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WildEarth Guardians Calls on Interior Department to Cancel Illegally Sold Federal Coal Leases

Date
February 13, 2014
Contact
Jeremy Nichols (303) 437-7663
In This Release
Climate + Energy

Thursday, February 13, 2014
WildEarth Guardians Calls on Interior Department to Cancel Illegally Sold Federal Coal Leases

Oversight Reports Released Last Week Found Coal Sold at Below Market Value, Contrary to Law
Contact: Jeremy Nichols (303) 437-7663

Denver—WildEarthGuardians today called on the U.S. Interior Department to cancelmore than a dozen federal coal leases, primarily in the Americna West, whichoversight reports last week found were sold at below fair market value,contrary to federal law.

“This is an absolute scandal. It’s bad enough the Interior Department isselling millions of tons of coal at a time when we should be doing everythingpossible to curtail carbon, now we come to find they’ve been selling coalillegally,” said Jeremy Nichols, WildEarth Guardians’ Climate and Energy ProgramDirector. “This isn’t just a violationof law, it’s a violation of public trust, and it behooves Interior to swiftlyfix these past mistakes.”

A report released February 4, 2014 by the U.S. Government AccountabilityOffice and a previously unreleased November 15, 2013 letter from the U.S.Department of Interior’s Inspector General, released February 6, 2014 bythe U.S. Senate Energy and Natural Resources Committee, roundly criticized theBureau of Land Management, the Interior Department agency charged with managingfederal coal, for failing to ensure leases were sold at fair market value, asrequired by the U.S. Mineral Leasing Act.

The Inspector General identified several instances inColorado where coal leases were sold below fair market value in violation oflaw, including a 3.2 million ton lease sold to Peabody Coal in 2012 and a 92million ton lease sold in 2007 to Colowyo Coal, a subsidiary of Western FuelsAssociation. IG Letter at 2.

There were at least 16 other instances identified by theInspector General where coal leases were sold below fair market value,including in Colorado, Montana, New Mexico, Oklahoma, and Wyoming. In one case, a lease was sold in Wyoming for$12.39 per acre, yet federal law requires a minimum charge of $100 per acre.

An independent report released in 2012 found thatundervaluing federal coal may have cost taxpayers nearly $30 billion since1990.

Despite the findings last week, the Bureau of LandManagement has made no public commitment to remedy its past misdoings. In a letter sent today to Director, NeilKornze, WildEarth Guardians called on the Bureau to confront its past failuresby canceling illegal leases and by suspending future lease sales until theproblems identified by the Government Accountability Office and InspectorGeneral can be fully addressed.

“The Bureau of Land Management can’t legitimately keepleasing federal coal while it refuses to make right its past wrongs,” saidNichols. “Any instance of federal coalsold illegally is a mark against the integrity of the Bureau. The only way to restore integrity is byacknowledging mistakes and taking every step possible to remedy them, includingcanceling illegal leases.”

The Government Accountability Office found in its reviewthat the Bureau of Land Management inconsistently appraises federal coal andoften fails to comply with its own economic evaluation handbook when sellingcoal leases. Among other things, thereport found that the Bureau is failing to take into account coal exports whenappraising coal, even though companies are fetching premium prices by sellingAmerican coal overseas.

The Bureau of Land Management’s Colorado office wasexplicitly singled out as failing to take into account coal exports, eventhough Arch Coal, the owner of the West Elk mine, announced last week in anearnings call that it exportshalf of the coal it produces in Colorado.

The reports indicate the problem of illegal federal coalsales may be more widespread. TheInspector General, for example, noted that in two recent coal leases sold inWyoming, the Bureau of Land Management assessed fair market value based onlower priced bids, rather than higher actual sale prices.

The Inspector General also found that several state Bureauoffices, including Colorado, New Mexico, and Utah, illegally negotiated withcoal companies when selling coal. In itsletter, the Inspector stated that negotiations are prohibited by federal law,noting that such a practice “would necessitate a change to the law andregulations.” IG Letter at 5.

In its letter, WildEarth Guardians specifically calls on theBureau of Land Management to undertake seven actions to review and remedy past coalleasing missteps. In addition to cancelingillegal leases, Guardians called on the Bureau to assess fair market valueassessments for all coal leases issued in the last five years and to prepare anationwide analysis of the environmental and economic impacts coal exports.

Other Contact
“This is an absolute scandal. It’s bad enough the Interior Department is selling millions of tons of coal at a time when we should be doing everything possible to curtail carbon, now we come to find they’ve been selling coal illegally,” said Jeremy Nichols, WildEarth Guardians’ Climate and Energy Program Director. “This isn’t just a violation of law, it’s a violation of public trust, and it behooves Interior to swiftly fix these past mistakes.”
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