Coal Exchange Management Continues To Need Attention

RCED-83-58: Published: Mar 7, 1983. Publicly Released: Mar 14, 1983.

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In response to a congressional request, GAO examined several aspects of the proposed exchange of coal land ownership in Montana between the Bureau of Land Management (BLM) and a mineral company which is a railroad affiliate. The exchange is proposed to give both parties contiguous parcels of land which would be more conducive to leasing and development.

GAO found that, although the Mineral Leasing Act prohibits common carrier railroads from receiving federal coal leases, these restrictions do not apply to coal exchanges. Under the authority of the Federal Land Policy and Management Act, BLM can noncompetitively exchange coal ownership at any time if the exchanges are in the public interest and if the exchanged resources are of equal value. In addition, GAO found no discussion of the relationship between leasing federal coal or exchanging it in the law or regulations; nor did it find regulatory criteria for determining when to consider an exchange or leasing. Thus, BLM has a great deal of discretion in processing exchange proposals. GAO believes that there is merit to proceeding with consideration of the proposal because: (1) an exchange would be the surest way to assemble land conducive to development and even greater quantities of coal would be brought under federal jurisdiction; (2) the long-term marketability of the federal tract would be enhanced by the elimination of a checkerboard land problem; and (3) an alternative cooperative leasing approach has been unproven. GAO found that, although BLM intends to use the experience gained from this project to develop criteria for handling future exchanges, there is little assurance that key factors affecting exchange decisions will be fully considered.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Interior's position is that each coal exchange is a unique, one-time administrative activity for which formal procedures and guidelines are unnecessary. No further follow-up is warranted.

    Recommendation: The Secretary of the Interior should establish regulatory requirements to help ensure that future coal ownership exchanges are consistently and equitably handled at the state level. These regulations should include: (1) guidelines for measuring public benefit and equal value for coal suitable for exchange; and (2) a requirement that both lease and exchange options are adequately considered when a proposal is received.

    Agency Affected: Department of the Interior

  2. Status: Closed - Not Implemented

    Comments: Interior's position is that each coal exchange is a unique, one-time administrative activity for which formal procedures and guidelines are unnecessary. No further follow-up is warranted.

    Recommendation: The Secretary of the Interior should follow through in implementing recommendations previously made by GAO with regard to lease exchanges.

    Agency Affected: Department of the Interior

 

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