Analysis of the Powder River Basin federal coal lease sale: economic valuation improvements and legislative changes needed

Technical Report · Wed May 11 04:00:00 EDT 1983

OSTI ID:5385217

Bowsher, C A

At sales in April and October 1982, the Department of the Interior sold Powder River Basin coal leases in Wyoming and Montana for $67 million. Although these prices were only $3.5 million less than Interior's original estimates of their value, they were roughly $100 million less than GAO's revised estimates of fair market value. GAO made these revisions using Interior's estimating approach and correcting for several inappropriate adjustments. The Secretary of the Interior may wish to reconsider Departmental determinations and cancel leases for which fair market value was not received. GAO recommends that the Secretary postpone scheduled regional coal sales until the Department strengthens its procedures for determining the fair market value of federal coal. Prevailing statutes assume all leases are competitive and do not recognize that much of the coal is essentially captive to existing producers. In trying to sell such leases competitively, the Government realizes a less-than-reasonable, GAO recommends that the Congress amend the Mineral Lands Leasing Act of 1920 to authorize Interior to negotiate the sale of leases in appropriate cases.

• Research Organization: General Accounting Office, Washington, DC (USA). Office of the Comptroller General
• OSTI ID: 5385217
• Report Number(s): GAO/RCED-83-119; ON: DE84900822
• Country of Publication: United States
• Language: English

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ECONOMIC ANALYSIS
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