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Non-Competitive Bidding for Coal Mining Rights a $28.9 Billion Taxpayer-Funded Subsidy?

2 min. read

A story by reporter Juliet Eilperin in yesterday's Washington Post highlighted yet another way in which U.S. taxpayers subsidize the fossil fuel industry in this country. This time, it's coal, and it's a lot of money if the analysis is correct:

The government’s longtime practice of auctioning coal mining rights to a single bidder may have cost taxpayers as much as $28.9 billion over the past 30 years, according to an analysis to be released Monday by the Institute for Energy Economics and Financial Analysis, a Cambridge, Mass.-based think tank.

The non-competitive nature of the federal leasing program is being reviewed by the Interior Department’s inspector general and also will be the subject of an audit by the Government Accountability Office, according to officials at the Bureau of Land Management, which oversees the leasing program.

...In the 26 coal leases the federal government has awarded in southeastern Montana and northeastern Wyoming since 1991, 22 have gone to a single bidder. In the other four instances, there were only two bidders involved.

In other words, highly profitable major coal companies like Peabody, Alpha Natural Resources, Arch Coal and Cloud Peak Energy received an implicit subsidy of $28.9 billion over the past three decades, or about $1 billion every single year.

What did the coal companies use that money for?  In the case of Alpha Natural Resources, it appears they used part of it to pay off the $209 million settlement for the Upper Big Branch Mine disaster, including "$41.5 million to the survivors and families of the deceased" and "a $10.8 million fine for 369 citations and orders, the largest fine for a mine accident in U.S. history." As we've asked many times before, is there any good reason why U.S. taxpayers should be subsidizing companies like these? We certainly can't think of any.