Using Commerce Clause Analysis, 6th Circuit Halts Kentucky Law Excluding Severance Taxes From ‘Reasonable’ Coal Costs |

Disagreeing with successive rulings on the issue by a federal district court, the U.S. Court of Appeals for the Sixth Circuit has imposed a preliminary injunction on a Kentucky law that directs the state’s public service commission to subtract out severance taxes on coal when it considers the “reasonableness” of coal-cost bids for use by state utilities.

The 2021 law, Senate Bill 257, requires the Kentucky Public Service Commission to “evaluate the reasonableness of fuel costs in contracts and competing bids based on the cost of the fuel less any coal severance tax imposed by any jurisdiction,” according to the Sixth Circuit decision, which reverses the U.S. District Court for the Eastern District of Kentucky on the injunction issue.

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