Wednesday, May 14, 2014

D.C. Circuit Dodges Export Clause Claim, Allows Coal Tax, for Now

The D.C. Circuit ruled yesterday in Coal River v. Jewell that a coal company couldn't challenge a Department of Interior regulation imposing a fee on coal at the point of sale under the Export Clause.  The ruling means that the Interior regulation stays in place for now, and probably for good.

The case inolves a federal fee on coal extraction under the Reclamation Act.  Congress designed the fee, determined by the weight of extracted coal, to fund the restoration of land damaged by coal mining.  The Department of Interior, recognizing that coal at the point of extraction contains rocks and other non-coal debris (and thus weighs more than the coal alone), issued regulations imposing the fee on coal at the point of sale (after the weighty debris is removed).  The result of the Interior regulations is to impose a fee that is lower than it would have been at the point of extraction (because the coal weighs less at the point of sale than at the point of extraction).

Still, coal companies sued, arguing that the Interior regs violated the Export Clause.  That Clause says that "No Tax or Duty shall be laid on Articles exported from any state."

In an earlier round of litigation, the Federal Circuit used the canon of constitutional avoidance and rejected the challenge, interpreting the statutory phrase "coal produced" as referring to coal extracted and the regulation as a fee imposed on extraction but at a later date.

In this round, Coal River, a new coal company, sued in the D.C. District and appealed to the D.C. Circuit, seeking to create a split between the D.C. and Federal Circuits. 

The D.C. Circuit didn't bite.  It ruled that Coal River's suit was untimely.  That's because the Reclamation Act requires all challenges to regulations promulgated under the Act must be brought within sixty days of the rule's promulgation.  The court said that Coal River didn't satisfy a statutory "safety valve" that allowed later suits under certain circumstances.

The court said, however, that Coal River could bring this same suit in the Court of Federal Claims later, after Interior actually imposes the regulation and fee on it.  But that case would almost surely meet the same fate as the earlier case, where the Federal Circuit interpreted the regulation to impose a fee on extraction collected at a later date.

https://lawprofessors.typepad.com/conlaw/2014/05/dc-circuit-dodges-export-clause-claim-allows-coal-tax-for-now.html

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