Analysis of the Powder River Basin Federal Coal Lease Sale

Testimony was given concerning a recent GAO report on the Federal coal lease sale in the Powder River Basin. GAO found limited evidence that a disclosure of proprietary coal data may have occurred. However, GAO could not verify the details related to this alleged disclosure. GAO found that the disclosure allegations were not investigated within Interior or promptly referred to Interior's Inspector General as required under departmental procedures. Interior had no records documenting the need to change the bidding system for the April sale, and the entry-level system used did not work as Interior envisioned. The October followup sale, while featuring a different approach, offered little indication of the worth of Interior's minimum bidding concept, since only two tracts were offered. A GAO evaluation showed that most of the Powder River coal leases sold for less than fair market value. GAO recommended that Congress and the Secretary of the Interior take several actions to ensure a reasonable return to the Government for leased coal and that Interior postpone scheduled regional coal sales until it has revised several features of its program by the development of: (1) a detailed analysis of factors affecting the value of a Federal coal lease; (2) new internal procedures for conducting coal lease valuations; (3) new guidelines for using untried or experimental bidding systems; (4) minimum selling prices for coal leases in each Federal coal region on a cents per ton, rather than a dollars per acre, basis; and (5) revise fair market value determination procedures. GAO also recommended that the Secretary of Interior direct the Bureau of Land Management to establish written, bureauwide, internal procedures for safeguarding coal lease pricing, economic valuation, and other proprietary data.