Rejected coal bid highlights declining coal market and need for federal coal leasing reform
September 19, 2013
Washington DC - September 18, 2013 - A federal coal lease sale failed to attract a sufficient bid for 167 million tons of publicly owned coal in Wyoming, the second time in two months that a federal coal auction resulted in no coal sales.
In the midst of growing public scrutiny and multiple federal investigations, the Bureau of Land Management (BLM) rejected Kiewit Mining Company’s 21 cent per ton bid for the Hay Creek II coal tract – the lowest offer for Powder River Basin coal in 15 years. This follows last month’s news that, for the first time, a federal coal lease sale in Wyoming failed to attract a single bidder.
On August 21st, Cloud Peak Energy declined to bid on the Maysdorf II tract, citing “current market conditions and the uncertainty caused by the current political and regulatory environment towards coal and coal-powered generation.” Kiewit also made headlines earlier this year by halting construction on its Haystack Mine in Wyoming, in response to weak coal demand.
"Kiewit’s rock-bottom bid is more evidence that coal markets are undergoing a radical transformation. [he US is moving away from coal in favor of cleaner energy, so the coal mining industry is wary of dumping big money into mines oriented to meet domestic demand. Yet the Bureau of Land Management remains clueless about the rapidly changing coal market and the industry's increasing focus on coal exports. This should serve as a wake up call to Secretary Jewell to establish a moratorium on new coal leasing." said Kelly Mitchell, Greenpeace Senior Climate and Energy Campaigner.
Although BLM rejected today’s bid, the Department of Interior has leased over 2 billion tons of coal in the Powder River Basin since 2011, at rates around $1 per ton. The Interior Department’s own Inspector General report reveal several flaws in the federal coal management program. Among the key findings of the IG is that the federal coal leasing program 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 the IG report did not 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.
These and other concerns about the federal coal leasing program were detailed in a letter sent to Interior Secretary Jewell on her first day on the job from the leaders of 21 environmental, health, and consumer organizations.
Contact: Joe Smyth, Greenpeace USA Communications, firstname.lastname@example.org