US Plans to Shut Royalty Loophole on Coal Exports

U.S. coal companies will no longer be able to settle royalties at low domestic prices when they make lucrative sales to Asia according to reforms proposed by the Interior Department on Friday.

American taxpayers by law are due a 12.5 percent royalty on the sales of millions of tons of coal pulled each year from federal land that mining companies lease.

In past years of strong global demand, U.S. miners have been able to avoid a royalty hit on lucrative exports by first selling to affiliated traders at low domestic prices.

The reforms proposed on Friday will update rules on how energy companies settle their royalty payments on coal, oil and gas pulled from federal land but the changes to the coal program may have the biggest impact.

"Coal produced on public lands is an important part of our domestic energy portfolio, but we have an obligation - and we are fully committed - to ensure that the American taxpayer receives a fair return for the production of domestic energy resources," Deputy Secretary of the Interior Mike Connor said in announcing the proposal.

The Interior Department has been investigating possible royalty shortfalls in the federal coal program since February 2012.

The plan is now open for public comment for 60 days.

Arch Coal Inc, Peabody Energy Corp and Cloud Peak Energy Inc are among the leaders in mining coal from federal land in the West.