## United States Court of Appeals for the Federal Circuit

2007-5108 CONSOLIDATION COAL COMPANY, CONSOL OF PENNS YLVANIA COAL COMPANY, CONSOL OF KENTUCKY INC., EIGHTY FOUR MINING COMPANY, HELVETIA COAL COM PANY, ISLAND CREEK COAL COMPANY, KENT COAL MINING COMPANY, KEYSTO NE COAL MINING CORPORATION, LAUREL RUN MINING COMPANY, MCEL ROY COAL COMPANY, NINEVEH COAL COMPANY, QUARTO MINING CO MPANY, EAGLE ENERGY, INC., ELK RUN COAL COMPANY, INC., GOALS COAL COMPANY, GREEN VALLEY COAL COMPANY, INDEPENDENCE COAL COMPANY, INC.,

KNOX CREEK COAL CORP ORATION, MARFORK CO AL COMPANY, INC., MARTIN COUNTY COAL CO RPORATION, PEERLESS EA GLE COAL COMPANY, PERFORMANCE COAL COMPANY, RAWL SALES & PROCESSING COMPANY, SIDNEY COAL COMPANY, INC., STONE MINING COMPANY, APOGEE COAL COMPANY, ARCH WESTERN RESOURCES, LLC, CANYON FUEL COMPANY, LLC, CATENARY COAL COMPANY, COAL-MAC , CO., DAL-TEX COAL CORPORATION, HOBET MINING, INC., MIN GO LOGAN COAL CO., KING STON RESOURCES, INC.,

PAYNTER BRANCH MINING, INC., PIONEER FUEL CORPORATION, PLATEAU MINING CORPORATION, RAG CUMBERLAND RESOURCES, L.P., RAG EMERALD RESOURCES, L.P., TWENTYMI LE COAL COMPANY, COASTAL COAL COMPANY, LLC., COASTAL COAL-WEST VIRGINIA , LLC, EASTERN ASSOCIATED COAL CORPORATION, EVERGREEN MINING CO MPANY, MID-VOL LEASING, INC., MOUNTAINEER COAL DEVELOPMENT CO MPANY, OLD BEN COAL COMPANY, SHIPYARD RIVER COAL TERMINAL CO MPANY, RIVERSIDE ENERGY, INC., VIRGINIA CREWS COAL COMPANY, CL INTWOOD ELKHORN MINING COMPANY, GATLIFF COAL COMPANY, PREMIER EL KHORN COAL COMPANY, PERRY COUNTY

COAL CORPORATION, GLAMORGAN COAL COMPANY, LLC, TERRY EAGLE L.P., NICHOLAS-CLAY LAND & MI NERAL, INC., NICHOLAS-C LAY COMPANY, LLC, AND

ALEX RESOURCES, INC., GENWAL RESO URCES, INC., PACIF IC COAST COAL COMPANY, USIBELLI COAL MINE, INC., POWDER RIVER COAL COMPANY, WEST RIDGE RESOURCES, IN C., UNITED STATES STEEL MINING COMPANY, LLC,

COVENANT COAL CORPORATION, and RAPOCA ENERGY COMPANY, LLC (now known as Wellmore Energy Company, LLC), Plaintiffs, and JIM WALTER RESOURCES, INC., Plaintiff-Appellee,

v. UNITED STATES, Defendant-Appellant.Paul A. Horowitz , Baker & McKenzie LLP, of New York, New York, argued for plaintiff-appellee. With him on the brief were Steven H. Becker , Charles H. Critchlow , and Suzanne I. Offerman

. Jonathan F. Cohn , Deputy Assistant Attorney General, Commercial Litigation Branch, Civil Division, United States Department of Just ice, of Washington, DC, argued for defendant-appellant. With him on the brief were Jeffrey S. Bucholtz , Acting Assistant Attorney General; Jeanne E. Davidson , Director; Todd M. Hughes , Deputy Director; and Tara K. Hogan , Trial Attorney. Of counsel on the brief was Daniel W. Kilduff , Office of the Solicitor, United States D epartment of the Interior, of Washington, DC. Appealed from: United States Court of Federal Claims Senior Judge Bohdan A. Futey

## United States Court of Appeals for the Federal Circuit

2007-5108 CONSOLIDATION COAL COMPANY, CONSOL OF PENNSYLVANIA COAL COMPANY, CONSOL OF KENTUCKY INC ., EIGHTY FOUR MINING COMPANY,

HELVETIA COAL COMPANY, ISLAND CREEK COAL COMPANY, KENT COAL MINING COMPANY, KEYSTONE COAL MINING CORPORATION, LAUREL RUN MINING COMPANY, MCELROY COAL CO MPANY, NINEVEH COAL COMPANY, QUARTO MINING COMPANY, EAGLE EN ERGY, INC., ELK RUN COAL COMPANY, INC., GOALS COAL COMPANY, GREEN VALLEY COAL COMPANY, INDEPENDENCE COAL COMPANY, INC ., KNOX CREEK COAL CORPORATION,

MARFORK COAL COMPANY, INC., MA RTIN COUNTY COAL CORPORATION, PEERLESS EAGLE COAL COMPANY, PERFO RMANCE COAL COMPANY, RAWL

SALES & PROCESSING COMPANY, SIDN EY COAL COMPANY, INC., STONE MINING COMPANY, APOGEE COAL CO MPANY, ARCH WESTERN RESOURCES, LLC, CANYON FUEL COMPANY, LLC, CA TENARY COAL COMPANY, COAL-MAC, CO., DAL-TEX COAL CORPORATION, HOBET MINING, INC., MINGO LOGAN COAL CO., KINGSTON RESOURCES, INC., PAYN TER BRANCH MINING, INC., PIONEER

FUEL CORPORATION, PLATEAU MINING CORPORATION, RAG CUMBERLAND

RESOURCES, L.P., RAG EMERALD RESO URCES, L.P., TWENTYMILE COAL COMPANY, COASTAL COAL COMPANY, LLC, COASTAL COAL-WEST VIRGINIA, LLC., EASTERN ASSOCIATED COAL CORPORATION, EVERGREEN MINING COMPANY, MID-VOL LEASING, INC., MOUNTAINEER COAL DEVELOPMENT COMPANY, OLD BEN COAL COMPANY, SHIPYARD RIVER COAL TERMINAL COMPANY, RIVERSIDE ENERGY, INC., VIRGINIA CREWS COAL COMPANY, CLINTWOOD ELKHORN MINING COMPANY, GATLIFF COAL COMPANY, PREMIER ELKHORN COAL COMPANY, PERRY COUNTY COAL CORPORATION, GLAMORGAN COAL COMPANY, LLC, TE RRY EAGLE L.P., NICHOLAS-CLAY LAND & MINERAL, INC., NICHOLAS-CLAY CO MPANY, LLC, AND ALEX RESOURCES, INC., GENWAL RESOURCES, INC., PACIFIC COAST COAL COMPANY, USIBELLI COAL MINE, INC., POWDER RIVER COAL COMPANY, WEST RIDGE RESOURCES, INC., UNITED STATES STEEL MINING COMPANY, LLC, COVENANT COAL CORPORATION, and RAPOCA ENERGY COM PANY, LLC (now known as Wellmore Energy Company, LLC), Plaintiffs, and JIM WALTER RESOURCES, INC., Plaintiff-Appellee,

v.UNITED STATES Defendant-Appellant. Appeal from the United States Court of Federal Claims in 01-CV-254, 01-CV-442, and 01-CV-929, Senior Judge Bohdan A. Futey.

__________________________ DECIDED: June 11, 2008

__________________________ Before NEWMAN, PROST, and MOORE, Circuit Judges

. MOORE, Circuit Judge

. Appellant United States appeals from t he United States Court of Federal Claims’s grant of summary judgment that application of the Surface Mining Control and Reclamations Act of 1977 (SMCRA ) reclamation fee to export sales of coal violates the Export Clause of the Constitution. We reverse and remand. BACKGROUND This case reaches us after a long histor y, including a previous appeal to this court. The factual background was explai ned in our prior opinion and will not be repeated here. See Consolidation Coal Co. v. United States , 351 F.3d 1374 (Fed. Cir. 2003). Following our remand in Consolidation Coal , the Court of Federal Claims granted summary judgment in fa vor of the plaintiff coal producers on the issue of liability. Consolidation Coal Co. v. United States , 64 Fed. Cl. 718 (2005). The court ruled that, as applied to coal that is export ed, the method by which the Office of Surface Mining Reclamation and Enforcement (OSM) co llects its reclamation fee violates the

2007-5108 2Export Clause of the Constitution. 1 The coal producers moved for judgment in favor of Jim Walter Resources (JWR), who is one of five test plaintiffs. On February 22, 2007, the court entered judgment in favor of JWR. This appeal followed. DISCUSSION We review the Court of Federal Claims’ s grant of summary judgment without deference. Old Stone Corp. v. United States , 450 F.3d 1360, 1367 (Fed. Cir. 2006). “Statutory interpretation is a question of law that we review de novo .” Wesleyan Co. v. Harvey , 454 F.3d 1375, 1378 (Fed. Cir. 2006). The only question before this court is one of statutory interpretation of 30 U.S.C. § 1232(a). Pursuant to the statute, the reclamation fee is imposed upon “coal produced” in the United States: All operators of coal mining operations . . . shall pay . . . a reclamation fee of 35 cents per ton of coal produced by surface mining and 15 cents per ton of coal produced by underground mining or 10 per centum of the value of the coal at the mine, as determined by the Secretary . . . . 30 U.S.C. § 1232(a) (emphases added). Neither the statute nor OSM’s regulations specifically define the term “coal pr oduced.” OSM’s regulations provide: (a) The operator shall pay a re clamation fee on each ton of coal produced for sale, transfer, or use, includi ng the products of in situ mining. (b) The fee shall be determined by the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator. 30 C.F.R. § 870.12 (emphasis added). If “coal produced” in § 1232(a) refers solely to coal extracted then the dis puted portion of the statute d oes not render the statute unconstitutional under the Export Clause. If, how ever, “coal produced” is interpreted to include the entire process of extracting and selling coal—if it is a tax on extraction and

1 The Export Clause provides that “No Ta x or Duty shall be laid on Articles exported from any State.” U.S. Const. art. I, § 9, cl. 5.

2007-5108 3sale—then, as it applies to sales that occur in the export process, it is an unconstitutional violation of the Export Clause. Where a possible construction of a statute would render the statute unconstitutional, courts must construe the stat ute “to avoid such problems unless such construction is plainly contrary to the intent of Congress.” Edward J. DeBartolo Corp. v. Fla. Gulf Bldg & Constr. Trades Council , 485 U.S. 568, 575 (1988). This canon of constitutional avoidance is subject only to the qualification that the interpretation that “save[s] a statute from unconstitutionalit y” must be reasonable— that is, the saving construction must not be “plainly cont rary to the intent of Congress.” Id. at 575. “The elementary rule is that ever y reasonable construction must be resorted to, in order to save the statute from unconstitutionality.” Id. (quoting Hooper v. California , 155 U.S. 648, 657 (1895)). Both sides agree the reclamation fee woul d be constitutional if imposed solely on coal extracted. We agree with the government that “coal produced” in § 1232(a) can reasonably be interpreted to mean “coal extract ed,” and that this interpretation avoids a potential violation of the Export Clause. JWR argues that in Drummond Coal Co. v. United States , 796 F.2d 503 (D.C. Cir. 1986) this same statutory language “coal produced” was interpreted as including both the extraction and sale of coal. In Drummond , however, the D.C. Circuit was not inte rpreting the statute in light of the potential conflict with t he Export Clause. The issue of the constitutionality of the reclamation fee as applied to exports simply was not raised. Id. at 503-08. Moreover, the Drummond court did not conclude that the language of the statute mandated the construction, but rather it held that the statute was ambi guous: “Like the district court,

2007-5108 4we do not find the ordinary meaning of t hat term unambiguous: ‘Production could reasonably be interpreted to include the entir e process of extracting and selling coal, complete from pit to buyer’s door, or it could refer solely to the process of extraction.’” Id. at 505. Drummond involved the validity of a governm ent regulation that directed that in calculating the tax on the gr oss weight of coal after it had been mined but before sale, the gross weight included impurities such as water that had not been removed. The court did not itself independent ly determine the meaning of the statutory term “coal produced,” but instead gave Chevron deference to the regulatory definition of that term, which included water as part of the “coal produc ed.” 796 F.2d at 507. In the present case, in contrast, the sole question is whether , in determining if the statute violates the constitutional prohibition of export taxes, ”coal produced” properly is defined as “coal extracted.” The government a sserted that the plain meaning of the statute is that “coal produced” is to be interpreted as “coal extract ed.” Even if we were to assume that the statute is ambiguous as to the meaning of “coal produced,” the government’s construction must still prevail as it is t he only reasonable construction which preserves the constitutionality of the statute. JWR also argues that the position taken by the government in this case, that “coal produced” is limited to “coal extract ed,” is inconsistent with the position the government took in Drummond . Although the government disput es the argument that it has taken inconsistent positions, either way, the government’s interpretation of “coal produced” in this case must prevail. Neither the gover nment, nor this court, are bound by any contrary assertions by the governm ent regarding the statut ory interpretation of “coal produced” where the canon of constitu tional avoidance mandates that we adopt

2007-5108 52007-5108 6 the reasonable construction that as appli ed to the SMCRA reclamation fee “coal produced” is limited to “coal extracted.” For the foregoing reasons, we reverse the grant of summary judgment and remand for proceedings consistent with this opinion. REVERSED and REMANDED