Coal Firm Can’t Have Tax Refund, High Court Rules

By Paul J. Nyden, The Charleston Gazette, W.Va.

Jun. 14–Elk Run Coal will not get a $5.5 million refund for severance taxes it paid in 1999.

The Supreme Court reversed decisions made by the state Office of Tax Appeals and Kanawha County Circuit Judge Duke Bloom awarding Elk Run the refund.

The Supreme Court opinion stated the Massey Energy subsidiary failed to file its appeal by the required deadline.

Justices Larry Starcher, Brent Benjamin and Joseph Albright voted with the 3-1 majority. Justice Elliot “Spike” Maynard dissented.

The Supreme Court ruled on Dec. 2 that coal severance taxes imposed on coal mined in West Virginia and exported to foreign nations were legal.

That decision involved eight coal companies that filed a lawsuit in 2002 arguing severance taxes on exports were illegal because they violated the Import-Export clause of the U.S. Constitution.

That lawsuit sought refunds for all coal severance taxes paid since 1997, which would have totaled about $500 million for all coal exporters in the state.

The eight companies in that suit were: Alpha Natural Resources, Arch Coal, Consol Energy, Foundation Coal Holdings, International Coal Group, Massey Energy, Peabody Holding and U.S. Steel Mining. That lawsuit is often called “U.S. Steel I.”

Seven of those companies filed a third lawsuit in January 2003, specifically challenging their 1999 severance taxes.

In that case, called “U.S. Steel II,” the Supreme Court ruled in favor of the seven companies, upholding a ruling by Bloom that the state tax commissioner was 10 days late in filing his legal response. Those seven companies received $20 million in refunds.

Elk Run argued it should have been included in that ruling.

But the Supreme Court held that Elk Run failed to file its appeal properly and could not be included in the U.S. Steel II decision.

During oral arguments about the Elk Run case on March 14, Albright asked, “How can we be consistent, given what we did to the Tax Department, if we decide this case in your favor? … That was a harsh decision in favor of the taxpayer [the other seven coal companies] and against the Tax Department.”

During that hearing, Benjamin said, “The argument ‘what is good for the goose is good for the gander’ is compelling.”

Tuesday’s ruling reflected Benjamin’s thought when it stated, “He who receives the advantage ought also to suffer the burden.”

To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.

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Copyright (c) 2006, The Charleston Gazette, W.Va.

Distributed by Knight Ridder/Tribune Business News.

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