BILLINGS — The U.S. government proposed changes Friday in how it values coal mined from public lands in the West to make sure companies aren’t shortchanging taxpayers on sales to Asia.
The Interior Department announcement comes after coal exports surged in recent years as the industry sought alternatives to a weak U.S. market.
Under rules in place since the 1980s, companies can sell the fuel to affiliates and pay royalties to the government on that price, then turn around and sell the coal for more overseas.
Federal lawmakers and interest groups have warned taxpayers could lose many millions of dollars annually if royalties are unfairly calculated.
The industry insists the existing system is working. In 2013, coal royalties totaled almost $670 million, according to the Interior Department.
Gregory Gould, director of Interior’s Office of Natural Resources Revenue, told The Associated Press that the proposed changes would base royalty payment on the final point of sale for a coal shipment. Deductions will be allowed for transportation costs, he said.
“It will be very transparent,” he said. “You’ll be able to see what the final sale price.”
Gould added that pending audits of coal sales over the past several years will show if past sales were fairly valued. Those audits should be done next year, he said.
“We’ll know if anybody was taking advantage of what could have possibly been a loophole,” he said.
Roughly a half-billion tons of coal is mined annually from federal lands. Although most of that coal is burned by power plants in the U.S., companies have been pursuing new ports in Oregon and Washington in a bid to dramatically increase export volumes.
Mines in Montana, Wyoming, Colorado and Utah produce coal from federal leases for export.
National Mining Association Vice President Nancy Gravatt said her organization was aware of the proposed changes to how coal is valued, but had not yet seen them.
“Anything that’s suggesting that (the current rules) have not been effective, we want to evaluate carefully,” she said. “Taxpayers have benefited from the royalties.”
U.S. Sen. Ron Wyden, an Oregon Democrat who’s been critical of the federal government’s coal program, said in a statement that he applauded the “common-sense steps” proposed by Interior to change to the royalty system.