Coal companies are selling coal to themselves to get more government subsidies http://t.co/M5v1mjaQTk pic.twitter.com/16vkTqPTg7

— ThinkProgress (@thinkprogress) January 8, 2015

Under current regulations, coal companies pay royalties on the first sale to another company after mining coal on federal land. The coal then can be bought and sold multiple times until it reaches a final destination and is sold to an end user, such as a power plant where it is burned for electricity. By building up hundreds of subsidiaries, coal companies have been able to sell to their own companies and partners, allegedly paying royalties based on an artificially low sale price. The CAP analysis presents evidence that captive transactions are common practice in the coal industry and regularly exploited to evade royalty payments and maximize subsidies.

“Increasingly, the major coal companies are selling Powder River Basin coal not on an open market, but to an elaborate network of shell companies that they own and control,” said Matt Lee-Ashley, a Senior Fellow and Director of the Public Lands Project at CAP in a press release. “This gaming of the system is costing federal and state governments millions of dollars in lost royalty payments and giving the Powder River Basin an unfair advantage over other U.S. coal producing regions.”