Fire-sale prices for public lands
One cannot help but notice the irony in the current controversy over US coal-leasing policies. In general the Reagan administration has urged the federal government to be more fiscally responsible and businesslike in its operations. Yet, in the case of federal coal leasing, the government may be losing taxpayers millions of dollars in potential revenue because of a leasing procedure that is not businesslike at all.
What is going on here? Is the US Department of the Interior in fact leasing off vast amounts of valuable public lands at ''fire sale prices'' as charged in a report prepared for the House Appropriations Committee? Has the Interior Department broken any existing laws by leasing out such public lands at less than fair market value?
The allegations regarding the Interior Department's coal-leasing policies stem largely from complaints about a 1.6 billion-ton coal auction in the Powder River Basin of Montana and Wyoming a year ago April. Powder River was the largest offering of federal coal deposits in US history. What is controversial about that offering - and the subject of a hearing in the House last week - was the fact that just prior to the offering Interior changed its method of bidding. The prior bidding policy was based on minimum acceptable bids - i.e, bids to develop coal on the federal tracts based on an appraised value of the land. But under the new policy the department instead posted entry-level bids, which were dollar amounts (not related to an appraisal) below which the government would not go in considering a leasing. The result, according to the House report, was to offer the land at roughly half the market value - $55 million instead of $100 million.
Congress will want to continue its examination into the Powder River leases to make certain that no laws were broken. At the same time Interior has a responsibility to ensure that future coal leasings are administered under only the most careful conditions so that the government cuts the best deal possible with bidders. The public, after all, owns the land. Another offering is now set for July, involving potential leases of between 800 million tons to 1.2 billion tons of coal in the Fort Union region of Montana and North Dakota.
A final question needs to be raised. That is the extent to which the government even needs to open up so much public land for coal leasing when there is significant overcapacity in the industry. What is to be gained by concluding such major leasings when the market for coal is already down - other than to allow potential bidders to lease out federal lands at bargain-basement prices?
One option that should be seriously considered by Congress is passing legislation disallowing the use of federal funds to conduct coal leasing unless the leases are sold only at fair market value, or above.
