The Obama administration’s announcement that the federal government will temporarily halt new coal leases on federal public lands in order to review its coal-leasing program is a long overdue move to serve the interests of the environment, of our new energy economy, and of the real investors in our federal public lands -- American taxpayers. 

When the federal government last wrote rules for coal mining on public lands, Indiana Jones and the Last Crusade was on the big screen, cars had no airbags, a gallon of gas cost 97 cents, and smoking was allowed on airplanes. 


As it stands now, the federal coal leasing program is hidden from public view and lacks an open, competitive process that would be required by investors in any other system and would secure a fair return for taxpayers.  Moreover, some companies have seized on a loophole to get out of paying their royalties. Here’s how it works: a company sells coal to its own affiliate for much less than the coal is worth, lowering the amount of royalties it is required to pay to the federal government.  Then, the affiliate company turns around and sells the coal at market value, enjoying the revenues without the burden of paying taxpayers their fair share.   

The Interior Department last week said it is putting a halt to issuing new coal leases while it decides how to overhaul this broken program.  This follows the department’s earlier pledge to review royalty prices that have remained unchanged for decades. Public lands account for about 40 percent of all U.S. coal production, returning about $1.3 billion to American taxpayers who invest every year in their maintenance and protection. But it could, and probably should, have been more. 

Very importantly, the department will also review all of the health and environmental effects of coal leasing on federal lands.  No doubt they will consider what the true costs of coal are and propose rules to account for those costs.  This review will not only mean further protections for our environment, but it will also likely help carbon-free energy technologies – in the electricity and transportation sectors – to compete in the economy on a level playing field. 

Pressing the pause button on new coal leases – which the department also did when it last reviewed the program in the 1970’s and 1980’s – will have little short-term effect on energy production.  Companies can continue to mine the federal coal reserves already under lease, which the government estimates will continue current production levels for about 20 years.  But it does mean the federal government is refusing to perpetuate a system that has turned into a bad deal for American taxpayers, the environment, and our economy.   

Pfund is the co-chair of the Conservation for Economic Growth Coalition, an advocacy group made up of founders of fast-growing entrepreneurial companies and venture capitalists. She is the funder and mnaging prtner of DBL Investors, a venture capital firm located in San Francisco.