Summary: The federal leasing of the Powder River Basin’s massive coal deposits opens the door to big profits, plentiful electricity, and environmental degradation in a place both remote and central to the world’s energy future.
The Powder River Basin, a majestic landscape that also harbors America’s largest coal reserves, is nestled in remote eastern Montana and Wyoming. The basin’s pine-studded ridges, sandstone buttes, and rivers are home to ranches, farms, and wildlife that evoke the Old West.
But that panorama, and any hope of stabilizing our atmosphere’s carbon balance, may change dramatically because of the Interior Department’s decision on March 23, 2011, to allow mining of the basin’s shallow seams of subbituminous coal on federal lands. Coal companies, railroads, and politicians all have their sights on the fossil fuel, which is low in sulfur and tantalizingly easy to extract. So, too, does China.
The basin’s reserves are voluminous, containing more energy than the oil in the Middle East, begging the question: Should the U.S. become the “Saudi Arabia of clean coal?” Much depends on the answer to that question—the environmental integrity of the West, energy security, and perhaps most important whether we have any serious hope of avoiding climatic tipping points.
Spanning Montana and Wyoming, the Powder River Basin is already the largest coal producer in the United States, supplying more than 40 percent of the nation’s coal and 14 percent of America’s carbon dioxide emissions. Demand is high for the low sulfur coal because it offers utilities easier compliance with the Clean Air Act.
While some tout this massive coal resource for U.S. energy independence, China eyes the Powder River Basin as an “energy colony,” seeking to import basin coal at a staggering rate. According to the U.S. Geological Survey, the Powder River Basin boasts 50 billion tons of recoverable coal. Sierra Club writer Peter Frick-Wright says: “It would take the United States almost a century to burn all that coal—but China could eat through it in 25 years or less.” Peabody Coal CEO Gregory Boyce spoke directly on the issue: “The real goal here is to see if we can’t get large volumes of basin coal . . . to the Pacific Rim. We know we can sell it in China and Korea.” Arch Coal, the nation’s second largest coal producer, has already purchased West Coast export terminals and, according to CEO Steven Leer, plans to “service growing coal demand in Asia, the world’s largest and fastest-growing coal market.”
The fate of much of this coal lies in the hands of the federal government. The Bureau of Land Management (BLM) administers 14 million acres of public surface lands and mineral estates on private lands in the Powder River Basin. In 1976, Congress passed the Federal Coal Leasing Amendment Act requiring the BLM to ensure the maximum economic recovery of federal coal resources.
In March, Secretary of the Interior Ken Salazar announced the BLM would hold four competitive coal lease sales on federal lands in the Powder River Basin in Wyoming. Environmental groups said the Interior Department ignored the impact of coal mining on climate change, air and water quality, and wildlife habitat. Estimated revenue from these and future sales, of which BLM plans to hold dozens over the next three years, ranges from $13.4 billion to $21.3 billion. Wyoming’s leases total as much as 2.3 billion tons of coal, while Montana leased more than 500 million tons of coal on state lands at Otter Creek. Otter Creek coal would be hauled by the controversial—and still unconstructed—Tongue River Railroad, slicing through the heart of family ranches in Montana.
This rush for basin coal on federal lands is worrisome to many, and courts often provide the only recourse for those seeking to challenge BLM’s new leases. Ranchers and environmentalists have fought against federal leasing since the 1976 U.S. Supreme Court case Kleppe v. Sierra Club. The Court found no coordinated government plan to develop the Northern Great Plains but required comprehensive studies when such plans crystallized. The Northern Plains Resource Council, a local coalition of ranchers and conservationists, has mounted legal challenges to both the Otter Creek and the Tongue River Railroad projects. Three environmental groups recently filed a lawsuit seeking to block the Forest Service from opening portions of Thunder Basin National Grassland to coal mining. Communities in Washington state are challenging the export terminals as small towns along the rail route fear a massive increase in rail traffic. One study predicts giant coal unit trains rumbling across Montana and the Pacific Northwest every 20 to 30 minutes.
While federal leasing provides governmental revenue, it opens the door to significant environmental degradation and portends another “boom and bust” cycle. Environmental reviews are often inadequate; for decades, courts have stricken federal energy leasing decisions. Further staining the federal leasing program is the fact that the government still does not classify the Powder River Basin as a “coal producing region” even though it produces far more coal than any other region. According to Frick-Wright, “if [classified], new mines would receive more environmental scrutiny and competitive bidding between mining companies would be required.”
Ultimately, the Powder River Basin’s fate lies beyond the courts, where challenges will likely stall and may not thwart the growing global demand for coal. Decisions made by the Obama administration and state officials about whether to approve coal leases in the basin will affect the future of this remote and stunning environment. The implications on climate change—a topic no government official has seriously broached—are mind-boggling. Equally startling is the prospect of tearing up a precious American landscape to stoke China’s economic juggernaut. As with Keystone XL and new Clean Air Act regulations, the Obama administration has the opportunity to show true leadership at this pivotal crossroads.