Cooperative Leasing Offers Increased Competition, Revenues, and Production From Federal Coal Leases in Western Checkerboard Lands

EMD-82-72: Published: Apr 28, 1982. Publicly Released: Apr 28, 1982.

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GAO evaluated the Department of the Interior's ongoing experiment with cooperative leasing agreements as a possible alternative approach for developing Federal coal in Western checkerboard lands. The basic GAO objective was to determine whether Interior's efforts to plan and conduct a cooperative coal lease sale would result in a fair and reasonable first test for the concept.

Prior to the actual lease sale, the cooperative coal leasing concept combines the surface and coal rights to checkerboard lands into a single logical mining unit. Interior chose the Red Rim, Wyoming, tract as the test site for the first cooperative lease sale. However, obtaining consent from the private surface owner and unresolved legal issues surrounding participation by the mining affiliates of land grant railroads have complicated the sale. Moreover, the possibility of protracted litigation of either issue may persuade Interior to withdraw the tract for consideration for sale under the cooperative agreement concept. GAO believes that it would be imprudent to decide on the merits of the cooperative leasing concept based solely on the outcome of the Red Rim experiment. Cooperative coal leasing could substantially increase competition, revenues, and production from checkerboard area coal leases. In addition, the concept could lead to the mining of Federal coal that might not otherwise be recovered. However, before meaningful comparisons can be made against other leasing alternatives, more experience with the concept is needed.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Interior should continue efforts leading to the cooperative leasing of the Red Rim tract.

    Agency Affected: Department of the Interior

  2. Status: Closed - Not Implemented

    Comments: Interior currently has no plans for using the cooperative agreements concept in upcoming coal leasing. No action is required by GAO.

    Recommendation: The Secretary of the Interior should, in planning future leasing activities: (1) take steps, such as announcements in the media, which could lead to increased submittals of cooperative coal leasing proposals from private parties holding surface and coal rights to lands adjoining Federal coal holdings; (2) identify to the public where cooperative leasing proposals could be incorporated into the existing coal leasing program; and (3) give priority to cooperative coal leasing proposals containing all of the surface and underlying coal rights.

    Agency Affected: Department of the Interior

 

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