The BLM’s corrupt coal leasing program: billions in subsidies for Peabody, gigatons of carbon pollution for the rest of us


June 22, 2012

Next week, the Bureau of Land Management (BLM) is scheduled to hold an auction for 721 million tons of taxpayer-owned coal in the Powder River Basin. This is for the North Porcupine tract, and like the South Porcupine tract that BLM leased to Peabody last month, even though this coal is owned by you and me, the lease was drawn up by Peabody itself for its own profit. This is whats known as a lease by application, and under BLMs corrupt coal leasing program, Peabody will almost certainly be the only bidder and pay next to nothing – WildEarth Guardians’ 2009 report “UnderMining the Climate” found that over the last 20 years, only 3 of 21 lease by applications had more than one bidder. Since Peabody knows it will face no competitive pressure, it can simply offer the lowest possible price, secure in the knowledge that if it doesnt meet BLMs absurdly low minimum price, it can just try again later. In fact, thats just what happened with the South Porcupine tract; Peabodys initial offer of just $0.90 per ton was rejected as too low by the BLM so they simply held another auction a few weeks later and accepted Peabodys offer of $1.11 per ton. In both auctions Peabody was the only bidder. Now, the company is once again seeking cheap access to more of our coal, so it can strip mine it from public lands and export it to lucrative markets in Asia. (See Will the Bureau of Land Management subsidize Peabodys plans to export coal to Asia?)

Despite vast strip mines, the Powder River Basin is not a "coal producing region" under BLM's corrupt coal leasing program. Photo by Paul K Anderson

Incredibly, BLMs coal leasing program deliberately encourages this uncompetitive process. Allowing lease by applications was a key change made possible once the BLM moved to decertify the Powder River Basin as a coal producing region even though its the source of almost half the coal mined in the US. BLM is supposed to manage this coal in the best interests of the Nation, and it has a process that is meant to determine the fair market value of a lease. But as Tom Sanzillo explains, the BLMs methods dramatically undervalue the coal, so much so that it has amounted to a $28.9 billion subsidy over the last 30 years.

Its clear that the BLMs coal leasing program is deliberately designed to benefit a few coal mining companies like Peabody and Arch at the expense of US taxpayers. This has become even more outrageous now that coal mining companies are seeking to dramatically expand exports of this taxpayer-owned coal, and thats why Congressman Ed Markey has called for a Government Accountability Office examination of the BLMs coal leasing practices. Beyond the lost revenue, however, BLMs undervaluing of this coal is helping fuel the devastating impacts to public health, the environment, and our climate system that inevitably accompany mining and burning this much coal. The BLM is facing a lawsuit from WildEarth Guardians and the Sierra Club because it ignores the impacts of the greenhouse gases that will result from leasing this coal.

And the amount of carbon pollution that will be emitted when this coal is burned is enormous.

The 721 million tons of coal contained in next weeks South Porcupine lease amounts to 1,196,456,240 metric tons of CO2 just over a billion metric tons, or a gigaton of CO2. Thats over ten times the 101 million metric tons of CO2 that the federal government hopes to reduce its own emissions over a decade long period under President Obamas Executive Order. Despite the fact that the emissions from burning this coal would not be possible without the BLMs leasing activities, the government does not include emissions associated with federal leasing of coal, oil and gas in its inventory of federal emissions.

We can also make sense of the vast amount of carbon pollution were talking about here with the help of EPA’s greenhouse gas equivalencies calculator. The emissions from the 721 million tons of coal in the South Porcupine is equivalent to the annual emissions of over 234 million passenger cars thats nearly all the cars in the US. Another way of measuring this coal perhaps especially important for those in the Pacific Northwest resisting the industrys efforts to ship this coal through their communities for export to Asia 721 million tons of coal is enough to fill 6.5 million train cars.

The North Porcupine tract contains enough coal to fill 6.5 million train cars. Photo by Paul K Anderson

The Bureau of Land Management’s corrupt coal leasing program is fueling climate change with billions of tons of carbon pollution, and it’s been a rip off for US taxpayers for decades. But as coal mining companies like Peabody move aggressively to export this taxpayer-owned coal, their always dubious claims of any public benefit to this subsidized extraction are increasingly untenable. If the BLM proceeds with the auction of the North Porcupine tract next week, they can expect to be confronted by protesters. How long does the industry think it can keep this boondoggle going as it seeks to turn the American West into a resource colony?


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