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Inspector general focuses on coal leasing problems

Published on NewsOK Modified: February 7, 2014 at 11:06 pm •  Published: February 7, 2014

BILLINGS, Mont. (AP) — Coal sales in Western states are getting more scrutiny from federal lawmakers amid new revelations Friday about officials accepting below-market bids for some coal sales and possibly illegally negotiating with companies over prices.

A probe by the U.S. Department of Interior Inspector General found federal officials in Colorado, Utah, Wyoming and New Mexico accepted the below-market bids or sold coal without full appraisals.

Deputy Inspector General Mary Kendall said such practices violated federal rules including the 1920 Mineral Leasing Act, which requires coal sales to be competitive.

Kendall also found that some state and local offices within the Interior Department's Bureau of Land Management had negotiated with companies that submitted failed bids. That allowed the companies to justify their initial bid and avoid the time and effort of going through another sale process.

"In our view, this is a form of negotiation currently prohibited by law and regulation," Kendall wrote. She did not name the companies or specify the states involved.

The findings were contained in a letter from Kendall to U.S. Sen. Ron Wyden, an Oregon Democrat who has been critical of the government's coal program. The letter was released Friday by the lawmaker's office.

It follows a report earlier this week from Congress' nonpartisan Government Accountability Office that found widespread inconsistencies in how coal is valued before it is sold. Massachusetts U.S. Sen. Ed Markey said his office calculated that the problems identified by the GAO might have cost taxpayers hundreds of millions of dollars in lost revenue.

More than 40 percent of the coal mined in the U.S. comes from beneath federal lands in Wyoming, Colorado, Utah, Montana and other Western states.

Amid the recent criticism, the coal industry has defended the federal program, which in 2012 brought in $876 million in royalties and almost $1.6 billion in bonus payments on lease sales, according to the Interior Department.

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