WASHINGTON, Oct 20: Asian economies, hungry for coal, stand to gain from a US programme meant to keep domestic power cheap and abundant.

At issue is how much miners pay the government to tap the coal-rich Powder River Basin in eastern Montana and Wyoming. Much of the basin is on federal land. Selling that coal cheap at a time of increasing exports across the Pacific could amount to a US taxpayer subsidy for industrial rivals like China.

Government auditors have long faulted lax oversight of the coal lease programme, saying miners have too much sway. Officials have defended the system, saying their approach is the right one to help utilise a region that provides a large share of the country’s power.

That argument has crumbled as more coal from federal land is being sold overseas and Asian economies anticipate gains from the programme meant to keep lights on in American homes. If the US miners can find ports to reach Asian markets easily it could mean hundreds of millions of dollars in additional profits and marginally lower coal prices for countries in those markets.

The US coal exports have steadily climbed since 2009 and are on track for a record high this year, as miners such as Peabody Energy and Arch Coal scramble to ship surplus coal overseas in deals that can double or triple their margins, analysts say.

That dynamic raises questions about whether taxpayers are essentially helping Asian economies save on energy costs, according to six former officials who served both Democratic and Republican presidents. The possibility of large-scale exports was far from their minds when they managed federal land years ago.

“A key question is whether the taxpayer is getting a fair return on the use of those lands,” said Lynn Scarlett, who served as a deputy to two Secretaries of the Interior under President George W. Bush between 2005 and 2009.

The investigative arm of Congress, the Government Accountability Office, is examining whether miners are paying fair market value for coal on federal land. The Bureau of Land Management, which oversees coal leases for the Department of the Interior points out that the programme has generated more than $9 billion in revenue in the last decade.

“It should be noted that the Bureau is obliged... to obtain fair market value, not maximise value, for federal coal,” a department spokeswoman said on Wednesday.

Questions about the coal lease programme could frame an intensifying debate about how the US should manage its abundance of fossil fuels and achieve energy independence.

The engine for future Asian coal profits is the Powder River Basin — a high western plain where the black rock runs in rich seams 10 stories deep. Eighty per cent of the basin is on federal land.

Cloud Peak Energy of the Powder River Basin has seen its Asian exports climb to nearly 5 million tons a year from 100,000 tons five years ago. While that is only about 5 per cent of sales, it accounted for nearly 19 per cent of revenue last year, according to securities filings.

Miners need large coal ports on the West Coast to best tap Asian markets. Opposition from environmentalists means developing such ports is no sure bet in the near-term. Without that coal export hub on the West Coast, shipments to Asia would likely continue the costly and circuitous trip down the Mississippi and through the Gulf of Mexico.

“We believe that Asia represents a promising source of sales for the Powder River Basin,” said Peabody spokesman Vic Svec.—Reuters