Sen. Maria Cantwell will introduce legislation designed to close loopholes in the Interior Department’s coal-mining program that watchdog groups say costs taxpayers millions of dollars.
The Washington state Democrat’s forthcoming bill would address a practice that critics contend allows coal companies to pay a smaller royalty than they should be paying. It also would change how the federal government offers federal leases to coal companies after a 2013 Interior Department inspector general report found lease tracts often received bids from just one company, undervaluing the tracts and costing taxpayers money.
Cantwell offered few details to the Washington Examiner. But she noted her measure would go beyond a proposed rule the Interior Department proposed in January to change coal royalty valuations.
“Let’s put it this way — that was one step, but we’d like to see more,” said Cantwell, the top Democrat on the Senate Energy and Natural Resources Committee.
The Interior proposal, which did not address coal leasing, is meant to address what some have called a flaw in the royalty system that has raised questions from lawmakers on both sides of the aisle.
A 2012 Reuters investigation found companies would flip coal mined on federal land to subsidiaries, paying the 12.5 percent royalty rate at that point of sale. But the middlemen, which were often owned by the same company, would sell that coal to international buyers at a higher rate.
The Interior Department proposed assessing the royalty rate to the final customer. The proposal also allows coal companies to deduct transportation costs and some expenses for processing coal.
Environmental and watchdog groups said the proposal would address an issue of fairness. They said it would increase royalty payments to states and that its effect on federal coal mining production would be negligible.
The coal industry has defended the practice, saying the agency hasn’t provided proof that companies are majorly underpaying royalties. It said the Interior proposal would raise costs to mine federal coal, in turn decreasing revenue to the federal government and states, which receive half of royalty payments.
“Increased taxes and royalties will reduce investment, lower government [federal and state] royalties and decrease jobs and access to affordable energy,” Luke Popovich, a spokesman with the National Mining Association, told the Examiner in an email.
