W. Va. Court Upholds Tax on Coal Exports
By LAWRENCE MESSINA
CHARLESTON, W.Va. – West Virginia’s Supreme Court on Friday affirmed the state’s ability to tax coal exports, rejecting coal companies’ arguments that the state’s severance tax is actually a sales tax that violates federal protections of interstate commerce.
If the court had struck down the tax, the state said it would have been forced to refund an estimated $500 million in tax revenue and interest to the 11 coal companies that challenged it. Coal company lawyers placed the figure at half that amount.
In a 3-2 ruling, the high court found more than a half-dozen legal conclusions supporting the state’s power to levy the severance tax.
“West Virginia’s coal severance taxes are substantially similar to coal severance taxes that have been found to be constitutional by the United States Supreme Court,” Justice Larry Starcher wrote for the majority. “No court in America has held that coal severance taxes like West Virginia’s offend the Import-Export Clause (of the U.S. Constitution).”
Exports make up about 10 percent of West Virginia’s total coal sales, and eliminating the exports’ severance tax would cost the state between $40 million and $50 million in future annual revenue.
A lawyer for the coal companies and Revenue Secretary Virgil Helton declined immediate comment Friday, pending a review of the ruling.
Justice Elliott “Spike” Maynard dissented from Friday’s ruling. Justice Brent Benjamin dissented from part of the decision while concurring with other aspects. They reserved the right to file separate opinions, along with Chief Justice Joseph Albright and Justice Robin Davis, who helped form Friday’s majority.
Issuing his dissent Friday, Maynard cited a 1946 U.S. Supreme Court ruling that struck down California’s attempt to tax a refinery that sold oil to another country.
“Because of what I consider to be the majority opinion’s insufficient analysis of the constitutionality of the other taxes challenged in this case, I decline to concur with its conclusion that those taxes are constitutional,” Maynard wrote.
The other severance taxes include two that are calculated as a percentage of the coal’s value, both mined and processed, and three taxes that are assessed as fixed amounts on each ton mined.