Controversial Sale Of Federal Coal Yields Low Prices With Only One Bidder

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"Controversial Sale Of Federal Coal Yields Low Prices With Only One Bidder"

Autumn aspens among evergreens surrounding one of the mesa Lakes on the Grand Mesa in western Colorado. Grand Mesa National Forest is right next to the  Bowie No. 2 Mine.

Autumn aspens among evergreens surrounding one of the mesa Lakes on the Grand Mesa in western Colorado. Grand Mesa National Forest is right next to the Bowie No. 2 Mine.

CREDIT: Shutterstock

Amid growing public concern over the federal government’s coal program and its substantial contribution to climate change, the U.S. Department of the Interior’s Bureau of Land Management (BLM) auctioned off 8 million tons of coal in western Colorado Wednesday as part of its “Spruce Stomp” lease sale.

The only bid at the coal sale was from Bowie Resources, LLC, the same company that proposed the parcel be auctioned through the BLM’s controversial lease by application process, which critics claim is noncompetitive and gives industry too much control over the leasing process. The Spruce Stomp sale is not unique in this respect; since 1990, roughly 90 percent of all “competitive” federal lease sales have only had one bidder.

Bowie Resources bid 36 cents per ton for the coal — or $2.9 million in total for the lease. A recent analysis from Greenpeace found that the average price for publicly-owned coal was $1.03 per ton. The company says this additional coal will help facilitate the expansion of its Bowie No. 2 Mine. The mining and burning of the coal sold Wednesday will emit more than 21 million metric tons of carbon pollution into the air, or the equivalent carbon emissions of 4.5 million cars.

The sale coincides with the Administration’s two-day public hearings in Denver, Washington, D.C. and Atlanta on the U.S. Environmental Protection Agency’s coal-fired power plant rule. In the days prior to the sale, environmental groups urged Secretary of the Interior Sally Jewell to halt the sale amid concerns that coal from the Spruce Stomp sale will be exported.

Bowie Resources currently operates coal mines in Colorado and Utah, exporting over one million tons of coal annually from its Bowie No. 2 Mine to ports in Asia. Bowie has indicated its intent to expand coal exports, raising concerns that the Spruce Stomp coal lease was pursued in part for export sales. In 2012, the U.S. exported almost 127 million tons of coal, which was 9 percent of the total coal exported globally.

A recent report by the Sightline Institute found that that BLM’s current practice of ignoring the value of export sales when calculating the minimum price accepted for federal coal has led to its underpricing. BLM’s coal program has been under fire recently due to reports from the Government Accountability Office and the Interior Department’s Inspector General, which found that noncompetitive leasing and appraisal practices were resulting in federal coal being sold at rates below fair market value. Increasingly, coal companies are selling U.S. coal overseas to reap higher prices on the global market.

An analysis by the Center for American Progress released Tuesday also found that, in addition to concerns with the undervaluation of federal coal, BLM’s coal-leasing program in the Powder River Basin in Wyoming and Montana is costing more than $19 billion per year in losses and damages resulting from carbon pollution.

BLM does not typically consider the social cost of carbon when leasing federal coal. However, a recent court decision that blocked the expansion of a federal coal mine in Colorado for overlooking carbon costs has sparked new questions on whether BLM must account for these costs.

The Obama administration has made significant strides to reduce greenhouse gas emissions and curb climate change, but critics of the BLM program note that these efforts are being undercut by the subsidization of federal coal.

Nidhi Thakar is the Deputy Director of the Public Lands Project at the Center for American Progress. You can follow her on Twitter at @NidhiJThakar.

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