How Coal Companies Are Cheating Taxpayers Out Of Billions

CREDIT: Greenpeace

Protesters rally outside the listening session for the federal government's coal program on Wednesday, July 29, 2015.

Secretary of the Interior Sally Jewell on Wednesday launched the first high-level review of the federal government’s coal program in more than three decades, noting concerns with the program’s environmental impacts and fairness to taxpayers.

“We are committed to making sure we’re doing right by the American citizens and the American taxpayer,” Secretary Jewell told a packed room in Washington D.C. as she kicked off the first in a series of public listening sessions to explore reforms to the outdated program. Following her call for an “honest and open conversation about modernizing the federal coal program” earlier this year, she emphasized the need to ask the “tough questions” about how the Department of the Interior (DOI) can make changes to “bring this program into the 21st Century.”

The DOI’s Bureau of Land Management has planned a series of five listening sessions across the country as the first step to raise rock-bottom coal royalty rates.

Although Secretary Jewell noted that the administration has undertaken major reforms to DOI’s oil, gas, and renewable energy programs, she said the agency had more work to do, including taking a “a hard look at the federal coal program” to consider impacts on the climate, increase transparency and competition, meet future energy needs and ensure that “taxpayers are getting the return that they are due from the development and use of our public natural resources.”

A large majority of the speakers at the Wednesday listening session — including leaders from national taxpayer organizations, government watchdog groups, Western landowner organizations, and conservation groups — called for major reforms to the program.

“I’ve had a ringside seat on federal coal management and valuation for the past 40 years,” Steve Charter, a Montana rancher and representative of the Western Organization of Resource Councils, said at the session. “The system is deeply broken and we welcome the opportunity to talk about solutions. Ending the giveaway at rock bottom prices and achieving greater transparency on valuation is absolutely critical.”

Currently, more than 40 percent of all coal in the United States comes from America’s public lands, primarily from the Powder River Basin in Wyoming and Montana. However, DOI’s outdated policies overseeing coal mining on public lands have been continually criticized for failing to ensure that coal companies pay royalties on the true market value of coal. In fact, recent investigations have shown that coal companies are exploiting loopholes in the program to intentionally avoid paying royalties and costing taxpayers more than $1 billion a year in lost revenue.

“Current practices shortchange taxpayers by failing to reflect the fair market value for the commodities we as taxpayers own and govern,” Ryan Alexander, President of Taxpayers for Common Sense, wrote in an op-ed on Wednesday. “There is enough evidence to suggest the DOI’s coal program is failing to ensure a fair return to taxpayers.”

Attendees sit at the listening session for the federal coal program on Wednesday, July 29, 2015.

Attendees sit at the listening session for the federal coal program on Wednesday, July 29, 2015.

CREDIT: Greenpeace

Despite these concerns and evidence that coal companies are taking advantage of policy loopholes, a representative of Arch Coal told the room that the federal coal program is a “tremendous success story, one that has generated tens of billions of dollars of value for American people in recent decades.”

Members of Congress, however, have continued to call for reform and to “end sweetheart deals for coal companies.” On a press call hosted by the Center for American Progress on Wednesday, Senators Tom Udall (D-NM) and Ron Wyden (D-OR) and Representative Matt Cartwright (D-PA) introduced legislation to close loopholes in the federal coal program and ensure coal companies pay royalties based on the market value of coal.

“What Senator Udall, Congressman Cartwright and I want to do is provide a simple, straightforward way to ensure that the American people get a fair return on publicly owned coal,” said Sen. Wyden.

Senator Udall echoed calls for reform, saying that “our broken system is costing taxpayers money that could be used to pay for schools, roads, local infrastructure, and many other priorities.”

In addition to the Coal Royalty Fairness Act in the Senate, Rep. Cartwright introduced similar legislation in the House, which directs funds to invest in “struggling coal communities throughout the Appalachian Region overcome the challenges associated with changing natural resources markets.”

The Department of the Interior plans to hold the rest of the listening sessions to explore potential reforms to the federal coal program throughout August in Montana, Wyoming, Colorado, and New Mexico.

Claire Moser is the Research and Advocacy Associate with the Public Lands Project at the Center for American Progress. You can follow her on Twitter at @Claire_Moser.