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Natural Resources & Energy

Rule Change Affects Royalties On Exported Coal

Stephanie Joyce

Coal companies could have to pay royalties on the sale price of exported coal if the Department of the Interior adopts new regulations next year. The draft rules released on Friday address a loophole first identified by the Reuters news service. It allows companies to sell their coal to an affiliated company at domestic prices and pay royalties on that price, and then the affiliated company can turn around and sell that into the international market for a steep markup.

Tom Sanzillo is the director of finance for the Institute for Energy Economics and Financial Analysis. He’s calculated taxpayers are losing out on tens of millions of dollars in royalties.

“It’s about time that the taxpayers in the United States received a fair share of coal profits, because after all, the United States taxpayer owns the coal," he said.

Industry has said in the past that sales to affiliates are not a loophole. Right now, the US exports roughly 100 million tons of coal a year, although companies would like to see that increase, with additional coal exports from the Powder River Basin.

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