On December 11, 2003, the U.S. Court of Appeals for the Federal Circuit announced a ruling in favor of Coudert Brothers’ numerous coal producer clients, reinstating the companies’ lawsuit challenging the constitutionality of the U.S. Interior Department’s collection of “reclamation fees” on coal that is exported from the United States.
If the coal companies prevail on the merits, they stand to recover reclamation fees paid on exports going back to 1995, based on the six-year statute of limitations applicable to damages suits against the United States.
The Federal Circuit remanded the case to the U.S. Court of Federal Claims, which had dismissed the action for lack of subject matter jurisdiction, for a decision on the constitutional issue.
The Firm filed suit on behalf of the coal companies in the Court of Federal Claims in 2001 alleging that the fees, which are used to fund mine reclamation and other projects, are unconstitutional as applied to exported coal under the Export Clause of the U.S. Constitution, which provides that “No Tax or Duty shall be laid on Articles exported from any State.”
Over the past several years, Coudert Brothers has successfully sued under the Export Clause to recover hundreds of millions of dollars of excise taxes collected by the U.S. Internal Revenue Service on exported coal and harbor maintenance taxes imposed on all waterborne exports from the United States.
In the reclamation fee case, the U.S. Government argued that the Court of Federal Claims lacked jurisdiction over the lawsuit on the ground that it constitutes a challenge to an Interior Department regulation which had to be brought in U.S. District Court for the District of Columbia within 60 days of the promulgation of the regulation in question, which in this case would have required the suit to be filed in 1977.
In the ruling announced last week, however, the Federal Circuit held that the lawsuit could proceed because the Export Clause provides an independent, self-executing cause of action for money damages against the United States over which the Court of Federal Claims possesses jurisdiction.
This principle was established in the Federal Circuit three years ago by the Firm’s successful challenge to the coal excise tax, and the Federal Circuit found no indication that the U.S. Congress intended such jurisdiction to be superseded in the reclamation fee case.
The coal companies argued that Congress could not have constitutionally withdrawn such jurisdiction in any event because it would have extinguished the Export Clause’s self-executing remedy as regards current reclamation fee payments that are made each quarter.
New York customs partner Paul Horowitz argued the case before the Federal Circuit. Paul was assisted on the briefs by New York partners Steven Becker and Chuck Critchlow and New York associate Suzanne Offerman
