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Obama: No new federal leases for coal mining companies

The ban will not have an immediate effect on the production of coal, or the jobs in the industry, as the current leases are sufficient, and can produce enough coal to supply demand for at least 20 years.

Matthew Brown/AP/File
Smoke rises from the Coal strip Steam Electric Station, a coal burning power plant in Coal strip, Mont. The market value of a Pennsylvania company’s stake in one of the largest coal plants in the Western United States has been slashed by 87 percent over the past two years. The sharp decline in Talen Energy’s partial ownership of the Coal strip facility reflects how exposed some utilities have become to the depressed coal industry.

A new order will prevent coal companies from obtaining new leases that allow coal mining on federal lands.

The Obama administration announced the temporary ban Friday, saying that the coal-leasing program is outdated, and needed re-examination.

“We haven’t undertaken a comprehensive review of the program in more than 30 years,” Interior Secretary Sally Jewell announced “and we have an obligation to current and future generations to ensure the federal coal program delivers a fair return to American taxpayers and takes into account its impacts on climate change.”

The announcement comes a few days after the Republican-controlled House approved a bill to block the president's proposed new rules aimed at lessening the negative effects of coal mining on the environment.

In his final State of the Union address on Tuesday, President Obama said that he will take actions that will lead to reduction of production and consumption of the fuels that are most responsible for global warming.

“I’m going to push to change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet,” Obama said.

The ban will not have an immediate effect on the production of coal, or the jobs in the coal industry, as the current leases can produce enough coal to supply demand for at least 20 years, The Washington Post reported.

Yet the administration is willing to make a few exceptions.

“We’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,” Secretary 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.”

This move has already drawn outrage from some organizations. “It appears that they’re going after the federal coal leasing program with the intention of keeping coal in the ground,” said Luke Popovich, a spokesman for the National Mining Association.

The coal industry is facing other pressures, too. Due to new market pressures and environmental regulations, natural gas has replaced coal as the country's cheapest fuel source, according to The New York Times.

On Monday Arch Coal Inc., the company that holds the second-largest reserve of coal in the United States, filed for bankruptcy, citing competition, production of cheap gas, and strict environmental regulations as the causes for the company’s financial woes.

Last year Walter Energy, an Alabama coal mining company, filed for bankruptcy a few days before SNL Financial released revealing data that highlighted how coal the industry was struggling.

Coal prices have drastically dropped in recent years, with the shift to natural gas as fuel for electric power plants.  

In filing the bankruptcy, Arch Inc. blamed the Environmental Protection Agency, saying that the regulations have made it more expensive for companies to use coal and caused more than 400 coal-fired generators to close.

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