UPDATE 1-US coal sold too low, taxpayers miss out -govt watchdog
* Federal coal sales need better oversight, inspector general says
* Officials miss Asian demand when valuing coal, report finds
* One-bid auctions are a common risk on federal leases - report
WASHINGTON, June 11 (Reuters) - U.S. officials who administer a federal coal program have undervalued the fuel, costing taxpayers $62 million in some recent mining leases alone, said a government watchdog report released on Tuesday.
About 40 percent of the coal sold in the United States is drawn from federal land and the program is administered by the Interior Department's Bureau of Land Management, which is required to seek a fair price on behalf of taxpayers.
"We found weaknesses in the current coal sale process that could put the government at risk of not receiving the full, fair market value," Interior's Inspector General, the investigative arm of the department, said in an independent review.
Federal officials have often used a low benchmark price for determining the value of coal when a higher price was more fitting, the report found, and officials rarely blame coal companies. Only six citations have been lodged against coal companies after more than 8100 inspections from 2009 to 2011, the report said.
Inspectors also faulted Interior for one-bid auctions and for giving mining companies too much say in the value of federal coal. Government estimates of coal value that must be kept secret have been handled carelessly, the report said.
"We found an instance where one employee locked an appraisal in a standard file cabinet in a cubicle that other employees could access," the report said about one instance of poor security.
A coal company that got an early look at that appraisal could make sure it won a bid with the smallest offer, the report found.
Miners that have sought to expand their existing lease since 2000 have underbid for coal by $60 million, the report said.
The Interior Department said on Tuesday that it was seeking to correct the shortcomings in the federal coal program.
"The BLM is committed to ensuring that the American people receive a fair return for the development of coal resources," Bureau of Land Management spokesperson Celia Boddington said in a statement.
The National Mining Association, the trade group for the coal industry, said the revenue shortfall in the report was only a small fraction of the overall coal program.
"The net benefit to the American taxpayer was over $2.4 billion last year alone," said Nancy Gravatt, spokesperson for the trade group in Washington. "The current federal leasing program is sound."
The report said that even a small error in calculating a fair market value (FMV) can add up to large sums when such large blocks of coal are auctioned.
Seven coal leases were conducted since 2011 in the coal-rich Powder River Basin of Wyoming and the report concluded that in those cases "even a 1-cent-per-ton undervaluation in the FMV calculation could result in a $3 million revenue loss."
The report also said that federal officials do not properly account for the value of Powder River Basin coal in export markets - particularly Asia.
"It appears that several state offices overlook the export potential," the report said.
In February, the Interior Department said that it will investigate whether coal companies wrongly cleared their sales through sister companies in order to skirt royalty payouts on those Asian sales.
"This audit raises new questions about whether BLM stood up for taxpayers when it comes to coal leasing," Ron Wyden of Oregon, the chairman of the Senate Energy and Natural Resources Committee, said in a statement.
Wyden, a Democrat, and Lisa Murkowski of Alaska, the Senate panel's ranking Republican, sought answers on Asian sales early this year.
Arch Coal Inc, Peabody Energy Corp and Cloud Peak Energy Inc. are among the leaders in Asian coal exports. None of the companies had an immediate comment.