According to a study published by the Center for American Progress, coal companies are avoiding federal and state royalty payments by selling coal to themselves through hundreds of subsidiary companies.
While that appears to be technically legal, the sheer scale of the scheme would seemingly call the practice into question.
The CAP review, released on Tuesday, found that five of the largest coal companies operating in the Powder River Basin in Wyoming and Montana have collectively created a network of 566 subsidiary companies through which they sell and market coal. Peabody Energy alone, which operates the country’s largest coal mine in Wyoming, boasts 242 domestic and foreign subsidiaries, with names like Coal Sales II, LLC.
By selling coal to themselves through hundreds of subsidiaries, coal companies pay royalties not based on market value but on the low value they pay themselves. Royalty payments are only made for the first sale so, after the sale to themselves is complete, they will not owe royalties again when it’s resold at full market value.
In other words, states and the federal government, and thus local taxpayers, are getting screwed out of large amounts of money that coal companies earn while mining public lands.
Unfortunately, while I would say even conservatives have a reason to be upset about this, I doubt they will be. Getting screwed is freedumb.