Government Accountability report highlights flawed federal coal leasing program
February 4, 2014
© Greenpeace / Tim Aubry
Washington DC - February 4, 2014 - The Government Accountability Office (GAO) today released a report identifying problems with the federal coal leasing program run by the Department of Interior’s Bureau of Land Management (BLM). The GAO report highlights flaws in the way the BLM determines the fair market value of publicly owned coal, especially in light of the coal industry’s increased focus on export markets. The report does not address broader problems with the federal coal leasing program such as its role in unlocking huge quantities of carbon pollution. In response, Greenpeace climate and energy campaigner Kelly Mitchell said:
“The GAO report is the latest to highlight flaws with a coal leasing program that is rigged to benefit a handful of coal mining companies like Peabody and Arch, and is yet another reminder of the BLM’s failure to account for the coal industry’s plans to boost exports. But the larger problem is that the BLM is undermining President Obama’s Climate Action Plan by subsidizing the extraction of hundreds of millions of tons of publicly owned coal. Secretary Jewell should put an end to the BLM's coal giveaways and start accounting for the costs of carbon pollution and other damage to the environment when setting royalty rates for the sale of publicly owned coal.”
The GAO report focused on lease by application sales from 1990 to 2012, and found that:
“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.” (page 16-17)
“..economic and appraisal reports in Wyoming typically contained generic boilerplate statements about the possibility of coal exports in the future and the uncertainty surrounding them, rather than specific information on actual or predicted coal exports––even for proposed lease tracts that were adjacent to mines on federal leases that are currently exporting coal.” (page 37-38)
“By not tracking and considering all available export information, BLM may not be factoring specific export information into appraisals for lease tracts that are adjacent to mines currently exporting coal or keeping abreast of emerging trends in this area.” (page 38)
“BLM officials were largely unaware of the various sources of mine-level information about exports, such as the information that EIA collects and the information collected by private companies.” (page 47)
The GAO report adds to the mounting pressure to reform the federal coal leasing program. In December 2013, a report from the Bicameral Task Force on Climate Change recommended that the Department of Interior reform the federal coal leasing program to help implement President Obama’s Climate Action Plan, stating, “BLM should also revisit policies that subsidize fossil fuel development on federal land by increasing royalty rates for federal coal leases, reviewing its procedures for determining “fair market value” during its coal leasing process, and reforming its leasing practices in the Powder River Basin.”
In June 2013, the Interior Department’s own Inspector General (IG) report also revealed several flaws with the federal coal leasing program, including that the BLM is failing to take into account coal exports when selling federal leases, and that for every penny coal is undervalued, taxpayers lose $3 million. Although neither the IG report nor the GAO report attempted to calculate the total amount of revenue denied to the public, a report by the Institute for Energy Economics and Financial Analysis found that taxpayers have lost nearly $30 billion because of flaws in the way that fair market value is determined.
Beyond lost revenue, selling publicly owned coal at such low rates amounts to a major fossil fuel subsidy, favoring coal at the expense of cleaner forms of energy. Between 2011-2012, BLM leased over 2.1 billion tons of coal in the Powder River Basin, unlocking nearly 3.5 billion metric tons of CO2. These and other concerns about the federal coal leasing program were detailed in a letter sent to Interior Secretary Sally Jewell on her first day on the job from the leaders of 21 environmental, health, and consumer organizations. Over 135,000 have called on Secretary Jewell to establish a moratorium on federal coal leasing in the Powder River Basin.
Contact: Joe Smyth, Greenpeace Communications, 831-566-5647, email@example.com
Photos available of coal mining and transport in the Powder River Basin