Legislative Changes Are Needed To Authorize Emergency Federal Coal Leasing

Pursuant to a congressional request, GAO reviewed the Department of the Interior's administration of coal leases, focusing on: (1) Interior's emergency lease sale regulations; and (2) the need for legislative and administrative remedies to emergency leasing.

Interior is required by law to issue federal coal leases by competitive bidding and ensure that the government receives fair market value for the coal. GAO found that Interior has had difficulty carrying out emergency leasing in a manner consistent with the requirements for competitive bidding and receipt of fair market value. Emergency leases are limited to situations where the lease applicant has a clear economic and competitive advantage over other bidders, and these leases have consistently been offered to meet the needs of the applicant requesting the lease sale. GAO also found that 33 percent of the emergency leases issued in an 18-month period did not produce coal for at least 3 years, as required by Interior regulations, and were not terminated. In addition, GAO found that Interior's method for determining fair market value is flawed because: (1) Interior does not assume that a lease tract has a higher value to an emergency lease applicant than it would on the open market; and (2) Interior's assumption that more than one bidder may be interested in an emergency lease tract has led to unrealistic estimates of the value of lease tracts to emergency lease applicants.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Michael Gryszkowiec Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 275-7756