How the Feds Are Ripping You Off To Benefit Big Coal
A new government oversight report reveals billions could be left on the table.
Federal coffers are missing out on what could be billions of dollars in lost revenue due to shoddy accounting work by the office that handles leases for coal mines on public land, according to a report made public today by the investigative arm of Congress.
The Government Accountability Office was asked by Senator Ed Markey (D-Mass.), a stalwart climate hawk, to look into whether the Interior Department's Bureau of Land Management routinely sells leases to coal mining companies for far less than their market value. Investigators found that BLM agents in Wyoming (by far the country's largest coal producer) set prices based on coal's historic value, but, in contradiction of the department's own rules, fail to take into account how much it will likely be worth in the future. Similar problems were found in other coal-producing states. As a result, the GAO report claims, many leases were sold far beneath their true market value, depriving taxpayers of additional royalties (which, as it stands, come to about $1 billion per year) that are normally skimmed from the mines' profits.
"As a net result, the public is getting screwed," said Tom Kenworthy, an energy analyst at the Center for American Progress who has kept tabs on Interior's longstanding problems with coal lease valuation.
That the leases are selling for less than they're worth seems clear; what's less obvious is exactly how much money is at stake, since the values were never properly set in the first place (the GAO report doesn't specify a number). A 2012 analysis of federal lease records by former New York State Deputy Comptroller Tom Sanzillo for the independent Institute for Energy Economics found that undervalued coal leases cost the Treasury $28.9 billion in lost revenue since 1983, or almost $1 billion every year. Meanwhile, analysis by Senator Markey's office put the figure at $200 million, although a spokesperson would not specify the time period to which that applied, as the underlying data are considered proprietary to the Interior Department, he said.
Since 1990, the federal government has leased 107 parcels of public land for coal mining; these parcels typically account for 25-40 percent of the roughly one billion tons of coal produced annually nationwide. That adds up to a massive carbon footprint: Fossil fuels produced on public land create roughly a billion metric tons of greenhouse gas pollution every year, about as much as 285 coal plants.