Coal Tattoo

IG report: Feds sell public coal too cheaply

There’s a new report out this week from the U.S. Department of Interior’s Inspector General, raising serious questions about the process used to lease publicly owned coal reserves out west to the mining industry. Reuters has the story:

U.S. officials who administer a federal coal program have undervalued the fuel, costing taxpayers $62 million in some recent mining leases alone, said a government report released on Tuesday.

About 40 percent of the coal sold in the United States is drawn from federal land and the program is administered by the Interior Department’s Bureau of Land Management, which is required to seek a fair price on behalf of taxpayers.

“We found weaknesses in the current coal sale process that could put the government at risk of not receiving the full, fair market value for the leases,” Interior’s Inspector General, the investigative arm of the department, said in an independent review.

Reuters, of course, broke this story back in December with this report:

Western states that rely on receipts from coal sales to help fund their governments are concerned the mining industry is dodging royalty payments on lucrative U.S. exports to Asia.

By valuing coal at low domestic prices rather than the much higher price fetched overseas, coal producers can skip a large royalty payout when mining federal land.

The practice could add up to hundreds of millions of dollars in forgone royalties if exports to Asia surge in coming years as the industry hopes, Reuters found.

Wyoming warned federal officials about flaws in the royalty system a year and a half ago. Last week Montana Governor Brian Schweitzer said he will not tolerate the coal industry skirting royalties: “If there’s phony baloney going on, we have to get to the bottom of it.”

You can read the IG report for yourself here.