Government Report: Coal Companies Are Pocketing Millions At Taxpayers’ Expense

June 11, 2013 | OPB
Bonnie Stewart,
Ashley Ahearn


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  • Heavy equipment moving coal at a mine in Wyoming. A new federal report says taxpayers aren't getting the full value of coal mined on public land. credit: Katie Campbell
Heavy equipment moving coal at a mine in Wyoming. A new federal report says taxpayers aren't getting the full value of coal mined on public land. | credit: Katie Campbell | rollover image for more

Coal mining companies are saving tens of millions of dollars that should be going into state and federal treasuries, according to a new report by the Inspector General at the U.S. Department of Interior.

The report paints a picture of inadequate oversight, poor record-keeping and frequent undervaluing of coal on public lands. Its authors concluded that means mining companies aren’t always paying the fair market rate for the coal they extract on public land. The report also shows that the BLM does not fully factor in the export potential of the coal when calculating the fair market value.

And that, in turn, means they may not be paying the full amount for leases and royalties that the government should be charging.

The report comes at a time when the Northwest is debating whether export terminals should be built on the Columbia River and Puget Sound so coal can be transported from Wyoming and Montana for export to Asia. Part of that debate centers on the question of whether the federal government is setting an artificially low price for companies that mine coal on public land.

The report’s authors look at 45 instances when the Bureau of Land Management had leased public land to coal mining companies in the Powder River Basin of Wyoming and Montana. They concluded that when companies sought to expand those leases, they paid less for the additional land than they were paying for the original leases — at the expense of $60 million in lost revenues.

Inspectors also looked at four sales in two states and concluded that the government accepted bids that were below the fair market value. That resulted in a $2 million loss of revenue.

“It’s a rounding error,” National Mining Association spokesman Luke Popovich said to the Associated Press, in reference to the combined $62 million in unrealized government revenues identified in the report.

The 45 leases and four sales examined for the report represent a fraction of the 314 total coal-mining leases nationwide.

“We are heartened by the DOI Inspector General’s thorough evaluation of the seriously flawed practices of the Bureau of Land Management’s coal leasing program. This report is the first step in giving Interior Secretary Sally Jewell the tools needed to facilitate a long overdue revamping of the BLM’s public leasing program,” said Sierra Club’s Bill Corcoran in a press release.

The Inspector General could not determine the quality of the BLM’s inspection and enforcement program because the inspection reports were inconsistent and did not provide complete documentation. Inspectors are supposed to visit the leased mines to make sure the companies are accurately reporting how much coal they are mining and selling and if the companies are complying with environmental laws. The Inspector General discovered that the BLM is operating from a draft inspection and enforcement handbook that was developed in the 1980s.

The report also cited the BLM for failing to have enforcement tools to use when mining companies operating on federal land do not comply with the laws. The lack of financial penalties “conceals a company’s record of noncompliance,” the report said.

In contrast, the report noted that the BLM can levy fines of up to $1,000 per day for violations on Indian leases.

In response, the BLM agreed with the majority of the findings in the report.

© 2013 OPB
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