Coal firms that operate at federal mines won’t be able to sell coal overseas at discounted rates any longer under a proposed Interior Department rule.
At issue is a practice where coal companies assessed royalties paid for mining on federal land at lower domestic rates even when the coal was being shipped to Asia, where the product fetched a higher price. The practice was uncovered by a 2012 Reuters investigation, which incited a round of oversight from Capitol Hill over concerns taxpayers were getting short shrift.
“Coal produced on public lands is an important part of our domestic energy portfolio, but we have an obligation – and we are fully committed – to ensure that the American taxpayer receives a fair return for the production of domestic energy resources,” Deputy Secretary of the Interior Mike Connor said.
Companies are supposed to pay a 12.5 percent royalty for the coal they mine on federal land, which they secure through leases with Interior. But firms have wriggled out of paying higher royalties by selling federal coal at the lower domestic price to traders that then flip the product to energy-hungry Asian customers that are willing to pay more. Reuters found companies exporting coal from federal land in Wyoming and Montana would have pocketed an additional $40 million in revenue in 2011 under that method.
Environmental groups praised the proposed rule, which also affects royalty valuations for oil and natural gas extracted from federal lands.
“Coal companies are making windfall profits as American taxpayers are being cheated, and today’s announcement signals a willingness to enact much-needed reform. The final rule should close loopholes that give the coal industry an unfair market advantage for decimating public lands and paying bargain-basement rates for public resources,” said Athan Manuel, director of public lands protection with the Sierra Club.
