On May 16th, the Bureau of Land Management (BLM) issued a final environmental impact statement on the Powder River Basin, stating that it will no longer be coal leasing on that land. This basin, stretching from Northeast Wyoming to Southern Montana, is the largest coal supplier in the country, and has been the backbone of Wyoming’s economy. The Powder River Basin is made up of 12 plants that together, roughly produced 220 million short tons of federal coal in 2022. The BLM points out that these plants used to generate closer to 400 million short tons at their peak in 2008.
As the data shows, these plants are still incredibly high-functioning and provide a substantial amount of energy for citizens across the country. These plants supply 43% of the nation’s coal production. This decision to end coal leasing was made due to a federal court order that directed the BLM to analyze the impacts of a land management plan after the original impact plan was supposedly not satisfactory due to lack of climate consideration. The public had a 30-day protest period before this measure takes effect which expired on June 17th. Existing coal leases will run through 2041.
This order comes at a historic time, as the Biden administration continues to crack down on CO2 emissions. Recently in late April, the EPA confirmed a new rules package that gave Wyoming three very difficult options for its coal-fired units. They could either shut down by January 2032, convert to natural gas co-firing by 2030, with a forced shutdown on January 1st, 2039, or install Co2 capture facilities by 2032. Wyoming has been the nation’s top coal producer since 1986, and this Powder River basin supplied the top ten producing mines in America4. Unfortunately, in Wyoming, the BLM manages 42.9 million acres of federal mineral estate.
Executive Director of the Wyoming Mining Association, Travis Deti, commented:
“The Biden Administration continues its aggressive, ridiculous assault on our coal industry. The banning of further federal coal leasing will kill thousands of Wyoming jobs, put families in economic jeopardy, devastate the state’s revenue base and put the already rickety American electricity grid at greater risk of failure.”
With all the pending lawsuits, the loss of baseload electricity has been a major point of concern during the shutdowns of these coal plants, and rightfully so. For more information on this, see our study on Wyoming’s power portfolio.
But another aspect that is going to be drastically impacted is public services. Wyoming can fund a substantial amount of its services by royalties on mineral extraction and energy production. The state has been able to avoid raising taxes because of this model. But now, the Powder River Basin shutdown could threaten that.
Senator John Barrasso also made a statement on the recent measure at Powder River Basin,
"President Biden Continues to wage war on Wyoming’s coal communities and families. This will kill jobs and could cost Wyoming hundreds of millions of dollars used to pay for public schools, roads, and other essential services in our communities.”
This mineral revenue is used for many critical functions in Wyoming, one of which is funding the K-12 system. Like most states, Wyoming funds its education system by property taxes. But what is unique is that minerals, including coal, pay 50% of its property taxes. This allows Wyoming to have the 5th lowest property taxes in the nation. As a result of declining coal and natural gas production and prices, as well as an increase in emission restrictions, in 2021 Wyoming found itself in a $300 million annual structural deficit. This forced Wyoming to tap into its “rainy day fund,” also known as its Legislative Stabilization Reserve Account (LSRA). But it cannot afford to continually take from that fund. There must be a long-term permanent fix.
Wyoming currently has excellent results in K-12 education. It’s known as the “best in the west” in terms of K-12 education, ranking 4th in the country by the National Assessment of Education Progress (NAEP).
I was recently able to get the perspective of Megan Degenfelder, Wyoming’s Superintendent of Public Instruction, on this matter. My questions are bolded below.
Does Superintendent Degenfelder support the current funding model for K-12 education? What changes would she make?
The response: “The superintendent supports equitable and adequate school funding as determined by school finance experts retained by the legislature. While she acknowledges the importance of the existing system, she believes there are areas needing improvement to better serve students and parents.”
Does Superintendent Degenfelder see the EPA's restrictions on coal emissions as a potential harm to the K-12 system?
The response: “It is an enormous threat to the K-12 system. The restrictions threaten crucial funding sources for public education, as Wyoming heavily relies on revenues from coal and other mineral extractions. These funds are vital for maintaining and improving the state's education system, and any decrease in revenue could lead to budget shortfalls and reduced educational services.”
Does Superintendent Degenfelder see any legislative path to reconcile the EPA's guidelines with K-12 funding?
The response: “She does not. The Biden Administration has not signaled it will make affordable, domestically produced energy a priority.”
No matter what perspective an individual takes on this BLM ruling, it is evident that this will significantly harm Wyoming’s K-12 funding model if no substantial, permanent, long-term plan is achieved by 2041 when these plants are scheduled to be retired.