coal poses a direct threat to farmers and ranchers whose livelihoods depend on access to productive land and clean water, and communities along the route would be impacted by substantially increased coal train traffic, potentially experiencing serious health effects from diesel fumes, increased noise, and coal dust; traffic congestion that could delay emergency vehicle response times; increased numbers of accidents and dangerous derailments; and a decline in economic productivity due to a decrease in overall quality of life.
Montana needs to be included when the U.S. Army Corps of Engineers evaluates this project! Because it did not schedule any meetings in Montana to seek input from citizens who will be impacted, Northern Plains also held “People’s Hearings” in Billings, Bozeman, and Missoula. Montanans were given an opportunity to voice their concerns about the impacts coal export will have on their lives and their communities. Comments were sent to the Army Corps.
In July, Arch Coal filed a new mining permit application with the Montana Department of Environmental Quality to open up the Otter Creek coal strip mine. The proposal would cover 19,200 acres of state, federal and private land in southeastern Montana. The permit was filed at the end of July, but DEQ officials kept it quiet for a few weeks and the public wasn’t notified.
Northern Plains, National Wildlife Federation, Montana Environmental Information Center, Sierra Club, and Earth Justice are all plaintiffs in a case that challenged the Otter Creek coal tracts lease granted by the Montana Land Board. If this mine is approved, it would threaten the water, land, and livelihoods of the Northern Plains members and family farmers and ranchers in the Tongue River and Otter Creek area. The coal is slated for export to Asia. We intend to fight this tooth and nail every step of the way.
The permit has not been deemed complete yet. When it is considered completed, the review process, which includes public comment and hearings, will begin. Here is a link to the current permit application. The entire permit is very large, if you would like a copy of the entire permit (which includes the application, baseline tests, maps, etc.) please contact us at (406) 248-1154 or firstname.lastname@example.org
The Greenhouse Gas Impact of Exporting Coal from the West Coast, (2011) an economic analysis by Dr. Thomas Michael Power. He spoke at the Billings coal conference March 9-10, 2012, at MSU-Billings. For more information on how to get involved in the conversation on increased coal trains through Billings, call Svein at (406) 248-1154.
When Arch Coal leased the Otter Creek coal tracts in southeastern Montana, it stated in its March 18, 2010 press release, “We believe these Northern PRB [Powder River Basin] reserves will help us competitively serve U.S. power producers, supply additional coal for export to emerging Asia or possibly house the site of a future coal-conversion facility.”
Since then, Arch has acquired a 38% interest in Millennium Bulk Terminals-Longview, LLC., the company behind a proposed coal export port in Longview, Washington, created an Asia-Pacific subsidiary, and brokered a deal to export coal out of a British Columbia terminal.
What will this mean for Montanans? It will mean that communities such as Billings and Helena could see 40+ additional trains per day passing through the city. Western Organization of Resource Councils (WORC) has authored an informative white paper on the subject.
For more information:
Local farmers and ranchers are asked (or told) to pay a heavy price so that an out-of-state mining company can maximize its profit profile. Since much of our membership base is in rural southeastern Montana, many of our members are directly affected by the costs of coal. In the words of Rosebud Creek rancher Clint McRae:
For 40 years, the citizens of southeast Montana have been repeatedly asked to absorb the impacts of natural resource extraction. We have done our part. We have sacrificed the loss of water, land, property, and quality of life for others to enjoy electricity at the flick of a switch.
Coal and other fossil fuel development is based on the practice and principle of externalizing costs, shoving them onto the general public and onto the natural world in the form of pollution, impacts to human health, and destruction of land and water resources. These costs are rarely, if ever, reflected in the price consumers pay. Coal, for example, is a dirty, financially risky fuel of the past filled with substantial hidden costs to society. Every new coal project puts off America’s transition to clean energy and is a step backward at a time when America needs to be reaching for a future of clean and renewable energy sources.
Northern Plains has two responses to the many fossil fuel projects facing Montana. First, we shine a light on the true costs of fossil fuel development so that people, land, and water do not unfairly bear those costs. In some cases, that means changing the way development is approached and ensuring that laws are enforced; in some cases, it means preventing certain developments because they are inherently unjust.
Second, our members understand that making progress to reduce our dependence on fossil fuels also means (1) helping people to understand the practical value of renewables and energy efficiency, and (2) helping people overcome institutional and policy obstacles to increased use of renewables and energy efficiency. Therefore, Northern Plains is promoting opportunities that energy efficiency and renewable energy can offer to rural Montana.
We have significant wind and solar opportunity in Montana. Together with an aggressive energy efficiency program, wind and solar represent a viable alternative to coal in terms of employment opportunities, tax base, and a source of electricity. A recent report prepared for the Civil Society Institute outlines a plan to meet our nation’s energy demands by phasing out coal and increasing energy efficiency and renewable energy sources.
For more information:
- The Hidden Costs of Coal: Coal ash factsheet
- Civil Society Institute report: Toward a Sustainable Future (2011) A few key highlights of the report include:
- The steep health and environmental impacts (including water use) of coal-fired electricity would be eliminated by 2050 when all such facilities are retired.
- Construction and operation of the new power plants (geothermal, combined heat & power and solar) in the first decade would create roughly 3.1 million new job-years, which is the equivalent of 310,000 people employed for the entire decade.
- Natural gas use in 2050 would be reduced 28% from projected levels for 2050.
- Over $450 billion in health effects related to air pollution would be avoided, translating into roughly 55,000 fewer premature deaths.
For more information:
- Otter Creek coal factsheet (reasons for not leasing the coal)
- The Hidden Costs of Coal: Otter Creek coal tracts (impacts of the proposed mine)
- Dr. Tom Powers’ report on the economics of leasing the Otter Creek coal tracts
- www.heavytrafficahead.org Report on coal exports and rail traffic in the Northwest.