Markey: Report on Public Coal Leasing Shows Taxpayers Losing Money

Press Release

Three decades after improprieties in coal lease sales in Wyoming and Montana were revealed, similar noncompetitive practices persist to this day, potentially cheating American taxpayers and benefitting large coal mining companies. These findings are included in the first review of leasing practices for federal coal mining rights since 1994 by the Government Accountability Office (GAO), the investigative arm of Congress, which was released today by Senator Edward J. Markey (D-Mass.). Calculations done by Senator Markey's staff indicate that hundreds of millions of taxpayer dollars have potentially been lost.

In light of the report and continuing problems with Powder River Basin and federal coal leasing practices, Senator Markey called for a temporary suspension of new sales of coal rights until the shortcomings identified by the GAO are addressed and taxpayers are protected.

The GAO report found that in nearly 90 percent of lease sales, only a single coal company submits a bid for coal mining rights, even though federal law requires that sales should be competitive among multiple companies. Yet even when competition does not exist, the Bureau of Land Management, which oversees coal lease sales, accepts these non-competitive bids 83 percent of the time. They do so despite the fact that the GAO found that when initial bids are rejected, companies always bid again and at higher levels. That could indicate that the rights may have higher value than usually accepted by the government.

The report also found that the increased practice of exporting coal from the United States to higher priced markets in Asia and Europe is not adequately factored into determining a fair price for public coal rights. U.S. coal exports have more than tripled over the last decade to 12 percent of total U.S. production in 2012 and coal mining leases can last for 20 years or longer, meaning that if exports aren't being considered, taxpayers may lose out for decades to come.

"These noncompetitive practices are costing taxpayers in Massachusetts and across the nation, benefitting just a few coal companies who may be leasing public coal resources at bargain basement prices," said Senator Markey. "Taxpayers are likely losing out so that coal companies can reap a windfall and export that coal overseas where it is burned, worsening climate change. This is a bad deal all around."

Source