US freezes new coal mine permits in environmental review

The US government announced Friday a freeze on issuing permits for new coal mines on government land, in a review of the environmental impact of federal coal policy.

The move could amount to a fresh hit on struggling US coal producers but advance the Barack Obama administration's commitment to fighting climate change.

The Department of the Interior said the review and freeze are to ensure that the government's coal program "is properly structured to provide a fair return to taxpayers and reflect its impacts on the environment, while continuing to help meet our energy needs."

The review, the first in three decades, will examine how leases issued to private companies to mine coal on public lands are issued and managed.

The reassessment will include examining the impacts on the environment and public health of coal production from federal lands, the Interior Department said.

"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," said Interior Secretary Sally Jewell.

"Even as our nation transitions to cleaner energy sources, building on smart policies and progress already underway, we know that coal will continue to be an important domestic energy source in the years ahead," she said in a statement.

The Interior department oversees about 570 million acres (230 million hectares) of coal lands which can be leased by miners. About 40 percent of US coal output comes from these lands.

The announcement came three days after President Obama, in his annual State of the Union address, pledged to overhaul federal energy policy with an eye on fighting climate change.

"Rather than subsidize the past, we should invest in the future—especially in communities that rely on fossil fuels," he said.

"That's why 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."

The move comes as the US coal industry continues to shrink due to the rise in large, cheap supplies of natural gas which has been more favored for power generation.

In recent years, some two dozen coal companies have shut down. Last week, the second largest mining company, Arch Coal, filed for bankruptcy reorganization and there are fears that the largest, Peabody Energy, could do the same as it struggles under a huge debt load.