Interior Department investigating royalties on coal exports

The U.S. Department of Interior is investigating whether mining companies are skirting royalty rules as they increase exports of coal to Asia, federal officials disclosed Friday.

No violations have yet been issued, but a newly released report to two U.S. senators says audits of overseas sales have just begun for years when coal export volumes from federal lands grew substantially.

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