U.S. Can Collect Fee on|Coal Sales, Court Rules

     WASHINGTON (CN) – The Office of Surface Mining can charge a reclamation fee when selling coal, because it’s a delayed tax on the extracted coal, the Federal Circuit ruled.

     Sixty-eight operators in the coal mining industry appealed the Court of Federal Claims’ 2009 ruling that upheld the constitutionality of the reclamation fee statute and the implementing regulations.
     The latest ruling upholds the government’s claim that “the time of collection cannot convert a constitutional tax or fee to an unconstitutional one.”
     “This is the third opinion we have issued in this long-pending case,” Judge Kimberly Moore wrote. Judges Alan Lourie and Daniel Friedman also heard arguments for the case.
     Moore explained that when the Office of Surface Mining (OSM) delays collection of the reclamation fee to the time of sale, it eases the burden on operators by not requiring the installation and use of weighing equipment at the time of extraction.
     Operators had argued that the extracted coal is a different product from that which is later sold.
     “They argue that between extraction and sale, certain impurities like oil and antifreeze may accumulate, while the operators remove other materials like dirt and rock that come along with coal as extracted,” the ruling states.
     Moore said the change of weight in the product was not persuasive and disagreed with the operators’ claim that the tax is exclusively on the sale, as coal that’s collected but never sold will never be subject to the fee.
     “The liability incurs at the time of extraction, and OSM merely collects the fee at the time of sale,” Moore wrote. “The practice of stockpiling — holding product that never sells — should not change the result. If an operator extracts coal, but chooses not to sell it, it still incurs liability; the stockpiling simply creates a collection issue for OSM.”

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