July 29, 2015

Wyden, Udall Introduce Bill to End Sweetheart Deals for Coal Companies

New Bill Would Get a Fair Return for Taxpayers

Washington, D.C. – U.S. Sens. Ron Wyden, D-Ore., and Tom Udall, D-N.M., today introduced legislation to ensure American taxpayers receive the full value of coal produced on public lands.

The Coal Royalty Fairness Act would require the Interior Department to collect royalties for coal mined on federal lands based on the actual market value of coal. Currently, some private mining companies sell coal to their own affiliated companies at a lower cost than market value, and pay federal royalties based on the cheaper, first point of sale.

“American taxpayers are getting ripped off by coal companies under the current, broken coal royalties system,” Wyden said. “I raised concerns about this two years ago, and today, Sen. Udall and I are introducing legislation to get the public every penny owed by companies that may be taking advantage of a loose system. Instead of subsidizing private coal companies, it’s time to put this money back where it belongs – into rural communities and the pockets of taxpayers.”

“Our bill makes a simple change that will ensure taxpayers get their fair share of royalties on coal mined from public lands. We’ve been shortchanged for far too long,” Udall said. “Like many other western states, New Mexico depends on mineral royalties to help pay for things like public education, and fixing our broken royalty program will give our schools a much-needed funding boost.” 

The bill is modeled after current successful practices in Montana where the state determines taxes for coal mined on public lands based on the true value of coal.

report from Headwaters Economics estimates the public loses about $140 million a year based on the current system of royalty valuation.

The bill would also increase transparency within the federal coal program by requiring the Interior Department to calculate and publish the going market rate for coal and coal transportation. Additionally, it would require the Government Accountability Office to review the program every three years.

Wyden called for an investigation into the federal coal program in 2013 as the then-chairman of the Senate Energy and Natural Resources Committee after a series of news reports detailed how some companies were using financial arrangements – selling coal to their own affiliates– to avoid paying full royalties on the market cost of coal.

Read the bill text here and a one-page summary here.


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