WCC of Mesa County President Eric Rechel answers a question from the audience at coal forum.

KREX TV-w/ video:
“The conservation group said it isn’t completely opposed to the idea of a coal mine, but is very skeptical over the potential long term effects.”

KKCO 11 News:
“A prospective coal mine land lease near Garfield and Mesa counties raises economic and environmental questions among Western Slope community members and one Grand Valley group aims to deliver some answers.”

Prof: Minimum coal price needed

By Gary Harmon, Grand Junction Daily Sentinel
Friday, August 29, 2014

Mark Squillace addresses the crowd at the WCC Coal Forum.

The Bureau of Land Management does a poor job of pricing the coal it leases to domestic producers, which often sell it in other countries at sharply inflated prices, a University of Colorado law professor said Thursday.

“We’re providing a huge subsidy to the coal industry,” said Mark Squillace, director of the Natural Resources Law Center at the University of Colorado Law School.

Squillace spoke to about 45 people in a meeting sponsored by the Mesa County chapter of the Western Colorado Congress.

The organization handed out postcards that participants could send to U.S. Sens. Mark Udall and Michael Bennet, both Colorado Democrats, asking them to ask the Interior Department to halt coal leasing “until this badly broken program can be fixed!”

Halting leasing would affect leasing plans for the proposed Red Cliff coal mine in the Bookcliffs north of Fruita. The BLM is preparing an environmental impact statement on a proposed lease of 78 million tons of coal.

The leasing program undervalues domestic coal to the point that it goes for 36 cents per ton, as was the case with a recent Colorado lease, to mining companies, which ship it overseas to countries such as India, China and South Korea, where it’s heavily taxed, sometimes for more than $21 a ton, Squillace said.

“Why not set a minimum bid price, say $3 a ton, or $5 a ton?” Squillace said. “The revenues would be enormous.”

The idea that competitive bidding would drive up the lease price hasn’t worked out because as many as 90 percent of lease sales have only one bidder, Squillace said. Coal companies also limit competition by expanding existing leases by small amounts, preventing other companies from bidding.

The idea that as many as three companies would bid on the proposed Red Cliff Mine would be a welcome development, Squillace said.

The BLM doesn’t take into account the global price of coal when it considers the price it will demand, Squillace said.

Preventing low-return sales, however, is difficult, because the agency uses what Squillace termed a “secret sauce” in deciding what is the fair market value of its coal.

It doesn’t disclose the way that it operates, making it impossible to question the approach, Squillace said.

At the same time, coal is losing market share to natural gas, Squillace said.

Based on the cost per megawatt hour of electricity it generates, he said, “It’s quite clear that coal has lost its competitive edge.”