Watchdog groups are raising flags over how the federal government is handling two major coal lease sales in Montana and Wyoming. The latter was postponed last minute.
About 50 years ago, the federal coal program was considered “rife with waste, fraud and abuse,” according to Sara Kendall, Western Organization of Resource Councils program director.
Kendall said taxpayers and local governments fought to get mining companies to pay a fair amount for public minerals.
And it worked.
Stricter federal rules came in 1976 and in following years, requiring companies to pay at least fair market value for coal. Kendall said it’s determined by the Department of the Interior’s Appraisal and Valuation Services, which is considered an apolitical government agency.
“[It’s] not controlled by politicians,” she said. “And that principle is being tested this week.”
Kendall said that’s because of the numbers shaking out from a Montana coal lease sale on Oct. 6. According to AP reporting, the top bid was $186,000 for 167 million tons of coal, penciling out to one-tenth of a dollar per ton. For comparison, the region’s last successful federal sale went for $1.10 per ton of coal.
Had the recent Montana lease gone for a similar rate, it would’ve been about $183 million.
Kendall said that matters, because half of that money is returned to states and local governments for things like public infrastructure and schools.
“I think the big question and the moment of truth will be whether the Bureau of Land Management (BLM) actually accepts the bid,” Kendall said.
The BLM is supposed to only accept “fair market value” bids under those 1976 federal rules protecting taxpayers and public lands. The BLM doesn’t disclose what it deems fair market value, so if it accepts a bid at a significantly lower rate, Kendall said that’s telling.
“I think the concern is that the offices and the systems that were put in place in order to ensure that the public is getting a fair return for taxpayers is under threat,” she said.
Kendall said historically the BLM accepts or denies bids within a couple days of a sale, but the decision was yet to be posted on the Federal Register as of publication.
The company that made the bid, Navajo Transitional Energy Co. (NTEC), made the case for lowballing the market value of coal in the area, according to AP reporting. NTEC acknowledged that’s because coal markets are predicted to continue to decline over the next couple decades, as utility demand wanes.
NTEC didn’t respond to Wyoming Public Radio (WPR) for comment.
In an emailed response to WPR, a Department of the Interior spokesperson said, “While we would have liked to see stronger participation, this sale reflects the lingering impact from Obama and Biden’s decades long war on coal which aggressively sought to end all domestic coal production and erode confidence in the U.S. coal industry.”
Leasing in the area more broadly has lagged for the past decade-plus, largely because of a declining market for coal. But also, during the Biden administration, the Bureau of Land Management (BLM) ended the option for new coal leasing in the Powder River Basin – the top producing coal region in the nation. The Trump administration is working to undo that.
Similar to the Montana sale, there was skepticis about the market for Wyoming’s upcoming lease sale that ultimately didn’t take place. It was scheduled for Oct. 8, with officials confirming it two days prior, despite the federal government shutdown. But Tuesday night, the BLM told Wyoming Public Radio the sale was postponed with no future date posted.
The federal sale was slated to be the first in 13 years in Wyoming. It was for a parcel of land in Wyoming’s northeast Powder River Basin that has 440 million tons of coal, known as the West Antelope III, nominated by NTEC. It was initially proposed by a different company under the Obama administration in 2015, but was paused over the last several years.
Kendall and her group analyzed the potential lease and public information about how much coal the company has already mined. They estimated it would be close to 25 years until the company would get around to mining coal under the new lease.
“In the past, BLM has rejected coal lease applications that wouldn't be mined for decades because these leases are highly speculative, and also because it's impossible for them to arrive at a real fair market value that would ensure a fair return to taxpayers for public coal,” she said.
The Trump administration and Wyoming’s delegation in Washington, DC are pushing to open more leasing in the region.
Just this week, Sen. Cynthia Lummis (R-WY) led the charge to reverse the management plan that ended new coal leasing in the Powder River Basin. Lummis is doing so through a Congressional Review Act (CRA) resolution that she introduced on Oct. 8.
“Coal is the backbone of Wyoming's economy, it supports thousands of good-paying jobs, generates the revenue that funds our communities, and provides reliable, cheap electricity to Americans across our country,” Lummis said in a press release.
Her resolution is supported by Sen. John Barrasso (R-WY) and Rep. Harriet Hageman (R-WY). Congress has 60 legislative days to pass the CRA. If signed into law, Lummis said the Powder River Basin area would revert to the previous resource management plan, which allowed new coal leasing. However, even when that previous plan was in place, there wasn’t a federal coal lease sale for more than a decade.
