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07/10/2013

Pay Attention to the Powder River Basin

On Tuesday, the House Subcommittee on Energy and Mineral Resources held an oversight hearing on “Mining in America: Powder River Basin Mining: the benefits and challenges.” This hearing came hot on the heels of the Inspector General’s June report finding that the U.S. Department of the Interior is losing millions of dollars in revenue annually because it leases public lands for coal-mining at below market values.

The bulk of coal mining on public lands takes place in one area – the Powder River Basin of Wyoming and Montana. Coal mining in this region produces 40% of our nation’s coal and is a significant source of revenue to the federal government. Yet according to the report, weaknesses in current leasing practices are leaving taxpayers shortchanged, while benefiting a handful of large coal companies.

This stems, in part, from the non-competitive nature of coal-leasing. As evidence, Representative Jared Huffman pointed to the Inspector General’s finding that 80% of leases in recent years had a single bidder; hardly any had more than two. Moreover, the Bureau of Land Management (BLM), which is responsible for overseeing coal production on public lands, does not independently verify the price of the coal it sells, but leaves this to the coal companies. These flawed practices keep the price of coal low for the coal companies and the cost high for American taxpayers.

When there is only one bidder, the BLM uses a formula to determine the “fair market value” for a given coal tract. Because this is based in part on prior rounds of noncompetitive bidding and does not take into account international demand for coal, this number is often low compared to the true value of coal. According to the Inspector General, every penny-a-ton undervaluation of coal could cost the federal government $3 million in revenues.

In addition, BLM allows coal companies to expand their current lease holdings by as much as 960 acres without bidding at all. According to the report, the BLM approved prices since 2000 that were 80% lower, on average, than the price asked in regular lease sales. The BLM and the American people have lost an estimated $60 million through these undervalued lease modifications.

The true cost to the American public is even greater. The report does not take into account the environmental costs of coal mining. Coal is our country’s dirtiest fuel source. Coal burning is responsible for nearly one-third of U.S. carbon emissions. Mining pollutes our air and water, destroys our landscapes, and threatens our health.

Public officials on both sides of the aisle should pay attention to the well-known impacts of mining on our environment and the Inspector General’s troubling findings that BLM’s coal leasing program cheats taxpayers out of a fair return on public resources. 

-- by Anne Haas


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