A Coal Industry Case

A Coal Industry Case

February 01, 2004

A coal industry case in the US courts may have broad implications for other industries.

The coal companies claim the US government has no right under the US constitution to collect reclamation fees on coal mines to the extent the charge falls on coal for export. The US government tried to get the case dismissed, but a federal appeals court said in December that it will hear the arguments.

The export clause of the US constitution says, “No Tax or Duty shall be laid on Articles exported from any state.” The US Department of the Interior collects a charge of 35¢ a ton on coal from surface mines and 15¢ a ton on coal from underground mines to help defray the cost of cleaning up coal mining areas after mines shut down. The charge applies to all coal, whether or not it is exported.

At issue is whether the amount is a “fee” or a “tax.” A tax would be unconstitutional. The difference is a fee is usually tied to the cost of services the government provides while a tax varies with the quantity or value of economic activity. In 1993, the US Supreme Court struck down a harbor maintenance tax that imposed a uniform charge on shipments of commercial cargo through the nation’s ports on grounds that it was a tax on exports.

The US government collects a variety of excise taxes — for example, on communications services, oil and chemicals, various fuels, heavy truck trailers, gas guzzling vehicles, certain transportation by water or air, alcohol, tobacco, lotteries, firearms, foreign insurance policies, vaccines and coal.

Congress sometimes provides an exception for exports. The tobacco tax contains such an exception. Arguments in the reclamation fee case should be heard later this year.

Keith Martin