Mineral Resources

Federal Coal-Leasing Program Needs Strengthening Gao ID: RCED-94-10 September 16, 1994

In 1976, only 59 of the 533 existing federal coal leases were producing coal. In response, Congress passed legislation to discourage the speculative holding of federal coal leases and to encourage the development of leased coal. Yet GAO found that the Bureau of Land Management (BLM) has taken actions that do not further these goals. For example, BLM has issued 36 federal oil, gas, and coal leases to an unqualified lessee. This report assesses Interior's actions to (1) encourage the development of federal coal leases, (2) address the cumulative environmental impacts of additional coal leasing, and (3) consider projected demand in coal-leasing decisions.

GAO found that: (1) recent BLM actions have not discouraged speculation or promoted the development of federal coal leases; (2) BLM has issued 36 federal oil, gas, and coal leases to an unqualified lessee and has disqualified other companies with nonproducing federal coal leases; (3) some companies have surrendered nonproducing coal leases to remain qualified to obtain additional federal mineral leases; (4) BLM has allowed the use of logical mining unit (LMU) provisions to extend the life of a federal coal lease that is close to termination for lack of production; (5) BLM actions may encourage other coal lessees to use LMU to extend the development periods of their nonproducing federal coal leases; (6) although BLM offices in Wyoming and the eastern states have addressed cumulative environmental impacts on most resources, the Forest Service and BLM in Utah have addressed only about 22 percent of the potentially affected resources; (7) BLM can meet its coal-leasing objectives without using projected demand to set leasing levels; (8) BLM can discourage speculation, encourage coal lease development, and ensure that it obtains a fair-market value for its leases by enforcing the Federal Coal Leasing Act Amendment's (FCLAA) coal-leasing diligence requirements; and (9) BLM may need to revert to a regional leasing process, using projected demand as a basis for setting leasing levels, if the demand for coal increases significantly.

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.

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