Published January 04, 2013
WASHINGTON – Two top U.S. senators are calling for the Interior Department to investigate whether coal companies are undervaluing coal they export in order to lower their royalty payments to the government by hundreds of millions of dollars.
Democratic Senator Ron Wyden, the incoming chairman of the Energy and Natural Resources Committee, and the panel's leading Republican, Senator Lisa Murkowski, said they were concerned that coal companies may be shorting royalty payments.
At issue is mining in the vast Powder River Basin in eastern Wyoming and Montana which is coal rich and chiefly on federal land. Mining companies pay a royalty to extract fuel from that region.
The lawmakers cited a Reuters investigation into how companies like Arch Coal Inc, Peabody Energy Corp and Cloud Peak Energy Corp account for royalties on sales to Asia from the Powder River Basin.
"If any violations of the law have occurred, companies should be required to cure any gap in royalty payments and, if misconduct has occurred, civil penalties should be levied," a letter from the lawmakers sent on Thursday to Interior Secretary Ken Salazar reads.
Congress' investigative arm, the Government Accountability Office, is examining the federal coal program. The Department of the Interior also has an existing investigation.
In October, Reuters reported that Asian economies stand to gain from U.S. coal policies meant to keep domestic power cheap and abundant.
Last month, Reuters reported that coal exporters could save on royalty payouts by valuing the fuel at low domestic prices when it was sold abroad, a practice that troubled lawmakers.
The senators cited Reuters reporting when they warned that coal miners may be selling to sister companies at artificially low prices to dodge royalty payouts.
"This is so obvious it shouldn't need to be said: Coal companies need to be paying taxpayers all of the money they are owed," Wyden said in a statement. "If regulators, or decades-old laws, are not doing enough to protect the public interest, our committee intends to find out, and to fix it."
Murkowski, a supporter of free energy trade, said she expects officials to protect taxpayers' stake in sales from federal land.
"Energy exports can create jobs, generate revenue, and improve our balance of trade," Murkowski said in a statement. "As we seek to maximize these benefits, we must be certain that coal exporters are following the rules."
The lawmakers noted that 118 million tons of coal have been exported from Western states since 2001. They urged officials to audit those years and look for abuses.
In early trading on the New York Stock Exchange Cloud Peak Energy was down 0.4 percent at $19.23 per share, Arch Coal was up 0.5 percent at $7.37 and Peabody Energy was up 0.5 percent at $26.76.
(Reporting by Patrick Rucker; Editing by Andrea Ricci and Phil Berlowitz)