Federal court overturns Obama-era coal leasing moratorium

A federal appeals court has overturned an Obama-era moratorium for new coal mine leasing on public lands - an "unequivocal win" for Wyoming's coal industry, according to Gov. Mark Gordon. Yet the decision, which the 9th Circuit Court of Appeals handed down on Wednesday, likely will not result in a rush on new federal coal leases in Wyoming.

The three-judge panel even noted an apparent "de facto moratorium" dictated by markets that has all but erased demand for major new federal coal tracts - a trend that particularly applies to Wyoming coal, which has lost nearly half its market among coal-burning electric power producers in the U.S over the past 15 years.

Nonetheless, the court's ruling does away with "duplicative" environmental analysis introduced by the Obama moratorium and is a clear charge to the Department of Interior that it must be responsive to federal coal lease requests, according to Gordon.

"The Department of Interior now has one less excuse to thwart its federal coal leasing responsibilities," he said in a prepared statement Wednesday.

Volley among administrations

In 2016, then-President Barack Obama directed the Interior and Bureau of Land Management to issue a moratorium on federal coal leasing and conduct a review of the program to better account for a fair rate of return to taxpayers, as well as coal's impact on human health and the environment.

But then the Trump administration rescinded the order before the federal agencies completed the work. The conflicting administrative policies set off a series of legal volleys and prompted Wyoming to join the battle in support of the Trump administration's actions on the matter.

The appellate court ruling this week nullifies a 2022 federal district court ruling that temporarily reinstated the original moratorium.

"With this ruling, important projects can once again advance and support the production of affordable, reliable power to the grid, while creating jobs and economic development across the country, helping federal, state and localities with necessary funding by contributing hundreds of millions each year in revenues to state and local governments," National Mining Association President and CEO Rich Nolan said in a prepared statement.

However, the Northern Cheyenne Tribe and several conservation groups that brought the lawsuit say the Biden administration can still take meaningful action regarding federal coal reserves.

"Almost 10 years ago under President Obama, we were promised there would be an honest conversation with the American people about the real costs of the federal coal program on our public lands and public health. We're still waiting for that conversation," Wyoming Sierra Club Acting Director Rob Joyce said. "Now we have less than a decade to make significant cuts to climate pollution to avoid the worst impacts of climate change. Instead of leasing coal to the highest corporate bidder, BLM needs to focus on helping coal communities transition to clean energy jobs and setting a conservation-minded course that preserves public lands for future generations."

Dwindling demand

Wyoming became the nation's largest coal producer in the 1980s, and at its peak, in 2008, produced 466 million tons. The annual volume of coal that's shipped out of state has fallen by nearly half since then. 

Powder River Basin mines, which account for the bulk of Wyoming's coal production, shipped about 230.4 million tons in 2023 - a decline of 7 million tons compared to 2022, according to the Gillette News-Record. 

Demand for new federal coal tracts has followed suit.

The most recent large federal coal leases sold in the Powder River Basin went to Peabody Energy and Arch Coal (now Arch Resources) in 2012. Peabody paid $1.24 billion for the rights to mine 1.12 billion tons of coal to extend operations at its North Antelope Rochelle mine, according to the BLM. Arch paid more than $300 million for 222.67 million tons of federal coal for its flagship Black Thunder mine.

All told, some 2.5 billion tons of federal coal reserves were leased in the Powder River Basin during the first seven years of the Obama administration prior to the coal leasing moratorium in 2016.

Since then, coal producers in Wyoming - responding to softening market demand - have pulled back on earlier plans to acquire large tracts of federal coal to last them decades into the future. Aside from leasing small "maintenance" coal tracts at existing mining operations - which was allowed to continue under the Obama moratorium - there are just two pending lease applications for major new federal coal tracts in Wyoming, according to the BLM.

Cloud Peak Energy applied for a 441 million-ton federal coal lease in 2015, but the company filed for bankruptcy in 2019. Its Powder River Basin mines were acquired by Navajo Transitional Energy Company LLC, which still maintains the lease application. NTEC, however, has scaled back production at the mines.

A subsidiary of Arch applied for a 468 million-ton federal coal tract in 2005, a request that was not subject to the moratorium. However, Arch has also scaled back its mining operations in Wyoming and plans to sell or close its mines in the state.

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