Troubled coal mines to acquire federal leases through SITLA land exchanges — and skip environmental reviews

Lila Canyon and Emery Deep operators look to gain access to 40 million tons of coal needed to keep their operations going.

(Francisco Kjolseth | The Salt Lake Tribune) Utah’s Lila Canyon coal mine, on Tuesday, Dec. 6, has been burning since a coal pillar spontaneously combusted on Sept. 20. The mine operator's plans to expand operations hinge on the state's acquisition of adjacent federal coal tracts.

Operators of two troubled Utah coal mines are set to acquire major coal leases under land exchanges outlined in the bipartisan 2019 Dingell Act, which designated 17 wilderness and conservation areas in Emery County. The mine operators’ plans to expand operations hinge on the Utah trust lands officials’ acquisition of adjacent federal coal deposits, which would then be leased to the coal companies.

The mine operators would avoid time-consuming, expensive environmental reviews of these proposed leases holding a combined 40 million tons of recoverable coal by waiting for the state to acquire the land, according to the Utah Division of Oil, Gas and Mining (DOGM). These leases are critical to the continued operation of these mines, both located in Emery County. One is the Lila Canyon mine, which has struggled with an underground fire since Sept. 20 that has indefinitely shut down production while crews work to fill the burning area of the mine with water.

Known as the Williams Draw and Walker Flat tracts, these lands have been proposed for leasing at the Lila Canyon Mine in the Book Cliffs and Emery Deep Mine in the Wasatch Plateau, respectively. Currently overseen by the Bureau of Land Management, these tracts were included in land exchanges outlined in the Dingell Act to shore up support from Emery County officials for a bill that set aside 663,000 acres of wilderness.

Now the coal-tract exchanges have put the environmental community, which championed the Dingell Act, on edge since they would advance further mining of a fossil fuel seen as a leading culprit in climate change.

In the deal, the Utah School and Institutional Trust Lands Administration, or SITLA, would acquire the coal tracts and then lease them to the Emery County Coal Resources and Bronco Utah Operations, which operate the Lila and Deep Emery mines, respectively, said Dana Dean, DOGM’s mining section chief, at a recent meeting of the Utah Board of Oil, Gas and Mining.

(Christopher Cherrington | The Salt Lake Tribune)

“The huge impact of that is they don’t have to go through BLM leasing process, they don’t have to go through the NEPA [National Environmental Policy Act] process. And when they come to permit with us at the state, they don’t have to go and get a federal mine plan approval. They can just get approval from the state of Utah, and move on,” Dean said at the Dec. 7 meeting. “Those mines will still be ahead of the game, going through a SILTA lease rather than a BLM lease.”

And instead of the federal treasury collecting the 8% royalty from the mined coal, the revenue would flow to Utah’s trust fund supporting public schools.

Production at both mines has surged in recent years, but they are now running out of coal to mine, absent access to nearby federal tracts. Before the fire idled the Lila mine, it produced about 3.5 million tons of coal a year, making it Utah’s most productive mine, while Bronco produced nearly 1.2 million tons in 2021, according to federal data.

In the land exchange, SITLA would acquire 98,600 federal acres in 16 counties, much of it holding promise for mineral and energy development. The 115,500 acres it would give up are sections arranged in a checkerboard pattern inside areas now managed as wilderness or for their recreational opportunities, such as the San Rafael Swell and Desert and Labyrinth Canyon. Under such management goals, SITLA would not have many opportunities to generate revenue from those inholdings.

By law, the exchange lands must be of equal value for the deal to go forward. The appraisals are just getting started and will take another year to wrap up, according to Chris Fausett, SITLA’s assistant director for surface. The land exchange is the subject of an ongoing environmental analysis by the BLM.

Interestingly, underground coal deposits in Emery Mine have been smoldering for 70 years, but that fire is not endangering the mine’s operations, unlike the situation at Lila, according of DOGM records. But that mine’s current operator is struggling with a challenge almost as big as Lila Canyon’s.

The coal Emery Mine produces is hard to sell because its excessive ash content is so high, rendering some of it unfit for use in power plants, according to court filings. CONSOL Energy, the mine’s former owner, and Bronco are suing each other in state court over Bronco’s refusal to pay CONSOL a $1-a-ton royalty on the coal sold from the mine.

As the sun set on the Trump Administration and its “American energy dominance” agenda, which prioritized fossil energy development, the Interior Department authorized the expansion of Lila’s existing lease by 1,272 acres along its eastern edge. That added 9 million tons of recoverable coal to the mine’s inventory, buying about three years of continued production. Lila has also secured leases to two adjacent SITLA sections totaling 1,280 acres.

During Donald Trump’s tenure as president, the mine operators applied to lease the adjacent tracts after his administration lifted an Obama-era moratorium on new coal leasing. Lila’s operator applied for the 4,231-acre Williams Draw tract, holding 32 million tons of recoverable coal, to the south of its operations. Bronco applied for the 2,956-acre Walker Flat tract, holding 8.2 million tons.

The proposals were undergoing NEPA reviews early last year, but Trump’s reelection defeat led to a change of plans.

Within days of Joe Biden taking office, the BLM suspended the analyses of both leases at the request of the coal companies, even though a draft environmental assessment had just been completed for the Lila Canyon lease, according to DOGM. Meanwhile, court challenges are targeting federal coal leases the BLM previously authorized for Utah’s Coal Hollow and Skyline mines.

“Any coal mine that is looking at federal coal, there are significant delays, and they’re even worse now. And it’s really a problem because the federal government is taking longer and longer to approve those,” Dean told the Utah mining board. “They’re asking for things during the NEPA process that they haven’t asked for in the past 40 years. It’s hard for mines to plan ahead for that type of thing.”

Last August, a federal judge re-imposed the leasing moratorium Trump had nixed while the Interior Department, under the leadership of Secretary Deb Haaland, conducts a review of the coal program. That review could put Utah’s federal coal off limits for years, so getting this coal in state hands could make all the difference in whether it ever gets mined.