By Kennedy Maize
Are tariffs infectious? Maryland’s General Assembly is considering identical bills that would impose what looks like a tariff on West Virginia coal shipped through the Free State to Baltimore’s port for export.
The cross-filed bills, titled “Coal Transportation Fee and Fossil Fuel Mitigation Fund (Coal Dust Cleanup and Asthma Remediation Act),” dropped in the House (HB 1088) and Senate (SB 882) last month (Feb. 5), would impose a $13/ton fee on “coal transported in the State to be paid by a carrier (i.e., a person that transports coal in the State) for the privilege of transporting coal in the State,” according to the analysis by the Assembly’s Department of Legislative Services.
The bulk of the coal that comes into the state is mined in West Virginia and transported by CSX. The Port of Baltimore is the second largest coal terminal in the U.S. after Hamton Roads in Virginia. Most of Baltimore’s coal exports are metallurgical coal used in making steel. In 2023, 28 million tons of coal went through the Port of Baltimore.
Most of the money that would come from the fee, estimated at about $300 million annually, would go to a new Fossil Fuel Mitigation Fund, to be run by the state’s Department of the Environment, to be used, according to the legislative analysis “to support activities that reduce greenhouse gas (GHG) emissions from fossil fuels and their impacts in the state.”
Some of the funds would go to existing programs to remediate fugitive coal dust in communities near the coal export terminal and their health effects, particularly the Curtis Bay community, which has long complained about dust from the coal trains and the terminal. According to testimony at a March 11 hearing by the House Environment and Transportation Committee, $5 million of the transport fee would go to asthma treatment in those communities.
Unstated in the discussion and testimony around the bills has been the fact that Maryland is facing a growing budget gap of expenditures that exceed revenues. State law requires the government to run a balanced budget. According to the non-profit Maryland Matters web site, the state is looking at more than a $1 billion deficit this year, growing to $2.7 billion in fiscal 2026 and 2027.
The proposed coal tax prompted outrage from West Virginia. In a letter to the Maryland General Assembly’s leaders, West Virginia Attorney General John B. McCuskey complained that the bills would nearly double the cost of shipping coal through Baltimore. “On average,” he wrote, “transporting coal costs about $18.77 per short ton.”
McCuskey also raised a constitutional argument against the legislation. He wrote, “The Constitution’s Commerce Clause gives Congress—not Maryland or any other State—the power [t]o regulate commerce … among the several States. U.S. CONST. art. I, § 8, cl. 3.”
Congress enacted the Commerce Clause, only 13 words long, to stop what had become common under the Articles of Confederation that preceded the Constitution: states imposing tariffs and other commercial barriers on each other as exercises of state sovereignty. The Article 1 clause gives Congress the power “to regulate commerce with foreign nations, among states, and with the Indian tribes.”
At the House hearing on the coal fee bill, Environment and Transportation Committee Chairman Dana Stein (D-Baltimore County) addressed the issue of constitutionality. He said Maryland Attorney General Anthony Brown assured him the bills were constitutional. Stein did not discussing the reasoning. Brown’s office declined to explain his position in response to an inquiry from The Quad Report.
For constitutional cognoscenti, McCuskey’s constitutional case is on shaky grounds. The problem is the arcane “dormant Commerce Clause” legal doctrine, which, according to a Cornell Law School discussion, “means that the courts may measure state legislation against Commerce Clause values even in the absence of congressional regulation, i.e., when Congress’s exercise of its power is dormant.”
This power is limited. First, to be unconstitutional under the dormant doctrine, the state law has to treat in-state and out of-state interests differently, to the benefit of the domestic business. In Maryland’s western Garrett County, geologically closer to West Virginia than the Port of Baltimore, the Casselman underground coal mine produces some 300,000 annual tons of met coal transported by truck to Pennsylvania and rail to Baltimore for export.
The mine’s owner, Canada’s Corsa Coal Corp. (CSO on Canada’s TXS Venture Exchange), Jan. 6 filed for Chapter 11 bankruptcy reorganization of its U.S. operations. The filing came the same day the Canadian Investment Regulatory Organization halted trading of the company’s stock.
An important 1978 Supreme Court decision involving Maryland also shows the limits to the dormant Commerce Clause claims. In Exxon Corp. v. Governor of Maryland, 437 U.S. 117, the state passed a law prohibiting oil producers from operating retail service stations in the Maryland.
Writing for the majority, Justice John Paul Stevens ruled that the Maryland law doesn’t discriminate against the interstate oil companies, prohibit the flow of interstate oil, or distinguish between in-state or out-of-state retailers. Without going into specifics, the Maryland oil law was mentioned in the committee hearing this month.
The Maryland General Assembly is likely to pass the measure and Democratic Gov. Wes Moore is likely to sign it into law. The legislative session ends midnight, April 7. If passed, the new law would go into effect July 1.
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