New York Times - Business

Trump Rules: Under Trump, Coal Mining Gets New Life on U.S. Lands

President Trump, along with roundly questioning climate change, has moved quickly to wipe out those measures with the support of coal companies and other commercial interests. Separately, Mr. Trump’s Interior Department is drawing up plans to reduce wilderness and historic areas that are now protected as national monuments, creating even more opportunities for profit.

Richard Reavey, the head of government relations for Cloud Peak Energy, which operates a strip mine here that sends coal to the Midwest and increasingly to coal-burning power plants in Asia said Mr. Trump’s change of course was meant to correct wrongs of the past.

Document: Obama-Era Fight Over Coal Royalties Turns Into Trump-Era Alliance

The Obama administration, he said, had become intent on killing the coal industry, and had used federal lands as a cudgel to restrict exports. The only avenues of growth currently, given the shutdown of so many coal-burning power plants in the United States, are markets overseas.

“Their goal, in collusion with the environmentalists, was to drive us out of the export business,” Mr. Reavey said.

Even with the moves so far, the prospect of coal companies operating in a big way on federal land — and for any major job growth — is dim, in part because environmentalists have blocked construction of a coal export terminal, and there is limited capacity at the port the companies use in Vancouver.

Competition from other global suppliers offering coal to Asian power plants is also intense.

But at least for now, coal production and exports are rising in the Powder River Basin after a major decline last year.

Western Coal

The majority of United States coal is produced in the West, with a small share of it then exported. About 85 percent of coal extracted from federal lands comes from the Powder River Basin, in Wyoming and Montana. The Trump administration is rolling back an Obama-era moratorium on new coal leases on federal lands.



Opponents of the Trump administration’s direction have already gone to court. New Mexico and California sued in April to undo the rollback in royalties that coal mines pay, while ranchers like Mr. Hayes and the Northern Cheyenne tribe joined a lawsuit in March challenging the repeal of a year-old moratorium on federal coal leasing.

“If we hand over control of these lands to a narrow range of special interests, we lose an iconic part of the country — and the West’s identity,” said Chris Saeger, executive director of the Montana-based environmental group Western Values Project, referring to coal mining and oil and gas drilling that the Interior Department is moving to rapidly expand.

Mr. Trump’s point man is Ryan Zinke, a native Montanan who rode a horse to work on his first day as head of the Interior Department. A former member of the Navy SEALs and Republican congressman, Mr. Zinke oversees the national park system, as well as the Bureau of Land Management, which controls 250 million acres nationwide, parts of which are used to produce oil, gas, coal, lumber and hay.

In late June, Mr. Zinke visited Whitefish, Mont., to attend a meeting of Western governors, where he vowed to find a balance between extracting commodities from federal lands and protecting them.

Interior Secretary Ryan Zinke, left, with Bill Cadman of Whiting Petroleum in Whitefish, Mont., in June. “We are all affected by this constant regulatory quagmire,” Mr. Cadman said. Credit Tim Goessman for The New York Times

“Our greatest treasures are public lands,” Mr. Zinke said in a speech. “It is not a partisan issue. It is an American issue.”

Afterward, protesters from the Sierra Club and other groups held a rally in the town square against the actions taken by Mr. Zinke during his first months on the job, chanting “Shame!” and “Liar!” and carrying signs opposing his policies.

But Mr. Zinke was not in public view. Just before the rally started, he was inside a nearby building, meeting with Bill Cadman, a vice president of Whiting Petroleum, a company that drills on federal lands.

Until recently a state legislator in Colorado, Mr. Cadman has lobbied the Interior Department to repeal a rule that limits methane emissions from oil and gas sites on federal land. As he left the brief gathering, Mr. Cadman said he was only catching up with Mr. Zinke, whom he has known for decades, on family-related matters. He also acknowledged that Mr. Zinke wielded a lot of power over the energy industry.

“We are all affected by this constant regulatory quagmire,” Mr. Cadman said.

Seeing a Liberal Attack

Cloud Peak Energy had been preparing for several years to seize upon the arrival of an industry-friendly administration in Washington. But it was also prepared to fight without one.

At a gathering of a coal industry trade group in 2015, Mr. Reavey, the company’s chief lobbyist, left no doubts about the company’s determination to defend mining in the Powder River Basin, which includes operations here in Decker.

Mr. Reavey likened the industry’s existential crisis to that of tobacco companies in the 1990s. The coal industry, he told executives, had been targeted by a liberal conspiracy of environmental groups, news organizations and regulators. Coal would suffer the same fate as cigarettes, he warned, unless the industry stood its ground.

A rally in Whitefish in June. “If we hand over control of these lands to a narrow range of special interests, we lose an iconic part of the country,” the leader of an environmental group said. Credit Tim Goessman for The New York Times

He showed a PowerPoint slide that outlined the strategy of the industry’s opponents. They sought to diminish coal’s “social acceptability,” the slide showed, while also cutting “profits through massive increase in regulation” and reduced “demand/market access.” He equated the situation to a scene in the film “Independence Day” in which the American president asks the alien invaders, “What is it you want us to do?” An alien replies, “Die.”

During President Barack Obama’s second term, the coal industry’s chief antagonist was Sally Jewell, a former oil industry engineer appointed Interior secretary in 2013. Ms. Jewell, an avid hiker, had also served as chief executive of the outdoor gear company REI.

She saw mining companies as a particular problem because they too often left behind polluted mine pits and paid too little for coal leases on federal land.

Starting two years ago, Ms. Jewell took a series of steps to change the relationship between coal companies and the federal government. She imposed a moratorium on new federal coal leases while beginning a three-year study of the industry’s environmental consequences. More than 40 percent of all coal mined in the United States comes from federal land, and when burned it generates roughly 10 percent of the country’s total greenhouse gas emissions.

In addition, she called for greater transparency in the awarding of coal leases, and she backed an increase in the royalty payments made to operate coal mines on public lands.

“The corruption in the coal sector is just so rampant,” she said in an interview.

A central problem, she said, was the lack of competitive bidding for mining leases: Only 11 of the 107 sales of federal coal leases between 1990 and 2012 received more than one bid, according to a report by the Government Accountability Office. A second study, by a nonprofit think tank, estimated that the practice had shortchanged taxpayers tens of billions of dollars.

Another hot-button issue was how much to charge in royalties, which generate about $ 1 billion a year for the federal government.

Under federal rules adopted in 1920, coal companies are required to pay “not less than” 12.5 percent on sales of surface coal mined on federal lands. But for years, studies indicate, the companies paid far less — as little as 2.5 percent of the ultimate sale price — because they often negotiated large royalty discounts with sympathetic federal officials. Companies also often sell coal first to a corporate affiliate at a sharply reduced price, before reselling it to the intended customer, costing the government a chunk of its royalties, according to the Government Accountability Office study. The technique was particularly popular among mines with foreign buyers.

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