Kentucky Coal Tax Break Is Unconstitutional, Sixth Circuit Rules

A Kentucky regulatory scheme making state coal more competitive by providing utilities with a severance tax discount discriminates against interstate commerce, the US Court of Appeals for the Sixth Circuit ruled Friday.

Kentucky imposes a 4.5% severance tax on coal extracted in the state, while also directing its utilities to buy the most competitive coal. Senate Bill 257 sought to make Kentucky coal competitive against coal from states without a severance tax by ordering the agency that regulates state utilities to pretend that it costs 4.5% less than its true price.

An Illinois coal producer, Foresight Coal ...