Analysis of the Powder River Basin Federal Coal Lease Sale

Pursuant to congressional requests, GAO discussed its recent report on the Powder River Basin coal lease sales conducted by the Department of the Interior and the management of the Federal coal leasing program as a whole. While there was limited evidence that a disclosure of proprietary coal data may have occurred, GAO was unable to verify that this had an impact on preparations for the April coal sale. The allegations that Interior made unauthorized disclosures of proprietary coal data prior to the sale were not investigated within Interior or promptly referred to Interior's Inspector General as required under agency procedures. Interior could provide no written quantitative basis supporting the need to change the bidding system for the April coal sale, and the "entry level" system used did not work as Interior envisioned. The October followup sale, while featuring a different bidding approach, offered little indication of the worth of Interior's minimum bidding concept since only two tracts were offered. Actual selling prices for leases sold in April and October were roughly $100 million below the GAO estimates of their value, and GAO believes that most Powder River coal leases sold for less than fair market value. GAO recommended that Congress and the Secretary of the Interior take actions to ensure a reasonable return to the Government for leased coal.