The Department of the Interior is selling publicly-owned coal for much less than it is worth, essentially allowing the coal industry to fleece U.S. taxpayers of at least $200 million.
That is one of the main takeaways from a much-anticipated report released today by the Government Accountability Office (GAO), which confirms that the coal leasing program is fundamentally flawed and deserves an overhaul.
The GAO report, “BLM Could Enhance Appraisal Process, More Explicitly Consider Coal Exports, and Provide More Public Information,” finds that the coal leases employed by the Bureau of Land Management within the Department of the Interior lack competition, use outdated methods to determine “fair market value,” ignore the growing trend of coal exports, and deliberately keep information from the public.
Senator Markey, who has been calling for an overhaul to the coal lease system since 1982, and who demanded this GAO review, responded to the report's release.
“These noncompetitive practices are costing taxpayers in Massachusetts and across the nation, benefitting just a few coal companies who may be leasing public coal resources at bargain basement prices,” said Senator Markey. “Taxpayers are likely losing out so that coal companies can reap a windfall and export that coal overseas where it is burned, worsening climate change. This is a bad deal all around.”
A vast majority of federal coal leases take place in the Powder River Basin of Montana and Wyoming. Coal companies like Peabody Energy, Arch Coal, and Cloud Peak Energy are all deeply dependent on this artificially cheap coal from federal leases.
One of the report's most stunning revelations is that roughly 90-percent of the leases issued by Interior were “single bidder” auctions, won by the company that applied for the lease, and who didn't bid against anyone else.
“Of the 107 leased tracts, sales for 96 (about 90 percent) involved a single bidder, which was generally the company that submitted the lease application,” according to the report.
Another key finding is that the BLM uses outdated and incomplete methods to determine “fair market value” of the land and the coal. This is of particular importance when there is only a single bidder, as the auction process demands that the winning bid achieve “fair market value.” According to staffers in Senator Markey's office, “for every cent per ton that coal companies decrease their bids for the largest coal leases, it could mean the loss of nearly $7 million for the American people.”