The big coal companies have been using shell corporations to avoid paying export royalties on the coal they're mining on leased Federal land in Montana' and Wyoming's Powder River Basin. Now the Interior Department is investigating the practice.
Coal sales investigated by feds; no violations yet
Interior Secretary Ken Salazar said he has asked the agency's Office of the Inspector General to look into whether such actions violated federal law.
He said one federal coal lessee is under investigation for possible criminal violations. Details weren't offered, and his office declined to say if that involved coal shipped overseas.
The administration was responding to concerns raised by Sen. Ron Wyden, D-Ore., and Sen. Lisa Murkowski, R-Alaska. They've warned that as coal exports grow, taxpayers could lose many millions of dollars annually if royalties are unfairly calculated.
Coal royalties nationwide totaled $876 million last year, from 460 million tons of coal mined from federal lands.
Salazar said a special task force of state and federal officials plans to review coal sales and contracts in Montana and Wyoming from 2009 and 2011, and later expand the inquiry to others states for sales dating to 2001.
Government agencies typically audit coal sales several years after they have taken place.
In a joint statement, Murkowski and Wyden said they were "pleased with the formation of a task force to ensure coal companies have paid their fair share when coal is mined on public lands and sold overseas."
Salazar said the issue underscores the need for reforms in how royalties are calculated, which was last updated in 1989, before the recent spike in coal exports.
The courts have struck down this practice of using shell corporations to avoid export duties in other industries. I diaried this in October, see:
Taxpayers are subsidizing US coal exports to fuel America's industrial rivals in Asia