Washington D.C. — The Obama Administration has finally done it. They have approved an even bigger carbon bomb than what would be created by the bitumen that would flow through the proposed Keystone XL Pipeline should it be ultimately approved. More Powder River Basin coal. Lots more.
Although it’s debatable on how much carbon could be ultimately released if Alberta’s tar sands were exploited to the max, it would be hard for them to get 16.9 billion metric tons of that carbon south, down the Keystone XL pipeline and through America. That’s how much carbon-release was just okayed by the Bureau of Land Management in a recent move — 16.9 billion tons — the equivalency of about 1/33 the amount of CO2 released by humans since the dawn of the industrial age. Already responsible for a befuddling 42% of America’s coal production, the Powder River Basin (PRB) hasn’t been pumped hard enough according to a new proposal handed down by the U.S. Bureau of Land Management (BLM).
In a regional management plan rolled out on May 29, 2015, for the Buffalo, Wyoming field office, BLM announced there would be more coal to come for the area. In fact, it would appear that Obama’s BLM has taken it upon itself to hand out a coal carbon pass so huge that it would more than cancel out all of the President’s mitigation efforts on climate change to date — This point was highlighted by the Greenpeace graphic below. So, how much more coal are we talking about exactly? Under the new plan, up to 28 new massive coal leases could be issued to developers, making as much as 10.2 billion tons of coal available for exploitation.
The proposed 10 billion tons could generate with it as much as 16.9 billion metric tons of carbon dioxide (CO2) which would all be released into the atmosphere according to a report issued by Green Peace. Dr. Brian Moench, President and Founder of the Utah Physicians for a Healthy Environment noted in a Truth Out news analysis that they carbon that would be released by this massive ticket to coal production is far greater than that generated by the Alberta tar sands and its subsequent Keystone XL Pipeline: While the Keystone pipeline has become the iconic environmental/climate battle in the United States, far removed from the media spotlight and the denunciations of high-profile climate activists, entrenched career employees and dysfunctional regulations at the BLM are helping Western coal companies starve the federal treasury, rip you, the taxpayer, off and light a much bigger carbon bomb than the Alberta Tar Sands and the Keystone pipeline. In addition to the mere fact that the BLM is planning to hand out the simply massive carbon-loaded leases in the first place, environmental groups are sounding the alarm, saying PRB coal leases also carry such a ridiculously low royalty rate that they amount to little more than “coal subsidies.”
Moench also added this in his analysis of the newly proposed, massive PRB coal leases: Carbon pollution from publicly owned coal leased just during the Obama administration will cause damages estimated at between $52 billion and $530 billion, using the federal government’s own methodology for estimating the social cost of carbon. In contrast, the total amount of federal revenue generated from those coal lease sales only amounted to $2.3 billion. Nationwide, the value of federal coal to a domestic coal burning power plant averages $35 a ton. For this, the federal government collects a mere $2. This is a giveaway of a vast public resource – a taxpayer rip-off virtually unparalleled in the 21st century.
To add even more fuel to this fire, PRB companies such as Ambre Energy, Cloud Peak Energy and more have been busted selling coal to their own subsidiary companies and then reselling that coal at a higher price to reduce or avoid royalty payments to the federal government. An article from Russia Today (RT) start off by stating, “Nearly half of the coal produced from federal land in Wyoming is initially sold to subsidiaries of companies that mined the coal, helping those entities avoid paying a royalty to the government.” Along these same lines, Moench added this in his piece: Mining companies are allowed to deduct transportation and washing costs from the sale price before applying the royalty.
The BLM can reduce the royalty rate to as low as 2 percent of the sale price if a company declares their mine unprofitable due to adverse circumstances – such as limited access to coal or a decrease in its quality. There are several court cases pending that could set precedent in these regards including Cloud Peak Energy v Montana. Self Bonding Another more obscure topic that fewer are talking about in regards to producers in the Powder River Basin is the issue of self-bonding. As of May 29, 2015, Alpha Resources which operates the sizable Eagle Butte mine is no longer eligible for self-bonding — a practice that has been available to Alpha for years. If an operator is to receive a self-bond, it must meet a certain criteria in order to qualify — but apparently Alpha no longer meets the bar as that privilege was stripped away by Wyoming state regulators last week.
The criteria for self-bonding in Wyoming is: a tangible net worth of at least $10 million; a ratio of total liabilities to net worth of 2.5 times or fewer; a ratio of current assets to current liabilities of 1.2 times or greater; and a bonding amount not to exceed 25 percent of the company’s net worth. Alpha Resources is now on the hook and required to come up with $411 million dollars reported Benjamin Storrow of the Star Tribune . “…if the decision stands, Alpha will need to come up with $411 million in 90 days to cover its reclamation obligations in Wyoming. That could be posted in the form of corporate surety bonds, government securities or cash,” the article stated. Considering current market terrain, and with coal in such a pinch that companies feel the need to squeeze royalty payments down to mere kibbles, people are asking if other PRB coal producers might soon fail on their self-bonding requirements and have to fork over cold hard cash.