Powder River Basin coal leasing prompts IG, GAO reviews

By:  Juliet Eilperin

The government's longtime practice of auctioning coal mining rights to a single bidder may have cost taxpayers as much as $28.9 billion over the past 30 years, according to an analysis to be released Monday by the Institute for Energy Economics and Financial Analysis, a Cambridge, Mass.-based think tank.

The non-competitive nature of the federal leasing program is being reviewed by the Interior Department's inspector general and also will be the subject of an audit by the Government Accountability Office, according to officials at the Bureau of Land Management, which oversees the leasing program.

The phenomenon - in which a mining company draws up a proposed area for leasing, and the Interior Department's BLM auctions it off to that same firm - is the rule rather than the exception in the country's single biggest coal producing region. In the 26 coal leases the federal government has awarded in southeastern Montana and northeastern Wyoming since 1991, 22 have gone to a single bidder. In the other four instances, there were only two bidders involved.

On Thursday, the BLM will auction off the right to extract 721.2 million tons of coal from Wyoming's North Porcupine tract in a region known as the Powder River Basin. Barring an unforeseen development, there will be one bidder for the lease: Peabody Energy, which bought the lease to mine 402 million tons on the adjacent tract in May.

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