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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

December 2013: 

Coal Leasing: 

BLM Could Enhance Appraisal Process, More Explicitly Consider Coal 
Exports, and Provide More Public Information: 

GAO-14-140: 

GAO Highlights: 

Highlights of GAO-14-140, a report to congressional requesters. 

Why GAO Did This Study: 

In fiscal year 2012, about 42 percent of the 1.05 billion tons of coal 
produced in the United States came from coal tracts leased under the 
federal coal leasing program. Interior’s BLM is responsible for 
managing this program, including estimating the fair market value of 
the coal to be leased. GAO was asked to examine this program. 
(Representative Markey originally made this request as Ranking Member 
of the House Committee on Natural Resources. He is now a member of the 
United States Senate.) This report examines (1) the number of tracts 
leased, along with the trends in associated coal production and 
revenues generated since 1990; (2) BLM’s implementation of the process 
to estimate fair market value for coal leases; (3) the extent to which 
BLM considers coal exports and domestic coal reserve estimates when 
estimating fair market value; and (4) the extent to which BLM 
communicates information on federal coal lease sales to the public. 
GAO analyzed data on coal leasing activity, examined regulations and 
case files for coal lease sales, and interviewed BLM and other 
officials. 

What GAO Found: 

Since January 1990, the Bureau of Land Management (BLM) has leased 107 
coal tracts, and associated coal production and revenues have grown. 
Most lease sales have had a single bidder and were leased the first 
time offered. The amount of coal produced from federal leases and 
associated revenues have increased since 1990, although production has 
leveled off since 2002. Revenues from federal coal leases have 
generated about $1 billion annually in recent years. Royalties paid 
when coal is sold and bonus bids paid for the right to mine a federal 
coal tract account for nearly all of these revenues. 

BLM’s guidance offers flexibility in how to estimate fair market 
value, and BLM state offices vary in the approaches they used to 
develop an estimate of fair market value. In estimating fair market 
value, some BLM state offices used both the comparable sales approach––
where bonus bids received for past sales are used to value the tract 
being appraised––and the income approach––which uses estimates of the 
future net revenue streams from the sale of coal from the appraised 
tract. However, some offices relied solely on the comparable sales 
approach and may not be fully considering future market conditions as 
a result. In addition, GAO found that BLM did not consistently 
document the rationale for accepting bids that were initially below 
the fair market value presale estimate. Furthermore, some state 
offices were not following guidance for review of appraisal reports, 
and no independent review of these reports was taking place. Adequate 
review of the fair market value process is critical to ensure that its 
results are sound and key decisions are fully documented. In addition, 
BLM is not currently taking advantage of a potential independent third-
party reviewer with appraisal expertise within the Department of the 
Interior (Interior), specifically, the Office of Valuation Services. 

BLM considers exports to a limited extent when estimating fair market 
value and generally does not explicitly consider estimates of the 
amount of coal that can be mined economically, known as domestic 
reserve estimates. As a result, BLM may not be factoring specific 
export information into appraisals or may not be fully considering the 
export potential of a lease tract’s coal as called for in agency 
guidance. The Wyoming and Montana BLM state offices considered 
exports, but they generally included only generic statements about 
exports in the reports they prepared. In the other seven states with 
leasing activity, exports were generally not considered during the 
appraisal process. According to BLM officials, domestic reserve 
estimates, which vary based on market conditions and the costs to 
extract the coal, are not considered due to their variable nature. 

BLM generally provides limited information on federal coal lease sales 
to the public because of the sensitive and proprietary nature of some 
of this information. The Wyoming BLM state office posts information on 
its website, including information on past lease sales, but most state 
office websites provide only general information. BLM’s guidance 
states that redacted public versions of its appraisal reports should 
be prepared, but no BLM state office has prepared such reports. BLM 
supplied redacted versions of fair market value documents in response 
to a recent public information request only after being advised to do 
so by Interior’s Solicitor’s office. 

What GAO Recommends: 

GAO recommends, among other things, that BLM require state offices to 
use more than one approach to estimate fair market value where 
practicable, develop a mechanism to ensure that reviews of appraisal 
reports take place, and take steps to release additional summary 
information on its websites, including past lease sales. Interior 
concurred with these recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-14-140]. For more 
information, contact Anne-Marie Fennell at (202) 512-3841 or 
fennella@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Since 1990, Over 100 Coal Tracts Have Been Leased, and Coal Production 
and Associated Revenues Have Generally Grown: 

BLM's Implementation of the Fair Market Value Process Lacks Sufficient 
Rigor and Oversight: 

BLM Considers Coal Exports to Limited Extent When Estimating Fair 
Market Value and Does Not Consider Domestic Reserve Estimates Because 
of Their Variable Nature: 

BLM Provides Limited Information on Federal Coal Lease Sales to the 
Public: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope and Methodology: 

Appendix II: Federal Coal Lease Sales, January 1990 through December 
2012: 

Appendix III: Summary Information from File Reviews of Selected 
Federal Coal Lease Sales: 

Appendix IV: Comments from Department of the Interior: 

Appendix V: Comments from Department of Agriculture: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Number of Federal Tracts Leased and Associated Amount of Coal 
by State from 1990 to 2012: 

Table 2: Summary of Approaches BLM Uses to Estimate Fair Market Value 
for Federal Coal Lease Tracts: 

Table 3: Summary of Federal Coal Leasing Information Contained on BLM 
Websites: 

Table 4: Federal Coal Lease Sales, January 1990 through December 2012: 

Table 5: Summary Information on Coal Lease Sale Files Reviewed: 

Figures: 

Figure 1: U.S. Coal Production by Region: 

Figure 2: U.S. Coal Exports, 2002-2012: 

Figure 3: Number of Bids Received for Federal Coal Tracts Leased, 1990-
2012: 

Figure 4: Map of Powder River Basin Coal Operations on Federal Coal 
Leases: 

Figure 5: Share of U.S. Coal Produced from Federal Leases, Fiscal 
Years 1990-2012: 

Figure 6: Coal Produced from Federal Leases by State, Fiscal Year 2012: 

Figure 7: Total Royalties Generated from Federal Coal Leases, Fiscal 
Years 1990 to 2012 (2013 dollars): 

Figure 8: Bonus and Royalty Revenue Generated from Federal Coal 
Leases, Fiscal Years 2003-2012 (2013 dollars): 

Abbreviations: 

BLM: Bureau of Land Management: 

Btu: British thermal unit: 

EIA: Energy Information Administration: 

EPA: Environmental Protection Agency: 

FCLAA: Federal Coal Leasing Amendments Act of 1976: 

FOIA: Freedom of Information Act: 

IEA: International Energy Agency: 

NEPA: National Environmental Policy Act: 

OMB: Office of Management and Budget: 

ONRR: Office of Natural Resources Revenue: 

USGS: United States Geological Survey: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

December 18, 2013: 

The Honorable Peter DeFazio: 
Ranking Member: 
Committee on Natural Resources: 
House of Representatives: 

The Honorable Edward J. Markey: 
United States Senate: 

Coal is an important domestic energy source, and in 2011, coal-fueled 
electric power plants supplied about 42 percent of the nation's 
electricity. The Department of the Interior's Bureau of Land 
Management (BLM) is responsible for managing the coal resources on 
about 570 million acres of federal, private, and state land under the 
federal coal leasing program.[Footnote 1] Under this program, BLM 
leases out federal coal tracts to mining companies who extract the 
coal from both surface and underground mines. In fiscal year 2012, 
about 42 percent of the 1.05 billion tons[Footnote 2] of coal produced 
in the United States came from federal coal lease tracts.[Footnote 3] 
The coal leasing program also generates significant revenue for 
federal and state governments; in fiscal year 2012, about $1.2 billion 
was generated from coal leasing.[Footnote 4] These revenues come 
primarily from royalties paid on the coal when it is sold and payments 
made by companies to obtain the rights to mine on a federal lease 
tract, known as bonus bids. 

Since 1990, all federal coal leasing has taken place through a lease-
by-application process where coal companies propose tracts of land to 
be put up for sale by BLM.[Footnote 5] At these sales, known as lease 
sales, companies can bid for the rights to lease tracts of land that 
contain federal coal for a set period of time; during the lease 
period, they can mine and sell coal from these tracts. In most cases, 
these lease tracts are adjacent to companies' existing coal mines, and 
the additional coal would allow these operations to continue. In 
preparation for a lease sale, BLM develops a confidential estimate of 
fair market value, which can generally be defined as the amount that a 
knowledgeable seller would obtain from a knowledgeable buyer for the 
coal deposit.[Footnote 6] This estimate of fair market value is 
documented in an appraisal report prepared by BLM.[Footnote 7] When 
conducting the lease sale, BLM leases the tract to the highest 
qualified bidder, as long as its bonus bid meets or exceeds BLM's 
estimate of fair market value.[Footnote 8] In response to a lease 
application, BLM will also determine the amount of the coal that can 
be extracted from the lease tract and the environmental impacts of the 
proposed mining activity. 

According to the Energy Information Administration (EIA),[Footnote 9] 
coal exports have increased in recent years--particularly exports to 
Asia and Europe, where coal prices are generally higher than U.S. 
domestic prices. In 2012, the United States exported about 126 million 
tons of coal--an increase of 54 percent over 2010 levels. This recent 
increase in coal exports has raised questions about whether BLM's 
process for estimating fair market value is taking these changes into 
account, and whether the agency considers the total amount of coal 
that can be mined in the United States economically, known as domestic 
reserve estimates. In addition, some stakeholders, particularly 
environmental groups, have raised concerns about the amount of 
publicly available information on the federal coal leasing program 
and, specifically, documents BLM prepares as part of estimating fair 
market value. Interior's Inspector General also recently issued a 
report examining aspects of the federal coal leasing program, 
including the process for estimating fair market value and the coal 
lease inspection and enforcement program.[Footnote 10] 

You asked us to examine the federal coal leasing program. (This 
request was originally made by Representative Edward J. Markey as 
Ranking Member of the Committee on Natural Resources, House of 
Representatives. Mr. Markey is now a member of the United States 
Senate.) Our objectives for this report were to examine: (1) federal 
coal leasing, including the number of tracts leased, along with the 
trends in associated coal production and revenues generated since 
1990; (2) BLM's implementation of the process to develop an estimate 
of fair market value for coal leases; (3) the extent to which BLM 
considers coal exports and domestic coal reserve estimates when 
developing an estimate of fair market value; and (4) the extent to 
which BLM communicates information on federal coal lease sales to the 
public. 

To provide information on trends in federal coal leasing, we analyzed 
data from BLM's LR2000 database--which BLM uses to track federal land 
and mineral resources, including coal--and summarized federal coal 
lease sale activity and bonus bids accepted since 1990. We also 
analyzed data on coal production and revenues generated from federal 
coal leases from 1990 to 2012 from the Department of the Interior's 
Office of Natural Resources Revenue (ONRR), which is responsible for 
collecting and distributing revenues associated with federal mineral 
leases including federal coal leases. To assess the reliability of 
these data, we conducted interviews with BLM and ONRR officials 
regarding these data and reviewed documentation on their data systems, 
and we determined the data we used to be sufficiently reliable for our 
purposes, unless otherwise indicated. 

To examine BLM's implementation of the process to develop an estimate 
of fair market value, we reviewed applicable regulations and BLM's 
guidance for the coal leasing program and interviewed BLM officials in 
both headquarters and state offices on how they implement these 
regulations and guidance. In addition, we reviewed appraisal standards 
developed by appraisal organizations in the United States and in other 
countries and spoke with officials from some of these groups. We also 
selected and reviewed a nonrandom sample of case files prepared by BLM 
officials as part of 31 coal lease sales using a data collection 
instrument we developed. Specifically, we focused on recent lease 
sales and examined case files for lease sales that generally took 
place from January 1, 2007, to July 31, 2012.[Footnote 11] For those 
states that did not oversee a lease sale during this time frame, we 
examined files from their two most recent sales. 

To determine the extent to which BLM considers coal exports when 
developing an estimate of fair market value, we used the results of 
our case file review to examine what types of information BLM included 
on exports. We interviewed BLM officials to learn about the 
information they consult in estimating fair market value and also 
spoke with knowledgeable stakeholders, such as academics, about future 
projections for coal exports. To determine the extent to which BLM 
considers domestic coal reserve estimates, we interviewed various BLM 
officials at headquarters and all of the BLM state offices where there 
are coal leases. In addition, we examined available export and 
domestic coal reserve information from government sources and coal 
mining companies. 

To examine the extent to which BLM provides information to the public 
on coal lease sales, we analyzed BLM's policies for making information 
publicly available, reviewed BLM websites related to federal coal 
leasing, and reviewed a sample of documents that are made publicly 
available during the coal leasing process. We also interviewed BLM 
officials, representatives from industry, and environmental groups to 
get their perspectives on the information made publicly available on 
federal coal leases. 

We conducted this performance audit from June 2012 to December 2013 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. A more 
detailed description of our objectives, scope and methodology is 
presented in appendix I. 

Background: 

Coal is an important domestic energy source, and BLM is responsible 
for managing coal resources on about 570 million acres of federal, 
state, and private land. Since 1990, all federal coal leasing has 
taken place through a lease-by-application process where companies 
propose lease tracts to be put up for sale by BLM. In fiscal year 
2012, about 1.05 billion tons of coal was produced in the United 
States, including production from federal coal leases, and the biggest 
coal production area for federal coal was the Powder River Basin in 
northeast Wyoming and southeast Montana. Coal is also an important 
fuel source worldwide and consumption of coal continues to increase. 
To meet this growing demand, there has been an increase in global 
trade of coal, including exports from the United States. 

Coal Leasing Program and the Transition from Regional Leasing to Lease-
by-Application: 

The Federal Coal Leasing Amendments Act (FCLAA) of 1976 amended the 
Mineral Leasing Act of 1920 to generally require that all federal coal 
leases be offered competitively.[Footnote 12] Competitive leasing 
provides an opportunity for any interested party to competitively bid 
for a federal coal lease. There are two procedures that can be used 
for competitive leasing: (1) regional leasing, where the Secretary of 
the Interior selects tracts within a region for competitive sale based 
on, among other things, expected demand for coal resources and 
potential economic impacts and (2) lease-by-application, where 
companies submit an application to nominate lease tracts that they are 
interested in leasing. Under both of these methods, BLM examines the 
potential environmental impact that could result from coal leasing. 

In April 1982, the first regional coal lease sale was held for 13 
lease tracts containing 1.6 billion tons of coal located in the Powder 
River Basin in Montana and Wyoming, and a follow-up sale was held in 
October 1982 for 2 lease tracts. Controversy surrounded the 1982 sale. 
Specifically, there were allegations that confidential appraisal 
information was disclosed to coal companies prior to the lease sale 
and that appraisal and sale procedures failed to assure that the 
public received fair market value for the leased coal tracts. These 
allegations led to an investigation by the House Appropriations 
Committee and a report that we issued in May 1983.[Footnote 13] Later 
that year, Congress directed the Secretary of the Interior to 
establish a commission to review the coal leasing procedures to ensure 
the receipt of fair market value, known as the Commission on Fair 
Market Value Policy for Federal Coal Leasing or the Linowes 
Commission. Congress imposed a moratorium on lease sales until after 
the commission's final report was issued in 1984. Among its key 
findings on the fair market value process, the Linowes Commission 
found that Interior used appraisal methods that were widely accepted 
by industry and government, but that Interior needed to, among other 
things, enhance its capacity to perform appraisals and seek 
independent reviews of its appraisals and, more broadly, of the 
federal coal leasing program. From March 1984 through February 1987, 
coal leases were subject to another moratorium to enable development 
and implementation of revised coal leasing procedures based on the 
commission's recommendations. 

By 1990, BLM had shifted from regional coal leasing to lease-by-
application as the primary method of conducting federal coal lease 
sales. From 1987 to 1990, Interior decertified six coal regions it had 
established under the regional leasing program, citing declining 
interest in coal leases and poor coal market conditions.[Footnote 14] 
Decertification meant that regional sales were no longer conducted, 
but that lease-by-application was available so that current mines 
could maintain production at their existing mines or new mines could 
begin operations. Under the lease-by-application process, companies 
may submit applications to BLM state offices to nominate lease tracts 
to be put up for sale.[Footnote 15] This contrasts with the regional 
leasing process where Interior would decide which lease tracts would 
be put up for sale. 

Tracts nominated under the lease-by-application process, commonly 
referred to as maintenance tracts, are generally adjacent to existing 
mining operations and are nominated by companies that own these 
operations. The BLM state office where the tract is located will 
review the application to determine whether it is consistent with 
applicable regulations, or if leasing the proposed property would be 
contrary to the public interest. For example, a lease application may 
be rejected if BLM determines that the land is unsuitable for coal 
mining or if a qualified surface owner does not consent to surface 
mining.[Footnote 16] During this review process, BLM may also choose 
to redraw the lease tract boundaries in the public interest, a process 
known as tract modification. Reasons for tract modification include 
ensuring that economically recoverable coal adjacent to the original 
lease tract not be bypassed, or enticing another mining company to bid 
on a lease tract by making the boundaries of the proposed tract 
adjacent to more than one potential bidder, according to BLM 
officials. Once BLM accepts an application, it will begin either an 
environmental assessment or an environmental impact statement in 
accordance with the National Environmental Policy Act (NEPA).[Footnote 
17] 

In preparing for a lease sale, BLM will also develop a presale 
estimate of fair market value of the lease tract's coal, which is 
generally expressed in cents per ton of coal that is recoverable from 
the lease tract. "Recoverable" refers to an estimate of the amount of 
coal that can be commercially mined from the tract and excludes coal 
that is not mined, such as top and bottom sections of a coal seam, 
which are typically mixed with less valuable rock.[Footnote 18] There 
are also instances when fair market value is expressed on a per acre 
basis. 

The presale estimate of fair market value is generally documented in 
an appraisal report prepared by the BLM state office overseeing the 
lease sale.[Footnote 19] Other reports, such as geologic, engineering, 
and economic reports, may also be prepared during the appraisal 
process by either the relevant BLM state office or an associated BLM 
district or field office in the state.[Footnote 20] The geologic 
report contains a legal description of the tract, along with an 
estimate of the amount of coal that can be recovered on the lease 
tract along with the characteristics of the coal, including its 
heating content.[Footnote 21] An engineering report generally contains 
a mining plan, along with estimates of the costs to extract the coal 
based on the number of employees and capital equipment necessary to 
carry out this plan, among other costs. An economic report provides 
information on future coal market conditions, including price and 
demand levels for the lease tract's coal. 

Prior to a lease sale, BLM is required to publicly announce in the 
Federal Register and a local newspaper when and where a lease sale 
will be held and the bidding procedures. Any company is free to bid on 
the lease using a sealed bid process. The amount that a company will 
pay to lease the tract--known as a bonus bid--is a function of the 
cents per ton they are willing to pay multiplied by the estimated 
recoverable tons of coal from a lease tract. These bonus bids are then 
reviewed by a BLM sales panel, which includes officials from the 
relevant BLM state office and BLM headquarters. Bids are accepted or 
rejected based on whether they meet the estimate of fair market value, 
and the lease is awarded to the highest qualified bidder that meets or 
exceeds this estimate of fair market value.[Footnote 22] This 
successful bidder must either pay the total bonus bid in full at the 
time of lease sale or pay 20 percent of the bonus bid at the lease 
sale followed by four equal payments on the first four anniversary 
dates of the lease. The minimum bid that BLM can accept for a lease 
tract is $100/acre. If a lease sale does not receive a qualified bid 
at or above the estimate of fair market value, the lease tract can be 
renominated again through the lease-by-application process by the 
company that originally nominated the tract or by another interested 
company. If there is no interest in the lease tract, the application 
is closed by BLM. 

In addition to paying a bonus bid for the rights to mine the coal on a 
lease tract, companies also pay rents and royalties on the coal they 
extract.[Footnote 23] Rent amounts are at least $3 an acre and 
royalties are 8 percent of the sale price for coal produced from 
underground mines and at least 12.5 percent of the sale price for coal 
produced from surface mines. These royalties are paid on the price of 
the coal received at the first point of sale after it is removed from 
the ground. Tracts are leased out for an initial 20-year period, so 
long as the lessee produces coal in commercial quantities within a 10-
year period and meets the condition of continued operations. Lease 
terms can be extended if a company is actively producing coal on the 
lease tract. 

U.S. Coal Production: 

According to EIA data, about 1.1 billion tons of coal was produced in 
the United States in 2011 from 1,325 mines, which employed over 91,000 
people.[Footnote 24] Coal is produced from three major regions--
Appalachia, the interior United States, and the western United States 
(see figure 1). More than half of U.S. coal came from the western 
region, which includes the Powder River Basin in northeast Wyoming and 
southeast Montana. The Powder River Basin is the largest coal-
producing region in the United States, and all 10 of the top-producing 
U.S. coal mines are in the Powder River Basin, with 9 of these located 
in the Wyoming portion of the basin, according to EIA data. Coal in 
the Powder River Basin has less sulfur than eastern coals, making it 
attractive to utilities for meeting Clean Air Act requirements. 
[Footnote 25] Close to 100 percent of federal coal is produced from 
leases located in the western region and, in fiscal year 2012, federal 
coal accounted for nearly 80 percent of the western region coal 
production totals. Production from the western region is expected to 
continue to be the largest source of coal production in the future--in 
2040, an estimated 56 percent of total U.S. coal production will come 
from western mines according to our analysis of EIA data. 

Figure 1: U.S. Coal Production by Region: 

[Refer to PDF for image: illustrated U.S. map] 

Map depicts coal production, in millions of tons, as follows: 

Calendar Year: 2012; 
Western: 542,673; 
Interior: 179,343; 
Appalachian: 293,111. 

Calendar Year: 2040; 
Western: 657,925; 
Interior: 225,901; 
Appalachian: 283,420. 

Source: GAO analysis of Energy Information Administration data; 
copyright Corel Corp., all rights reserved. 

[End of figure] 

There are two primary methods used to mine coal: underground mining 
and surface mining. Deeper coal resources require use of underground 
mining, which entails digging a series of mine entries and shafts and 
using equipment to extract the coal and transport it to the surface. 
Underground mining is more expensive than surface mining, which is 
used where coal deposits are buried within a few hundred feet of the 
surface. In surface mining, soil and rock above the coal--known as 
overburden--is blasted with explosives and removed using large 
equipment, and the uncovered coal is then extracted. Mining on federal 
leases involves both underground and surface mining. According to BLM 
officials, underground mining is generally used on federal leases in 
Colorado and Utah, and surface mining is generally used in Montana and 
Wyoming. 

Market for Coal and Coal Prices: 

Domestically, coal continues to be an important energy source and 
fuels a large portion of the electric power sector in the United 
States, according to EIA data. In 2011, coal-fueled electric power 
plants supplied about 42 percent of the nation's total electricity 
and, within the past decade, coal has provided as much as 50 percent 
of electricity in the United States. More than 90 percent of the coal 
consumed in the United States is used by the electric power sector. 
According to EIA, for this reason, coal production trends are strongly 
influenced by coal demand in the electric power sector, which is 
sensitive to both changes in the overall demand for electricity 
generation and changes in the mix of fuel sources. Recently, there has 
been a general decline in the amount of coal used to generate 
electricity in the United States due to a combination of factors 
including a decline in overall electricity demand and shifts in the 
relative prices of other fuels. 

Coal used in electricity generation is referred to as steam coal, as 
the coal is burned to produce steam which turns turbines that generate 
electricity. Most of the coal that is leased out through the federal 
leasing program is steam coal, according to BLM officials. In addition 
to its use in the generation of electricity, coal can also be used for 
a variety of industrial uses. For example, metallurgical coal is baked 
at high temperatures to make coke, which is used as fuel to make 
steel. Metallurgical coal has low sulfur and ash content, among other 
properties needed for making coke. 

The amount of coal produced and consumed worldwide continues to 
increase. The International Energy Agency (IEA) reported that 
worldwide coal production increased by 6.6 percent in 2011, the 
twelfth straight year of growth.[Footnote 26] In addition, as of 2011, 
coal supports 28 percent of the total primary energy consumption 
worldwide and is the second primary energy source behind oil. China 
continues to drive much of the world coal markets as its consumption 
and production of coal accounted for about 45 percent of both global 
consumption and production totals in 2011 according to IEA data. To 
respond to this growing international demand, there has been an 
increase in coal exports with global coal trade increasing 7 percent 
in 2011 according to IEA. 

The United States exports a small but increasing amount of coal 
primarily to Europe and Asia and, in 2011, the United States ranked 
fourth globally in coal exports behind Indonesia, Australia, and 
Russia. According to EIA data, total U.S. coal exports more than 
tripled from 2002 to 2012, as shown in figure 2 below. In 2012 about 
126 million tons of coal was exported--about 12 percent of the total 
coal produced in the United States. The majority of this coal is 
exported to Europe and Asia. Metallurgical coal, which is generally 
not mined on federal coal leases, has historically made up the 
majority of U.S. coal exports. Nonetheless, there has been growth in 
exports the last few years of steam coal--the primary type of coal 
mined on federal coal leases. Specifically, from 2010 to 2012, steam 
coal exports from the United States more than doubled, rising from 
25.6 million tons to 55.9 million tons. Based on EIA data, exports 
from Wyoming and Montana, the two largest states in terms of 
production from federal leases, accounted for less than 2 percent of 
total U.S. coal production in 2011. In addition, coal companies have 
announced plans to further increase steam coal exports in the future, 
and there are several coal export facilities that are being proposed 
on the West Coast to transport coal to growing Asian markets. 

Figure 2: U.S. Coal Exports, 2002-2012: 

[Refer to PDF for image: multiple line graph] 

Millions of tons: 

Year: 2002; 
Total Exports: 39,601; 
Steam Coal Exports: 18,066; 
Met Coal Exports: 21,535. 

Year: 2003; 
Total Exports: 43,014; 
Steam Coal Exports: 20,924; 
Met Coal Exports: 22,090. 

Year: 2004; 
Total Exports: 47,998; 
Steam Coal Exports: 21,157; 
Met Coal Exports: 26,841. 

Year: 2005; 
Total Exports: 49,942; 
Steam Coal Exports: 21,281; 
Met Coal Exports: 28,660. 

Year: 2006; 
Total Exports: 49,647; 
Steam Coal Exports: 22,149; 
Met Coal Exports: 27,498. 

Year: 2007; 
Total Exports: 59,163; 
Steam Coal Exports: 26,978; 
Met Coal Exports: 32,184. 

Year: 2008; 
Total Exports: 81,519; 
Steam Coal Exports: 38,970; 
Met Coal Exports: 42,548. 

Year: 2009; 
Total Exports: 59,097; 
Steam Coal Exports: 21,835; 
Met Coal Exports: 37,261. 

Year: 2010; 
Total Exports: 81,716; 
Steam Coal Exports: 25,601; 
Met Coal Exports: 56,113. 

Year: 2011; 
Total Exports: 107,259; 
Steam Coal Exports: 37,727; 
Met Coal Exports: 69,531. 

Year: 2012; 
Total Exports: 125,746; 
Steam Coal Exports: 55,870; 
Met Coal Exports: 69,876. 

Source: GAO analysis of Energy Information Administration data. 

[End of figure] 

The price for coal varies widely across the United States. Among the 
four states with the most production from federal coal leases--
Colorado, Montana, Utah, and Wyoming--the average prices for coal 
originating in these states in 2011 were $39.88/ton in Colorado, 
$16.02/ton in Montana, $33.80/ton in Utah, and $13.56/ton in Wyoming, 
according to EIA's 2011 Annual Coal Report.[Footnote 27] This large 
difference in price is tied to coal quality, which is referred to as 
coal rank.[Footnote 28] Among other factors, coal rank is determined 
by the amount of carbon that the coal contains and the amount of heat 
energy it can produce, with higher rank coal having more energy 
content. The total amount of coal that an electric utility will need 
to fuel a power plant is tied to the heat content of coal. For 
example, a utility will need to buy more tons of coal with lower 
energy content to achieve the same output of energy that could be 
attained using less coal with a higher energy content. Other factors 
that affect a coal's quality are sulfur, moisture, and ash content. 
The sulfur content of the coal affects the sulfur dioxide emissions 
that result when coal is burned, and using coal with less sulfur 
content can help electric utilities meet air quality requirements. 
Coal with higher moisture and ash content is lower rank because both 
of these impact the amount of energy obtained from burning the coal. 
For example, coal with lower moisture content has greater energy 
content. 

Since 1990, Over 100 Coal Tracts Have Been Leased, and Coal Production 
and Associated Revenues Have Generally Grown: 

Since January 1990, BLM has leased 107 coal tracts under the lease-by-
application process, and both coal production and the associated 
revenues have grown. Most lease sales had a single bidder, and the 
successful bid amounts--typically expressed in cents per ton--have 
varied by state, with the greatest increases over time observed in 
Wyoming. The amount of coal produced from federal leases and 
associated revenues increased from fiscal year 1990 to fiscal year 
2002.[Footnote 29] Since fiscal year 2002, coal production from 
federal leases has remained relatively steady, but revenues continued 
to grow. In total, revenues from federal coal leases have generated 
about $1 billion annually in recent years. 

Of the 107 Tracts Leased Since 1990, About 90 Percent Had a Single 
Bidder, and Most Were Leased the First Time Offered: 

In 1990, BLM began using the lease-by-application process as the 
primary method to lease out coal, and since then BLM has leased 107 
coal tracts, 31 of which were in Wyoming. (See appendix II for a 
complete list of lease sales held since 1990.) The coal from the 
Wyoming lease tracts comprise approximately 8 of the 9 billion tons, 
or about 88 percent, of the coal available from federal tracts leased 
since 1990, as shown in table 1. 

Table 1: Number of Federal Tracts Leased and Associated Amount of Coal 
by State from 1990 to 2012: 

State: Wyoming; 
Number of federal tracts leased: 31; 
Acres: 77,137; 
Tons of recoverable coal (Millions): 7,967[A]; 
Percentage by tons of recoverable coal: 88.4%. 

State: Colorado; 
Number of federal tracts leased: 20; 
Acres: 26,375; 
Tons of recoverable coal (Millions): 289; 
Percentage by tons of recoverable coal: 3.2%. 

State: Utah; 
Number of federal tracts leased: 15; 
Acres: 30,082; 
Tons of recoverable coal (Millions): 214; 
Percentage by tons of recoverable coal: 2.4%. 

State: Montana; 
Number of federal tracts leased: 4; 
Acres: 5,349; 
Tons of recoverable coal (Millions): 187; 
Percentage by tons of recoverable coal: 2.1%. 

State: North Dakota; 
Number of federal tracts leased: 12; 
Acres: 8,386; 
Tons of recoverable coal (Millions): 135; 
Percentage by tons of recoverable coal: 1.5%. 

State: New Mexico; 
Number of federal tracts leased: 3; 
Acres: 10,926; 
Tons of recoverable coal (Millions): 93; 
Percentage by tons of recoverable coal: 1.0%. 

State: Oklahoma; 
Number of federal tracts leased: 9; 
Acres: 16,339; 
Tons of recoverable coal (Millions): 71; 
Percentage by tons of recoverable coal: 0.8%. 

State: Alabama; 
Number of federal tracts leased: 6; 
Acres: 11,097; 
Tons of recoverable coal (Millions): 44; 
Percentage by tons of recoverable coal: 0.5%. 

State: Kentucky; 
Number of federal tracts leased: 7; 
Acres: 2,952; 
Tons of recoverable coal (Millions): 10; 
Percentage by tons of recoverable coal: 0.1%. 

State: Total; 
Number of federal tracts leased: 107; 
Acres: 188,243; 
Tons of recoverable coal (Millions): 9,011; 
Percentage by tons of recoverable coal: 100.0%. 

Source: GAO analysis of BLM data. 

[A] In Wyoming, we are reporting primarily mineable tons of coal 
while, for the other states, we are reporting recoverable tons of 
coal. This estimate of mineable tons of coal is generally a larger 
number than the recoverable estimate, because it includes coal that is 
generally left in place during actual mining operations, such as coal 
along property boundaries or coal left in place as pillars for 
structural reasons in an underground mine. Wyoming BLM typically does 
not report recoverable tons publicly because officials in this state 
office consider this sensitive information. 

[End of table] 

Of the 107 leased tracts, sales for 96 (about 90 percent) involved a 
single bidder (see figure 3), which was generally the company that 
submitted the lease application. More than 90 percent of the lease 
applications BLM received were for maintenance tracts used to extend 
the life of an existing mine or to expand that mine's annual 
production. 

Figure 3: Number of Bids Received for Federal Coal Tracts Leased, 1990-
2012: 

[Refer to PDF for image: vertical bar graph] 

Total coal tracts leased since 1990: 107; 
Tracts leased involving single bidder: 97; 
Tracts leased involving two bidders: 10; 
Tracts leased involving three bidders: 1. 

Source: GAO analysis of BLM data. 

[End of figure] 

According to BLM officials and coal industry representatives, there is 
limited competition for coal leases because of the significant capital 
investment and time required to establish new supporting 
infrastructure to start a new mine or to extend operations of an 
existing mine to a tract that is not directly adjacent to it. For 
these reasons, there have not been many new mines established on 
federal leases recently. For example, according to BLM officials the 
last new mine started on a federal lease in the Powder River Basin in 
Wyoming was the North Rochelle mine, which began operations in 1982. 
Officials from coal companies told us they typically submit new 
applications for federal coal leases to maintain a 10-year coal supply 
at their existing mining operations. In 1983, we noted a similar lack 
of competition for federal coal leases following the 1982 regional 
coal lease sale in the Powder River Basin and concluded that the 
market for coal leasing was largely noncompetitive because lease 
tracts sold "appear captive to adjacent mining operations."[Footnote 
30] According to BLM officials, this same issue remains relevant 
today, and it is difficult to attract multiple bidders on a lease 
tract if it is not adjacent to multiple mining operations. For 
example, as shown in figure 4, tracts submitted for lease-by-
application that are north and west of the Black Thunder mine are less 
likely to be bid on by the operators of the North Antelope Rochelle or 
Antelope mines. This is because it would be too costly and take 
significant time for these mine operators to move their heavy 
equipment to extract coal from these lease tracts, which are not 
directly adjacent to their existing operations. In contrast, the lease 
tracts that are located between two mines are more likely to be bid on 
by multiple mine operators, according to BLM officials. 

Figure 4: Map of Powder River Basin Coal Operations on Federal Coal 
Leases: 

[Refer to PDF for image: illustrated map with submap] 

Powder River Basin geologic region within the state of Wyoming: 

Depicted: 

Cities: 
Cheyenne; 
Casper. 

Mining operations on federal coal leases in the southern portion of 
the Powder River Basin: 

Depicted: 
Leased-by-application submitted; 
State coal lease; 
Black Thunder mine[A]; 
North Antelope Rochelle mine[A]; 
Antelope mine[A]. 

Source: GAO analysis of BLM information. 

[A] This map is a general representation of coal mining operations in 
the Powder River Basin. The Black Thunder, North Antelope Rochelle, 
and Antelope mines are each composed of several lease tracts, but we 
have combined this into a single entity for representation purposes. 

[End of figure] 

BLM officials told us that, where possible, BLM uses the tract 
modification process to encourage competition for lease sales. For 
example, Wyoming BLM officials told us that they recently divided an 
applicant's proposed tract into two distinct tracts to be sold in two 
separate coal lease sales upon realizing that one segment may 
potentially interest another mining company. Colorado BLM officials 
told us that they altered boundaries of one coal lease application to 
allow for multiple entry points to the coal for underground mining to 
make the tract attractive to other companies. In our review of case 
files related to 31 recent lease sales, we found that BLM modified 
boundaries for seven tracts (23 percent) to enhance competition. 
[Footnote 31] Six of these tracts were located in Wyoming and 
comprised more than half of the 11 Wyoming lease sales we reviewed; 1 
was located in Utah. None of these leases, however, received multiple 
bids when sold. 

Of the 107 leased tracts, 89 (about 83 percent) were leased the first 
time they were offered for sale. According to representatives of 
appraisal organizations we spoke with, this high acceptance rate of 
initial bids may reflect the reliance of existing mines on federal 
coal leases to maintain their operations and a willingness of mine 
owners to submit slightly higher bids to ensure they win federal coal 
leases. The remaining 18 tracts were leased after being reoffered for 
sale one or more times because the initial bonus bid offered was below 
the estimate of fair market value.[Footnote 32] Of the 18 tracts that 
were reoffered for sale, 8 were in Wyoming and 5 were in Colorado. 

Amount of Coal Produced from Federal Leases Gradually Increased in the 
1990s Before Leveling Off in Fiscal Year 2002, with Most Production 
Taking Place in Wyoming: 

The total amount of coal produced from federal leases has nearly 
doubled since fiscal year 1990. Growth in coal production from federal 
coal leases was largest from fiscal years 1992 to 2002, when it grew 
from 239 million tons to 444 million tons. The proportion of coal 
produced from federal leases relative to the total amount of U.S. coal 
production also grew over this same period from about 24 percent in 
fiscal year 1992 to about 40 percent in fiscal year 2002 (see figure 
5). During this period there was an increase in U.S. western coal 
production, where a majority of federal coal is located, and a 
corresponding decline in production from eastern coal regions. In 
particular, BLM officials told us that Powder River Basin coal grew in 
demand over eastern coal because it enabled utilities to meet the 
stricter emissions limits due to its low sulfur content. Powder River 
Basin coal was also attractive to utilities because of its low 
production costs and access to transportation networks, both of which 
help to decrease the market price that a utility must pay for the 
coal. A United States Geological Survey (USGS) study reported that 
this shift reflected the fact that western mines, which typically rely 
on surface mining, can extract coal more cheaply than eastern mines, 
where coal is generally mined using underground methods.[Footnote 33] 

Figure 5: Share of U.S. Coal Produced from Federal Leases, Fiscal 
Years 1990-2012: 

[Refer to PDF for image: stacked vertical bar graph] 

Tons: 

Fiscal Year: 1990; 
Federal coal: 248,137,000; 
Non-federal coal: 776,554,000. 

Fiscal Year: 1991; 
Federal coal: 251,450,000; 
Non-federal coal: 747,593,000. 

Fiscal Year: 1992; 
Federal coal: 239,321,000; 
Non-federal coal: 761,219,000. 

Fiscal Year: 1993; 
Federal coal: 250,419,000; 
Non-federal coal: 703,678,000. 

Fiscal Year: 1994; 
Federal coal: 289,254,000; 
Non-federal coal: 724,843,000. 

Fiscal Year: 1995; 
Federal coal: 316,921,000; 
Non-federal coal: 717,944,000. 

Fiscal Year: 1996; 
Federal coal: 325,032,000; 
Non-federal coal: 728,883,000. 

Fiscal Year: 1997; 
Federal coal: 334,793,000; 
Non-federal coal: 749,658,000. 

Fiscal Year: 1998; 
Federal coal: 359,608,000; 
Non-federal coal: 749,689,084. 

Fiscal Year: 1999; 
Federal coal: 397,789,000; 
Non-federal coal: 710,992,398. 

Fiscal Year: 2000; 
Federal coal: 383,139,000; 
Non-federal coal: 701,102,257. 

Fiscal Year: 2001; 
Federal coal: 411,544,000; 
Non-federal coal: 699,385,759. 

Fiscal Year: 2002; 
Federal coal: 443,763,000; 
Non-federal coal: 661,171,548. 

Fiscal Year: 2003; 
Federal coal: 436,187,000; 
Non-federal coal: 639,223,653. 

Fiscal Year: 2004; 
Federal coal: 451,331,000; 
Non-federal coal: 650,467,195. 

Fiscal Year: 2005; 
Federal coal: 447,310,000; 
Non-federal coal: 683,365,974. 

Fiscal Year: 2006; 
Federal coal: 428,884,000; 
Non-federal coal: 724,267,654. 

Fiscal Year: 2007; 
Federal coal: 443,453,000; 
Non-federal coal: 705,707,014. 

Fiscal Year: 2008; 
Federal coal: 482,715,000; 
Non-federal coal: 678,414,032. 

Fiscal Year: 2009; 
Federal coal: 462,420,000; 
Non-federal coal: 652,259,401. 

Fiscal Year: 2010; 
Federal coal: 456,479,000; 
Non-federal coal: 611,505,431. 

Fiscal Year: 2011; 
Federal coal: 447,976,000; 
Non-federal coal: 640,978,669. 

Fiscal Year: 2012; 
Federal coal: 441,752,000; 
Non-federal coal: 607,894,697. 

Source: GAO analysis of Office of Natural Resources Revenue and Mine 
Safety and Health Administration data. 

Note: Non-federal coal sources include private, state, and tribal coal. 

[End of figure] 

Since fiscal year 2002, coal production from federal leases remained 
relatively steady, averaging near 450 million tons annually, or about 
41 percent of total U.S. production. Production peaked in fiscal year 
2008 at 483 million tons and has since declined by 8 percent to 442 
million tons in fiscal year 2012. In October 2012, we reported the 
amount of electricity generated using coal has decreased recently due 
to a decline in overall electricity demand and growth in the use of 
natural gas to fuel power plants.[Footnote 34] 

In fiscal year 2012, 85 percent of the coal produced from federal 
leases came from Wyoming. As shown in figure 6, Wyoming and three 
other western states--Montana, Colorado, and Utah--accounted for 97 
percent of coal produced from federal leases. The remaining 3 percent 
of coal (about 12 million tons) was produced from federal leases in 
five other states--Alabama, Kentucky, New Mexico, North Dakota, and 
Oklahoma. 

Figure 6: Coal Produced from Federal Leases by State, Fiscal Year 2012: 

[Refer to PDF for image: pie-chart] 

State: Wyoming; 
Tons of Coal: 374,173,324; 
Percentage: 85%. 

State: Montana; 
Tons of Coal: 23,466,693; 
Percentage: 5%. 

State: Colorado; 
Tons of Coal: 19,106,582; 
Percentage: 4%. 

State: Utah; 
Tons of Coal: 13,371,330; 
Percentage: 3%. 

State: Other; 
Tons of Coal: 11,633,659; 
Percentage: 3%; 
- New Mexico; 
Tons of Coal: 4,710,143; 
Percentage: 1.1%; 
- North Dakota; 
Tons of Coal: 3,918,743; 
Percentage: 0.9%; 
- Alabama; 
Tons of Coal: 2,326,397; 
Percentage: 0.5%; 
- Oklahoma; 
Tons of Coal: 450,656; 
Percentage: 0.1%; 
- Kentucky; 
Tons of Coal: 227,720; 
Percentage: 0.1%; 

Total: 
Tons of Coal: 441,751,588; 
Percentage: 100% 

Source: GAO analysis of Office of Natural Resources Revenue data. 

[End of figure] 

Revenue from Federal Coal Leases Has Nearly Doubled Since 2003 and 
Generated About $1.2 Billion in Fiscal Year 2012: 

The total revenue generated from federal coal leases has nearly 
doubled from $682 million in fiscal year 2003 to $1.2 billion 
generated in fiscal year 2008 and again in fiscal year 2012.[Footnote 
35],[Footnote 36] Total revenues from federal coal leases have 
remained relatively steady since fiscal year 2005 averaging about $1.0 
billion per year according to our analysis of ONRR data. There are 
three sources of revenue from federal coal leases--royalties, bonus 
bids, and rents--but royalties and bonus bids account for nearly 100 
percent of the revenues from the federal coal leasing program. 

Royalties. Royalties comprised the majority of the revenue from 
federal coal leases--nearly two-thirds of the total revenue over the 
period from fiscal years 2003 to 2012.[Footnote 37] Royalty rates for 
coal depend on the mine type and are generally calculated based on a 
proportion of sales value, less allowable deductions, such as 
transportation and processing allowances.[Footnote 38] BLM generally 
sets royalty rates at 12.5 percent for surface mines, the required 
minimum royalty rate, and 8 percent for underground mines, the rate 
prescribed by regulation.[Footnote 39] In total, royalties generated 
from federal coal leases have more than doubled since fiscal year 
1990, from $392 million to $796 million in fiscal year 2012 (see 
figure 7). In addition, as with coal production from federal leases, 
royalties generated from the sale of coal from federal leases in 
Wyoming comprise an increasing proportion of the royalty stream 
ranging from 50 percent of total royalties in 1990 to 80 percent in 
2012 (see figure 6). 

Figure 7: Total Royalties Generated from Federal Coal Leases, Fiscal 
Years 1990 to 2012 (2013 dollars): 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal Year: 1990; 
Wyoming: $196,712,000; 
Other States: $195,037,000; 
Total: $391,749,000. 

Fiscal Year: 1991; 
Wyoming: $227,031,000; 
Other States: $179,486,000; 
Total: $406,517,000. 

Fiscal Year: 1992; 
Wyoming: $218,315,000; 
Other States: $166,129,000; 
Total: $384,444,000. 

Fiscal Year: 1993; 
Wyoming: $214,183,000; 
Other States: $169,558,000; 
Total: $383,741,000. 

Fiscal Year: 1994; 
Wyoming: $236,420,000; 
Other States: $176,621,000; 
Total: $413,041,000. 

Fiscal Year: 1995; 
Wyoming: $249,226,000; 
Other States: $186,562,000; 
Total: $435,788,000. 

Fiscal Year: 1996; 
Wyoming: $250,153,000; 
Other States: $174,489,000; 
Total: $424,642,000. 

Fiscal Year: 1997; 
Wyoming: $234,828,000; 
Other States: $181,188,000; 
Total: $416,016,000. 

Fiscal Year: 1998; 
Wyoming: $233,293,000; 
Other States: $160,061,000; 
Total: $393,354,000. 

Fiscal Year: 1999; 
Wyoming: $253,696,000; 
Other States: $158,861,000; 
Total: $412,557,000. 

Fiscal Year: 2000; 
Wyoming: $269,033,000; 
Other States: $152,887,000; 
Total: $421,920,000. 

Fiscal Year: 2001; 
Wyoming: $296,435,000; 
Other States: $152,926,000; 
Total: $449,361,000. 

Fiscal Year: 2002; 
Wyoming: $353,302,000; 
Other States: $187,215,000; 
Total: $540,517,000. 

Fiscal Year: 2003; 
Wyoming: $377,816,000; 
Other States: $127,232,000; 
Total: $505,048,000. 

Fiscal Year: 2004; 
Wyoming: $396,648,000; 
Other States: $123,660,000; 
Total: $520,308,000. 

Fiscal Year: 2005; 
Wyoming: $406,212,000; 
Other States: $134,284,000; 
Total: $540,496,000. 

Fiscal Year: 2006; 
Wyoming: $455,077,000; 
Other States: $127,586,000; 
Total: $582,663,000. 

Fiscal Year: 2007; 
Wyoming: $498,287,000; 
Other States: $132,582,000; 
Total: $630,869,000. 

Fiscal Year: 2008; 
Wyoming: $595,380,000; 
Other States: $135,958,000; 
Total: $731,338,000. 

Fiscal Year: 2009; 
Wyoming: $630,840,000; 
Other States: $128,971,000; 
Total: $759,811,000. 

Fiscal Year: 2010; 
Wyoming: $636,947,000; 
Other States: $152,442,000; 
Total: $789,389,000. 

Fiscal Year: 2011; 
Wyoming: $651,329,000; 
Other States: $147,961,000; 
Total: $799,290,000. 

Fiscal Year: 2012; 
Wyoming: $647,885,000; 
Other States: $160,238,000; 
Total: $808,123,000. 

Source: GAO analysis of Office of Natural Resources REvenue and Energy 
Information Administration data. 

[End of figure] 

Coal prices have been a major driver of the increases in royalty 
revenues. For instance, from fiscal years 1990 to 2000, royalty 
revenues remained relatively steady even though production of federal 
coal increased over this period related to a decline in coal prices. 
Since then, coal royalty revenues have steadily increased, even with a 
recent decline in production. Specifically, from fiscal years 2008 to 
2012 the amount of coal produced from federal leases declined by about 
41 million tons of coal (or 8 percent); however the reported sales 
value of this coal increased 15 percent from $6.7 billion to $7.7 
billion, reflecting growth in coal prices. 

The effective royalty rate--the rate actually paid by lessees after 
processing and transportation allowances have been factored in along 
with any royalty rate reductions--generated from coal produced from 
federal leases has remained on average at about 11 percent since 
fiscal year 1990. Royalty rate reductions may be approved by BLM in 
cases where a reduction is needed to promote mining development. For 
example, BLM officials told us they may approve royalty rate 
reductions to enable continued operations in cases where mining 
conditions may be particularly challenging and costly, or to enable 
expanded recovery of federal coal. The effective royalty rate varies 
by state due to differences in mine type and other factors. For 
example, the effective royalty rate is higher in Wyoming and Montana 
where most coal is extracted using surface mining. In fiscal year 
2012, the effective royalty rates for the top federal coal producing 
states were: Wyoming (12.2 percent), Montana (11.6 percent), Utah (6.9 
percent), and Colorado (5.6 percent). 

Bonus bids. Bonus bids are generally expressed in cents per ton of 
coal that is recoverable from the lease tract. The total bonus bid 
paid is the cents per ton multiplied by the estimated recoverable tons 
of coal from the lease tract. According to BLM officials, typically an 
initial payment of 20 percent of the total bonus bid is provided with 
the sealed bid, and the remaining 80 percent is paid in four equal 
annual installments over a 4-year period, but it may also be paid in 
full by the lessee at the time of a lease sale. ONRR revenue data from 
fiscal years 2003 to 2012 show total bonus bids received from all 
federal coal leases averaged $335 million annually, or about one-third 
of the total revenues from federal coal leases, as shown in figure 8. 
Since fiscal year 2003, revenue from bonus bids has fluctuated from 
year to year related to lease sale activity. For example, since fiscal 
year 2003, revenue from bonus bids has fluctuated from a peak of about 
$521 million in fiscal year 2005, when bonus bids made up 49 percent 
of the total revenue generated from coal leases, to a low of $116 
million in fiscal year 2010, when bonuses comprised 13 percent of 
total revenue. 

Figure 8: Bonus and Royalty Revenue Generated from Federal Coal 
Leases, Fiscal Years 2003-2012 (2013 dollars): 

[Refer to PDF for image: stacked vertical bar graph] 

Fiscal Year: 2003; 
Total Royalty Revenue: $505,048,000; 
Total Bonus Revenue: $175,498,000. 

Fiscal Year: 2004; 
Total Royalty Revenue: $520,308,000; 
Total Bonus Revenue: $199,540,000. 

Fiscal Year: 2005; 
Total Royalty Revenue: $540,496,000; 
Total Bonus Revenue: $520,971,000. 

Fiscal Year: 2006; 
Total Royalty Revenue: $582,663,000; 
Total Bonus Revenue: $480,216,000. 

Fiscal Year: 2007; 
Total Royalty Revenue: $630,869,000; 
Total Bonus Revenue: $383,323,000. 

Fiscal Year: 2008; 
Total Royalty Revenue: $731,338,000; 
Total Bonus Revenue: $470,776,000. 

Fiscal Year: 2009; 
Total Royalty Revenue: $759,811,000; 
Total Bonus Revenue: $416,787,000. 

Fiscal Year: 2010; 
Total Royalty Revenue: $789,389,000; 
Total Bonus Revenue: $115,800,000. 

Fiscal Year: 2011; 
Total Royalty Revenue: $799,290,000; 
Total Bonus Revenue: $180,714,000. 

Fiscal Year: 2012; 
Total Royalty Revenue: $808,123,000; 
Total Bonus Revenue: $408,335,000. 

Source: GAO analysis of Office of Natural Resources REvenue data. 

Note: Rents and other income account for less than 1 percent of the 
revenues collected from federal coal leases and are not shown in the 
above figure. 

[End of figure] 

Based on our analysis of BLM data on coal lease sales, BLM accepted 
$6.4 billion in total bonus revenue for the 107 tracts leased since 
1990, with total bids ranging from $5,000 to more than $800 million 
for a lease tract. In addition, successful bonus bid amounts for coal 
leases varied across states, with bonus bids received in Wyoming 
showing the greatest increase since 1990 when compared with the other 
seven states with active federal coal leases. Successful bonus bids 
for lease sale tracts in Wyoming ranged from $0.04 to $1.37 per ton of 
coal, after adjusting for inflation, and generally increased from 1990 
to 2012. In comparison, successful bonus bids in Colorado bids ranged 
from $0.02 to $0.55 per ton and slightly increased from 1990 to 2012, 
and in North Dakota all successful bonus bids were $100 per acre in 
nominal dollars, the minimum bid BLM can accept for a lease tract and 
did not vary meaningfully over time when measured on a per ton scale. 
In other states, trends in bonus bids were not discernible due to 
variation in the successful bids over time or there being too few 
sales in these states. According to officials from coal companies we 
spoke with, bonus bids for federal coal leases depend on many factors, 
including coal quality, mine type (e.g., underground or surface 
mining), and the price of coal at the time of the sale. 

Even when coal quality, mine type, and price are similar, successful 
bonus bids can vary greatly because of other factors. For example, 
mining conditions in Colorado and Utah are similar in several 
respects--most mines are underground, the energy content of the coal 
being mined generally exceeds 11,500 BTUs per pound of coal, and coal 
prices were in a similar range from 1990 to 2011.[Footnote 40] Yet, 
the total bonus bids accepted by Colorado since 1990 have been about 
$22 million less after adjusting for inflation than those accepted by 
Utah despite the fact that Colorado has leased out almost 76 million 
tons more coal than Utah. When asked about the differences in total 
bonus bids, BLM officials reiterated that differences in conditions 
affecting coal marketability across these states, such as access to 
transportation options and proximity of customer base, make direct 
comparison of bonus bid values across these states difficult. 
Specifically, BLM officials told us that most of the coal produced in 
Utah is consumed locally by power plants in state; this proximity to 
the customer could be considered an advantage. In contrast, much of 
the coal produced in Colorado needs to be transported out of state. 

Rents. Rents, which are set at $3 per acre, are also collected 
annually from federal coal leasing tracts but comprise an 
insignificant amount of the revenue stream.[Footnote 41] In fiscal 
year 2012, $1.4 million in rent revenue was generated from federal 
coal leases, composing 0.1 percent of the annual revenue related to 
coal. 

BLM's Implementation of the Fair Market Value Process Lacks Sufficient 
Rigor and Oversight: 

BLM's guidance offers flexibility in how to estimate fair market 
value, and BLM state offices vary in the approaches they use to 
develop an estimate of fair market value. Some state offices use both 
the comparable sales and income approaches in their appraisals while 
others rely solely on the comparable sales approach and may not be 
fully considering future market conditions as a result. In addition, 
we found that BLM did not consistently document the rationale for 
accepting bids that were initially below the fair market value presale 
estimate, and some state offices were not following guidance for 
review of appraisal reports. Furthermore, no independent review of 
appraisals is taking place, as is recommended by commonly used 
appraisal standards, despite Interior having expertise that could be 
leveraged to do so. 

BLM's Guidance Offers Flexibility in How to Estimate Fair Market Value: 

According to BLM guidance, the goal of BLM's appraisal process is "to 
provide a well-supported estimate of property value that reflects all 
factors that influence the value of the appraised property," and it 
gives state offices flexibility in how they do so.[Footnote 42] BLM's 
guidance lays out two approaches to develop an estimate of fair market 
value--comparable sales and income--but does not say that both 
approaches must be used.[Footnote 43] Under the comparable sales 
approach, bonus bids received for past sales are used to value the 
tract being appraised. Adjustments may be made to these comparable 
sales based on how the characteristics of these past lease tract sales 
compare with the lease tract being appraised. For example, if a past 
lease sale involved coal that had lower heating content than the lease 
tract being appraised, BLM might conclude that the current tract 
should have a higher fair market value than the bonus bid received for 
this past sale. In contrast, under the income approach, the revenues 
received from selling the coal and costs to extract it are projected 
into the future, and this net revenue stream is discounted back to the 
present. The resulting net present value of this revenue stream 
becomes an estimate of the fair market value for the lease tract. See 
table 2 for a summary of methods used and information needed for the 
comparable sales and income approaches. 

Table 2: Summary of Approaches BLM Uses to Estimate Fair Market Value 
for Federal Coal Lease Tracts: 

Appraisal approach: Comparable sales approach; 
General methods and steps: Uses past sales prices of coal tracts to 
estimate fair market value for tract being appraised; 
Compares characteristics of past lease tracts to tract being appraised 
to identify the most applicable sale(s) for use in the analysis and 
determines if any adjustments should be made to past sales prices; 
Reconciles, as necessary, results of the most applicable sale(s) and 
uses these results to estimate the fair market value; 
Information needed: Bonus bids paid in prior coal lease sales; 
Characteristics of lease tracts sold in prior transactions, such as: 
* Time of sale; 
* Coal quality (heating content value; 
* sulfur content, ash content); 
* Type of mining to be used; 
* (surface or underground); 
* Physical characteristics of mining (i.e., depth to deposit, seam 
thickness); 
* Market conditions at time of sale. 

Appraisal approach: Income approach; 
General methods and steps: Estimates future net revenues from the sale 
of coal extracted from the lease tract using annual costs and revenue 
projections over the period of time that a deposit is expected to be 
mined, which could be more or less than 20 years, corresponding to the 
length of time that leases are initially issued for; 
Discounts, or converts, the future net revenue streams back to a 
single number to the present--referred to as the net present value. 
(BLM's guidance suggests using a 10 percent real discount rate to 
determine this net present value); 
Uses the calculated net present value of the projected after-tax net 
revenue of the mine operation to estimate the fair market value of the 
lease tract; 
Determine whether and how to incorporate uncertainty surrounding 
future market conditions into the analysis; 
Information needed: Mine plan based on geologic and engineering data; 
Lease development plan and coal production schedule based on the mine 
plan; 
Coal price projections; 
Anticipated capital and operating costs, taxes, and other expenses for 
extracting the lease tract's coal. 

Source: GAO summary of BLM guidance. 

[End of table] 

BLM's guidance states that the comparable sales approach is preferred 
to the income approach when similar comparable sales are available 
because it is assumed that this method will provide the best 
indication of value. When comparable sales are not available, the 
guidance states that the income approach is a viable alternative, but 
the guidance highlights the uncertainty associated with using the 
income approach. This uncertainty stems from its reliance on 
projections of future market conditions, such as demand for coal, coal 
prices, and the costs to extract the coal. The guidance also provides 
examples for how the results of the comparable sales and income 
approaches can be used together. For example, information from 
comparable sales can be used as a comparison point for results from 
the income approach. In addition, results from the income approach can 
be used to adjust past comparable sales. Specifically, if the net 
present value of the tract being appraised is less than the net 
present value of a past lease sale, a conclusion can be made that the 
tract being appraised is less valuable than the past lease, and a 
numeric adjustment can be made to the actual sales prices of the past 
lease sale to account for this difference.[Footnote 44] 

BLM State Offices Differ in Their Appraisal Approaches, and Some 
Offices May Not Be Fully Considering Future Market Conditions as a 
Result: 

During our interviews with BLM officials, we found that BLM state 
offices use different approaches to develop an estimate of fair market 
value of coal leases, and we confirmed this during our case file 
review. For example, for lease sales in Wyoming, Montana, and New 
Mexico,[Footnote 45] the BLM state offices use both the comparable 
sales and income approaches, based on our review of case files. 
Moreover, the BLM Wyoming state office goes a step further to 
numerically adjust its comparable sales using the results of the 
income approach. In contrast, for lease sales in Colorado, North 
Dakota, Oklahoma, and Utah, the BLM state offices have generally used 
just the comparable sales approach in recent years. For the two lease 
sales we reviewed in both Alabama and Kentucky, one of the sales used 
both approaches, while the other used just the comparable sales 
approach. When using the comparable sales approach, BLM state offices 
generally only used sales information for coal sales that occurred in 
their state. (See appendix III for specific information on the 
approaches used for the lease sales that we reviewed.) 

BLM officials in some state offices said that they did not have the 
resources to perform appraisals using the income approach. In 
particular, the income approach may require the help of an economist, 
and some BLM state offices do not have an economist on staff. For 
example, officials in both the Utah and Colorado state offices said 
they did not have economists on staff. For this reason, the Utah BLM 
office recently contracted with a firm to help them perform the income 
approach for a lease under consideration. However, BLM headquarters 
officials told us that the income approach did not require an 
economist and that some mining engineers in state offices could 
perform appraisals using this method. Officials in other state offices 
said they could not justify using the income approach due to the 
market for coal in their states. For example, they said that most coal 
mining in Oklahoma involves privately held coal, and a bonus bid is 
not required to obtain the rights to mine the coal, while in North 
Dakota, bonus bids offered as part of private sales have generally 
been less than or equal to the $100/acre minimum required for federal 
coal leases. When using these private sales as comparable sales, BLM 
officials in these states concluded that the minimum bonus bid of 
$100/acre should be the estimate of fair market value. BLM officials 
told us that if they did not set fair market value at this level, the 
coal on the federal lease tracts would be bypassed and never mined. 

The reliance solely on the comparable sales approach among certain BLM 
state offices contrasts with the recommendations of officials from 
appraisal organizations we spoke with, who generally supported using 
both the comparable sales and income approaches when conducting 
mineral valuations. Representatives from three U.S. appraisal 
organizations told us that the income approach can provide helpful 
information and should be used along with the comparable sales 
approach.[Footnote 46] Specifically, the income approach can serve as 
a check on the results of the comparable sales approach. In addition, 
we reviewed general appraisal standards in the United States and 
industry-developed standards for mineral valuation in Canada and 
Australia, as identified by appraisal organizations we spoke with, and 
we found that mineral valuation standards in Canada were the most 
prescriptive in terms of using multiple appraisal methods.[Footnote 
47] Specifically, the Canadian standards require that more than one 
appraisal approach be used unless justification is provided, and these 
standards recommend use of both the income and comparable sales 
approaches.[Footnote 48] All of the standards we reviewed stated that 
appraisal reports should include a discussion of the rationale for the 
appraisal approaches used, as well as the rationale for any approaches 
not used. Similarly, representatives from one of the appraisal groups 
we interviewed said that if only a single approach is employed, the 
reasons for doing so should be documented and justified. According to 
BLM's guidance, officials must document the rationale for choosing a 
certain appraisal approach in the appraisal report but, during our 
review of case files, we generally did not find this rationale 
documented in states where one approach was used. In contrast, 
appraisal reports prepared for lease sales in New Mexico, North 
Dakota, Montana, and Wyoming contained explanations for the appraisal 
approaches they chose to use. 

Because the income approach examines estimates of future market 
conditions while the comparable sales approach focuses on past coal 
lease sales, BLM state offices that rely solely on the comparable 
sales approach may not be fully considering current or new trends in 
coal markets when estimating fair market value. This is particularly 
true if a state office is using comparable sales from a time during 
which market conditions were different. During our case file review, 
we found there were several comparable sales used that were over 5 
years old. One official from an appraisal organization told us that he 
would hesitate to use comparable sales that were older than 5 years 
because of changes in market conditions. BLM officials noted that the 
usefulness of sales over 5 years old would depend on the extent to 
which the market has changed. 

BLM Did Not Always Document the Rationale for Accepting Bids and 
Inconsistently Prepared Appraisal Reports: 

During our case file review of 31 selected lease sales, we found four 
lease tracts in three states where the bonus bid offered was below the 
fair market value presale estimate, but BLM accepted these bids after 
additional consideration was given to them.[Footnote 49] In total, the 
accepted bonus bid amounts related to all four tracts was more than $2 
million below the presale estimate of fair market value. Three of 
these sales occurred in the 1990s, and one occurred in 2007. As 
outlined in BLM's guidance, bonus bids below the presale estimate of 
fair market value may be considered as long as the bid is above the 
minimum bonus bid requirement of $100 per acre, among other factors. 
Furthermore, BLM's guidance allows for additional information to be 
considered or additional analysis to be completed as part of a 
postsale review process to address technical errors or in cases where 
appraisal standards are not met. BLM's guidance states that postsale 
analysis be documented and any revised fair market value be reviewed, 
but it does not clearly describe what postsale documentation is 
needed. According to BLM headquarters officials, this postsale 
analysis must be documented and a new estimate of fair market value 
needs to be completed and reviewed. We did not, however, find this 
documentation in the case files we reviewed for these four sales. 
Specifically, we found no documented evidence of a single, revised 
fair market value estimate against which to compare the bids. The 
files contained general statements about additional information that 
was considered during the postsale review process, such as changes in 
mining plans or changes in coal prices. In each of the four cases, BLM 
found that the respective bids fell within an "acceptable range of 
values" close to the initial presale fair market value estimate and, 
as a result, BLM determined in each of these cases that the bid should 
be accepted. Without better documentation of these decisions, 
including specifying the revised fair market value estimate and clear 
justification for the revision, BLM has not demonstrated that the 
accepted bids met or exceeded the fair market value estimate as 
required under the Mineral Leasing Act. 

We also found inconsistencies in the appraisal reports prepared as 
part of coal lease sales. In particular, some states consistently 
updated past comparable sales for inflation while others did not. For 
example, we found instances where the Montana/Dakotas and New Mexico 
state BLM offices used comparable sales that were more than 5 years 
old, but did not adjust them for inflation. In contrast, the Colorado, 
Utah, and Wyoming BLM state offices generally updated sales that were 
more than 5 years old for inflation. BLM headquarters officials told 
us that past comparable sales should be adjusted for differences in 
market conditions over time. State offices also varied in the number 
of comparable sales they consulted when using the comparable sales 
approach. For the 31 lease sales we reviewed, the number of 
comparables used in the appraisal ranged from a low of 2 to a high of 
10 comparable sales. 

In addition, we found instances where BLM did not fully document its 
estimate of fair market value. Specifically, we found three related 
lease sales in Oklahoma where a formal appraisal report was not 
prepared to justify using the minimum bid amount of $100/acre as the 
estimate of fair market value. In the case file, there was discussion 
of the general market for coal in Oklahoma, including the fact that 
private coal sales did not involve up-front payments, such as bonus 
bids, but there was no description of the methods used to develop an 
estimate of fair market value. A BLM official said that he believed 
comparable sales were reviewed to determine that the fair market value 
estimate would be below the minimum bid value for these leases, but 
this was not documented in a formal appraisal report. 

Some State Offices Did Not Follow BLM's Guidance for Reviewing 
Appraisal Reports and Currently There Is No Independent Review of 
Appraisals: 

From our review of 31 case files, we found differences in the 
appraisal review process used by different state offices and, in some 
cases, states had not followed BLM guidance. According to BLM 
guidance, appraisal reports must be signed by three BLM officials--the 
chief of the regional evaluation team, a qualified mineral reviewer, 
and the deputy state director--to ensure technical accuracy of the 
fair market value estimate and conformance with BLM's appraisal 
guidance. The chief of the regional evaluation team is an outdated 
position that no longer exists because BLM no longer leases coal on a 
regional basis, but the guidance has not been updated to reflect this. 
BLM headquarters officials said they expected that the mineral 
appraiser's signature would take this official's place. However, we 
found that appraisal reports were not consistently signed by the three 
officials, and there was no mechanism in place to ensure that this 
review was taking place. While appraisal reports in Wyoming were 
signed by three officials--the mineral appraiser, mineral reviewer, 
and deputy state director--other state offices had appraisal reports 
that were reviewed and signed by a single official.[Footnote 50] For 
example, two appraisal reports in Colorado were signed only by the 
branch chief of solid minerals, while in Alabama, one appraisal report 
was just signed by an economist. Of the two appraisals we reviewed for 
lease sales in Kentucky, one was signed by only an economist, and one 
was not signed at all. Without clear guidance on who is supposed to be 
reviewing reports and consistent reviews by these officials, BLM does 
not have assurance that proper oversight is taking place in all state 
offices responsible for coal leasing. 

Currently, review of appraisal reports takes place primarily at the 
state office level, and there is no review by an independent third 
party outside of BLM state offices. In its review of the coal leasing 
procedures in 1984, the Linowes Commission concluded that periodic 
independent review of coal activities by a group with clear 
independence from the coal leasing program was desirable. Furthermore, 
both the Uniform Standards of Professional Appraisal Practice and the 
Uniform Appraisal Standards for Federal Land Acquisition note that 
independent appraisal review is an important tool for ensuring that 
the valuation estimate is credible. BLM headquarters officials 
currently have a very limited role in reviewing appraisal reports 
prior to a lease sale, and they told us that headquarters officials 
receive copies of between 5 and 10 percent of appraisal reports prior 
to a lease sale occurring. These officials told us that they are 
provided with these appraisal reports so that they can participate in 
sale panel meetings where BLM considers whether to accept bids for 
lease tracts. BLM headquarters officials do not sign off on these 
reports or provide comments to the state officials during the period 
when the appraisal reports are being developed. As a result of not 
regularly reviewing all appraisals, BLM headquarters officials were 
unaware of some of the differences in appraisal practices and 
documentation issues that we found across BLM state offices. 

In addition, BLM is not currently taking advantage of a potential 
independent third-party reviewer with appraisal expertise within 
Interior, specifically, the Office of Valuation Services. The Office 
of Valuation Services, established by secretarial order in May 2010 
and reorganized in Interior's Departmental Manual in June 2011, is 
responsible for providing real estate valuation services to the 
department's bureaus and offices, including "appraisals, appraisal 
reviews, consultation services, and mineral evaluation products for 
Department and client agencies."[Footnote 51] Within the Office of 
Valuation Services, the Office of Mineral Evaluation is responsible 
for providing mineral evaluations for Interior's bureaus and offices, 
according to the Departmental Manual. Because the Office of Mineral 
Evaluation is a small office with about six staff, it is not feasible 
for this office to take over the mineral valuation function for the 
entire coal leasing program, according to officials in this office, 
and it would not be practical given the knowledge and expertise that 
state and field BLM staff have regarding coal in their respective 
regions. Rather, officials in this office said they were amenable to 
helping BLM in other ways by, for example, providing independent third-
party review of appraisal reports, which is critical for ensuring the 
integrity of the appraisal process. Without additional oversight of 
the appraisal process by an independent reviewer, BLM is unable to 
ensure that its results are sound, key decisions are fully documented, 
and that differences we noted across state offices are warranted. 

BLM Considers Coal Exports to Limited Extent When Estimating Fair 
Market Value and Does Not Consider Domestic Reserve Estimates Because 
of Their Variable Nature: 

BLM considers coal exports to a limited extent when developing an 
estimate of fair market value and generally does not explicitly 
consider estimates of the total amount of coal in the United States 
that can be mined economically, known as domestic reserve estimates. 
In the few state offices that did consider exports, we generally found 
the same generic statements in appraisal and economic reports that 
stated in general terms the possibility of future growth in coal 
exports, and there was limited tracking of exports from specific 
mines. As a result, BLM may not be factoring specific export 
information into appraisals or keeping up-to-date with emerging 
trends. Domestic reserve estimates are not considered due to the 
variable nature of these estimates according to BLM officials. 

BLM Considers Coal Exports for Some Lease Sales in Certain States, but 
Associated Reports Provide Little Information on Current or Future 
Export Activity: 

BLM's guidance states that appraisal reports should consider specific 
markets for the coal being leased, and that "export potential" may be 
considered as part of the appraisal process. The export potential for 
coal from a particular mine can be influenced by several factors, 
including the quality of the coal and whether there is a 
transportation system nearby that can ship the large volume and weight 
of coal to a port for export.[Footnote 52] Some coal mines, such as 
those in Wyoming's Powder River Basin, are part of a national coal 
market and, in 2011, Wyoming mines shipped coal to 34 states in the 
United States according to EIA data.[Footnote 53] Other mines supply 
coal only to neighboring power plants, known as mine mouth operations, 
meaning that their export potential is limited, and exports would not 
factor into the fair market value estimation, according to BLM 
officials. 

In our review of BLM case files for 31 coal lease sales, we found that 
coal exports were generally mentioned in appraisal and economic 
reports for the 13 federal lease sales held in Montana and Wyoming. 
Mines in these states exported 17.7 million tons of coal in 2011, 
according to EIA data, or about three-quarters of the total amount of 
coal exported from western states.[Footnote 54] Exports from these 
states represented less than 2 percent of total U.S. coal production 
and about 17 percent of total U.S. exports of coal in 2011.[Footnote 
55] Of the 13 Montana and Wyoming case files we reviewed, one provided 
specific export information for the mine that was adjacent to the 
lease tract being appraised. This appraisal report, which was prepared 
for a lease tract in Montana, provided detailed information from IHS 
Global Insight and Wood Mackenzie, two private providers of 
information on coal.[Footnote 56] In addition, we found that economic 
and appraisal reports in Wyoming typically contained generic 
boilerplate statements about the possibility of coal exports in the 
future and the uncertainty surrounding them, rather than specific 
information on actual or predicted coal exports--even for proposed 
lease tracts that were adjacent to mines on federal leases that are 
currently exporting coal. Wyoming BLM officials told us that coal 
exports made up such a small portion of total production from Wyoming 
that they did not believe it was necessary to provide specific 
information on exports in their economic or appraisal reports. Wyoming 
BLM officials told us that future appraisal reports may provide more 
specific export information if exports became a more significant 
issue, but they did not identify a threshold for including it. 

We generally did not find mention of coal exports in the other states 
with federal coal leasing activity: Alabama, Colorado, Kentucky, New 
Mexico, North Dakota, Oklahoma, or Utah.[Footnote 57] State BLM 
officials in these states told us they did not consider exports when 
estimating fair market value because there were few or no coal exports 
from their state. However, we found an example in Utah where the lease 
tract was adjacent to a mine that, according to EIA data, was 
exporting coal, but the appraisal report did not mention coal exports. 
EIA officials told us that they began collecting mine-level 
information on coal exports in 2008 and received a request from one 
BLM state office for these data. BLM state and headquarters officials 
generally told us they were not aware that EIA collects these data. 
Similarly, Wood Mackenzie has mine-level data on coal exports, but not 
all state BLM officials were aware that this information was available 
to them through a BLM subscription. By not tracking and considering 
all available export information, BLM may not be factoring specific 
export information into appraisals for lease tracts that are adjacent 
to mines currently exporting coal or keeping abreast of emerging 
trends in this area. 

BLM officials said that they examine projections of future coal prices 
during the appraisal process, and these projections would account for 
exports. However, only the income approach for appraisals explicitly 
considers future prices, so the state offices that use only the 
comparable sales approach would not explicitly factor export potential 
into their fair market value assessments. Two states in particular--
Colorado and Utah--have coal exports from mines on federal leases, but 
they generally use the comparable sales approach to estimate fair 
market value, therefore their fair market values would not explicitly 
reflect the potential impact of coal exports. 

BLM officials told us that they are aware that some coal companies 
plan to export more coal in the future but voiced some concern about 
weighting these plans too heavily in estimating fair market value 
because major port infrastructure upgrades are needed on the West 
Coast to handle increased coal exports. Several stakeholders with 
expertise in coal markets that we interviewed shared this view. In 
addition, IEA said it is difficult to predict future coal exports from 
Wyoming's Powder River Basin to countries such as China because of a 
lack of infrastructure in place to handle exports and the uncertainty 
of market conditions.[Footnote 58] 

BLM Generally Does Not Consider Domestic Coal Reserve Estimates 
Because of Their Variable Nature: 

BLM officials told us that BLM does not consider domestic coal reserve 
estimates during the fair market value process.[Footnote 59],[Footnote 
60] One reason they gave was these estimates can vary greatly 
depending on market conditions. Domestic coal reserve estimates 
reflect the amount of coal that can be economically recovered at a 
given point in time; as a result, these estimates can change as coal 
prices fluctuate and mining technologies advance. For example, USGS 
estimated reserves of 10.1 billion tons in the Gillette coal field of 
the Powder River Basin at a sales price of $10.47 per ton in 2007, 
[Footnote 61] but it changed this estimate to 18.5 billion tons when 
prices rose to $14.00 per ton in March 2008.[Footnote 62] A more 
recent USGS assessment estimated that there was 25 billion tons of 
coal that can be economically recovered in the entire Powder River 
Basin at the time of study, but notes that "mining costs and coal 
prices are not static as both tend to increase over time."[Footnote 
63] The report goes on to state that "if market prices exceed mining 
costs, the reserve base will grow (the converse is also true)." 

Some BLM officials told us they do not consider domestic reserve 
estimates when estimating fair market value because the United States 
has ample coal supplies to meet demand over the next 20 years, the 
time horizon that BLM uses when evaluating coal lease-by-applications. 
For example, EIA estimated that the United States has over 190 years 
of coal reserves, at the time of its most recent Annual Energy Outlook 
in April 2013.[Footnote 64] While BLM does not consider reserve 
estimates explicitly, those BLM state offices that prepare an economic 
report as part of estimating fair market value examine future demand 
and price projections for coal, which impact reserve estimates as 
mentioned previously. 

BLM Provides Limited Information on Federal Coal Lease Sales to the 
Public: 

BLM generally provides limited information on federal coal lease sales 
to the public. Environmental documents produced as part of the NEPA 
process and required coal lease sale announcements are the primary 
source of detailed written information made available on coal lease 
sales. The amount and type of information provided on websites vary by 
state office, with the most comprehensive information of the websites 
we reviewed provided by the Wyoming BLM state office. In addition, BLM 
does not typically make documents used to estimate fair market value 
publicly available due to the sensitive and proprietary information 
they contain, although its guidance states that a public version of 
the appraisal document should be prepared. 

BLM Provides Some Information through Environmental Documents and Coal 
Lease Sale Announcements: 

BLM provides some information on coal lease sales in environmental 
documents developed to meet NEPA requirements and in lease sale 
announcements. BLM is required to share these documents with the 
public, and these documents are made available for review in public 
reading rooms in relevant BLM state and field offices and are also 
typically available on BLM's websites during the period of leasing 
activity. These environmental documents include environmental 
assessments and environmental impact statements,[Footnote 65] which 
evaluate the likely environmental effects of leasing and mining the 
proposed lease tract. These documents generally include information on 
the lease applicant, mining methods at the existing operation, 
alternatives considered, and anticipated environmental effects. For 
example, an environmental assessment for a recent coal lease in 
Montana included an overview of the mine's history, the mining methods 
used at the site, the mine's layout, and information on potential 
effects of alternatives considered. In addition to environmental 
documents, a decision document summarizing the results of the process 
and the agency decision regarding the lease sale is also issued. 
[Footnote 66] 

BLM is also required to announce forthcoming coal lease sales in the 
Federal Register and a newspaper in the area of the lease tract. These 
announcements typically include general characteristics of the lease 
tract up for sale, such as the size of the tract, and the amount and 
quality of the coal being offered, including its estimated heating 
value, ash and moisture content, and the thickness of the coal beds. 
In addition, the announcements list the applicant and potential use of 
the tract, such as whether it will be used to extend existing mining 
operations or the tract's location adjacent to more than one existing 
mine. The announcement also notes where interested stakeholders can 
view lease sale details including bidding instructions, terms and 
conditions of the proposed coal lease, and case file documents, 
typically available for review at the relevant BLM state office. 

BLM State Offices Vary in the Amount and Type of Coal Lease 
Information on Their Websites: 

BLM websites are another way that public information is released on 
the leasing program, but we found that it was difficult to locate this 
information on some of BLM's websites that we reviewed and the amount 
and type of information shared across the websites that we accessed in 
May 2013 varied (see table 3). For example, BLM headquarters' website 
contains general information on the federal coal leasing program, but 
it does not include information on past or upcoming federal coal lease 
sales or link to relevant BLM state or field office websites. BLM 
officials told us that they attempted to provide general information 
on past lease sales on the headquarters website in 2010, but they were 
unable to obtain state BLM offices' verification of the data, which 
stalled the effort. Five of the six state offices do not maintain 
information on past lease sales on their websites, although officials 
in BLM headquarters and two state offices also told us they have 
provided this information upon request. All six state offices that 
manage lease sales, at a minimum, publish lease sale announcements in 
the Federal Register, which is searchable via the Internet, and based 
on our review of BLM websites and interviews with BLM officials, all 
but one of the state offices issue press releases with lease sale 
results that are highlighted for limited periods. In addition, during 
our review of BLM websites, we found that five of the six state 
offices keep environmental documents related to lease sales on their 
websites during the time of lease sale activity. 

Table 3: Summary of Federal Coal Leasing Information Contained on BLM 
Websites: 

BLM office website and states covered: Number of coal tracts leased 
since 1990; 
Colorado BLM (Colorado): 20; 
Eastern States BLM (Alabama, Kentucky): 13; 
Montana/Dakotas BLM (Montana, North Dakota): 16; 
New Mexico BLM (New Mexico, Oklahoma): 12; 
Utah BLM (Utah): 15; 
Wyoming BLM (Wyoming): 31. 

BLM office website and states covered: General information on the 
federal coal leasing program[A]; 
Colorado BLM (Colorado): [Empty]; 
Eastern States BLM (Alabama, Kentucky): [Check]; 
Montana/Dakotas BLM (Montana, North Dakota): [Check]; 
New Mexico BLM (New Mexico, Oklahoma): [Empty]; 
Utah BLM (Utah): [Check]; 
Wyoming BLM (Wyoming): [Check]. 

BLM office website and states covered: Lease sale results announced in 
press release; 
Colorado BLM (Colorado): [Check]; 
Eastern States BLM (Alabama, Kentucky): [Check]; 
Montana/Dakotas BLM (Montana, North Dakota): [Check]; 
New Mexico BLM (New Mexico, Oklahoma): [Empty]; 
Utah BLM (Utah): [Check]; 
Wyoming BLM (Wyoming): [Check]. 

BLM office website and states covered: Environmental documents linked 
on website (during time of lease sale activity); 
Colorado BLM (Colorado): [Check]; 
Eastern States BLM (Alabama, Kentucky): [Check]; 
Montana/Dakotas BLM (Montana, North Dakota): [Check]; 
New Mexico BLM (New Mexico, Oklahoma): [Empty]; 
Utah BLM (Utah): [Check]; 
Wyoming BLM (Wyoming): [Check]. 

BLM office website and states covered: Final environmental documents 
maintained on website; 
Colorado BLM (Colorado): [Empty]; 
Eastern States BLM (Alabama, Kentucky): [Empty]; 
Montana/Dakotas BLM (Montana, North Dakota): 
[Empty]; 
New Mexico BLM (New Mexico, Oklahoma): [Empty]; 
Utah BLM (Utah): [Empty]; 
Wyoming BLM (Wyoming): [Check]. 

BLM office website and states covered: Summary information from past 
lease sales maintained on website; 
Colorado BLM (Colorado): [Empty]; 
Eastern States BLM (Alabama, Kentucky): [Empty]; 
Montana/Dakotas BLM (Montana, North Dakota): [Empty]; 
New Mexico BLM (New Mexico, Oklahoma): [Empty]; 
Utah BLM (Utah): [Empty]; 
Wyoming BLM (Wyoming): [Check]. 

Sources: GAO analysis of BLM websites accessed May 2013 and interviews 
with BLM officials. 

[A] Links to general information on primary coal website pages were 
considered as being contained on BLM website pages. 

[End of table] 

Of the six state office websites we reviewed, the Wyoming state office 
provided the most comprehensive information on the federal coal 
leasing program, including results for all coal lease sales in the 
Powder River Basin since 1990. For each lease sale, this website had 
information on successful bid amounts, associated coal volume and coal 
quality, and links to environmental documents. Wyoming BLM officials 
told us that they had this information on their website because they 
receive regular inquiries from the press and public on coal leasing in 
the Powder River Basin. In contrast, the New Mexico state office had 
no coal leasing information on its website. New Mexico BLM officials 
told us that there is not much public interest in coal lease sales in 
the states of New Mexico and Oklahoma, which they oversee, and 
requests for this type of information are limited to inquiries from 
mining companies. 

Making electronic information available to the public is a position 
supported by the Office of Management and Budget (OMB) and has been 
demonstrated by other agencies. Specifically, OMB guidance directs 
federal agencies to use electronic media to make government 
information more easily accessible and useful to the public.[Footnote 
67] In addition, we have previously reported on the importance of 
federal programs allowing users to easily access and use information 
on websites.[Footnote 68] BLM's federal oil and gas onshore leasing 
program maintains a list of planned lease sale auction dates on the 
headquarters level website, along with summary results from recent 
lease sales by state. Without standard information on BLM websites, 
federal coal leasing activity is difficult to track by the public, and 
access to publicly available documents may be hampered. 

BLM Does Not Make Reports Related to Its Estimation of Fair Market 
Value Publicly Available, Which Is Inconsistent with Some Parts of Its 
Guidance: 

BLM's guidance states that a public version of the appraisal report 
that deletes all proprietary material should be prepared for each 
lease sale, but BLM has not been following this guidance.[Footnote 69] 
According to officials from BLM state offices, a public version of 
appraisal reports is not prepared as a standard practice in the six 
BLM offices managing the coal lease sale process. According to some 
BLM officials, they do not prepare this public version because they 
are concerned about the potential release of proprietary and sensitive 
information these reports contain and the impact this could have on 
the bidding process.[Footnote 70] 

BLM's guidance also states that the "fair market value appraisals and 
estimates can be released to the public upon request on tracts where 
the high bid has been accepted," and further states "information and 
analyses documents used to derive these released fair market value 
estimates are to be released to the public upon request" after these 
documents have been "modified to exclude proprietary information." 
[Footnote 71] BLM has interpreted this guidance to mean that the 
agency has the discretion to determine whether to release these 
reports in a redacted format. For two Freedom of Information Act 
(FOIA) requests received in 2011 for reports used to determine fair 
market value of coal leases,[Footnote 72] BLM initially withheld all 
fair market value documents until Interior's Office of the Solicitor 
advised BLM to provide redacted documents in response to an appeal 
filed in one of these cases.[Footnote 73] In its response to this FOIA 
appeal, Interior's Office of the Solicitor agreed that BLM has 
discretionary authority to disclose this information and noted that 
BLM's guidance "does not require the BLM to release 'fair market value 
appraisals and estimates' to the public and, instead, merely notes 
that it 'can' do so." In the end, BLM provided redacted appraisal 
reports to this FOIA request, which we reviewed. These documents 
included a description of the approaches BLM used to estimate fair 
market value, the number of comparable sales that were considered, and 
background information on the mining operation, but the fair market 
value estimate was redacted along with the supporting analysis behind 
this number. As of June 2013, BLM was in the process of responding to 
another request for fair market value documents received in 2012. 

BLM headquarters and state office officials consistently told us that 
it is critical that the sensitive information in lease sale documents 
not be released publicly so that the integrity of the sealed bid 
process can be maintained. For example, if companies were to obtain 
the specific comparable sales used for a past lease sale, this 
information could lead them to reduce their bid for a future lease 
sale so that it is closer to the fair market value estimate, according 
to BLM officials. But there are differing views within the agency on 
the extent of information that should and could be shared. For 
instance, BLM headquarters officials told us that they are open to 
releasing additional information on federal coal leasing, including 
making redacted appraisal reports available. In contrast, Wyoming BLM 
officials told us they were not comfortable making any additional 
information on the fair market value process available such as 
redacted appraisal reports. They told us that, in their opinion, 
considerable information is already available in documents that must 
be prepared as part of the process, such as environmental impact 
statements, public notices, and detailed statements on how to bid. 
They also told us most people are interested primarily in lease sale 
results, which Wyoming BLM makes available on its website. Wyoming BLM 
officials also said they are concerned that, by making additional 
information available, including redacted appraisal reports, some 
important information might be shared that would result in reduced 
bids on future coal lease sales. The Wyoming BLM officials' point of 
view stands in conflict with BLM's guidance that additional 
information in the form of public versions of the appraisal report 
should be prepared and the Office of the Solicitor's determination 
that FOIA does not allow BLM to withhold entire documents relating to 
the estimate of fair market value in response to FOIA requests when 
portions of these documents contain information that is not protected 
from disclosure and should be released. 

Conclusions: 

With about 40 percent of the nation's coal produced from federal coal 
lease tracts in recent years, the federal coal leasing program plays 
an important role in the nation's energy portfolio. In managing the 
leasing program, BLM is required to obtain fair market value for coal 
leases. Because there is typically little competition for federal 
leases, BLM plays a critical role in ensuring that the public receives 
fair market value for the coal that is leased. However, we found 
differences across BLM state offices in the approaches they use to 
estimate fair market value and the rigor of these reports. Moreover, 
BLM state offices are not documenting the rationale for choosing their 
approaches for the appraisal process. 

Adequate oversight of the fair market value process is critical to 
ensuring that its results are sound and properly reviewed. However, 
BLM's guidance on the valuation of coal properties is out of date, and 
officials are not reviewing and signing appraisal reports in 
accordance with BLM's guidance. Without a mechanism to ensure 
consistent reviews by three officials, as specified in the guidance, 
and independent third-party reviews, appraisal reports may not be 
receiving the scrutiny they deserve. 

BLM's guidance allows for additional information and analyses to be 
considered as part of the postsale review process, which could result 
in a lower revised fair market value estimate and acceptance of bids 
below the presale fair market value estimate but above the revised 
estimate. The guidance calls for such decisions to be fully justified 
and that a revised fair market value be clearly documented and 
reviewed. However, we found instances where BLM's justification to 
accept such bids was not adequately documented. Without proper 
documentation of these decisions, adequate oversight cannot take 
place, and BLM does not have assurance that accepted bids were in 
compliance with the Minerals Leasing Act. 

Coal exports make up a small but growing proportion of total U.S. coal 
production, yet BLM state offices were generally not tracking the 
export activity for mines on federal leases and were including only 
generic statements about exports in their appraisal reports, and some 
state offices were not routinely including export information in 
appraisal reports. Moreover, BLM officials were largely unaware of the 
various sources of mine-level information about exports, such as the 
information that EIA collects and the information collected by private 
companies. By not tracking and considering all available export 
information, BLM may not be factoring specific export information into 
appraisals for lease tracts that are adjacent to mines currently 
exporting coal or keeping abreast of emerging trends in this area. 

BLM state offices are not following agency guidance because they have 
not prepared public versions of appraisal reports, and there is a lack 
of agreement within the agency on the extent and type of information 
related to the estimation of fair market value to be shared in 
response to public requests. Without updated guidance and a consensus, 
there may continue to be a disconnect between BLM's guidance and its 
standard practice of not releasing this information publicly. Finally, 
BLM provides little summary information on its websites on past lease 
sales or links to sale-related documents. Having additional 
information online could increase the transparency of federal coal 
leasing program. 

Recommendations for Executive Action: 

We are recommending that the Secretary of the Interior direct the 
Director of the Bureau of Land Management to take the following eight 
actions: 

To ensure that appraisal reports reflect future trends in coal 
markets, BLM should revise its guidance to have state offices use both 
comparable sales and income approaches to estimate fair market value 
where practicable. Where it is not practicable to do so, the rationale 
should be documented in the appraisal report. 

To ensure that appraisal reports receive the scrutiny they deserve and 
are reviewed by specified officials, BLM should take the following 
actions: 

* update its guidance so that it reflects the current titles of 
officials who should review appraisal reports; 

* develop a mechanism to ensure that state offices are reviewing and 
signing appraisal reports consistent with the guidance; 

* develop a process for independent review of appraisal reports and 
work with the Office of Valuation Service to determine its role, if 
any, in this process. 

To ensure that all accepted bids comply with the Minerals Leasing Act 
by meeting or exceeding BLM's estimate of fair market value, BLM 
should update its guidance to specify the documentation needed for 
postsale analyses in instances where a decision is made to revise the 
fair market value estimate and accept a bonus bid that was below the 
presale estimate of fair market value but above the revised estimate. 
Such documentation for postsale analyses should include the revised 
estimate of fair market value, the rationale for this revision, and 
review of this decision by appropriate officials. 

To ensure that appraisal reports reflect the current state of export 
activity for mines on federal leases, BLM headquarters should develop 
guidance on how to consider exports as part of the appraisal process 
and identify potential sources of information on coal exports that 
state offices should use when conducting appraisals. 

To eliminate the disconnect between its guidance and BLM state 
offices' practice of not releasing appraisal documents to the public, 
BLM headquarters, state office officials, and Interior's Office of the 
Solicitor should come to agreement on the extent and type of 
information related to the estimation of fair market value that should 
be shared in response to public requests for this information and make 
sure that its guidance reflects this consensus. 

To make electronic information on the coal leasing program more 
accessible to the public, BLM should provide summary information on 
its websites on results of past lease sales (e.g., amount of coal 
offered, coal quality, bonus bids received ) and status of any 
upcoming coal lease sales along with links to sale-related documents. 

Agency Comments: 

We provided a draft of this report to the Department of the Interior, 
the Department of Agriculture, and the Department of Energy for review 
and comment. The Department of the Interior concurred with our 
recommendations and also noted it has begun to address some of these 
recommendations. Specifically, BLM has signed a memorandum of 
understanding with the Office of Valuation Services to enhance the 
review of fair market values. In addition, BLM stated it will soon 
publish additional information on lease sales on its national and 
state websites. The Departments of the Interior, Agriculture, and 
Energy also provided us with technical comments, which we have 
incorporated as appropriate. See appendixes IV and V for agency 
comment letters from the Department of the Interior and the Department 
of Agriculture. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the appropriate congressional committees, the Secretary of the 
Interior, the Secretary of Agriculture, the Secretary of Energy, and 
other interested parties. In addition, the report will be available at 
no charge on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-3841 or fennella@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix VI. 

Signed by: 

Anne-Marie Fennell: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Objectives, Scope and Methodology: 

Our objectives were to examine (1) federal coal leasing, including the 
number of tracts leased, along with the trends in associated coal 
production and revenues generated since 1990; (2) Bureau of Land 
Management's (BLM) implementation of the process to develop an 
estimate of fair market value for coal leases; (3) the extent to which 
BLM considers coal exports and domestic coal reserve estimates when 
developing an estimate of fair market value; and (4) the extent to 
which BLM communicates information on federal coal lease sales to the 
public. 

To provide information on trends in federal coal leasing under the 
first objective, we analyzed data from BLM's LR2000 database--used by 
BLM to track federal land and mineral resources including coal--and 
summarized federal coal lease sale activity and bonus bids accepted 
from January 1, 1990 to December 31, 2012. For each lease sale where a 
bid was accepted and the tract leased, we analyzed data including: 
lease sale date, tract acreage, the amount of offered coal, number of 
bids received, and winning bid amounts. We also analyzed data on coal 
production and revenues generated from federal coal leases from fiscal 
years 1990 to 2012 from the Department of the Interior's Office of 
Natural Resources and Revenue (ONRR), which is responsible for 
collecting and distributing revenues associated with federal mineral 
leases including federal coal leases. We used ONRR sales year revenue 
data, which includes current fiscal year data and adjusted or 
corrected transactions for sales that took place in previous years. 
According to ONRR officials, adjustments to sales year data are made 
on an ongoing basis in real time, such that the data varies daily. We 
used sales year data because this type of data was identified by ONRR 
as the best for trending purposes. To complete our analysis, we 
adjusted both BLM bonus bid data and ONRR revenue data to 2013 dollars 
using the gross domestic product price index. 

We conducted interviews with BLM and ONRR officials regarding these 
data and reviewed documentation on their data systems. We found that 
some of the revenue data initially provided by ONRR prior to 2003, in 
particular the bonus, rent, and other income data, had gaps resulting 
from a data system conversion the agency underwent and was not 
reliable for use in our analysis. ONRR ultimately provided updated 
bonus data for this period, but it did so late in our review process, 
and we were unable to determine its reliability. We determined that 
all other ONRR data including royalty and production data from 1990 to 
2012, as well as BLM federal coal leasing data, were sufficiently 
reliable for describing trends in the federal coal leasing program. 

To examine how BLM implements the process to develop an estimate of 
fair market value, we reviewed applicable regulations and BLM's 
guidance for the coal leasing program, including BLM's H-3070-1 
handbook, titled Economic Evaluation of Coal Properties. We also 
interviewed BLM officials in headquarters and state offices on how 
they implement these regulations and guidance. Specifically, we 
interviewed officials in the following BLM state offices because they 
are the only state offices involved in federal coal leasing at BLM: 
Colorado, Eastern States, Montana/Dakotas, New Mexico, Utah, and 
Wyoming.[Footnote 74] We also spoke with officials in the Casper Field 
Office who are directly involved in coal leasing activity in the 
Powder River Basin. In addition, we reviewed other appraisal standards 
developed by appraisal organizations in the United States and 
appraisal standards used in other countries. These standards included 
the Uniform Standards of Professional Appraisal Practice prepared by 
the Appraisal Standards Board in the United States; the Uniform 
Appraisal Standards for Federal Lands Acquisitions prepared by the 
Interagency Land Acquisition Conference in the United States; 
Standards and Guidelines for Valuation of Mineral Properties prepared 
by the Canadian Institute of Mining, Metallurgy and Petroleum; and the 
Code for Technical Assessment and Valuation of Mineral and Petroleum 
Assets and Securities for Independent Expert Reports prepared by 
several groups, including the Australasian Institute of Mining and 
Metallurgy. We examined these standards to see what they said about 
certain aspects of an appraisal including required documentation and 
review processes. To learn about appraisal practices for mineral 
properties, we also spoke with appraisal officials, including 
officials from the Appraisal Institute, the Appraisal Foundation, the 
American Institute of Mineral Appraisers, and an official involved in 
the development of the Canadian standards for mineral valuation 
mentioned above. In addition, we spoke with officials from Interior's 
Office of Valuation Services, which is responsible for providing real 
estate evaluation services to the Department of the Interior's bureaus 
and offices. 

We selected and reviewed a nonrandom sample of case files prepared by 
BLM officials as part of 31 recent coal lease sales using a data 
collection instrument we developed. The sample included all reports 
for lease sales that generally took place from January 1, 2007, to 
July 31, 2012. This nonrandom sample cannot be generalized to all coal 
lease sales held but rather has a focus on recently prepared files. 
However, the results of this sample provide illustrative examples of 
the coal leasing process used and the documentation prepared. We 
requested the following documentation from BLM for these lease sales 
if they had been prepared: appraisal report, economic report, 
engineering report, geologic report, and tract modification report. As 
part of our review, we examined 147 documents that were prepared for 
these 31 lease sales. For those states that did not oversee two lease 
sales from January 1, 2007, to July 31, 2012--Alabama, Kentucky, New 
Mexico, North Dakota, and Oklahoma--we examined their two most recent 
lease sales.[Footnote 75] In the end we reviewed case files for 11 
lease sales in Wyoming, 4 lease sales in Colorado, 3 lease sales in 
both Oklahoma and New Mexico, and 2 lease sales each in Alabama, 
Kentucky, North Dakota, Montana, and Utah.[Footnote 76] To ensure that 
our data collection instrument was filled out correctly, two GAO staff 
members reviewed the provided documents: one filled out the data 
collection instrument the first time, and the other verified this 
work. We conducted follow-up interviews with BLM state offices to 
discuss both general questions our review raised about the processes 
used to estimate fair market value in each of the BLM states and 
details related to specific cases we reviewed. 

To determine the extent to which BLM considers coal exports when 
developing an estimate of fair market value, we used our case file 
review to examine what types of information BLM provided on exports, 
if any. For those files that did contain information on exports, we 
compared the wording used to describe exports across the various 
reports to see what kind of information was provided. We also used our 
interviews with BLM officials at headquarters and state offices to 
learn about the information they consult in estimating fair market 
value and the extent to which they consider exports when making this 
determination. We examined available information on coal exports from 
the Energy Information Administration (EIA) and other publicly 
available documents, such as financial statements of mining companies. 
We also spoke with knowledgeable stakeholders about future projections 
for coal exports, including the National Mining Association, 
International Energy Agency, and other officials from academia and 
industry. 

To determine the extent to which BLM considers reserve estimates, we 
interviewed a variety of BLM officials at the headquarters and state 
office level to determine if reserves were considered. In addition, we 
examined available reserve information from the United States 
Geological Survey (USGS) and spoke with USGS officials involved in 
making these estimates. We also obtained perspectives from 
stakeholders from academia, industry, and environmental organizations. 

To examine the extent to which BLM provides information to the public 
on coal lease sales, we analyzed BLM's policies for making information 
publicly available, including BLM's H-3070-1 handbook. We also 
reviewed BLM websites related to federal coal leasing, and we reviewed 
a sample of environmental documents that are made publicly available 
during the coal leasing process. We obtained data from BLM on Freedom 
of Information Act (FOIA) requests made for fair market value 
information prepared for federal coal lease sales. We also reviewed 
copies of request letters and BLM's response to these requests, 
including redacted versions of fair market value documents made 
available in response to the only FOIA request where BLM supplied 
these documents. We interviewed BLM staff, industry representatives, 
as well as conservation and environmental groups to get their 
perspectives on the information made publicly available on federal 
coal leases. 

Finally, we conducted site visits to Colorado and Wyoming. During 
these visits, we met with officials in BLM state offices in Colorado 
and Wyoming, and we also met with officials in the Casper Field Office 
in Wyoming. In addition, we met with a coal mining company and toured 
a large surface mine in Wyoming and met with a professor of economics 
at the University of Wyoming's School of Energy Resources. We selected 
these states because they have different types of mining that take 
place--generally surface mining in Wyoming and underground mining in 
Colorado. In addition, we selected Wyoming because of the large amount 
of federal coal leasing activity in the state. 

We conducted this performance audit from June 2012 to December 2013 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Federal Coal Lease Sales, January 1990 through December 
2012: 

This appendix presents data on all federal coal lease sales by state 
that were conducted from January 1, 1990, through December 31, 2012. 
Table 4 provides information on the lease tract characteristics 
(acreage, type of mine, and amount of coal) along with the lease sale 
results (number of bids received, bonus bid accepted, and name of 
successful bidder). 

Table 4: Federal Coal Lease Sales, January 1990 through December 2012: 

Alabama: 

Sale date: 6/12/1990; 
Lease serial number: ALES 041886; 
Acres: 80; 
Associated mine name: River King; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 160; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $21,101; 
Bonus bid per ton (nominal dollars): $0.13; 
Bonus bid per acre (nominal dollars): $264; 
Successful bidder: River King Energy. 

Sale date: 7/12/1991; 
Lease serial number: ALES 043165; 
Acres: 6440; 
Associated mine name: Yellow Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 24,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,300,880; 
Bonus bid per ton (nominal dollars): $0.05; 
Bonus bid per acre (nominal dollars): $202; 
Successful bidder: Pittsburg & Midway Mining Coal Co. 

Sale date: 3/18/1994; 
Lease serial number: ALES 044853; 
Acres: 1610; 
Associated mine name: Shoal Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 8,065; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $330,000; 
Bonus bid per ton (nominal dollars): $0.04; 
Bonus bid per acre (nominal dollars): $205; 
Successful bidder: Drummond Co. Inc. 

Sale date: 6/28/1996; 
Lease serial number: ALES 046611; 
Acres: 40; 
Associated mine name: Mary Lee Number 1; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 191; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $7,795; 
Bonus bid per ton (nominal dollars): $0.04; 
Bonus bid per acre (nominal dollars): $194; 
Successful bidder: Drummond Co. Inc. 

Sale date: 8/21/1997; 
Lease serial number: ALES 047886; 
Acres: 40; 
Associated mine name: Oak Mountain and Boone Number 1; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 500; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $4,223; 
Bonus bid per ton (nominal dollars): $0.00001; 
Bonus bid per acre (nominal dollars): $103; 
Successful bidder: Oak Mtn. Energy LLC. 

Sale date: 9/30/2004; 
Lease serial number: ALES 051589; 
Acres: 2887; 
Associated mine name: North River; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 10,789; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $320,568; 
Bonus bid per ton (nominal dollars): $0.03; 
Bonus bid per acre (nominal dollars): $111; 
Successful bidder: Pittsburg & Midway Mining Coal Co. 

Colorado: 

Sale date: 4/27/1990; 
Lease serial number: COC 049465; 
Acres: 193; 
Associated mine name: King; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 1,000; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $101,560; 
Bonus bid per ton (nominal dollars): $0.10; 
Bonus bid per acre (nominal dollars): $526; 
Successful bidder: National King Coal. 

Sale date: 6/26/1991; 
Lease serial number: COC 051551; 
Acres: 1280; 
Associated mine name: Deserado; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 8,700; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $656,640; 
Bonus bid per ton (nominal dollars): $0.08; 
Bonus bid per acre (nominal dollars): $513; 
Successful bidder: Western Fuels. 

Sale date: 7/30/1992; 
Lease serial number: COC 053510; 
Acres: 1340; 
Associated mine name: Elk Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 10,300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,025,998; 
Bonus bid per ton (nominal dollars): $0.10; 
Bonus bid per acre (nominal dollars): $766; 
Successful bidder: Somerset Mining. 

Sale date: 12/18/1992; 
Lease serial number: COC 053356; 
Acres: 522; 
Associated mine name: Bowie Number 2; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 2,500; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $52,178; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Cyprus Orchard Valley. 

Sale date: 10/7/1993; 
Lease serial number: COC 053560; 
Acres: 544; 
Associated mine name: Foidel Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 3,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $57,225; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $105; 
Successful bidder: Cyprus Western. 

Sale date: 11/4/1993; 
Lease serial number: COC 054558; 
Acres: 1012; 
Associated mine name: West Elk; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 14,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $803,520; 
Bonus bid per ton (nominal dollars): $0.06; 
Bonus bid per acre (nominal dollars): $794; 
Successful bidder: Mountain Coal Co. LLC. 

Sale date: 5/15/1995; 
Lease serial number: COC 056447; 
Acres: 2770; 
Associated mine name: West Elk; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 37,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $6,408,035; 
Bonus bid per ton (nominal dollars): $0.17; 
Bonus bid per acre (nominal dollars): $2,314; 
Successful bidder: Mountain Coal Co. LLC. 

Sale date: 1/25/1996; 
Lease serial number: COC 054608; 
Acres: 2600; 
Associated mine name: Foidel Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 23,870; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $4,057,900; 
Bonus bid per ton (nominal dollars): $0.17; 
Bonus bid per acre (nominal dollars): $1,561; 
Successful bidder: Twentymile Coal Co. 

Sale date: 3/30/1998; 
Lease serial number: COC 060941; 
Acres: 195; 
Associated mine name: King; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 624; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $19,752; 
Bonus bid per ton (nominal dollars): $0.03; 
Bonus bid per acre (nominal dollars): $101; 
Successful bidder: National King Coal. 

Sale date: 5/31/2000; 
Lease serial number: COC 061357; 
Acres: 4444; 
Associated mine name: Elk Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 20,920; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $8,723,661; 
Bonus bid per ton (nominal dollars): $0.42; 
Bonus bid per acre (nominal dollars): $1,963; 
Successful bidder: Oxbow Mining Inc. 

Sale date: 5/31/2000; 
Lease serial number: COC 061209; 
Acres: 3211; 
Associated mine name: Bowie Number 2; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 32,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $10,334,186; 
Bonus bid per ton (nominal dollars): $0.32; 
Bonus bid per acre (nominal dollars): $3,219; 
Successful bidder: Bowie Resources Ltd. 

Sale date: 12/4/2001; 
Lease serial number: COC 062920; 
Acres: 1305; 
Associated mine name: King II; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 7,049; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $396,720; 
Bonus bid per ton (nominal dollars): $0.06; 
Bonus bid per acre (nominal dollars): $304; 
Successful bidder: National King Coal. 

Sale date: 1/6/2004; 
Lease serial number: COC 066514; 
Acres: 1520; 
Associated mine name: McClane Canyon; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 8,365; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $2,065,000; 
Bonus bid per ton (nominal dollars): $0.25; 
Bonus bid per acre (nominal dollars): $1,358; 
Successful bidder: Central Appalachia Mining, CAM Holdings. 

Sale date: 7/1/2004; 
Lease serial number: COC 067011; 
Acres: 691; 
Associated mine name: West Elk; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 2,300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $191,994; 
Bonus bid per ton (nominal dollars): $0.08; 
Bonus bid per acre (nominal dollars): $278; 
Successful bidder: Arch Coal, Inc., Ark Land Co. 

Sale date: 10/12/2006; 
Lease serial number: COC 067514; 
Acres: 200; 
Associated mine name: Foidel Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 2,100; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $525,000; 
Bonus bid per ton (nominal dollars): $0.25; 
Bonus bid per acre (nominal dollars): $2,620; 
Successful bidder: Twentymile Coal Co. 

Sale date: 1/24/2007; 
Lease serial number: COC 067232; 
Acres: 1517; 
Associated mine name: West Elk; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 14,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $3,025,000; 
Bonus bid per ton (nominal dollars): $0.22; 
Bonus bid per acre (nominal dollars): $1,994; 
Successful bidder: Ark Land Co. 

Sale date: 5/30/2007; 
Lease serial number: COC 068590; 
Acres: 1407; 
Associated mine name: Colowyo; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 92,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $13,106,600; 
Bonus bid per ton (nominal dollars): $0.14; 
Bonus bid per acre (nominal dollars): $9,317; 
Successful bidder: Colowyo Coal Co. LP. 

Sale date: 1/14/2009; 
Lease serial number: COC 072980; 
Acres: 500; 
Associated mine name: Foidel Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 1,400; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $350,000; 
Bonus bid per ton (nominal dollars): $0.25; 
Bonus bid per acre (nominal dollars): $700; 
Successful bidder: Twentymile Coal Co. 

Sale date: 5/15/2012; 
Lease serial number: COC 070615; 
Acres: 726; 
Associated mine name: Elk Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 3,960; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $990,264; 
Bonus bid per ton (nominal dollars): $0.25; 
Bonus bid per acre (nominal dollars): $1,364; 
Successful bidder: Oxbow Mining, LLC. 

Sale date: 8/22/2012; 
Lease serial number: COC 074219; 
Acres: 400; 
Associated mine name: Sage Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 3,200; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $800,000; 
Bonus bid per ton (nominal dollars): $0.25; 
Bonus bid per acre (nominal dollars): $2,000; 
Successful bidder: Sage Creek Holdings, LLC. 

Kentucky: 

Sale date: 12/13/1990; 
Lease serial number: KYES 041395; 
Acres: 180; 
Associated mine name: Bell Co. Number 2; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 900; 
Number of qualified bids received: 3; 
Total accepted bonus bid (nominal dollars): $196,000; 
Bonus bid per ton (nominal dollars): $0.22; 
Bonus bid per acre (nominal dollars): $1,089; 
Successful bidder: Apollo Fuel. 

Sale date: 12/13/1990; 
Lease serial number: KYES 045303; 
Acres: 800; 
Associated mine name: Stone Number 2; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 3,800; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $160,000; 
Bonus bid per ton (nominal dollars): $0.04; 
Bonus bid per acre (nominal dollars): $200; 
Successful bidder: Apollo Fuel. 

Sale date: 5/3/1991; 
Lease serial number: KYES 043034; 
Acres: 167; 
Associated mine name: Camp Number 2; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 900; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $16,658; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Peabody. 

Sale date: 5/3/1991; 
Lease serial number: KYES 042948; 
Acres: 99; 
Associated mine name: Big Fist Number 4; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 400; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $9,900; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Wellmore Coal. 

Sale date: 8/31/1993; 
Lease serial number: KYES 045088; 
Acres: 181; 
Associated mine name: Number 60; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 500; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $19,005; 
Bonus bid per ton (nominal dollars): $0.04; 
Bonus bid per acre (nominal dollars): $105; 
Successful bidder: Leeco. 

Sale date: 7/27/2005; 
Lease serial number: KYES 051002; 
Acres: 1210; 
Associated mine name: Beechfork; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 2,900; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $501,003; 
Bonus bid per ton (nominal dollars): $0.17; 
Bonus bid per acre (nominal dollars): $414; 
Successful bidder: Bledsoe Coal Leasing Company. 

Sale date: 5/11/2006; 
Lease serial number: KYES 050213; 
Acres: 315; 
Associated mine name: Chas Number 4; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 792; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $47,250; 
Bonus bid per ton (nominal dollars): $0.06; 
Bonus bid per acre (nominal dollars): $150; 
Successful bidder: Chas Coal LLC. 

Montana: 

Sale date: 6/16/1999; 
Lease serial number: MTM 080697; 
Acres: 1401; 
Associated mine name: Rosebud; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 27,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $4,416,000; 
Bonus bid per ton (nominal dollars): $0.16; 
Bonus bid per acre (nominal dollars): $3,152; 
Successful bidder: Western Energy Co. 

Sale date: 11/27/2000; 
Lease serial number: MTM 088405; 
Acres: 150; 
Associated mine name: Spring Creek; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 15,400; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,740,200; 
Bonus bid per ton (nominal dollars): $0.11; 
Bonus bid per acre (nominal dollars): $11,601; 
Successful bidder: Spring Creek Coal Co. 

Sale date: 4/17/2007; 
Lease serial number: MTM 094378; 
Acres: 1118; 
Associated mine name: Spring Creek; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 108,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $19,902,200; 
Bonus bid per ton (nominal dollars): $0.18; 
Bonus bid per acre (nominal dollars): $17,806; 
Successful bidder: Spring Creek Coal Co. 

Sale date: 2/28/2012; 
Lease serial number: MTM 097988; 
Acres: 2680; 
Associated mine name: Bull Mountains Mine No. 1; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 35,500; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $10,650,000; 
Bonus bid per ton (nominal dollars): $0.30; 
Bonus bid per acre (nominal dollars): $3,974; 
Successful bidder: Signal Peak Energy LLC. 

New Mexico: 

Sale date: 7/31/1991; 
Lease serial number: NMNM 078371; 
Acres: 3082; 
Associated mine name: Salt River; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 19,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,571,963; 
Bonus bid per ton (nominal dollars): $0.08; 
Bonus bid per acre (nominal dollars): $510; 
Successful bidder: Salt River Project. 

Sale date: 7/31/1991; 
Lease serial number: NMNM 086717; 
Acres: 3360; 
Associated mine name: Salt River; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 10,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $799,680; 
Bonus bid per ton (nominal dollars): $0.08; 
Bonus bid per acre (nominal dollars): $238; 
Successful bidder: Salt River Project. 

Sale date: 11/1/2000; 
Lease serial number: NMNM 099144; 
Acres: 4484; 
Associated mine name: San Juan; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 63,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $13,000,000; 
Bonus bid per ton (nominal dollars): $0.21; 
Bonus bid per acre (nominal dollars): $2,899; 
Successful bidder: San Juan Coal Co. 

North Dakota: 

Sale date: 1/23/1991; 
Lease serial number: NDM 078697; 
Acres: 160; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 2,500; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $16,000; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Coteau Properties Co. 

Sale date: 8/9/1994; 
Lease serial number: NDM 081582; 
Acres: 793; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 9,140; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $79,300; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Coteau Properties Co. 

Sale date: 3/26/1997; 
Lease serial number: NDM 085516; 
Acres: 159; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 1,750; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $15,900; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Falkirk Mining Co. 

Sale date: 3/26/1997; 
Lease serial number: NDM 085537; 
Acres: 80; 
Associated mine name: Coteau; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 510; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $8,000; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Coteau Properties Co. 

Sale date: 3/26/1997; 
Lease serial number: NDM 085517; 
Acres: 399; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 5,610; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $39,900; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Coteau Properties Co. 

Sale date: 3/26/1997; 
Lease serial number: NDM 085515; 
Acres: 79; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 2,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $8,000; 
Bonus bid per ton (nominal dollars): $0.004; 
Bonus bid per acre (nominal dollars): $101; 
Successful bidder: Coteau Properties Co. 

Sale date: 9/30/1998; 
Lease serial number: NDM 086601; 
Acres: 360; 
Associated mine name: Beulah; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 6,210; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $36,000; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Knife River Corp. 

Sale date: 2/12/2002; 
Lease serial number: NDM 090783; 
Acres: 503; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 7,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $50,280; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Coteau Properties Co. 

Sale date: 12/10/2002; 
Lease serial number: NDM 091647; 
Acres: 40; 
Associated mine name: Falkirk; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $4,000; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Falkirk Mining Co. 

Sale date: 3/2/2006; 
Lease serial number: NDM 091535; 
Acres: 5334; 
Associated mine name: Freedom; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 89,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $533,400; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: Coteau Properties Co. 

Sale date: 9/12/2006; 
Lease serial number: NDM 095104; 
Acres: 320; 
Associated mine name: Center; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 8,300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $32,000; 
Bonus bid per ton (nominal dollars): $0.004; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: BNI Coal LTD. 

Sale date: 10/15/2009; 
Lease serial number: NDM 097633; 
Acres: 160; 
Associated mine name: Center; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 3,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $16,000; 
Bonus bid per ton (nominal dollars): $0.01; 
Bonus bid per acre (nominal dollars): $100; 
Successful bidder: BNI Coal LTD. 

Oklahoma: 

Sale date: 11/14/1994; 
Lease serial number: OKNM 091590; 
Acres: 400; 
Associated mine name: Shady Point, Cavanal; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 369; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $165,544; 
Bonus bid per ton (nominal dollars): $0.45; 
Bonus bid per acre (nominal dollars): $414; 
Successful bidder: Farrell-Cooper Mining Co. 

Sale date: 11/14/1994; 
Lease serial number: OKNM 091569; 
Acres: 2725; 
Associated mine name: Heavener; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 18,290; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $281,388; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $103; 
Successful bidder: Farrell-Cooper Mining Co. 

Sale date: 11/14/1994; 
Lease serial number: OKNM 091568; 
Acres: 1933; 
Associated mine name: Red Oak South; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 11,137; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $204,502; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $106; 
Successful bidder: Farrell-Cooper Mining Co. 

Sale date: 11/14/1994; 
Lease serial number: OKNM 091190; 
Acres: 3429; 
Associated mine name: Pollyanna Number 8 North and South; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 15,320; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $346,710; 
Bonus bid per ton (nominal dollars): $0.02; 
Bonus bid per acre (nominal dollars): $101; 
Successful bidder: P&K Company. 

Sale date: 1/31/1997; 
Lease serial number: OKNM 094663; 
Acres: 90; 
Associated mine name: Pollyanna Number 9; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 138; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $10,000; 
Bonus bid per ton (nominal dollars): $0.07; 
Bonus bid per acre (nominal dollars): $111; 
Successful bidder: Georges Colliers Inc. 

Sale date: 1/31/1997; 
Lease serial number: OKNM 091571; 
Acres: 2120; 
Associated mine name: Rock Island; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 4,300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $251,816; 
Bonus bid per ton (nominal dollars): $0.06; 
Bonus bid per acre (nominal dollars): $119; 
Successful bidder: Farrell-Cooper Mining Co. 

Sale date: 9/14/2005; 
Lease serial number: OKNM 108097; 
Acres: 2380; 
Associated mine name: McCurtain; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 10,058; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $323,204; 
Bonus bid per ton (nominal dollars): $0.03; 
Bonus bid per acre (nominal dollars): $136; 
Successful bidder: Farrell-Cooper Mining Co. 

Sale date: 9/14/2005; 
Lease serial number: OKNM 107920; 
Acres: 2702; 
Associated mine name: Bull Hill; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 8,993; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $409,965; 
Bonus bid per ton (nominal dollars): $0.05; 
Bonus bid per acre (nominal dollars): $152; 
Successful bidder: Farrell-Cooper Mining Co. 

Sale date: 9/14/2005; 
Lease serial number: OKNM 104763; 
Acres: 560; 
Associated mine name: Liberty Number 4; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 2,057; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $57,820; 
Bonus bid per ton (nominal dollars): $0.03; 
Bonus bid per acre (nominal dollars): $103; 
Successful bidder: Farrell-Cooper Mining Co. 

Utah: 

Sale date: 1/11/1990; 
Lease serial number: UTU 064263; 
Acres: 1987; 
Associated mine name: Star Point Mine; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 7,630; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,526,369; 
Bonus bid per ton (nominal dollars): $0.20; 
Bonus bid per acre (nominal dollars): $768; 
Successful bidder: Cyprus Western. 

Sale date: 6/28/1990; 
Lease serial number: UTU 066060; 
Acres: 933; 
Associated mine name: Aberdeen; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 8,800; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,654,776; 
Bonus bid per ton (nominal dollars): $0.19; 
Bonus bid per acre (nominal dollars): $1,773; 
Successful bidder: AMCA Coal Leasing. 

Sale date: 6/28/1990; 
Lease serial number: UTU 064375; 
Acres: 2631; 
Associated mine name: Trail Mountain; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 12,200; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $6,103,479; 
Bonus bid per ton (nominal dollars): $0.50; 
Bonus bid per acre (nominal dollars): $2,320; 
Successful bidder: Beaver Creek Coal. 

Sale date: 12/29/1993; 
Lease serial number: UTU 068082; 
Acres: 2979; 
Associated mine name: Genwal, Crandall Canyon North; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 18,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $3,810,000; 
Bonus bid per ton (nominal dollars): $0.20; 
Bonus bid per acre (nominal dollars): $1,279; 
Successful bidder: Andalex Resources, Inc. 

Sale date: 7/19/1995; 
Lease serial number: UTU 069635; 
Acres: 2177; 
Associated mine name: Dugout Canyon; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 12,700; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $2,667,000; 
Bonus bid per ton (nominal dollars): $0.21; 
Bonus bid per acre (nominal dollars): $1,225; 
Successful bidder: Sage Point Coal Co. 

Sale date: 5/30/1996; 
Lease serial number: UTU 067939; 
Acres: 3291; 
Associated mine name: Skyline; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 24,100; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $5,600,000; 
Bonus bid per ton (nominal dollars): $0.23; 
Bonus bid per acre (nominal dollars): $1,702; 
Successful bidder: Coastal States Energy Co. 

Sale date: 12/18/1996; 
Lease serial number: UTU 073975; 
Acres: 2299; 
Associated mine name: Willow Creek Mine; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 22,100; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $5,127,200; 
Bonus bid per ton (nominal dollars): $0.23; 
Bonus bid per acre (nominal dollars): $2,230; 
Successful bidder: Cyprus Plateau Mining Co. 

Sale date: 5/14/1998; 
Lease serial number: UTU 074804; 
Acres: 1288; 
Associated mine name: Horizon; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 6,300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $315,000; 
Bonus bid per ton (nominal dollars): $0.05; 
Bonus bid per acre (nominal dollars): $244; 
Successful bidder: White Oak-Horizon Mining. 

Sale date: 5/20/1999; 
Lease serial number: UTU 076195; 
Acres: 7172; 
Associated mine name: Sufco; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 60,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $16,900,000; 
Bonus bid per ton (nominal dollars): $0.28; 
Bonus bid per acre (nominal dollars): $2,356; 
Successful bidder: Canyon Fuel Co. 

Sale date: 12/12/2001; 
Lease serial number: UTU 078562; 
Acres: 1646; 
Associated mine name: West Ridge; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 14,800; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $11,459,900; 
Bonus bid per ton (nominal dollars): $0.77; 
Bonus bid per acre (nominal dollars): $6,961; 
Successful bidder: Andalex Resources, Inc. 

Sale date: 6/12/2003; 
Lease serial number: UTU 078953; 
Acres: 880; 
Associated mine name: Genwal, Crandell Canyon South; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 7,630; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $6,561,800; 
Bonus bid per ton (nominal dollars): $0.86; 
Bonus bid per acre (nominal dollars): $7,457; 
Successful bidder: Andalex Resources, Inc. 

Sale date: 6/24/2004; 
Lease serial number: UTU 079975; 
Acres: 703; 
Associated mine name: Aberdeen; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 3,040; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $486,400; 
Bonus bid per ton (nominal dollars): $0.16; 
Bonus bid per acre (nominal dollars): $692; 
Successful bidder: Andalex Resources, Inc. 

Sale date: 6/8/2006; 
Lease serial number: UTU 081893; 
Acres: 1760; 
Associated mine name: Aberdeen; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 14,900; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $2,816,000; 
Bonus bid per ton (nominal dollars): $0.19; 
Bonus bid per acre (nominal dollars): $1,600; 
Successful bidder: Andalex Resources, Inc. 

Sale date: 8/1/2006; 
Lease serial number: UTU 084285; 
Acres: 214; 
Associated mine name: Deer Creek; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 325; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $98,000; 
Bonus bid per ton (nominal dollars): $0.30; 
Bonus bid per acre (nominal dollars): $459; 
Successful bidder: PACIFICORP. 

Sale date: 9/3/2009; 
Lease serial number: UTU 086038; 
Acres: 120; 
Associated mine name: Emery Deep; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 561; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $201,600; 
Bonus bid per ton (nominal dollars): $0.36; 
Bonus bid per acre (nominal dollars): $1,680; 
Successful bidder: Consolidation Coal. 

Wyoming: 

Sale date: 9/20/1990; 
Lease serial number: WYW 119606; 
Acres: 81; 
Associated mine name: Swanson; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 300; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $28,611; 
Bonus bid per ton (nominal dollars): $0.10; 
Bonus bid per acre (nominal dollars): $353; 
Successful bidder: Lion Coal. 

Sale date: 9/26/1991; 
Lease serial number: WYW 117924; 
Acres: 1709; 
Associated mine name: Jacobs Ranch; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 102,600; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $20,110,457; 
Bonus bid per ton (nominal dollars): $0.20; 
Bonus bid per acre (nominal dollars): $11,770; 
Successful bidder: Kerr McGee. 

Sale date: 8/12/1992; 
Lease serial number: WYW 118907; 
Acres: 3493; 
Associated mine name: Black Thunder; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 481,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $71,898,842; 
Bonus bid per ton (nominal dollars): $0.15; 
Bonus bid per acre (nominal dollars): $20,587; 
Successful bidder: Thunder Basin. 

Sale date: 9/28/1992; 
Lease serial number: WYW 119554; 
Acres: 3064; 
Associated mine name: North Antelope Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 370,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $86,986,960; 
Bonus bid per ton (nominal dollars): $0.24; 
Bonus bid per acre (nominal dollars): $28,390; 
Successful bidder: Powder River. 

Sale date: 1/7/1993; 
Lease serial number: WYW 122586; 
Acres: 463; 
Associated mine name: Rocky Butte; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 55,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $16,500,001; 
Bonus bid per ton (nominal dollars): $0.30; 
Bonus bid per acre (nominal dollars): $35,621; 
Successful bidder: Northwestern Resources. 

Sale date: 4/5/1995; 
Lease serial number: WYW 124783; 
Acres: 1059; 
Associated mine name: Eagle Butte; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 166,400; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $18,470,400; 
Bonus bid per ton (nominal dollars): $0.11; 
Bonus bid per acre (nominal dollars): $17,438; 
Successful bidder: AMAX Land Co. 

Sale date: 12/4/1996; 
Lease serial number: WYW 128322; 
Acres: 617; 
Associated mine name: Antelope; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 60,364; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $9,054,600; 
Bonus bid per ton (nominal dollars): $0.15; 
Bonus bid per acre (nominal dollars): $14,670; 
Successful bidder: Antelope Coal Co. 

Sale date: 9/25/1997; 
Lease serial number: WYW 127221; 
Acres: 1482; 
Associated mine name: North Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 157,610; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $30,576,340; 
Bonus bid per ton (nominal dollars): $0.19; 
Bonus bid per acre (nominal dollars): $20,633; 
Successful bidder: Triton. 

Sale date: 6/30/1998; 
Lease serial number: WYW 136142; 
Acres: 4224; 
Associated mine name: North Antelope Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 532,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $109,596,500; 
Bonus bid per ton (nominal dollars): $0.21; 
Bonus bid per acre (nominal dollars): $25,945; 
Successful bidder: Powder River Coal Co. 

Sale date: 10/1/1998; 
Lease serial number: WYW 136458; 
Acres: 3546; 
Associated mine name: Black Thunder; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 412,000; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $158,000,009; 
Bonus bid per ton (nominal dollars): $0.38; 
Bonus bid per acre (nominal dollars): $44,563; 
Successful bidder: Arch Coal. 

Sale date: 9/29/1999; 
Lease serial number: WYW 139975; 
Acres: 5206; 
Associated mine name: Elk Mountain; 
Type of mine: Surface & Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 65,780; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $1,957,456; 
Bonus bid per ton (nominal dollars): $0.03; 
Bonus bid per acre (nominal dollars): $376; 
Successful bidder: Ark Land Co. 

Sale date: 9/7/2000; 
Lease serial number: WYW 141435; 
Acres: 2819; 
Associated mine name: Antelope; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 275,577; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $91,220,121; 
Bonus bid per ton (nominal dollars): $0.33; 
Bonus bid per acre (nominal dollars): $32,363; 
Successful bidder: Kennecott Energy. 

Sale date: 1/16/2002; 
Lease serial number: WYW 146744; 
Acres: 4982; 
Associated mine name: Jacobs Ranch; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 537,542; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $379,504,652; 
Bonus bid per ton (nominal dollars): $0.71; 
Bonus bid per acre (nominal dollars): $76,171; 
Successful bidder: Kennecott Energy. 

Sale date: 6/29/2004; 
Lease serial number: WYW 154001; 
Acres: 2957; 
Associated mine name: North Antelope Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 297,469; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $274,117,684; 
Bonus bid per ton (nominal dollars): $0.92; 
Bonus bid per acre (nominal dollars): $92,710; 
Successful bidder: Peabody-BTU Western Resources, Inc. 

Sale date: 9/22/2004; 
Lease serial number: WYW 150318; 
Acres: 5084; 
Associated mine name: Black Thunder; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 718,719; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $610,999,950; 
Bonus bid per ton (nominal dollars): $0.85; 
Bonus bid per acre (nominal dollars): $120,193; 
Successful bidder: Ark Land LT Incorporated. 

Sale date: 11/17/2004; 
Lease serial number: WYW 151634; 
Acres: 921; 
Associated mine name: Buckskin; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 142,698; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $42,809,400; 
Bonus bid per ton (nominal dollars): $0.30; 
Bonus bid per acre (nominal dollars): $46,473; 
Successful bidder: Kiewit Mining Group. 

Sale date: 12/15/2004; 
Lease serial number: WYW 151643; 
Acres: 2809; 
Associated mine name: Antelope; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 194,961; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $146,311,000; 
Bonus bid per ton (nominal dollars): $0.75; 
Bonus bid per acre (nominal dollars): $52,084; 
Successful bidder: Antelope Coal Co. 

Sale date: 12/29/2004; 
Lease serial number: WYW 150210; 
Acres: 2369; 
Associated mine name: North Antelope Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 324,627; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $299,143,785; 
Bonus bid per ton (nominal dollars): $0.92; 
Bonus bid per acre (nominal dollars): $126,254; 
Successful bidder: BTU Western Resources, Inc. 

Sale date: 1/19/2005; 
Lease serial number: WYW 154595; 
Acres: 2242; 
Associated mine name: Bridger; 
Type of mine: Underground; 
Estimated amount of coal leased (1,000 tons)[A]: 32,145; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $6,953,861; 
Bonus bid per ton (nominal dollars): $0.22; 
Bonus bid per acre (nominal dollars): $3,101; 
Successful bidder: Bridger Coal Co. 

Sale date: 2/16/2005; 
Lease serial number: WYW 151134; 
Acres: 2813; 
Associated mine name: School Creek; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 327,186; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $317,697,610; 
Bonus bid per ton (nominal dollars): $0.97; 
Bonus bid per acre (nominal dollars): $112,959; 
Successful bidder: BTU Western Resources, Inc. 

Sale date: 6/5/2007; 
Lease serial number: WYW 160394; 
Acres: 1399; 
Associated mine name: Black Butte; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 11,200; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $2,426,620; 
Bonus bid per ton (nominal dollars): $0.0002; 
Bonus bid per acre (nominal dollars): $1,735; 
Successful bidder: Black Butte Coal Company. 

Sale date: 2/20/2008; 
Lease serial number: WYW 155132; 
Acres: 1428; 
Associated mine name: Eagle butte; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 255,000; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $180,540,000; 
Bonus bid per ton (nominal dollars): $0.71; 
Bonus bid per acre (nominal dollars): $126,429; 
Successful bidder: Foundation Coal West Inc. 

Sale date: 4/22/2008; 
Lease serial number: WYW 174407; 
Acres: 2900; 
Associated mine name: Cordero Rojo; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 288,100; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $250,800,000; 
Bonus bid per ton (nominal dollars): $0.87; 
Bonus bid per acre (nominal dollars): $86,476; 
Successful bidder: Cordero Mining Co. 

Sale date: 1/28/2009; 
Lease serial number: WYW 154432; 
Acres: 446; 
Associated mine name: Cordero Rojo; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 54,657; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $48,098,424; 
Bonus bid per ton (nominal dollars): $0.88; 
Bonus bid per acre (nominal dollars): $107,871; 
Successful bidder: Cordero Mining Co. 

Sale date: 5/11/2011; 
Lease serial number: WYW 163340; 
Acres: 2838; 
Associated mine name: Antelope; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 350,263; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $297,723,228; 
Bonus bid per ton (nominal dollars): $0.85; 
Bonus bid per acre (nominal dollars): $104,920; 
Successful bidder: Antelope Coal LLC. 

Sale date: 6/15/2011; 
Lease serial number: WYW 177903; 
Acres: 1909; 
Associated mine name: Antelope; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 56,356; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $49,311,500; 
Bonus bid per ton (nominal dollars): $0.88; 
Bonus bid per acre (nominal dollars): $25,836; 
Successful bidder: Antelope Coal LLC. 

Sale date: 7/13/2011; 
Lease serial number: WYW 161248; 
Acres: 1671; 
Associated mine name: Caballo; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 221,735; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $210,648,060; 
Bonus bid per ton (nominal dollars): $0.95; 
Bonus bid per acre (nominal dollars): $126,059; 
Successful bidder: BTU Western Resources. 

Sale date: 8/17/2011; 
Lease serial number: WYW 172657; 
Acres: 1024; 
Associated mine name: Belle Ayr; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 130,196; 
Number of qualified bids received: 2; 
Total accepted bonus bid (nominal dollars): $143,417,404; 
Bonus bid per ton (nominal dollars): $1.10; 
Bonus bid per acre (nominal dollars): $140,057; 
Successful bidder: Alpha Coal West. 

Sale date: 12/14/2011; 
Lease serial number: WYW 174596; 
Acres: 1977; 
Associated mine name: Black Thunder; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 222,676; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $300,001,012; 
Bonus bid per ton (nominal dollars): $1.35; 
Bonus bid per acre (nominal dollars): $151,769; 
Successful bidder: Ark Land Co., South. 

Sale date: 5/17/2012; 
Lease serial number: WYW 176095; 
Acres: 3243; 
Associated mine name: North Antelope Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 401,831; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $446,031,864; 
Bonus bid per ton (nominal dollars): $1.11; 
Bonus bid per acre (nominal dollars): $137,536; 
Successful bidder: BTU Western Resources. 

Sale date: 6/28/2012; 
Lease serial number: WYW 173408; 
Acres: 6364; 
Associated mine name: North Antelope Rochelle; 
Type of mine: Surface; 
Estimated amount of coal leased (1,000 tons)[A]: 721,155; 
Number of qualified bids received: 1; 
Total accepted bonus bid (nominal dollars): $793,270,311; 
Bonus bid per ton (nominal dollars): $1.10; 
Bonus bid per acre (nominal dollars): $124,644; 
Successful bidder: BTU Western Resources. 

Source: GAO analysis of BLM data. 

[A] With the exception of WYW 154595 lease tract, we are reporting 
minable tons of coal for the lease tracts in Wyoming. For WYW 154595 
lease tract and lease tracts in all other states, we are reporting 
recoverable tons of coal. This estimate of mineable tons of coal is 
generally a larger number than the recoverable estimate, because it 
includes coal that is generally left in place during actual mining 
operations, such as coal along property boundaries or coal left in 
place as pillars for structural reasons in an underground mine. 
Wyoming BLM does not typically report recoverable tons publicly 
because officials in this state office consider this sensitive 
information. 

[End of table] 

[End of section] 

Appendix III: Summary Information from File Reviews of Selected 
Federal Coal Lease Sales: 

This appendix provides information on the 31 federal coal lease sales 
we reviewed that generally took place from January 1, 2007, to July 
31, 2012. For those BLM state offices that did not conduct 2 lease 
sales during this time, we reviewed their 2 most recent lease sales. 
[Footnote 77] 

Reports that are relevant to the determination of fair market value 
include the following: 

* geologic reports, which contain an estimate of the amount of coal 
that can be recovered on the lease tract along with the 
characteristics of the coal, including its heating content; 

* engineering reports, which generally contain estimates of the costs 
to extract the coal based on the number of employees and capital 
equipment necessary to carry out mining activities; 

* economic reports, which establish price and demand levels for the 
lease tract's coal; and: 

* appraisal reports, which document the fair market value for the 
lease tract, along with an explanation of the methods used to develop 
this number. 

BLM's guidance does not direct that all of these reports to be 
prepared as part of a lease sale. For example, it is unlikely that an 
economic report would be prepared if the income approach was not used 
to determine fair market value. However, BLM guidance requires that 
appraisal reports be signed by three officials. 

For the files we reviewed, table 5 provides information by lease tract 
on the amount of coal involved in the sale, types of reports prepared 
as part of the sale, fair market value approaches used, and compliance 
with appraisal report review requirements. 

Table 5: Summary Information on Coal Lease Sale Files Reviewed: 

State: AL; 
Serial number: ALES-047886; 
Lease tract name: Jesse Creek; 
Date of lease sale: 8/21/1997; 
Coal offered (millions of tons)[A]: 0.5; 
Geologic report prepared: No; 
Engineering report prepared: No; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} Unknown because BLM 
unable to provide copy of appraisal. 

State: AL; 
Serial number: ALES-051589; 
Lease tract name: Flat Creek; 
Date of lease sale: 9/30/2004; 
Coal offered (millions of tons)[A]: 10.8; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} No. 

State: CO; 
Serial number: COC-067232; 
Lease tract name: Dry Fork; 
Date of lease sale: 1/24/2007; 
Coal offered (millions of tons)[A]: 12.1; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: CO; 
Serial number: COC-68590; 
Lease tract name: Collom; 
Date of lease sale: 5/30/2007; 
Coal offered (millions of tons)[A]: 92.0; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} No. 

State: CO; 
Serial number: COC-072980; 
Lease tract name: Foidel Creek; 
Date of lease sale: 1/14/2009; 
Coal offered (millions of tons)[A]: 1.4; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: CO; 
Serial number: COC-070615; 
Lease tract name: Elk Creek East; 
Date of lease sale: 5/15/2012; 
Coal offered (millions of tons)[A]: 4.0; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: KY; 
Serial number: KYES-051002; 
Lease tract name: Gray Mtn. 
Date of lease sale: 7/27/2005; 
Coal offered (millions of tons)[A]: 2.9; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} No. 

State: KY; 
Serial number: KYES-050213; 
Lease tract name: Laurel Fork; 
Date of lease sale: 5/11/2006; 
Coal offered (millions of tons)[A]: 0.8; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: MT; 
Serial number: MTM-094378; 
Lease tract name: Spring Creek; 
Date of lease sale: 4/17/2007; 
Coal offered (millions of tons)[A]: 108.6; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} Yes. 

State: MT; 
Serial number: MTM-097988; 
Lease tract name: Bull Mtn. 
Date of lease sale: 2/28/2012; 
Coal offered (millions of tons)[A]: 35.5; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} No. 

State: NM; 
Serial number: NMNM-078371; 
Lease tract name: Fence Lake 1; 
Date of lease sale: 7/31/1991; 
Coal offered (millions of tons)[A]: 19.6; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} Yes. 

State: NM; 
Serial number: NMNM-086717; 
Lease tract name: Fence Lake 2; 
Date of lease sale: 7/31/1991; 
Coal offered (millions of tons)[A]: 10.0; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} Yes. 

State: NM; 
Serial number: NMNM-099144; 
Lease tract name: San Juan Deep Ext. 
Date of lease sale: 11/1/2000; 
Coal offered (millions of tons)[A]: 63.0; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Appraisal report signed by three officials?[B} No. 

State: ND; 
Serial number: NDM-095104; 
Lease tract name: Center Mine; 
Date of lease sale: 9/12/2006; 
Coal offered (millions of tons)[A]: 8.3; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No[C]; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: ND; 
Serial number: NDM-097633; 
Lease tract name: Center Mine 2; 
Date of lease sale: 10/15/2009; 
Coal offered (millions of tons)[A]: 3.0; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No[C]; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: OK; 
Serial number: OKNM-107920; 
Lease tract name: Bull Hill; 
Date of lease sale: 9/14/2005; 
Coal offered (millions of tons)[A]: 9.0; 
Geologic report prepared: No; 
Engineering report prepared: No; 
Economic report prepared: No; 
Appraisal report prepared: No; 
Fair market value approaches used: No approaches documented; 
Appraisal report signed by three officials?[B} No. 

State: OK; 
Serial number: OKNM-104763; 
Lease tract name: Liberty West; 
Date of lease sale: 9/14/2005; 
Coal offered (millions of tons)[A]: 2.1; 
Geologic report prepared: No; 
Engineering report prepared: No; 
Economic report prepared: No; 
Appraisal report prepared: No; 
Fair market value approaches used: No approaches documented; 
Appraisal report signed by three officials?[B} No. 

State: OK; 
Serial number: OKNM-108097; 
Lease tract name: McCurtain Tract No. 1; 
Date of lease sale: 9/14/2005; 
Coal offered (millions of tons)[A]: 6.5; 
Geologic report prepared: No; 
Engineering report prepared: No; 
Economic report prepared: No; 
Appraisal report prepared: No; 
Fair market value approaches used: No approaches documented; 
Appraisal report signed by three officials?[B} No. 

State: UT; 
Serial number: UTU-086038; 
Lease tract name: Miller Canyon; 
Date of lease sale: 9/3/2009; 
Coal offered (millions of tons)[A]: 0.6; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: UT; 
Serial number: UTU-85539; 
Lease tract name: Dry Canyon; 
Date of lease sale: 11/15/2011; 
Coal offered (millions of tons)[A]: 42.2; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: No; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Appraisal report signed by three officials?[B} No. 

State: WY; 
Serial number: WYW-160394; 
Lease tract name: Pit 14; 
Date of lease sale: 6/5/2007; 
Coal offered (millions of tons)[A]: 11.2; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales[D]; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-155132; 
Lease tract name: West Eagle Butte; 
Date of lease sale: 2/20/2008; 
Coal offered (millions of tons)[A]: 255.0; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-174407; 
Lease tract name: South Maysdorf; 
Date of lease sale: 4/22/2008; 
Coal offered (millions of tons)[A]: 288.1; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-154432; 
Lease tract name: North Maysdorf; 
Date of lease sale: 1/29/2009; 
Coal offered (millions of tons)[A]: 54.7; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-163340; 
Lease tract name: West Antelope 2 North; 
Date of lease sale: 5/11/2011; 
Coal offered (millions of tons)[A]: 350.3; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-161248; 
Lease tract name: North Belle Ayr; 
Date of lease sale: 7/13/2011; 
Coal offered (millions of tons)[A]: 221.7; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; 
Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-172657; 
Lease tract name: Caballo West; 
Date of lease sale: 8/17/2011; 
Coal offered (millions of tons)[A]: 130.2; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-174596; 
Lease tract name: South Hilight; 
Date of lease sale: 12/14/2011; 
Coal offered (millions of tons)[A]: 222.7; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-176095; 
Lease tract name: South Porcupine; 
Date of lease sale: 5/17/2012; 
Coal offered (millions of tons)[A]: 401.8; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-177903; 
Lease tract name: West Antelope 2 South; 
Date of lease sale: 6/15/2012; 
Coal offered (millions of tons)[A]: 56.4; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

State: WY; 
Serial number: WYW-173408; 
Lease tract name: North Porcupine; 
Date of lease sale: 6/28/2012; 
Coal offered (millions of tons)[A]: 721.2; 
Geologic report prepared: Yes; 
Engineering report prepared: Yes; 
Economic report prepared: Yes; 
Appraisal report prepared: Yes; 
Fair market value approaches used: Comparable sales; Income; 
Adjusted discounted cash flow comparable sales; 
Appraisal report signed by three officials?[B} Yes. 

Source: GAO analysis of BLM case files for coal lease sales. 

[A] In Wyoming, we are reporting mineable tons of coal, while for the 
other states, we are reporting recoverable tons of coal. This estimate 
of mineable tons of coal is generally a larger number than the 
recoverable estimate because it includes coal that is generally left 
in place during actual mining operations, such as coal along property 
boundaries or coal left in place as pillars for structural reasons in 
an underground mine. Wyoming BLM does not report recoverable tons 
publicly because officials in this state office consider this 
sensitive information. 

[B] According to BLM's handbook on the economic evaluation of coal 
properties and BLM officials, the three officials that need to sign 
the appraisal report are: appraiser, reviewer, and deputy state 
director. 

[C] While a separate economic report was not prepared, economic and 
market information was incorporated into the appraisal report. 

[D] This approach involves numerically adjusting comparable sales 
using the results of the income approach. 

[End of table] 

Appendix IV: Comments from Department of the Interior: 

The report number was changed to a FY2014 number after it was sent to 
the agency for comment. 

United States Department of the Interior: 
Office of The Secretary: 
Washington, D.C. 20240: 

August 29, 2013: 

Ms. Anne-Marie Fennell: 
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Fennell: 

Thank you for the opportunity to review and provide comments on the 
draft Government Accountability Office (GAO) Report entitled "Coal 
Leasing: BLM Could Enhance Appraisal Process, More Explicitly Consider 
Coal Exports, and Provide More Public Information" (GAO-13-586). 

The Department of the Interior appreciates the work of the GAO team 
and how the draft report captures the uncertainties and complexities 
involved with the coal leasing process. We concur with the 
recommendations in the report. The Bureau of Land Management (BLM) has 
already begun implementing a number of reforms designed to improve and 
standardize the performance of the BLM coal program, including the 
establishment of a Memorandum of Understanding (MOU) with the 
Department's Office of Valuation Services to strengthen the BLM coal
valuation program. The BLM also will soon publish additional detailed 
information regarding past lease sales on its national and state 
websites. 

We are providing two enclosures. The first is a table of our technical 
comments on the draft report to assist with the preparation of the 
final report. The second is a copy of the referenced MOU between the 
BLM and Office of Valuation Services. If you have any questions or need
any additional infol1llation, please contact Mitchell Leverette, 
Chief, Division of Solid Minerals, at 202-912-7113 or LaVanna 
Stevenson, BLM's Audit Liaison Officer, at 202-912-7077. 

Sincerely, 

Signed by: 
Tommy P. Beaudreau: 
Acting Assistant Secretary: 
Land and Minerals Management: 

Enclosure: 

[End of section] 

Appendix V: Comments from Department of Agriculture: 

The report number was changed to a FY2014 number after it was sent to 
the agency for comment. 

USDA: 
United States Department of Agriculture: 
Forest Service: 
Washington Office: 
1400 Independence Avenue, SW: 
Washington, DC 20250: 

File Code: 1420. 

Date: August 21, 2013. 

Ms. Anne-Marie Fennell: 
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Fennell: 

Thanks you for the opportunity to review and provide comments on draft 
U.S. Government Accountability Office (GAO) Report on "Coal Leasing: 
BLM Could Enhance Appraisal Process, More Explicitly Consider Coal 
Exports, and Provide More Public Information (GAO-l3-586)." We place 
great value on our collaborative relationship with the BLM and our 
joint roles in minerals development to meet the needs of the American 
public. The Forest Service has reviewed the report and has no 
additional comments. 

Thank you again for the opportunity to review your draft report. If 
you have any questions, please contact Thelma Strong, Chief Financial 
Officer, at 202-205-0429 or tstrong@fs.fed.us. 

Sincerely, 

Signed by: 

Tim DeCoster, for: 

Thomas L. Tidwell: 
Chief: 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Anne-Marie Fennell, (202) 512-3841 or fennella@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Elizabeth Erdmann 
(Assistant Director), Antoinette Capaccio, Scott Heacock, Rich 
Johnson, Mehrzad Nadji, Alison O'Neill, Dan Royer, Rebecca Shea, 
Jeanette M. Soares, Jeff Tessin, and Swati Sheladia Thomas made key 
contributions to this report. 

[End of section] 

Footnotes: 

[1] The federal government owns and manages the mineral resources on 
and below these lands but the state, in cases of state land, or a 
private party, in the case of private land, owns the surface land. 
Federal land where coal leasing takes place includes land managed by 
BLM and other federal agencies, including the U.S. Forest Service. In 
those instances where a proposed federal lease would be on lands 
managed by another agency, the federal agency managing the land must 
consent to offer the lands for lease. In these cases, BLM is still 
responsible to overseeing the leasing process. 

[2] This report uses tons when describing amounts of coal. One ton is 
2,000 pounds. 

[3] We did not include coal produced from tribal lands in our review 
of federal coal leasing because they are governed by a different set 
of regulations and do not involve the same leasing process as the 
federal coal leasing program. As of December 31, 2012, there were four 
operations mining tribal coal. 

[4] Generally, revenues from federal coal leases are split equally 
between the federal government and the state in which the coal lease 
is located. 

[5] Another way for companies to obtain the rights to mine coal is 
through the lease modification process where a company may request a 
certain amount of contiguous land be added to an existing lease. BLM 
considers this request and, if granted, the lands are added to the 
existing lease without competitive bidding. The lease modification 
process was not part of our review. 

[6] More specifically, fair market value is defined as "that amount in 
cash, or on terms reasonably equivalent to cash for which in all 
probability, the coal deposit would be sold or leased by a 
knowledgeable owner willing but not obligated to sell or lease to a 
knowledgeable purchaser who desires but is not obligated to buy or 
lease." 43 C.F.R. § 3400.0-5(n) (2013). The Federal Coal Leasing 
Amendments Act of 1976 require that BLM obtain fair market value for 
the coal lease tracts and that coal leasing generally be done on a 
competitive basis. 

[7] For the purposes of this report, we are using the term appraisal 
to mean the valuation of federal coal property offered for lease, in 
keeping with BLM's guidance. See BLM, H-3070-1 Economic Evaluation of 
Coal Properties (Washington, D.C.: 1994). The value estimated for 
federal coal lease sales is used to ensure receipt of at least the 
fair market value as required by the Federal Coal Leasing Amendments 
Act of 1976. 

[8] Before the lease can be issued, the high bidder must also provide 
a bond to ensure performance of lease conditions, and must undergo an 
antitrust review by the Department of Justice. 

[9] EIA is a statistical agency within the Department of Energy that 
collects, analyzes, and disseminates independent information on energy 
issues. 

[10] Office of Inspector General, U.S. Department of the Interior, 
Coal Management Program, U.S. Department of the Interior (Washington, 
D.C.: 2013). 

[11] This nonrandom sample cannot be generalized to all coal lease 
sales held. However, the results of this sample provide illustrative 
examples of the coal leasing process used and the documentation 
prepared. 

[12] Prior to the enactment of FCLAA, some coal leases were awarded 
noncompetitively through preference right leases, which were awarded 
in areas where coal deposits were not known to exist and were 
discovered by the applicant. Competitive lease sales were held for 
coal tracts located in areas with known coal reserves. 

[13] GAO, Analysis of the Powder River Basin Federal Coal Lease Sale: 
Economic Valuation Improvements and Legislative Changes Needed, 
[hyperlink, http://www.gao.gov/products/GAO/RCED-83-119] (Washington, 
D.C.: May 11, 1983). 

[14] Two other coal regions were decertified in 1981 and 1982. 

[15] BLM has 12 state offices, with most of these located in the 
western part of the United States. These state offices are located in 
Alaska, Arizona, California, Colorado, Idaho, Montana, Nevada, New 
Mexico, Oregon, Utah, Virginia, and Wyoming. 

[16] There are instances where the surface is owned by an entity other 
than the federal government, but the underlying minerals are owned and 
managed by the federal government. In these cases, known as split 
estates, the qualified surface owner must consent to any surface 
mining, but this consent is not required for underground mining. The 
qualified surface owner does not receive any royalties or other 
revenues for mining activities but may receive compensation from the 
lessee. 

[17] Enacted in 1970, NEPA has two principal purposes: (1) to ensure 
that an agency carefully considers detailed information concerning 
significant environmental impacts and (2) to ensure that this 
information will be made available to the public. NEPA requires 
federal agencies to evaluate the likely environmental effects of 
proposed projects using an environmental assessment or, if the 
projects would likely significantly affect the environment, a more 
detailed environmental impact statement evaluating the proposed 
project and alternatives must be completed. 

[18] 43 C.F.R. § 3480.0-5(a)(32). 

[19] Some of these state offices oversee leasing activities across 
multiple states. For example, the New Mexico state office oversees New 
Mexico, Oklahoma, Kansas, and Texas. There are no federal coal leases 
in Kansas or Texas according to BLM officials. 

[20] There are generally multiple BLM field offices that report to a 
specific BLM state office. For example, there are 10 BLM field offices 
in Colorado and 3 of these oversee federal coal leasing. 

[21] Heating content is usually expressed as British thermal units 
(Btu) per pound of coal. A Btu is the amount of energy needed to heat 
1 pound of water by one degree Fahrenheit. 

[22] Before a lease is issued, the high bidder must also provide a 
bond to performance of lease conditions, and the lease issuance is 
subject to a Department of Justice antitrust review. 

[23] The Mineral Leasing Act, as amended, directs the Secretary of the 
Interior to establish annual rentals and royalties for leases but 
establishes a minimum royalty rate of not less than 12.5 percent of 
the value of coal recovered by surface mining operations. 30 U.S.C. § 
207(a) (2013). The regulation establishing the minimum rental rate--43 
C.F.R. § 3473.3-1(a)--and the regulation establishing the minimum 
royalty rate for surface mining--43 C.F.R. § 3473.3-2(a)(1)--were 
issued in 1979. The regulation establishing the royalty rate for 
underground mining--43 C.F.R. § 3473.3 -2(a)(2)--was initially issued 
in 1979 with a regulatory minimum (of a 8 percent royalty rate) that 
could be lowered (to a 5 percent royalty rate) but in 1990 the 
regulation was amended to establish a 8 percent royalty rate. The 
regulations also authorize BLM to waive, suspend, or reduce the 
rental, or reduce the royalty, for the purpose of encouraging the 
greatest ultimate recovery of federal coal, and in the interest of 
conservation of federal coal and other resources, whenever it is 
necessary to promote development or when the lease cannot be 
successfully operated under its terms, but in no case can the royalty 
on a producing federal lease be reduced to zero. 

[24] EIA. Annual Coal Report 2011 (Washington, D.C.: 2012). 

[25] According to Environmental Protection Agency (EPA) data, coal-
fueled electric power plants are among the largest emitters of sulfur 
dioxide (SO2) and nitrogen oxides (NOx), which have been linked to 
respiratory illnesses and acid rain. The Clean Air Act requires EPA to 
establish national ambient air quality standards for six pollutants, 
including sulfur oxides and nitrogen oxides, which states are 
primarily responsible for attaining. States attain these standards, in 
part, by regulating emissions of these pollutants from certain 
stationary sources, such as electricity generating units In addition, 
the Clean Air Act Amendments of 1990 established a national cap-and-
trade program to reduce SO2 emissions from fossil-fuel electric 
generating units and required EPA to establish NOx emissions 
limitations for coal-fueled electric power plants. In response to 
these Clean Air Act requirements, many utilities installed scrubbers 
and switched to burning low-sulfur coal such as that from the Powder 
River Basin to reduce SO2 emissions. 

[26] IEA, Coal Medium-Term Market Report. Paris, France, 2012. IEA is 
an autonomous organization established in 1974 that works to ensure 
reliable, affordable and clean energy for its 28 member countries and 
beyond. The IEA's four main areas of focus are: energy security, 
economic development, environmental awareness, and engagement 
worldwide. Among its key objectives are to improve transparency of 
international markets through collection and analysis of energy data. 

[27] This price per ton of coal is for all coal sold in that state and 
may include coal from mines that are not on federal lease tracts. This 
price per ton of coal is the "free on board" price for the coal, 
meaning it is the price paid for the coal before it is loaded on to a 
train or barge for transport to its final destination. Thus, this 
price does not include the cost to transport the coal. 

[28] Coal is classified into four major ranks (from highest to 
lowest): (1) anthracite, (2) bituminous, (3) subbituminous, and (4) 
lignite. 

[29] In this section, the information we present on coal production is 
based on data from ONRR on the volume of coal sold from federal coal 
leases. As mentioned earlier, we did not include coal produced from 
tribal lands in the scope of our report. Thus, the production and 
revenue information we present does not include tribal lands. 

[30] [hyperlink, http://www.gao.gov/products/GAO/RCED-83-119]. 

[31] We included only those tracts where the documentation explicitly 
said the tracts were modified to enhance competition. We did not 
include those tracts modified for other reasons, such as to ensure 
federal coal was not bypassed. 

[32] Fifteen tracts were leased after a second sale; two tracts leased 
after a third sale; and one tract was leased after a fourth sale. 

[33] J.A. Luppens, T.J. Rohrbacher, L.M. Osmonson, and M.D. Carter, 
"Coal Resource Availability, Recoverability, and Economic Evaluations 
in the United States--A Summary," in The National Coal Resource 
Assessment Overview: U.S. Geological Survey Professional Paper 1625-F, 
eds. B.S. Pierce, and K.O. Dennen, chapter D (Reston, Va.: 2009). 

[34] GAO, Electricity: Significant Changes Are Expected in Coal-Fueled 
Generation, but Coal is Likely to Remain a Key Fuel Source, 
[hyperlink, http://www.gao.gov/products/GAO-13-72] (Washington, D.C.: 
Oct. 29, 2012). 

[35] All dollar figures in this section have been adjusted for 
inflation to 2013 dollars using the gross domestic price index, unless 
otherwise noted. 

[36] Bonus bid and rent data prior to fiscal year 2003 initially 
provided by ONRR was limited due to a data system conversion the 
agency undertook. ONRR ultimately provided updated bonus bid data for 
this period, but it did so late in our review process, and we were 
unable to determine its reliability. ONRR provided royalty data for 
the entire period of our review, starting in 1990, which we assessed 
to be reliable. 

[37] These royalty amounts do not include advance royalties, which 
lessees, if authorized by BLM, can pay in advance of actual production 
in lieu of meeting the lease's minimum coal production requirements. 
In fiscal year 2012, ONRR officials told us that revenue from advance 
royalties amounted to about $2.1 million or about 0.2 percent of total 
revenue from coal. If, in years subsequent to paying the advance 
royalty, the lease meets the minimum coal production requirement, the 
lessee's royalty will be reduced on a dollar for dollar basis by the 
amount of the advance royalty. If the lease is relinquished, canceled, 
or terminated for any reason, the lessee forfeits any advance 
royalties paid or due. 

[38] An allowance is an allowable deduction from the value of a 
mineral for royalty purposes. A processing allowance includes 
reasonable, actual costs incurred by the payer for processing a 
mineral commodity. A transportation allowance includes reasonable, 
actual costs incurred by the payer for moving a mineral commodity to a 
point of sale remote from the lease or unit area, or away from a 
processing plant; it excludes costs to gather the commodity. 

[39] For all types of coal leases, BLM is authorized to reduce the 
royalty for the purpose of encouraging the greatest ultimate recovery 
of federal coal, and in the interest of conservation of federal coal 
and other resources, whenever it is necessary to promote development, 
or when the lease cannot be successfully operated under its terms, but 
in no case can the royalty on a producing federal lease be reduced to 
zero. 43 C.F.R. §§ 3473.3-2(e), 3485.2(c)(1) (2013). 

[40] From 1990 to 2011, adjusted average prices for all coal sold in 
Colorado ranged from $23 to $42 per ton and Utah coal prices ranged 
from $21 to $35 per ton. 

[41] 43 C.F.R. § 3473.3-1(a). 

[42] BLM, H-3070-1 Economic Evaluation of Coal Properties, I-7. 

[43] There is also a third appraisal approach called the cost 
approach. Under this approach, the value of a property is appraised 
based on the cost to rebuild or replace the improvements on it. For 
example, the value of a property with a house on it could be based on 
the cost to rebuild the house, less any depreciation that has 
occurred. The cost approach is generally not used to appraise minerals 
because most of their value is tied to the minerals themselves and not 
capital improvements. 

[44] Adjusting comparable sales using the results of the income 
approach can be done using the arithmetic and/or proportional 
approach. In the arithmetic approach, the net present value of the 
comparable sale is subtracted from the net present value of the tract 
being appraised. This difference is then added to the actual sale 
price of the comparable sale. In the proportional approach, the net 
present value of the tract being appraised is divided by the net 
present value of the comparable sale, and this adjustment factor is 
then multiplied by the actual sales price of the comparable sale to 
adjust it. 

[45] The Montana/Dakotas state office manages federally owned minerals 
in Montana, South Dakota, and North Dakota. There are not any federal 
coal leases in South Dakota. The New Mexico state office oversees 
federally owned minerals in New Mexico, Oklahoma, Kansas, and Texas. 
There are no federal coal leases in Kansas or Texas according to BLM 
officials. 

[46] We spoke with officials from the Appraisal Institute, the 
Appraisal Foundation, and the American Institute of Mineral Appraisers. 

[47] These standards included the Uniform Standards of Professional 
Appraisal Practice prepared by the Appraisal Standards Board of the 
Appraisal Foundation in the United States, the Uniform Appraisal 
Standards for Federal Lands Acquisitions prepared by the Interagency 
Land Acquisition Conference in the United States, Standards and 
Guidelines for Valuation of Mineral Properties prepared by the 
Canadian Institute of Mining, Metallurgy, and Petroleum, and the Code 
for Technical Assessment and Valuation of Mineral and Petroleum Assets 
and Securities for Independent Expert Reports prepared by several 
groups, including the Australasian Institute of Mining and Metallurgy. 

[48] Special Committee of the Canadian Institute of Mining, 
Metallurgy, and Petroleum on Valuation of Mineral Properties, 
Standards and Guidelines for Valuation of Mineral Properties, 
(February 2003). These standards are required by the Toronto Stock 
Exchange, and recommended to be followed in mineral valuations 
required by regulatory bodies in Canada. 

[49] For the other 27 lease sales we reviewed, the initial bonus bid 
met or exceeded BLM's presale estimate of fair market value for 26 
lease sales. For 1 of the 2 lease sales we reviewed in Utah, no bids 
were received. 

[50] Appraisal reports prepared in the Wyoming BLM state office also 
contained a signature by a fourth official, the branch chief of solid 
minerals. 

[51] Interior, Departmental Manual, part 112, chapter 33 (June 1, 
2011). 

[52] Due to its volume and weight, most coal is transported in the 
United States by train. 

[53] EIA, Annual Coal Distribution Report (Washington, D.C.: 2011). 

[54] In 2011, coal exports from Montana mines were 13.2 million tons, 
and coal exports from Wyoming mines were 4.5 million tons. These 
export amounts may include coal from mines that are not on federal 
coal leases. EIA, Annual Coal Distribution Report. 

[55] In 2011, coal exports from states east of the Mississippi River 
totaled about 84.3 million tons or about 79 percent of total coal 
exports from the United States. As mentioned earlier, there is little 
federal coal leasing east of the Mississippi River. 

[56] IHS Global Insight is a firm that provides comprehensive economic 
and financial information on countries, regions, and industries. Wood 
Mackenzie provides industry and analysis on energy and minerals 
industries around the world. 

[57] Utah BLM officials reported that they were currently preparing 
for a lease sale and that they would be considering exports as part of 
this sale. In order to determine the impact of exports on fair market 
value, the Utah state office contracted with a private firm. 

[58] IEA, Coal Medium-Term Market Report, 2012: Market Trends and 
Projections to 2017, (2012). 

[59] According to BLM officials, BLM does develop an estimate of the 
economically recoverable tons of coal for each lease by application 
for use in valuing each lease. 

[60] Coal reserves are different from coal resources. To be classified 
as reserves, coal must be considered economically producible at the 
time of classification. Coal reserves are a subset of coal resources. 

[61] The Gillette coal field is the largest producing coal field in 
the Powder River Basin. 

[62] James Luppens et. al, USGS, Assessment of Coal Geology, 
Resources, and Reserves in the Gillette Coalfield, Powder River Basin, 
Wyoming (Reston, VA.: 2008). Spot market prices for Powder River Basin 
coal were $10.55/ton as of April 2013, according to EIA. Spot prices 
are prices received on very short-term contracts, generally lasting a 
few months in length. 

[63] USGS, Assessment of Coal Geology, Resources, and Reserve Base in 
the Powder River Basin, Wyoming and Montana (Reston, Va.: 2013). 

[64] EIA projects that U.S. coal production will increase at about 0.2 
percent per year for the period from 2011 to 2040. If that growth rate 
continues into the future, estimated recoverable coal reserves would 
be exhausted in about 194 years if no new reserves are added. 

[65] Environmental impact statements are more detailed evaluations of 
the proposed project and alternatives compared to environmental 
assessments, and are required if a project would likely significantly 
affect the environment. 

[66] For environmental assessments a decision record is used; for 
environmental impact statements a record of decision is issued. 

[67] OMB Circular No. A-130. 

[68] GAO, Agricultural Chemicals: USDA Could Enhance Pesticide and 
Fertilizer Usage Data, Improve Outreach and Better Leverage Resources, 
[hyperlink, http://www.gao.gov/products/GAO-11-37] (Washington, D.C.: 
Nov. 4, 2010), and GAO, Medicare: Communications to Beneficiaries on 
the Prescription Drug Benefit Could Be Improved, [hyperlink, 
http://www.gao.gov/products/GAO-06-654] (Washington, D.C.: May 3, 
2006). 

[69] BLM, H-3070-1 Economic Evaluation of Coal Properties, V-4. 

[70] BLM officials noted that federal officers and employees are 
prohibited from publishing or disclosing proprietary or business 
confidential information to any extent not authorized by law and that 
unauthorized publication or disclosure could result in criminal 
penalties. 

[71] BLM, H-3070-1 Economic Evaluation of Coal Properties, V-5. 

[72] Pub. L. No. 89-487 (1966), codified as amended at 5 U.S.C. § 552. 
FOIA requires federal agencies to provide the public with access to 
government records and information on the basis of the principles of 
openness and accountability in government. 

[73] The other requester did not appeal BLM's decision. 

[74] The Eastern States office oversees activities in the eastern half 
of the United States. There is currently coal leasing activity in 
Alabama and Kentucky. The New Mexico state office also oversees 
leasing activity in Oklahoma. 

[75] We reviewed three pre-2007 files for both Oklahoma and New Mexico 
because these sales involved multiple lease tracts that were held on 
the same date. 

[76] One of the two lease sales we reviewed from Utah did not receive 
any bids. All of the other lease sales received at least one bid. 

[77] We reviewed three pre-2007 files for both Oklahoma and New Mexico 
because these sales involved multiple lease tracts that were held on 
the same date. 

[End of section] 

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