Coal-tax dispute may return to high court


Montana is trying to force its coal-tax dispute with the Crow tribe - a case that has been kicking around the federal courts for 19 years - to yet another hearing before the U.S. Supreme Court.

The tribe won the first round in 1988, when the Supreme Court declared in a $46.8 million judgment that the state had improperly collected coal severance taxes from Crow-owned coal since 1976. The ruling also held that coal owned by an Indian tribe was not subject to state taxation. However, the tribe rejected the judgment and is holding out for its original demand of $93 million.

But this March, Montana Gov. Marc Racicot and Attorney General Joseph P. Mazurek refused a Crow request to draft legislation to settle the case. The next step for the state would be to petition the Supreme Court for an appeal.

Meanwhile, the money from the original judgment - which would be paid from Montana's coal-tax trust fund - is gathering interest at a rate yet to be determined by a lower court.

If the tribe wins, the state may wish it had listened to former state Sen. Thomas Towe, author of Montana's Coal Severance Tax, who urged the Legislature in 1984 to settle the case out of court. Towe, now a Billings lawyer, recently said the case could drag on for another five years. In the end, the state may have to pay a potential $300 million judgment with interest earned from the original judgment. That could wipe out the principal balance of the Coal Tax Trust Fund, which began back in 1975 with a 30 percent severance tax on coal.

"My guess is that the Supreme Court will simply refuse to review it," Towe says. "The state should try to settle with the tribe right now, out of the trust fund, with some negotiated rate of interest."

The Coal Severance Tax Trust Fund was set up to help avoid a repeat of the plunder-and-run tradition of the 19th century copper kings and, later, the Anaconda Co. The idea was to keep some of the wealth in the state for future generations after the resource was hauled away. Coal-tax revenues have also been used to mitigate coal-mining-related impacts on schools, roads and other services.

Pat Dawson writes in Billings, Montana.

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