The debate over Interior Secretary James G. Watt's coal policies has focused national attention on the heart of his agenda: transfer of government resources to private control on a scale unprecedented in recent history.
For two years, the controversy surrounding Watt has centered on his policies in wilderness areas, national parks and wildlife refuges. But he has often said that a central mission of the Reagan administration at the Interior Department is to open billions of dollars in natural resources and tens of millions of acres of federal land to the energy industry for development.
Virtually all of these resources are located in the West and beneath the oceans. Some resource economists estimate that energy resources worth as much as $1 trillion will have been leased to industry before Reagan leaves office. It would be the largest transfer of resources since the government deeded vast portions of the West to frontier settlers and developers.
Although Watt has been blocked on several fronts, he has moved rapidly on this one, which his defenders and his critics expect to be his most far-reaching legacy. Under Watt's stewardship, the Interior Department has, according to agency documents:
* Leased more government coal reserves in one year--1.7 billion tons in 1982--than the Carter administration proposed to lease in four. Watt has announced plans to lease as much as an additional 15 billion tons by 1985.
* Leased more acres of federal land for oil and gas development in 1982 than the Carter administration leased in four years. Interior planning documents predict that an additional 60 million acres will be leased in 1984, or five times the amount in the last year of the Carter administration.
* Established a program to make available 200 million acres of coastal waters annually for oil and gas leasing in the next five years--almost the entire U.S. coastline. The Carter administration had proposed offering 55 million acres for offshore leasing in five years.
* Put all known geothermal steam resources on the market, issuing leases on 2.1 million acres of land--more than twice the area leased by the Carter administration in its last two years.
* Drafted plans to lease oil shale and tar sands in the Rocky Mountain states in 1984. Neither resource was leased by previous administrations, and officials of the synthetic fuels industry have questioned whether there will be a market for either by next year.
These leases run from five to 20 years, depending on the mineral, and can be extended in some cases if mining begins by the expiration date.
Watt has argued that such a transfer is needed to speed development of domestic energy supplies and to stimulate the economy. He and his aides have testified that they believe the private marketplace is better equipped than the government to manage these resources.
This is the same position Watt took as an attorney for the Mountain States Legal Foundation in Denver, where before 1981 he frequently sued the Interior Department on behalf of energy companies seeking more control over federal land and minerals. He recently said those who differ with him seek "centralized power in Washington so they can dictate our social behavior and conduct."
But an investigation ordered by the House Appropriations Committee and released last week has changed the terms of the debate from philosophy to economics.
It concluded that Watt's coal-leasing program has flooded a glutted market with government resources, bringing only "fire sale" prices and allowing the coal industry to reap "windfall" profits at the expense of the federal treasury.
In particular, it cited Watt's auction of 1.1 billion tons of government coal along the Wyoming-Montana border in April, 1982--the largest coal auction in U.S. history--when the coal industry was in a deep recession. Most tracts drew only one bidder, and the average bid was 3.6 cents a ton plus royalties, compared to 20 cents a ton for similar coal reserves in 1980, the report said.
Watt and his aides have called the report "deceitful" and denied its charges. They have emphasized that the speedup in mineral leasing increased revenues from $4.8 billion in 1980 to $7.6 billion in 1982 and that the real gains will show up as royalties when production begins.
The issue appears likely to intensify in the next weeks. Five House subcommittees are investigating whether Watt's leasing strategies have resulted in what they call a "giveaway" to industry. The General Accounting Office is also finishing an inquiry that sources say will harshly criticize the April, 1982, coal auction, and there is a bipartisan move in Congress to ban the department from leasing more coal until a system is developed to ensure higher returns.
Watt, as interior secretary, manages trillions of dollars in federally owned minerals and hundreds of millions of acres of government land, most of it in the West. Throughout history, the department has received poor returns for these resources, and members of Congress repeatedly have tried to change leasing laws to capture more money for the government. Large loopholes remain, though, and the increase in leasing activity is bringing them into focus.
Most leasing laws require the Interior Department to receive a "fair market value" for federal resources, or the price a willing buyer would pay a willing seller. At issue in the current controversy is whether the department is required to time its leasing to attract the most competition and highest prices and whether the sheer volume of leasing is driving down prices.
"The question is whether the government received a fair bid for those lands . . . ," Rep. Sidney R. Yates (D-Ill.) said last week in a hearing on the Montana-Wyoming auction. "How do you know? You'll never know."
"Let's don't define competition as 10 bidders and one seller," Assistant Interior Secretary Garrey Carruthers answered. "A market is a relationship between one bidder and one seller. Competition is nice in the market. We'd love to have more bidders . . . . It's good business . . . . But we do not give the coal away."
In addition to leasing more minerals, the Interior Department has revised regulations to give industry more influence over when and where the minerals will be developed. One of the most controversial changes came in a regulation designed to stop private interests from leasing government coal at low prices, holding it for years, then selling the rights to speculators at a profit.
The old regulation required anyone who acquired coal leases before 1976 to start mining by 1986 or forfeit them to the government. Backed by its solicitor's opinion, the Interior Department changed this rule to give holders of the old leases an extra 10 years. On leases issued after 1976, federal law requires that companies begin mining within 10 years. The Reagan administration is supporting a push by the coal industry for legislation to extend that term.
The new leasing strategy stands to affect so many states and people that its opponents span an unusual spectrum, from conservative governors to environmentalists, ranchers, farmers and hunters. All complain that too much land is being leased for the government to account for impacts on water, air, wildlife, people, cultural resources and general quality of life.
The Natural Resources Defense Council, joined by six states, has challenged the offshore leasing program in a suit contending that it shortchanges environmental concerns and the U.S. treasury. The National Wildlife Federation, joined by ranchers and farmers, has sued to invalidate the Montana and Wyoming coal leases on the same grounds. The state of Massachusetts recently blocked leasing off its coast.
J. Allen Overton Jr., president of the American Mining Congress, which represents a large segment of the energy industry, said his group sees no need to slow the leasing pace set in the last two years.
"In a particular instance, mistakes may have been made, but it's important for the economic well-being of the country as well as its national security that we have an adequate minerals base," he said. "It takes energy and stuff to make things. And the only place we can get the stuff is from the ground."