In addition, the non-competitive nature of the federal leasing program is being reviewed by the Interior Department’s (DoI) Inspector General and also will be the subject of an audit by the Government Accountability Office (GAO), according to officials at the Bureau of Land Management (BLM), which oversees the leasing program.
Of the 26 coal leases the federal government has awarded in southeastern Montana and northeastern Wyoming since 1991, 22 have gone to a single bidder. In the other four instances, there were only two bidders involved.
Rep. Edward J. Markey (D-Mass.), whose April 24 letter has prompted the first GAO review of the program in three decades, said he is concerned the bidding system has depressed leasing rights in the Powder River Basin (PRB), the way it did in the early 1980s. In 1983, the GAO concluded the BLM auctioned off lease rights there for $100 million below their fair market value.
“There’s a long history of under-market coal sales from the Powder River Basin,” Markey said. “We need to ensure that the taxpayers are not being shortchanged the way they were in the 1980s.” Interior and mining industry officials said the lack of competition stems from the fact that there are only four major coal companies operating in the Powder River Basin, and mining equipment is so large and expensive that firms confine themselves to one place.
“The reason why a single company sometimes bids on a tract for leasing is that the company, which already has the existing infrastructure in place, is bidding on the adjacent parcel to their existing leased parcel,” said Megan Crandall, BLM spokeswoman. “It would be too expensive for a new company to come in and build.”
Crandall added that the BLM, which oversees mineral rights for nearly 700 million acres of federal land, “strives to ensure that public coal resources are developed in a manner that is in the best interests of taxpayers and returns fair market value,” and will cooperate with both federal probes.