Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
When the Commerce Clause and the Export Clause Collide:
A Critique of Consolidation Coal v. United States
Melissa H. Goldschmid
In Consolidation Coal Co. v. United States, 1 the U.S. Court of Federal Claims declined to resolve how the Export Clause intersects with the Commerce Clause of the United States Constitution. The plaintiffs argued that the Export Clause’s prohibition of taxes on exports is absolute and, hence, that no governmental levies on sales to foreign buyers can ever be constitutional, even if these levies are part of a regulatory program that is constitutionally permissible under the Commerce Clause. The defendant argued that regulatory fees under the Commerce Clause are immune from Export Clause scrutiny. In short, the court in Consolidation Coal faced the question whether the Commerce Clause can ever trump the Export Clause. But instead of providing an answer, the court rendered the issue moot by holding that the tax at issue failed under the Export Clause for other reasons. As a result, the question whether regulations legislated under the Commerce Clause are ever beyond the reach of the Export Clause was left unanswered. Instead, what remains is an ambiguous standard for lawyers and legislators seeking guidance to ensure that legislated congressional revenue acts are constitutional under the Export Clause.
This Note argues that the Consolidation Coal opinion has increased uncertainty by mischaracterizing the relationship between the Export Clause and Commerce Clause. Specifically, the Court of Federal Claims should have found that the language of the Export Clause narrowly tailors its scope, making certain regulatory levies and fees that are permissible under the more expansive Commerce Clause beyond the reach of the Export Clause. Particularly in this case, where the purpose of the fee is primarily regulatory and penalty-like by nature, the Surface Mining Control and Reclamation Act of 1977 2 (SMCRA) reclamation fee should be characterized as a regulation that is valid under the Commerce Clause and beyond the reach of the Export Clause, since it is not a “tax” or “duty.”
Part I provides background information about the statutory provision at issue in Consolidation Coal, Title IV of the SMCRA, and the Export Clause, the constitutional provision at issue. Part II summarizes the Court of Federal Claims opinion and holdings with respect to Title IV of the SMCRA. Part III criticizes the court’s characterization of the intersection between the Commerce Clause and Export Clause, and Part IV proposes an alternative characterization of the reclamation fee as a valid regulatory fee. Finally, this Note considers the ramifications of the Consolidation Coal opinion, which include the willingness of a lower court to scrutinize the constitutional merits of congressional revenue
statutes, the effect of federal revenue statutes that apply domestically, and the availability of SMCRA fee refunds for taxpayers who export coal.