TCS Statement on Denver Coal Listening Session

Article,  | Quick Take
Aug 18, 2015  | 4 min read | Print Article

Taxpayers for Common Sense Senior Program Director Autumn Hanna spoke today at the fourth in a series of listening sessions being held by the Bureau of Land Management (BLM) to gather input from the public about how it can ensure American taxpayers receive a fair return on federal coal.

Below is the text of her comments before Department of the Interior officials and her official statement on the listening session is available here.

Good afternoon. My name is Autumn Hanna and I am Senior Program Director at Taxpayers for Common Sense, a national, non-partisan budget watchdog organization that promotes sound fiscal policy across the federal government.

Since 1995, Taxpayers for Common Sense has actively worked to ensure that taxpayers receive a fair return on ALL resources extracted or developed on federal lands and waters, including hardrock minerals, oil and gas, coal, wind and solar.

According to the Office of Natural Resource Revenue, an estimated $4.8 billion worth of coal was mined from federal lands in Colorado during the last 5 years.

Congress has repeatedly and expressly directed federal agencies to ensure a fair return to taxpayers for the development of this federal coal, but the coal leasing program has had a history of problems.

In 2013 we released a study on Fair Market Value of federal coal. We found that a lack of transparency and accountability in the federal coal program is responsible for billions in taxpayer losses.

For example, by supplanting the competitive system envisioned by Congress more than 40 years ago, the current Lease by Application, or LBA, system has prevented taxpayers from receiving fair market value for federal coal leases. The LBA system improperly skews the valuation of lease tracts, garners significantly reduced bids, and shrouds crucial information in secrecy.

The DOI Inspector General found that more than 80 percent of leases in the Powder River Basin over the last 20 years had only one bidder. This is because – under the LBA system – individual companies play a large role in delineating the tracts for leasing.

In the absence of competition, it is critical BLM accurately calculate the FMV of federal coal. Here too BLM has failed and limits public participation.

Before determining the FMV, the Secretary must provide an opportunity for public comments. But it is impossible to provide substantive feedback when the BLM refuses to share its valuation data or methodology. Further complicating the problem, final lease sale values that are undervalued can then be used as comparables for new tracts– locking in a rolling system of undervalued leases and taxpayer losses.

Finally, the BLM should take into consideration changes in the marketplace when calculating fair market value for federally-owned coal since exports to foreign markets have more than doubled in the last ten years. As we detailed in our comments to DOI earlier this summer, coal valuation at the initial point of sale may not truly capture the value of the taxpayers’ resource.

BLM must use this opportunity to create a process where it – not the coal companies – selects the tracts for lease. The BLM must make the calculation of fair market value more transparent, allow for full public participation, and consider the changing marketplace when leasing federal coal.

BLM has a fiduciary responsibility to taxpayers to ensure they are fully compensated for the sale of public resources. In the face of an $18 trillion federal debt, taxpayers can afford nothing less.

Thank you for the opportunity to present comments here today.


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