Further Clarification On The Constitutionality Of Exported Coal Reclamation Fee Is Delayed

by Holland & Knight LLP

The D.C. Circuit has decided against ruling on the substance of whether the Abandoned Mine Land reclamation fee and the regulatory methods the Office of Surface Mining uses to collect it on exported coal create an unconstitutional tax. Instead of addressing the substance of the question, the Circuit affirmed the ruling below that the United States District Court lacked jurisdiction to decide the issue given that the plaintiff failed file the case in a timely manner under the statutory requirements of the Surface Mining Control and Reclamation Act of 1977.

The Export Clause of Article I of the U.S. Constitution provides that "No Tax or Duty shall be laid on Articles exported from any state." U.S. Const. Art. I, § 9, cl. 5. Congress enacted an act which established a fee on all coal mined in the United States. 30 U.S.C. § 1232(a). To address how to determine the fee should be assessed, the Secretary of the Interior promulgated a regulation establishing that the fee is to be based on "the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator." 30 C.F.R. § 870.12. A number of coal mining companies challenged the constitutionality of the regulation with respect to the sales of coal for export but lost that challenge in the Federal Circuit. See Consolidation Coal Co. v. United States, 528 F.3d 1344, 1348 (Fed. Cir. 2008), cert. denied 131 S. Ct. 2990 (2011).

Coal River Energy, LLC sought a different ruling from the D.C. Circuit when it challenged the same regulation, contending that it was a company formed after the Federal Circuit decision and that the statute allowed for actions to be filed at any time where new grounds arise after the statute's initial sixty day limitations period.

The D.C. Circuit disagreed with Coal River's at any time argument, concluding that the statute can only be interpreted to mandate another sixty day limitation to any challenges based on later occurring events even though the statute does not expressly state such. The court reasoned that, to hold otherwise, "would certainly frustrate Congress's objective that facial challenges to the regulation be confined to a limited period[.]" Given that the action was not timely, the Court concluded that it need not decide the substantive challenge to the constitutionality of the regulation.

The substantive issue of whether the reclamation fee on exported coal is an unconstitutional tax is not dead, however. The Circuit made clear that Coal River and others can challenge the constitutionality of the agency's application of the regulation after a fee is assessed. To do so, however, Coal River or another challenger will need to file the action in the Court of Federal Claims and address head-on the existing unfavorable Federal Circuit precedent. Until that time, the reclamation fee and the methods used by the government to collect it on exported coal stand.

Coal River Energy, LLC v. Jewell, Case No. 13-5119 (D.C. Cir.)


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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