Through royalty loopholes and deductions, the federal government is providing more than $1 billion per year in taxpayer-funded subsidies to coal companies operating on public lands—money that could be used for schools, roads, and aging infrastructure in coal states. The Department of the Interior, however, has proposed a rule that—if strengthened—could end these giveaways and deliver a better return to U.S. taxpayers from the mining of publicly owned coal.
The U.S. Department of the Interior’s Office of Natural Resources Revenue’s, or ONRR’s, proposed rule would ensure that royalties are paid on the first arm’s-length transaction of a coal sale so that coal companies can no longer use their affiliates to dodge royalty payments. But this rule does not go far enough to guarantee that taxpayers are receiving every dollar due on their publicly owned resources. More significant reforms are needed to improve efficiency and transparency in the federal royalty-collection process and to ensure that royalties are paid on the true market value of coal—not just the price paid by a middleman broker. The Department of the Interior should strengthen its proposed rule to value coal for royalties at the delivered price, or the price paid by a power plant or exporter; cap transportation deductions at no more than 50 percent of the value of the coal; and eliminate washing allowances. These simple and common-sense changes to the proposed rule would help ensure that American taxpayers and coal-originating states receive their fair share of revenue.
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