Press Release

Apr 24, 2012

As Coal Exports Rise, Markey Asks for GAO Review of Federal Coal Leasing Program

 

American Taxpayers Must Receive Full Value of Domestic Minerals Before Sent to Foreign Markets, Says Congressman

WASHINGTON (April 24, 2012) - Rep. Ed Markey (D-Mass.), the Ranking Democrat on the House Natural Resources Committee, today asked the Government Accountability Office (GAO) to conduct its first review of the government’s coal leasing program since 1994.

Rep. Markey’s request comes as U.S. coal companies lay the groundwork to ship hundreds of millions of tons of federally leased coal overseas at premium prices. Domestic coal producers exported 107 million tons of coal in 2011 – the most since 1991 – and Peabody Energy told investors last week that U.S. coal export capacity could grow to 250 million tons by 2017.

“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 Tuesday 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.”

Read the letter from Rep. Markey to GAO HERE.

Markey asked the GAO to examine how the Bureau of Land Management (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.”

Mining companies produced 451 million tons of coal from federal leases during fiscal year 2011, accounting for about 41 percent of total U.S. production. Nine out of every 10 tons of federally leased coal comes from the Powder River Basin in Wyoming and Montana, where producers have rapidly increased exports to Asian countries.

With additional export projects planned for Oregon, Washington, Louisiana, Texas, Canada and Mexico, it is critical that the Bureau of Land Management take into account the prospect that companies will export more federally leased coal. Not doing so could cost taxpayers, states and the U.S. Treasury millions of dollars.