Read as much as you want on BostonGlobe.com, anywhere and anytime, for just 99¢.

Inquiry sought to explain why US government is being underpaid $30 billion for coal reserves

WASHINGTON -- A Massachusetts energy think tank is urging Congress to reexamine how the government leases the nation’s coal reserves, saying that the US Treasury has lost out on nearly $30 billion in revenue over the last 30 years because the Bureau of Land Management has sold coal rights way below market value.

The report released Monday by the Cambridge-based Institute for Energy Economics and Financial Analysis underscored a call by Representative Edward Markey for a review of coal leasing programs. In an April 24 letter to the US Government Accountability Office, Markey urged the GAO to conduct an investigation into how the Bureau of Land Management operates about 570 million acres of coal-rich land, much of it in the Powder River Basin of Wyoming and Montana.

Continue reading below

It is the nation’s richest coal-producing region.

In a story published on Monday, the Washington Post reported that the BLM on Thursday will auction off rights to about 720 million tons of coal from the basin, with only one known bidder so far.

That follows past practice, in which the BLM often auctions off coal rights to the same mining firm that detailed the area for leasing, without any competitive bidding process. In the 26 coal leases the federal government has awarded in the basin, 22 have gone to a single bidder.

The paper said the lack of competition is because there are only a few coal extraction companies in the Powder Basin.

But that same lack of competition means the government is not getting the fair market value for coal on federal lands. And companies are selling the coal to overseas buyers, who are willing to pay higher prices.

“The BLM has a legal obligation to the American public to secure a fair market value for coal on public land,” the Energy Economics analysis said. The last review of the BLM process in which Powder Basin Coal is sold was last reviewed nearly 30 years ago, the report said. “Historically the agency has sold PRB coal for below fair market value and continues to fail the public to this day.”

Markey, Democrat of Malden, is seeking a federal inquiry into how coal leasing policies affect the value of US coal. In particular, Markey wants an accounting of the number of lease requests and bids, as well as the amount of royalties generated. In addition, Markey is seeking to better understand the process in which the federal land management bureau determines fair pricing for its coal.

Bobby Caina Calvan can be reached at bobby.calvan@globe.com. Follow him on twitter @GlobeCalvan.
Loading comments...

You have reached the limit of 10 free articles in a month

Stay informed with unlimited access to Boston’s trusted news source.

  • High-quality journalism from the region’s largest newsroom
  • Convenient access across all of your devices
  • Today’s Headlines daily newsletter
  • Subscriber-only access to exclusive offers, events, contests, eBooks, and more
  • Less than 25¢ a week