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RCED-83-119 1 (1983-05-11)

handle is hein.gao/gaobabeal0001 and id is 1 raw text is: 






BY THE COMPTROLLER GENERAL



Report To The Congress

OF THE UNITED STATES


Analysis Of The Powder River Basin

Federal Coal Lease Sale: Economic

Valuation. Improvements And

Legislative Changes Needed


At sales in April and October 1982, the Department of
the Interior sold Powder River Basin coal leases in
Wyoming and Montana for $67 million. Although
these prices were only $3.5 million lessthan Interior's
original estimates of their value, they were roughly
$100 million less than GAO's revised estimates of fair
market value. GAO made these revisions using
Interior's estimating approach and correcting for
several inappropriate adjustments.

The Secretary of the Interior may wish to reconsider
Departmental determinations and cancel leases for
which fair market.value was not received. GAO
recommends that the Secretary postpone scheduled
regional coal sales until the Department strengthens
its procedures for determining the fair market value of
Federal coal.

Prevailing statutes assume all leases are competitive
and do not recognize that much of the coal is essen-
tially captive to existing producers. In trying to sell
such leases competitively, the Government realizes a
less-than-reasonable return for Federal coal. To
remedy this situation, GAO recommends that the
Congress amend the Mineral Lands Leasing Act of
1920 to authorize Interior to negotiate the sale of
leases in appropriate cases.

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                 U                                          GAO/RCED-83-119
               'k                                             MAY 11, 1983

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