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Montana News

Senators Introduce Expanded Coal Royalty Reform Bill

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USDA NRCS
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Heavy equipment loading coal at the Decker Coal Company.

New legislation introduced this week aims to ensure taxpayers get the full value of coal mined from public lands. Critics say coal companies are ripping off American taxpayers by not paying their fair share of royalty payments.Democratic senators Ron Wyden of Oregon and New Mexico's Tom Udall want to double-down on a federal coal reform proposal.

Coal is currently valued when it's sold at the mine. Companies are accused of selling their coal at artificially low prices to their own subsidiaries, which turn around and resell it at higher prices. Some estimate that practice short changes state and local governments of tens of millions of dollars annually.

The Interior Department now wants coal companies to pay taxes based on the price they charge companies that are not their subsidiaries.

Senator Wyden says that's a good start, but doesn't go far enough.

"For example, if a coal company sells a ton of coal for 12 or 13 dollars-per-ton to somebody who they know is going to quickly sell it for $16, the taxpayer ought to get the royalty on $16, the true market price regardless of who the middleman is. The bill is based on what are current and successful practices in Montana," Wyden says.

The bill would also require the government to calculate and publish the going market rate for coal and coal transportation. And it would require a federal audit every three years.

The coal industry counters these reform proposals could lead to a spike in electricity prices and hamper coal production. They say that would lead to a reduction in coal-related revenue and ultimately lead to higher property taxes.

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