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.