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The BLM’s Corrupt Coal Leasing Program: Billions In Subsidies To Peabody, Gigatons Of Carbon Pollution For The Rest Of Us

By Climate Guest Contributor

"The BLM’s Corrupt Coal Leasing Program: Billions In Subsidies To Peabody, Gigatons Of Carbon Pollution For The Rest Of Us"

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by Joe Smyth

Next week, the Bureau of Land Management (BLM) is scheduled to hold an “auction” for 721 million tons of taxpayer-owned coal in the Powder River Basin.

This is for the North Porcupine tract, and like the South Porcupine tract that BLM leased to Peabody last month — even though this coal is owned by you and me — the lease was drawn up by Peabody itself for its own profit. This is what’s known as a “lease by application,” and under BLM’s corrupt coal leasing program, Peabody will almost certainly be the only bidder and pay next to nothing.

WildEarth Guardians’ 2009 report “UnderMining the Climate” found that over the last 20 years, only 3 of 21 lease by applications had more than one bidder. Since Peabody knows it will face no competitive pressure, it can simply offer the lowest possible price, secure in the knowledge that if it doesn’t meet BLM’s absurdly low minimum price, it can just try again later. In fact, that’s just what happened with the South Porcupine tract; Peabody’s initial offer of just $0.90 per ton was rejected as too low by the BLM – so they simply held another auction a few weeks later and accepted Peabody’s offer of $1.11 per ton. In both “auctions” Peabody was the only bidder.

Now, the company is once again seeking cheap access to more of our coal, so it can strip mine it from public lands and export it to lucrative markets in Asia. (See: Will the Bureau of Land Management subsidize Peabody’s plans to export coal to Asia?)

Incredibly, BLM’s coal leasing program deliberately encourages this uncompetitive process. Allowing lease by applications was a key change made possible once the BLM moved to decertify the Powder River Basin as a coal producing region – even though it’s the source of almost half the coal mined in the US. BLM is supposed to manage this coal “in the best interests of the Nation,” and it has a process meant to determine the fair market value of a lease. But as Tom Sanzillo explains, the BLM’s methods dramatically undervalue the coal, so much so that it has amounted to a $28.9 billion subsidy over the last 30 years.

It’s clear that the BLM’s coal leasing program is deliberately designed to benefit a few coal mining companies like Peabody and Arch at the expense of U.S. taxpayers. This has become even more outrageous now that coal mining companies are seeking to dramatically expand exports of this taxpayer-owned coal. And that’s why Congressman Ed Markey has called for a Government Accountability Office examination of the BLM’s coal leasing practices.

Beyond the lost revenue, however, BLM’s undervaluing of this coal is helping fuel the devastating impacts to public health, the environment, and our climate system that inevitably accompany mining and burning this much coal. The BLM is facing a lawsuit from WildEarth Guardians and the Sierra Club because it ignores the impacts of the greenhouse gases that will result from leasing this coal.

And the amount of carbon pollution that will be emitted when this coal is burned is enormous.

The 721 million tons of coal contained in next week’s South Porcupine lease amounts to 1,196,456,240 metric tons of CO2 – just over a billion metric tons, or a gigaton of CO2. That’s over ten times the 101 million metric tons of CO2 that the federal government hopes to reduce its own emissions over a decade long period under President Obama’s Executive Order. Despite the fact that the emissions from burning this coal would not be possible without the BLM’s leasing activities, the government does not include emissions associated with federal leasing of coal, oil and gas in its inventory of federal emissions.

We can also make sense of the vast amount of carbon pollution we’re talking about here with the help of EPA’s greenhouse gas equivalencies calculator. The emissions from the 721 million tons of coal in the South Porcupine is equivalent to the annual emissions of over 234 million passenger cars – that’s nearly all the cars in the U.S. Another way of measuring this coal – especially important for those in the Pacific Northwest resisting the industry’s efforts to ship it through their communities for export to Asia – is that 721 million tons of coal is enough to fill 6.5 million train cars.

The Bureau of Land Management’s corrupt coal leasing program is fueling climate change with billions of tons of carbon pollution, and it’s been a rip off for U.S. taxpayers for decades. If the BLM proceeds with the auction of the North Porcupine tract next week, they can expect to be confronted by protesters. How long does the industry think it can keep this boondoggle going as it seeks to turn the American West into a resource colony?

Joe Smyth is a Media Officer with Greenpeace.

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11 Responses to The BLM’s Corrupt Coal Leasing Program: Billions In Subsidies To Peabody, Gigatons Of Carbon Pollution For The Rest Of Us

  1. Andy Hultgren says:

    Can nothing be done at this point to stop/delay the auction?

  2. Paul Klinkman says:

    How much money will taxpayers spend to reduce the federal government’s CO2 emissions by 101 megatons. Is Peabody Coal willing to pay 10 times that price? More to the point, how much will it cost to reduce all of 1 gigaton of carbon dioxide emissions?

    The real beneficiary of government welfare gone wild is China. They get the cheap coal.

    We’re subsidizing China.

    We’re coddling China.

    You know that country with all the human rights problems and environmental disasters? The country hacking into U.S. military computers? The country with a $30 billion dollar slush fund, engaged in monopolistic practices to kill the U.S. solar panel industry dead?

    • Mark Shapiro says:

      “We’re subsidizing China.”

      Right.

      ” that country with all the human rights problems and environmental disasters . . . ”

      Right. That country formerly known as Communist China — Red China for short — until we discovered that huge pool of free labor.

      Yuck.

  3. Solar Jim says:

    The US unit of weight in business is usually the US ton, or “short ton” of 2000 pounds. The heavier metric ton is 1000 kilograms. It would be helpful to keep the units consistent.

    If all of the 721 million US tons of coal were pure carbon (carbon content varies with species of coal), then oxidation would release 3.66 times this weight as carbonic acid gas, or some 2,640 million US tons. I wonder how the stated figure of 1,196 million metric tons is derived.

    Either way, this corrupt destruction of landscape represents acceleration toward climate meltdown orchestrated by Uncle Scam.

    • Joe Smyth says:

      Solar Jim – thanks for your note, here’s some more detail on the calculations. I used short tons for the coal because that’s what the industry and government use, but used metric tons of CO2 because it’s common for GHG emissions calculations, even in the US – for example, the President’s executive directive that aims to reduce federal government emissions is measured in metric tons of CO2.
      The other issue is how much CO2 is emitted per ton of coal. For this I used the BLM’s own estimates: for the Powder River Basin, 1.659 metric tons of CO2 per ton of coal burned (it varies depending on the type of coal). So, 721 million x 1.659 = 1,196,139,000. Note also that this doesn’t even include the GHG emissions associated with mining and transporting the coal, which are considerable. The best resource for more detailed info on the carbon pollution of Powder River Basin coal mining is WildEarth Guardians’s report, “Undermining the Climate.”

  4. This is a great piece, and it is terrific that Greenpeace, WildEarth Guardians, the Sierra Club, and others are taking this on.

    The coal needs to stay in the ground.

    Having met several of the national leaders of the BLM, I can attest that they are intelligent, conscientious, and hardworking people.

    Yet somehow they persist in perpetuating such madness, with formal explanations that beggar logic.

    It seems like a microcosm of how bureaucracy contributes to our inability to slam n the brakes, even as we rush civilization off the edge of an entirely obvious cliff. It has to be stopped!

    • Mulga Mumblebrain says:

      Kevin, it’s a racket, and similar rackets persist in pharmaceutical and chemical industry regulation, not to forget the financial kleptocracy. There is a revolving door between Big Business and the Washington agencies meant to control industry in the public interest. Top executive move between business and bureaucracy, to the advantage of the money power. It is, in my opinion, straight out, formalised, even ritualised, corruption, but it is standard operating procedure in capitalist economies. The lower ranks do their best, but Thought Crime or whistle-blowing is heavily policed, never more so than under the Obama regime, which, cleverly, promised to do the exact opposite and protect whistle-blowers.

  5. bill mckibben says:

    many thanks for good work on this most outrageous of scams

  6. kramerjw says:

    Once a lease is issued, an annual rental payment of $3 per acre is required, along with a royalty payment of 12.5 percent of the value of coal produced by surface mining methods.
    How’s the value of the 721 million tons of coal contained in next week’s South Porcupine lease going to be figured?

  7. LNorman says:

    BLM one of the most corrupt agencies in US. Almost everything they do is illegal and nauseating. They are also committing genocide with our tax dollars, eradicating so called “protected” wild horses/burros from their legal domain. We are subsidizing “welfare” corporate ranchers like Barrick Gold on our PUBLIC lands. BLM’s budget is 1.1 billion and they use it for genocide, raping & pillaging PUBLIC lands and spin doctors. They need to be dismantled & prosecuted to fullest extent of the law and their leader Salazar should be impeached and prosecuted.

  8. Michael Mac says:

    Of all the coal to export, PRB is the most cost effective and the cleanest( lowest sulfur) of any US Coal.The Chinese are going to buy coal either from the USA, Russia , or Indonesia.They are putting on line 50 new coal burns in the next 2 years. Better for them to burn low sulfur from the USA than High sulfur out of Indonesia or Russia. As for expansion of coal companies in the USA, most of the thermal coal producers are going dormant.Arch coal is laying fallow many of their thermal coal mines. The eastern US power companies are now burning LNG or are in the process of converting over. So too further debate the question, does the ground water get polluted in Pennsylvania with LNG, and the Chinese burn high sulfur coal from Indonesia or does the Westport get opened in Oregon? I vote for the later.