U.S. Interior Department outlines reforms for federal coal program

WASHINGTON, Jan 11 (Reuters) - The U.S. Interior Department on Wednesday recommended federal coal leasing reforms to ensure taxpayers receive the fair value of the fuel and account for its impact on climate change, but the incoming administration could derail those measures.

The department’s Bureau of Land Management released the findings from its first study of the federal coal program in three decades. The report comes a year after Interior Secretary Sally Jewell halted new federal coal leases while the agency conducted the review.

That freeze in new coal leases will continue.

Federal coal, primarily from Wyoming’s Powder River Basin, accounts for more than 40 percent of all of that fuel mined in the United States and produces for 10 percent of U.S. greenhouse gas emissions.

“We have a responsibility to ensure the public - including state governments - get a fair return from the sale of America’s coal, operate the program efficiently and in a way that meets the needs of our neighbors in coal communities, and minimize the impact coal production has on the planet that our children and grandchildren will inherit,” Jewell said on Wednesday.

“The only responsible next step is to undertake further review and implement some of these commonsense measures.”

With Republican President-elect Donald Trump’s Jan. 20 inauguration less than two weeks away, it will be up to his appointed Interior secretary to decide whether to adopt the policy recommendations needed to modernize the leasing program and whether to lift the moratorium on coal leasing.

Trump’s pick to head the Interior Department, Montana Republican Congressman Ryan Zinke, has supported legislation to lift the coal leasing moratorium on federal and tribal land.

Trump has called for an immediate reversal of the federal coal mining moratorium.

However, some analysts said market conditions for coal had reduced demand for new mining and that the most recent federal lease auctions drew no bids, especially as the electricity sector uses more natural gas.

Jewell said a review of the program was decades overdue and necessary after government and watchdog reports found the Land Management Bureau was not properly accounting for the fair market value of coal and called for more transparency in the leasing process.

The report offers recommendations for increasing transparency of the leasing program, boosting protection for private surface owners and preventing wasted natural gas from mines.

It also suggests adjusting rental rates for leased coal for inflation, stronger financial and environmental requirements for coal operators bidding on federal leases, and other measures to make the lease process more efficient. (Reporting by Valerie Volcovici; Editing by Lisa Von Ahn)