Applause for the Pause? A Moratorium Made Possible by NEPA

A three year pause for a "programmatic environmental impact statement" opens up important possibilities.

The big news out of western coal country is the Department of Interior’s announced review of its coal leasing program and consequent “moratorium” on new leases for coal mines on federal public lands.  As most media reports have emphasized, 40% of the nation’s mined coal comes from federal lands and most of that comes from federal lands in just four states: Wyoming, Utah, Colorado and Montana.

In the last decade alone those leases raised some $12 billion in public revenues, half of it distributed to the states in which the mines are located.  So, despite coal’s lagging fortunes of late, this is still big business in the interior West.  Less noticeable in the coverage has been the law under which the “pause” will occur: our very own National Environmental Policy Act.

This post explains the Administration’s authority to conduct such a review during a supposed moratorium on “new” leases.  It then critiques the analytical techniques that will probably be employed in the review and suggests how the review might better be steered analytically given the shape of the governing law and our changing energy markets both here and abroad.

NEPA, the Mineral Leasing Act and the Legal Power to Pause

Secretary of the Interior Sally Jewell made the announcement, in unison with the White House, that the Obama Administration will be undertaking a “programmatic” review of the federal coal leasing program.

This sounds like the very same programmatic review that has been sought by a coalition of plaintiffs suing the Department in the D.C. Circuit (appeal filed on October 28, 2015), as our story detailed here.  Three years or more would be the norm for programmatic EISs (some of which have been noted to lag on far longer).  PEISs may be rare for that reason.

The last time the Department conducted a PEIS review of coal production on federal lands Ronald Reagan was president.  Back then, the ‘no new federal leasing alternative’ was summarily rejected in light of the nation’s need for base load electricity generating capacity.  Today, the situation has changed dramatically.Coal_anthracite

Under the Mineral Leasing Act, as updated by the Coal Leasing Amendments of 1976, the Department of Interior must fit any leasing program into its overall policy of “multiple use” on the covered federal lands.  So-called “multiple use lands” are to be managed to this unitary, all-encompassing standard—a notorious and often confused managerial optimum—according to the Federal Land Policy Management Act or FLPMA to its friends.

The coal lobby has argued that the Mineral Leasing Act flat out requires the Department to lease “available” coal, an interpretation that simply ignores the law as a whole—which includes FLPMA.

In the only real substantive guidance the law gives (through FLPMA), leasing is supposed to be carried out “in a manner which recognizes the Nation’s need for domestic sources of minerals” and “in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource and agricultural values.”  43 U.S.C. § 1701(a).

With coal prices as thoroughly depressed as they are (by the competitiveness of other fuels now that environmental consequences matter), it is hard to argue that our domestic “need” for more coal outweighs our at least calculating and considering its climate and other environmental costs.  Still, according to the Washington Post, Jewell assured reporters in a Friday conference call that

[w]e’ll make accommodations in the event of emergency circumstances to ensure this pause will have no material impact on the nation’s ability to meet its power generation needs,” Jewell said. “We are undertaking this effort with full consideration of the importance of maintaining reliable and affordable energy for American families and businesses, as well other federal programs and policies.

Most of the coal companies operating where most of the federal coal sits—in the Powder River Basin of Wyoming and Montana—had already idled several of their mines and halted expansions of existing leases.  Of course this didn’t stop Peabody Coal—one coal behemoth that hasn’t yet sought bankruptcy protections—from denouncing the pause as “misguided.”

While the industry plays its Shakespearean tones, the fiscal reality is that coal is simply becoming economically uncompetitive and committing to supplying more of it makes no sense if that supply will come with big environmental costs. In a sense, capitalists have already decided that leaving it in the ground is both necessary and probable.  And that is coal’s problem, in a nutshell.  The Administration’s “Clean Power Plan” put the biggest chill into the coal industry as most analysts predicted that coal will slide from grid competitiveness even in places it has traditionally enjoyed supremacy as more states solidify their plans for achieving the CPP’s ambitious targets by phasing out their reliance on coal.  {See this collection of analyses by Resources for the Future.}

The ‘export market awaits’ has been the industry’s fallback as prices have kept declining.  But even there coal is facing stiffening headwinds, especially after the Paris Agreement in December.

Shipping It Abroad or Leaving it in the Ground?

A serious wrinkle in any assessment of the federal coal program will be the export market and especially an export market about to be remade by the “Transpacific Trade Partnership” or TPP.  TPP famously includes a provision mandating the U.S. Department of Energy automatically approve any permit application for the export of (fossil) fuels to TPP partners abroad—something that environmental groups have opposed vehemently.

How will this TPP wrinkle fit into the Department’s programmatic review of leasing federal coal?

800px-Map_of_US_export_import_1899

When Exports Were Simpler

First, it is at least worth noting that China’s already in the midst of a pause like ours, having announced its own moratorium on new coal mines back in December.  As the Financial Times reported, China has been shutting down coal mines for several years and where the Chinese will take their coal demand coming out of their own moratorium and their own promises in Paris is deeply unclear.

Assuming the export market remains viable, though, NEPA will still require any federal coal lease in the future be tested for the significance of its projected environmental impact and that any resulting impact analysis be weighed along with any other pros and cons in Department of Interior’s decision to issue a new lease.  The upside of preparing a PEIS for most agencies is that they can later “tier” more action-specific impact analyses to them.  They hold out the hope for speeding those later analyses up.  But what should those action-specific impact analyses investigate?

Not Another Cost/Benefit Balance: Using NEPA Effectively

Globally, like here at home, cost/benefit analysis is a booming industry.  In March 2010, we even took our first steps toward a cost/benefit analysis of greenhouse gas emissions.  The White House Office of Management and Budget released its “social cost of carbon” (SCC) estimates for use in cost/benefit analyses, updating them in May 2013.

By linking the coal leasing pause to a line in POTUS’s SOTU a week ago, the New York Times editorial board explicitly commended this SCC—or at least one of its central estimates ($37 per ton)—and how it should feature in the review.

But the SCC has provoked a great deal of skepticism.  Now, the dust-up may have revealed some true colors: many long-time advocates of cost/benefit analysis changed tunes once the “costs” being estimated were those of not regulating, i.e., the costs of not internalizing a massive externality that some business/industry (or a whole species!) has been putting onto others.

But one can doubt the veracity of the SCC numbers for many reasons.  Probably the best is their demonstrable downward biasing.  Numbers of this kind are only as good as the damages we calculate climate change will inflict.  But without knowing what those damages will be (or how to monetize them), the estimates suffer.

Another reason to keep the SCC estimates out of truly momentous analyses like this programmatic NEPA review of federal coal leasing is the cynical circularity of using them now that the U.S. has pledged to cut CO2 emissions dramatically instead of just marginally.  As those who concocted the SCC estimates will tell you, four-fifths of the data comprising the underlying scenario premises running the models is “business as usual” data.  {See the “Technical Support Document” here at pages 15-16.}  In other words, in order to derive the estimates the analysts had to assume that the U.S. made no commitment to dramatically reducing emissions.  Such business-as-usual scenario analysis might allow computer models to spit out numbers, but unless those numbers actually compel U.S. policymakers into the emissions cuts the Nation promised in Paris to pursue, they will simply amount to a papering over of the real question: what can be done to slash our carbon emissions by over 30% in 15 years?

A better way to conduct the programmatic review would be to reach beyond such marginal, “Pigouvian” thinking altogether.  Here the plan would be to compare alternative possible futures for the federal coal leasing program qualitatively with the best estimative techniques available.  Scenario planners do this in business all the time.  And there is much to hash out in the intermediate- to long-term future for coal.  After all, not all coal is made the same: heat, SO2, mercury, and CO2 contents all vary.  And then there’s the public versus private ownership, susceptibility to export, localized economic diversification and other dimensions upon which particular coal resources can be differentiated (even in a carbon-constrained future).

Using scenario analyses for tiering purposes would be easier and quicker than a social-cost-of-carbon approach, too.  Some scenario is bound to stand out as the future unfurls as having been closer to reality than its peers and, as experience with the SCC has shown, those numbers are constantly in need of updating.  Sew them into an EIS today and in five years their “damage functions” may be demonstrably, even laughably wrong.

Ultimately, the predictive analyses that inform such comparative work may entail a fair bit of quantification.  But they need not aim to convert every marginal ton of CO2 into some theoretical average existing nowhere but on paper for the sake of pricing that which we simply cannot know how to price.  NEPA alternatives analysis, in short, would be a good tool for us so long as the Interior Department doesn’t just cram this PEIS into a mold that is never going to fit.

{Image: A dragline and CAT 797 truck at North Antelope Rochelle opencut mine—courtesy of Peabody Energy via Wikimedia commons}

 

I teach environmental, natural resources, and administrative law at Penn State Law. Before teaching I was an enforcement lawyer at U.S. EPA. Along the way I've done work for environmental nonprofits and written a fair bit about NEPA.
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