WASHINGTON (Reuters) - The Obama administration will announce as soon as Friday an overhaul of how the United States manages coal development on federal land, according to government and conservationist sources, in a further move to confront climate change.

Nick Browning enters a coal mine prior to the start of the afternoon shift at a coal mine near Gilbert, West Virginia May 22, 2014. REUTERS/Robert Galbraith

In his State of the Union address on Tuesday, Democratic President Barack Obama said he would “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 new plan will require federal officials, when weighing land use decisions, to consider how mining and burning coal adds to greenhouse gas pollution, said environmental group sources familiar with the plans.

The overhaul also will aim to maximize returns for taxpayers by updating royalty rates when mining companies pull coal from federal land, said the sources.

“We’re working to have this tomorrow,” said a Bureau of Land Management official who declined to give details on the administration’s plans.

Environmentalists have urged the White House to freeze new coal leases on federal land until it accounts for how that fossil fuel development contributes to climate change.

A moratorium on coal leases could be part of the reform, said environmental sources familiar with the effort.

Coal leases are often awarded without a competitive bidding process, frequently going to a single bidder, and officials can undervalue the fuel heading to market, the nonpartisan Government Accountability Office has concluded.

“Public lands should be developed in the public interest but taxpayers have been shortchanged for decades,” said Theo Spencer of the Natural Resources Defense Council, an environmental group.

The Energy Information Administration says roughly 41 percent of U.S. coal production occurs on federal land.

The coal industry had been battered in recent years by competition from cheap natural gas and clean-air regulations that have raised costs for burning the black rock.

This week, Arch Coal, one of the nation’s largest coal companies, filed for bankruptcy - the latest mining company to seek protection from creditors in the current downturn.

The National Mining Association was not immediately available for comment.