The coal producers originally filed the lawsuit in 2003 and were hoping the Supreme Court would rule taxes on export coal were unconstitutional. The coal companies argued the severance tax was actually a sales tax that violated interstate commerce laws.
The Supreme Court on Friday found in favour of the state. If it had not, the state government could have been forced to pay back an estimated $US360 million in taxes to the companies.
“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 Starcher said in the court’s conclusions.
The court found the taxes did not “discriminate against coal exports” and provided “crucial revenue to the state that fairly reflects the costs to the state associated with coal production”.
The case was originally initiated by several companies including US Steel Mining Company, Consolidated Coal, Laurel Run Mining, McElroy Coal, Arch Coal, Coastal Coal-West Virginia, Elk Run Coal, Paynter Branch, Kingston Resources and Pioneer Fuel Corporation.
Industry consolidation over the past two years has seen most of those companies changing hands. Firms now involved in the lawsuit include Alpha Natural Resources, Arch Coal, Consol Energy, Foundation Coal Holdings, International Coal Group, Massey Energy, Peabody Holding and US Steel Mining.