Since 1990 coal production from federal leases—almost all of which are on Bureau of Land Management (BLM) property, has increased 78%, peaking in 2004. Also, the number of active coal leases managed by BLM has tripled since 1990 to more than 300. Overall, the BLM is in charge of coal leasing on 570 million acres of land and is supposed to award leases only if an offer meets “fair market value,” Markey explained in his letter.
Markey’s four page letter references the central role of exports in earnings reports and financial projections from several U.S. coal producers including industry leader Peabody Energy which recently stated that coal export capacity could double within 10 years. “Coal exports are rising as U.S. electricity producers move away from coal in favor of natural gas and renewable energy,” Markey wrote in a letter to Comptroller General Gene Dodaro. “With such rapid market changes taking place, American taxpayers must be assured they are receiving the full value for energy resources held in the public trust, especially when mining companies are seeking to export hundreds of millions of tons of coal for premium prices.”
Markey asked the GAO to examine how the BLM has conducted its coal sales over the last two decades; the process used to estimate “fair market value” determining the price of those sales; whether the agency’s estimate of fair market value accounts for lower reserve estimates and increased exporting to higher priced markets; and if BLM adequately tracks and makes publically available information pertaining to sales and lease payments.
“We lack information about how the rapid growth of coal mining on federal land combined with shrinking reserves and increasing exports produced from federal leases affect the value of U.S. coal,” Markey writes. “The House Natural Resources Committee has an interest in ensuring that BLM’s leasing process promotes competition for coal tracts and that the ‘fair market value’ established by BLM is accurate. Having GAO undertake this review of the federal coal leasing program will give us the information we need to better understand how the program is working and what implications rising coal exports and declining domestic demand might have for its future.”
