Should the Government Impose a Climate Change Impacts Fee on Federal Coal Leases? New Working Paper Presents the Legal and Policy Rationales for This Measure

In a new working paper, Executive Director Michael Burger presents a “Mitigation-Based Rationale for Incorporating a Climate Change Impacts Fee into the Federal Coal Leasing Program.” The paper makes several key points about the rationale for introducing such a fee, most notably, that the federal government has a duty to mitigate climate impacts from the federal coal leasing program, and that the Department of Interior (“Interior”) and the Bureau of Land Management (“BLM”) have ample authority to impose a climate change impacts fee on coal leases as a form of compensatory mitigation for those coal leases. The paper also discusses technical issues that should be considered when assessing the effectiveness of this mitigation option, such as what metrics should be used to establish an appropriate fee and how a fee might work with carbon sequestration efforts and other emissions offsets.

The paper is intended to inform the scope of the mitigation measures that Interior and BLM will consider in their programmatic environmental review of the federal coal leasing program, and has been submitted directly to these federal agencies.  While others have explored the question of whether the coal leasing program should put an effective price on carbon, primarily through an increased royalty rate, this is the first in-depth exploration of a mitigation-based approach that operates through the agencies’ authority and obligations under NEPA, FLPMA and the Mineral Leasing Act. It complements several other Sabin Center initiatives and projects aimed at informing the programmatic coal review, including our recent conference, “US Coal in the 21st Century: Markets, Bankruptcy, Finance and Law”, a comment letter on the scope of issues that should be covered in the review, and our work on accounting for upstream and downstream emissions in NEPA reviews.

The full paper is available here, and an executive summary is available here.

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