The White House issued a study critical of the federal coal-leasing program Wednesday, which the industry blasted as more of the same from an administration bent on curtailing coal production by raising prices for consumers.
The report says taxpayers are being shortchanged by lax oversight and permissive royalty rules, blaming coal companies for gaming the system to enhance profits, according to the study from the White House Council of Economic Advisers.
"The program has been structured in a way that misaligns incentives going back decades," it reads. "Companies have employed several tactics to lower the selling price of coal without losing revenue."
The Treasury is expected to collect a 12.5 percent royalty on all coal sold from above-ground mines on public lands, but the royalty is less than half that, at about 5 percent due to industry gaming and allowances, according to the report. About 40 percent of the nation's coal comes from federal lands.
A pro-coal group responded to the study, saying it has to be taken in the context of President Obama's broader energy and environmental goals, not as a straight report on improving government efficiency.
"Today's White House report once again puts politics ahead of practicality," said Laura Sheehan, senior vice president of communications for the American Coalition for Clean Coal Electricity.
"Unfortunately, it seems the only answer the administration is willing to provide is one that conflates issues and picks winners and losers in our energy markets," she said.
Her statement suggests the study will be used to support the restructuring of the coal leasing program at the Department of Interior. The administration placed a moratorium on any new coal leases until it assesses a better way to account for the cost of climate change in issuing new leases, which most likely will increase the cost of mining coal on federal lands.
"At a time when millions of low and middle-income families are struggling to pay their electric bill, any decision that further restricts access to affordable power from coal should be followed by a legitimate explanation," Sheehan said.
Despite the environmental costs, Obama's climate change adviser, Brian Deese, said the study shows the federal coal program is a loser.
"This is a hard look at the economics," he said. "And what we see is a program that, even before getting to the environmental considerations, is not serving the interest of taxpayers."
Sen. Ed Markey, D-Mass., a leading proponent of climate change, said the administration needs to take immediate action to raise coal rates.
"The Interior Department has the power to increase royalty rates on public coal without congressional action," Markey said. "It should take immediate action to significantly raise rates on coal mining on public lands before the end of this administration to ensure that taxpayers stop getting shortchanged and that the climate impacts of burning any public coal are taken into account."
Markey used the study to underscore legislation he and Sens. Sheldon Whitehouse, D-R.I., and Richard Blumenthal, D-Conn., introduced to "significantly increase royalty rates for federal coal to ensure that taxpayers are protected and that the impacts of carbon pollution are taken into account," Markey's office said in a release.
Markey's legislation would increase royalty rates for coal to no less than 50 percent. He also introduced a bill to modernize the coal-leasing program to protect taxpayers by ending noncompetitive leasing practices and other weaknesses of the program.
Several major coal companies have filed for bankruptcy as they struggle because of competition from cheaper and cleaner natural gas and Obama's environmental regulations.