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Feds investigating coal sales

Feb. 09, 2013 @ 12:00 AM

BILLINGS, Mont. -- The U.S. Department of Interior is investigating whether mining companies are skirting royalty rules as they increase exports of coal to Asia, but no violations have yet been issued, federal officials disclosed Friday.

The investigation is focused on companies that use affiliates or brokers to sell coal from mines in the Western U.S. to customers in Asia.

That's when the parent company pays government royalties based on the mine price, then the affiliate ships the fuel overseas where it's sold for many times the original price.

Interior Secretary Ken Salazar said in a letter to two U.S. senators released Friday that he's asked the agency's Office of Inspector General to look into whether such actions have violated federal law.

Salazar wrote that one federal coal lessee is under investigation for possible criminal violations. But no specifics were offered and it was uncertain if that involved coal shipped overseas.

Salazar was responding to concerns raised by Oregon Sen. Ron Wyden and Alaska Sen. Lisa Murkowski. They've warned that as coal exports grow, taxpayers could lose many millions of dollars annually if royalties are unfairly calculated.

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