Opinion ID: 877181
Heading Depth: 1
Heading Rank: 2

Heading: effect of the commerce clause

Text: Before we discuss the commerce clause contentions, we look at the relationship of the various plaintiffs to the coal tax which is being attacked. The true taxpayers before us in this case are the producers of the coal. The Montana coal severance tax is levied at the time the coal is separated by the producer from the realty in Montana, and at its value when sold by the producer in Montana. Section 15-35-103, MCA. Thus in this case, only the coal producing plaintiffs are actually paying taxes, they being Decker Coal Company, Peabody Coal Company, Westmoreland Resources, Inc., and Western Energy Company. The remaining plaintiffs are utilities to whom the producers, by contract or indirectly, may have passed on the coal severance tax as a part of the price of Montana coal. To contend that the utility plaintiffs are the true plaintiffs because by contract or indirectly they have assumed the coal severance taxes would seem also to argue that the coal producers have no real issue at stake here. Nevertheless the coal producers have the only vital stake in this case because they and not the utility companies are in fact the taxpayers. It is the producers to whom the protested taxes would be returned should the tax be found unlawful. In deciding this case therefore, we look to the status in Montana of the producing taxpayers to determine whether the coal, at the time it is severed by the producers, is subject to the present Montana state taxation. The United States Constitution provides in Article I, Section 8, that Congress shall have the power to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes. The principal contention of the plaintiffs in this case is that the holdings of the United States Supreme Court in Heisler, Oliver Iron Co., and Hope Gas Co., infra, no longer have any force. The plaintiffs do not allow that Montana can tax a purely local event such as the severance of coal from a seam or deposit. They insist that the commerce clause reaches even into the very severance of the coal, and that the only issue for the District Court to have decided here was whether the coal severance tax had impact enough to hamper or obstruct interstate commerce. The plaintiffs concede that the state can levy some tax, perhaps twelve and a half to fifteen percent of the value of the coal. Therefore, by inference, the plaintiffs contend that at some point not specified, between fifteen to thirty percent of the value of the coal, Montana's coal severance tax butts into the lintel of federal impermissibility. In essence, the plaintiffs' argument under the commerce clause reduces to this: Montana has no inherent right to tax the intrastate severance of coal which may eventually enter interstate commerce except by federal sufferance; such sufferance ceases when the tax can be construed to hamper or obstruct commerce between the states. The law on state taxation of production of goods, it seems to us, has been settled by the United States Supreme Court since the 1920's. Leading cases on manufacturing ( American Mfg. Co. v. St. Louis (1919), 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084); producing ( Hope Gas Co. v. Hall (1927), 274 U.S. 284, 47 S.Ct. 639, 71 L.Ed. 1049); and extracting ( Oliver Iron Co. v. Lord (1923), 262 U.S. 172, 43 S.Ct. 526, 67 L.Ed. 929); Heisler v. Thomas Colliery Co. (1922), 260 U.S. 245, 43 S.Ct. 83, 67 L.Ed. 237); established a common theme: production of personal property within a state is a local activity which precedes the entry of the property into interstate commerce, and is therefore subject to state regulation and taxation. Yet we have found no United States Supreme Court case, and none has been cited to us, which implicitly or directly overthrows the rule that the several states have the reserved power to tax intrastate manufacturing, extraction, and production of goods. It is true that some cases have used language which seems to assail this reserved power. Notwithstanding, it must be concluded after an analysis of the cases bearing on the subject that the United States Supreme Court continues to recognize the taxing power of the states in these intrastate fields. The plaintiffs' attack against the coal severance tax under the commerce clause is based upon the premise that the United States Supreme Court has moved away from its holdings in Hope Gas Co., Oliver Iron Co., and Heisler, supra. The cases on which plaintiffs rely for this contention may be summarized as follows: (1) Labor Board v. Jones & Laughlin (1937), 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, upholding the NLRA against a constitutional attack; Wickard v. Filburn (1942), 317 U.S. 111, 63 S.Ct. 82, 87 L.Ed. 122, upholding a federal program of acreage allotments for wheat production; Parker v. Brown (1943), 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, which upheld a California state statute that fixed prices and restricted sales of raisins grown in California but which contains language seeming to reject the mechanical test of Heisler; Freeman v. Hewit (1946), 329 U.S. 249, 67 S.Ct. 274, 91 L.Ed. 265, holding unconstitutional the application of an Indiana gross income tax act to the sales of securities by brokers in New York; the securities being assets of an Indiana estate, and incidentally, applying the commerce clause to intangibles as well as to tangibles; Nippert v. Richmond (1946), 327 U.S. 416, 66 S.Ct. 586, 90 L.Ed. 760, striking down a municipal tax on solicitors in Richmond, Virginia; Pike v. Bruce Church, Inc. (1970), 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174, striking down an Arizona state regulation concerning the packing of cantaloupes grown in Arizona; Hunt v. Washington Apple Advertising Comm'n. (1977), 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383, striking down a North Carolina statute which prescribed the labeling of containers in which apples were to be sold in that state; A. & P. Tea Co. v. Cottrell (1976), 424 U.S. 366, 96 S.Ct. 923, 47 L.Ed.2d 55, holding unconstitutional the application of a Mississippi regulation that milk and milk products could be sold in Mississippi from another state only if the other state had reciprocal provisions for Mississippi milk, where a Louisiana producer was refused a permit from Mississippi; Complete Auto Transit, Inc. v. Brady (1977), 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326, reh. den. 430 U.S. 976, 97 S.Ct. 1669, 52 L.Ed.2d 371, which we will discuss more in detail hereafter; Washington Rev. Dept. v. Stevedoring Assn. (1978), 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682, also discussed hereafter. Plaintiffs have cited a number of other cases, but their full recitation here would only be cumulative. The District Court, in ruling on the motions to dismiss, determined that the cases relied on by the plaintiffs from the United States Supreme Court fell into four categories, which we here set forth together with some examples: (1) When Congress has asserted its regulatory powers under congressional acts. Labor Board v. Jones & Laughlin, supra; Parker v. Brown, supra. (2) When the State engages in regulatory activity of interstate commerce. Pike v. Bruce Church, Inc., supra; A. & P. Tea Co. v. Cottrell, supra. (3) When the state imposes a tax on interstate commerce activity. Nippert v. Richmond, supra; Complete Auto Transit, Inc. v. Brady, supra. (4) When the state imposes a tax on an activity which is not in commerce. Heisler v. Thomas Colliery Co., supra; Alaska v. Arctic Maid (1961), 366 U.S. 199, 81 S.Ct. 929, 6 L.Ed. 227. The District Court determined that the coal severance tax in issue here fell into the fourth category. The District Court further found that the cases in the fourth category involved a local incident subject to the state's reserved power of taxation on goods which preceded their entry into interstate commerce. We agree. It is fair judicial policy for us not to regard as controlling here dicta found in cases in which the United States Supreme Court has upheld the regulatory powers of Congress under the commerce acts. See, for example of dicta, Labor Board v. Jones & Laughlin, supra; Parker v. Brown, supra. It is likewise fair judicial policy for us not to feel bound here by dicta found in cases involving states which have engaged in regulation of interstate commerce. Again, see Pike v. Bruce Church, Inc., supra; Philadelphia v. New Jersey (1978), 437 U.S. 617, 98 S.Ct. 2531, 57 L.Ed.2d 475. Nor do we feel bound or controlled by dicta found in cases decided by the United States Supreme Court involving states or municipalities which have imposed a tax on an interstate commerce activity. For example, Nippert v. Richmond, supra; Complete Auto Transit, Inc. v. Brady, supra. We rely instead on those cases where the United States Supreme court has directly upheld state taxation of production, extraction or manufacturing. While the plaintiffs have contended that the trend of the United States Supreme Court decisions has been to move away from the holdings in Heisler, Oliver Iron Co., and Hope Gas Co., supra, we do not find that contention supported in cases involving state taxes. Indeed, if we can read the trend of the decisions, it has been the policy of the Supreme Court to open up and to allow, not to prevent, state taxation of interstate commerce transactions. What has occurred in those decisions is that the Supreme Court has moved away over the course of years from the immunity per se rule which prevented state taxation of interstate commerce, LeLoup v. Port of Mobile (1887), 127 U.S. 640, 8 S.Ct. 1380, 32 L.Ed. 311, to a rule of accommodation which recognizes that interstate commerce, in utilizing the services and protections of a state is required to pay its way. See Western Live Stock v. Bureau (1938), 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823. For this reason the Supreme Court has upheld state taxation which intrudes upon interstate commerce but where there exist local incidents which justify state taxation nevertheless. General Motors v. Washington (1964), 377 U.S. 436, 84 S.Ct. 1564, 12 L.Ed.2d 430; Norton Co. v. Dept. of Revenue (1951), 340 U.S. 534, 71 S.Ct. 377, 95 L.Ed. 517. Local incidents which are severable from interstate commerce but occur within a state, such that multiple taxation by other states on the same activity is not a threat, provide a basis which has brought about the standards announced by the Supreme Court in Complete Auto Transit, Inc. v. Brady, supra, to find constitutional permissibility for state taxes on interstate commerce. A most recent case demonstrating the tendency of the United States Supreme Court to encourage and allow state taxation of interstate commerce can be found in Exxon Corp. v. Wisconsin Dept. of Revenue (1980), ___ U.S. ___, 100 S.Ct. 2109, 65 L.Ed.2d 66. Exxon had filed income tax returns in Wisconsin using a geographical system of accounting which reflected only its Wisconsin marketing operations and which showed a loss for each year, resulting in no taxes being due. Exxon kept its accounts in three major functional departments: exploration, refining, and marketing. Transfers of products and supplies among the three functional departments were theoretically based on competitive prices. Exxon had no exploration, production or refining operations in Wisconsin in the taxable years in question. Only marketing in Wisconsin was carried on by Exxon. Nonetheless, Wisconsin treated Exxon as a unit, and apportioned its income in such manner that a tax was produced, for which Wisconsin made demand upon Exxon. The United States Supreme Court held that Wisconsin was not prevented from applying its statutory apportionment formula to appellants total income under the due process clause of the Fourteenth Amendment. It held that the unitary business principle was a proper basis for apportioning state income tax upon an interstate enterprise when its income can be reasonably related to the activities of the corporation within the taxing state. The Wisconsin tax was held valid even though its statutory apportionment formula indirectly taxed income derived from extraction or refinement of oil and gas located outside the state. The Supreme Court found nexus, proper apportionment, and a rational relationship between the income attributed to the state and the interstate values of the enterprise. (Compare Mont. Dept. of Rev. v. Am. Smelting & Refining (1977), 173 Mont. 316, 567 P.2d 901.) Mobile Oil Corp. v. Com'r of Taxes of Vermont (1980), 445 U.S. 425, 100 S.Ct. 1223, 63 L.Ed.2d 510, likewise approved such apportionment, finding a nexus is established if the corporation avails itself of the substantial privilege of carrying on business within the state. These recent cases buttress our statement that plaintiffs have misread the trend of the United States Supreme Court cases. That trend lies in the direction of allowing states to tax products in interstate commerce, once a nexus with the taxing state is established. The intent and portent of the United States Supreme Court in these cases is not to overturn the holdings of Heisler, Oliver Iron Co., and Hope Gas Co., supra. Indeed the Court has consistently recognized the vitality of those holdings on production and extraction. In Freeman v. Hewit, supra, Justice Frankfurter expressed the distinction between permissible and prohibited taxes as follows: ... a seller State has various means of obtaining legitimate contribution to the cost of its government, without imposing a direct tax on interstate sales. While these permitted taxes may in an ultimate sense come out of interstate commerce, they are not, as would be a tax on gross receipts, a direct imposition on that very freedom of commercial flow which for more than 150 years has been the ward of the commerce clause. 329 U.S. at 256, 67 S.Ct. at 278, 91 L.Ed. at 274. In like manner, state taxation of manufacturing within a state has also been upheld, though manufacturing of goods destined for commerce may be thought to present a weaker case than the production or extraction of goods. Adams Mfg. Co. v. Storen (1938), 304 U.S. 307, 58 S.Ct. 913, 82 L.Ed. 1365. The intent of the United States Supreme Court to preserve these fields for state taxation as preliminary to interstate commerce and within the reserved taxing powers of the states is manifest. In Alaska v. Arctic Maid, supra, for example, the court found that Alaska's taxing of the gathering and freezing of fish taken from Alaska's territorial waters by ships was a preliminary local business, to be compared with Oliver Iron Co., supra, as its first cousin; this, even though the ships eventually took their frozen cargo directly from the seas to the State of Washington for canning. From that evident intent of the Supreme Court, we find this portent: there is no indication by the United States Supreme Court that its historical judicial sanction of state taxation on production, extraction and manufacturing is in jeopardy. Indeed, the very inference of such a threat in a Supreme Court opinion would have raised such a clamor that the case would be a benchmark. We find none, and can only conclude that the Supreme Court will be as consistent in this area in the future as it has been in the past. See Federal Compress Co. v. McLean (1934), 291 U.S. 17, 54 S.Ct. 267, 78 L.Ed. 622; and Chassaniol v. Greenwood (1934), 291 U.S. 584, 54 S.Ct. 541, 78 L.Ed. 1004; referred to with approval in Pike v. Bruce Church, Inc., supra. Also Caskey Baking Co. v. Virginia (1941), 313 U.S. 117, 61 S.Ct. 881, 85 L.Ed. 1223. The importance of these reserved fields of taxation to the states cannot be overstated. The State of Texas, whose attorney general appears before us as amicus opposing Montana's tax, will realize $980 million in oil and gas production taxes this year. The State of Alaska has sufficient revenues from the severance of oil and gas within its borders that its 1980 legislature, before its recent adjournment, provided $900 million in an inviolate trust, not unlike Montana's, from those revenues. Such examples of local taxes could be added to almost state by state. No more important case on the power of states to levy taxes can be imagined than is presented here. For if the rate of tax on a local activity, as here, can be found to violate the commerce clause, then certainly the amount of tax raised by a state on a local activity is in the same jeopardy. Were we or the United States Supreme Court to reach that result, then we should see, in the words of the old spiritual that the walls came a-tumblin' down. Plaintiffs' attack here is another in a series that seeks to assail and overturn the recognized power of states in these regards. In Bel Oil Corporation v. Roland (1962), 242 La. 498, 137 So.2d 308, appeal dismissed 371 U.S. 2, 83 S.Ct. 22, 9 L.Ed.2d 48, the state court upheld the validity of a severance tax on the extraction of natural gas in Louisiana. In Industrial Uranium Co. v. State Tax Commission (1963), 95 Ariz. 130, 387 P.2d 1013, an Arizona privilege tax on mining was upheld. In Post Oak Oil Company v. Oklahoma Tax Com'n (Okl. 1978), 575 P.2d 964, a state excise tax on the severance of natural gas in Oklahoma withstood a commerce clause attack. All of these courts relied, as we do, on the continued adherence by the United States Supreme Court to its steady course of sanction in these fields. On the basis that the severance of coal here is a taxable event that precedes entry into interstate commerce, we rule without hesitation that plaintiffs cannot prevail on their claims under count I of their complaints, because Montana's coal severance tax does not violate the commerce clause. The severance of coal by mining is not an interstate activity. In oral argument, the plaintiffs asked us to give them a straight up-and-down decision on whether the coal severance tax was governed by the commerce clause. We have done that in the foregoing paragraphs. However, we feel compelled to remark that even if the commerce clause in this case obtained, plaintiffs could not have prevailed and the motion dismissing the complaints would have been properly granted in any event. In making their commerce clause argument, the plaintiffs have contended that we were bound to apply the tests set forth in Complete Auto Transit, Inc., supra. In that case, the United States Supreme Court considered the constitutionality of a Mississippi tax on the privilege of doing business in [that] state. The earlier case of Spector Motor Service v. O'Connor (1951), 340 U.S. 602, 71 S.Ct. 508, 95 L.Ed. 573, had adopted a formalistic test to the effect that taxes on the privilege of doing interstate business violated the commerce clause. The United States Supreme Court in Complete Auto Transit, Inc. overruled Spector stating that state taxes affecting interstate commerce must be viewed as to their practical effect and must be examined in light of a four-pronged test of that practical effect: (1) Whether the tax is applied to an activity with a substantial nexus with the taxing state, (2) Whether it is fairly apportioned, (3) Whether the tax does not discriminate against interstate commerce and, (4) Whether the tax is fairly related to the services provided by the state. 430 U.S. at 277-8, 97 S.Ct. at 1078, 51 L.Ed.2d at 330. Washington Rev. Dept. v. Stevedoring Assn., supra, upheld this four-pronged test and further recognized that a state had a significant interest in exacting from interstate commerce its fair share of the cost of state government. 435 U.S. at 748, 98 S.Ct. at 1398, 55 L.Ed.2d at 695. Complete Auto Transit, Inc. is a good example of our earlier assertion that the United States Supreme Court, instead of intruding upon the reserved fields of taxation allowed the state on local activities, has been moving toward a permissive or accommodating position allowing state taxation of interstate commerce under certain conditions. Applying the Complete Auto Transit, Inc. four-pronged test, for the sake of argument, to the case at bar, plaintiffs could not prevail as a matter of law. Surely there can be no argument here that a substantial, in fact, the only nexus of the severance of coal is established in Montana. There can be no discussion of apportionment, because the severance can occur in no other state. There is no danger of multiple taxation, for no other state can tax the severance. See, Chassaniol, supra; compare, Mich.-Wis. Pipeline Co. v. Calvert (1954), 347 U.S. 157, 74 S.Ct. 396, 98 L.Ed. 583. There would remain, if Complete Auto Transit, Inc. applied, only the fourth test, whether the tax is fairly related to the services provided by the state. The taxpayers here, the coal producers, have the right to and the availability of all the governmental comforts and protection which this state provides. Since the United States Supreme Court is tending toward the position that interstate commerce must pay its way in the respective states affected thereby, it is with logic of great force that Montana can require strip-coal mining to assume its just share for the cost of the state government that it enjoys, and for the governmental cost that has occurred, is now occurring, and will in the future occur as the direct result of such strip-coal mining. Here Montana meets the test set out in General Motors v. Washington, supra, 377 U.S. at 441, 84 S.Ct. at 1568, 12 L.Ed.2d at 435: For our purposes the decisive issue turns on the operating incidents of the tax. In other words, the question is whether the State has exerted its power in proper proportion to appellant's activities within the state and to appellant's consequent enjoyment of the opportunities and protections which the State has afforded ... It is impossible for any court to foot up the dollar cost of the government benefits received and to be received by the taxpayers here. Aptly the state points out the heart of plaintiffs' complaint is the rate of the tax. The state further contends that no United States Supreme Court opinion invalidating a state levy has turned on the rate of a tax. No summation of the cost of governmental benefits has ever been required by any court in determining the validity of a rate of levy in a general excise, property or income tax imposed by a state. It is said: A tax is not an assessment of benefits. It is, as we have said, a means of distributing the burden of the cost of government. The only benefit to which the taxpayer is constitutionally entitled is that derived from his enjoyment of the privileges of living in an organized society, established and safeguarded by the devotion of taxes to public purposes ... Any other view would preclude the levying of taxes except as they are used to compensate for the burden on those who pay them, and would involve the abandonment of the most fundamental principle of government  that it exists primarily to provide for the common good. Carmichael v. Southern Coal Co. (1937), 301 U.S. 495, 522-523, 57 S.Ct. 868, 878-879, 81 L.Ed. 1245, 1260-1261. The rate of a tax is a determination for the legislature to make, not a court. Montana's legislature has determined that its coal severance tax is fairly related to the governmental services Montana provides, and to the benefits of a trained work force and the advantages of a civilized society. See, Japan Line, Ltd. v. County of Los Angeles (1979), 441 U.S. 434, 99 S.Ct. 1813, 60 L.Ed.2d 336; Washington Rev. Dept. v. Stevedoring Assn., supra. We are not talking here about user charges or like fees imposed for the use of state facilities where the charge for the service must bear some fair relation to the service or property provided for use. Such user charges are capable of being determined. See Evansville Airport v. Delta Airlines (1972), 405 U.S. 707, 92 S.Ct. 1349, 31 L.Ed.2d 620. Taxes as here imposed for the general support of the government are fairly related to that purpose by the mere fact that a government is thereby maintained. It is only when the taxpayer has an insufficient nexus to the taxing state, or the tax is disproportionate to the incidents of commerce being taxed, that the fair-relation test applies. See, e.g. National Bellas Hess, Inc. v. Dept. of Revenue (1967), 386 U.S. 753, 756, 758, 87 S.Ct. 1389, 1390, 1392, 18 L.Ed.2d 505. Complete Auto Transit, Inc., is intended to apply to situations where a state or local taxing authority adopts a tax that intrudes upon, hampers or obstructs in some fashion interstate commerce. It has no application in this case to the intrastate severance of coal by mining. But even if Complete Auto Transit, Inc. applied, as we have shown, plaintiffs could not prevail here as a matter of law. We note that a tax of thirty percent of the coal's value at the time of its severance is not any indication of the impact of the severance tax as to the cost of coal at its final destination, in-state or out-of-state. The attorney general of Texas, appearing here as amicus, informed us in oral argument that Montana coal destined for Texas is now purchased at $7 per ton at the mine, resulting in a severance tax in Montana of $2.10 per ton; however, the coal at destination in Texas costs $30 per ton. Most of the added price comes from the cost of transportation of the coal to Texas, which costs, the attorney general informed us, have increased from $8 per ton to $20 per ton in a short time. Demonstrably therefore, as to Texas, the interstate impact of the Montana coal severance tax is no greater than that of federal and state taxes on gasoline at the pump (before the recent price increases) or the state and city sales taxes on goods and services found in most localities. On the same tack, when we consider the customers of the utilities who are appearing in this case, it is obvious without argument or proof that coal costs are only a portion of total generating costs of electricity. Although plaintiffs have contended that Montana's coal tax is passed on to the utility consumers, it must be admitted that this is because of the particular terms of the coal contracts of purchase entered into by the utility-plaintiffs. It would be strange indeed if the legality of a tax could be made to depend on the vagaries of the terms of contracts. We do not assume that in the broad picture all of the Montana coal tax is passed on to consumers because Montana does not have a monopoly in the production of coal. Montana coal must compete in the market with coal produced in Wyoming, North Dakota, and other sources of supply. Under those circumstances, economic factors will determine whether the producers will shoulder all or part of the tax, or pass it on in the form of increased prices. The argument therefore that Montana is exporting its coal tax to out-of-state users has no more force in reality when applied to Montana coal than to any other type of lawful tax on goods or products eventually moving in interstate commerce. Certainly, taxes paid on goods and products from origin to the eventual consumer are a factor in the final price to the consumer; that is an economic fact of our lives. In that sense, every state or locality that levies a tax on goods or products originating therein or manufactured therein is exporting its tax. No sane rule of law can or should be developed that would make a local tax illegal solely because it is a factor in the cost the eventual consumer pays. Such a rule would make state government taxation of goods and products a judicial morass. It is for these reasons that we have determined, as we have stated earlier, to look at the status of the true taxpayers in this case, the producers of the coal. The Montana severance tax is levied at the time the coal is separated by the producer from the realty in Montana at its value when sold in Montana. In that light we have no difficulty in finding that Montana has the power as a state to tax the severance of coal within its borders. Plaintiffs contended in oral argument that because the coal bought by the utilities from the producers was already under contract for sale when mined, that the instant the coal was severed, it was in interstate commerce. We do not have to address that argument because the taxable event, as far as Montana is concerned is the act of severance itself. The event of severance necessarily precedes the instant when the coal ceases to be part of the realty and becomes part of the mass of personalty in Montana. We are not required here to determine whether the mined coal should not be considered a part of interstate commerce until the moment when the producer hands the coal over to the buyer, or its transporter for the account of the buyer. There is no need to concern ourselves with such fine points here. The severance itself is a taxable event and the Montana statutes here tax that event in advance of any entry of the coal into commerce. In other words, the coal is produced and that production is taxed. Montana's coal severance tax is therefore ahead of and preliminary to the sweep of the power of Congress to regulate commerce. If this be not so, Montana and all other states would have to concede that any power of a state to tax the production of products which may eventually enter into interstate commerce is at the whim or forebearance of the federal government. Neither the United States Supreme Court nor any other court has so held, and well enough, for such a decision would shatter the shield of judicially-approved states' rights in this field. When it is realized that the coal producing plaintiffs are the real and only taxpayers of the Montana tax, the exported tax theory falls. With it falls the notion that there is no political check on the Montana legislature to limit the tax. Experience shows the producer plaintiffs are a vigorous presence at any session of the Montana legislature. Records of the Montana Secretary of State, of which we take judicial notice, Rule 202(b), M.R.Evid., show the number of lobbyists registered for the coal industry in recent sessions, sections 5-7-103 and 5-7-201, MCA, and their participation before legislative committees on matters affecting the coal industry. Finally, with respect to the commerce clause, plaintiffs have continued to assert an argument which does not raise a substantive issue or one material to our decision in this case, but nonetheless requires a comment lest our silence be considered an admission of its substance. The nonissue raised by plaintiffs is that since a good deal of the coal being mined by plaintiffs or potentially to be mined (in oral argument it was said 75% of the coal) underlies federal leases, this coal therefore is not Montana's birthright but belongs to the nation as a whole. The argument is intended to have us believe that Montana is taxing here not the coal producers, but the people of the United States themselves. Montana, in common with many of the states, has a substantial portion of its surface area under federal ownership. In addition, the federal government reserved to itself coal and other minerals in many of its patents or deeds of grant. We assume this situation gives rise to the nonissue raised by the plaintiffs. Plaintiffs' argument is addressed to emotion and not to law. As long as the federal coal remains in deposit under federal ownership, it is our coal in the sense that it belongs to the people through the federal government. Once mined under a federal lease or permit, title to the coal is vested as personal property in the lessee or permittee as soon as it is mined and removed from its original place, subject only to the royalty rights of the lessor, Olson v. Pedersen (1975), 194 Neb. 159, 231 N.W.2d 310, the same as with oil and gas. De Mik v. Cargill (Okl. 1971), 485 P.2d 229. Montana may impose taxes on the private lessees of federal lands. 30 U.S.C. § 189; Oklahoma Tax Comm'n v. Texas Co. (1949), 336 U.S. 342, 69 S.Ct. 561, 93 L.Ed. 721; reh. den. (1949), 336 U.S. 958, 69 S.Ct. 887, 93 L.Ed. 1111. The coal being taxed here therefore is not our coal, but the personal property of the plaintiffs who produced it under lease or permit. When the coal is mined, the federal government is in no different position as a lessor than a private lessor who grants a mining lease or permit.