FOR IMMEDIATE RELEASE: July 24, 2014
FOR MORE INFORMATION, CONTACT: Bob LeResche, (907) 723-2506; Kevin Dowling, WORC staff, (406) 252-9672, kdowling@worc.org; or Serena Larkin, Sightline Institute, (206) 447-1880 x111, serena@sightline.org.
Seattle, Wash. – Despite explosive growth in U.S. coal exports in recent years, and mounting evidence that coal companies plan for even faster export growth, the U.S. Bureau of Land Management (BLM) ignores exports when setting the selling price of publicly owned coal, according to a new report by Sightline Institute, produced in collaboration with the Western Organization of Resource Councils (WORC), Northern Plains Resource Council, Powder River Basin Resource Council, and WildEarth Guardians.
The new report, “Unfair Market Value: By Ignoring Exports, BLM Underprices Federal Coal,” documents how coal companies operating in the Western U.S. have bought federally owned coal for pennies per ton, and are now reselling that coal on international markets for hundreds of times more than they bought it for. The report argues that BLM has consistently sold publicly owned coal to private coal companies at unreasonably low prices—thereby boosting profits for the coal industry while shortchanging the American public by millions of dollars per year.
“By ignoring potential profits from coal exports, BLM has set prices for federal coal too low,” said Clark Williams-Derry, the study’s author. “Private coal companies are buying federal coal on the cheap—and when market conditions are favorable they can make a killing selling that coal to Asia.”
The report examines seven mining projects in Montana, Colorado, Utah, and Wyoming where mining companies have detailed plans to purchase coal at low prices from the American public, and resell that coal for higher prices on the export market. It also documents efforts by coal companies to purchase new federal coal leases specifically intended to service export markets—and the persistent failure of BLM to consider the profit potential of export sales when setting a price for federal coal.
“BLM’s pricing practice is still based on their long-ago goal to provide cheap electricity for domestic consumption. They have not taken into account today’s declining U.S. demand and Big Coal’s aggressive push for subsidized exports,” said Bob LeResche of Clearmont, Wyoming, landowner and Chair of WORC’s Coal Team and Powder River Basin Resource Council Board Member. “As stewards of a public resource, the agency has no excuse for not bringing its pricing policies into the 21st century.”
This report is just the latest in a string of critical looks at BLM’s coal leasing programs. Last year, the U.S. Department of Interior’s inspector general issued a stinging assessment that found that the agency repeatedly set a low bar for coal prices, while systematically overlooking exports when determining the “fair market value” of coal. The IG report intensified the scrutiny of BLM’s pricing practices by Congressional oversight committees.
Earlier this year, a Government Accountability Office report called the federal coal program “outdated” because it lacks rigor and oversight in deciding the “fair market value” of coal and does not fully consider coal exports despite market changes.
The Colorado BLM state office is offering over 8 million tons of public coal for sale July 30, the Spruce Stomp lease at the Bowie Mine #2 Mine, which was covered in the report. Bowie Resource Partners is one of the companies seeking export capacity at West Coast ports.
“It’s time to press the pause button on coal giveaways for our economic competitors on the Pacific Rim. BLM needs to address this issue before offering more coal sales,” LeResche said.
BLM’s policy of selling federal coal at rock-bottom prices has helped fuel the coal industry’s ambitions to build massive West Coast coal terminals to service Asian markets. These coal export proposals have sparked intense controversy, with many residents of the Northwest objecting to coal trains, coal dust, the climate impacts of coal exports, and the threats to Native American fishing rights and sacred areas.
The full report is available at sightline.org/WesternCoalExport.
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