American Oil and Gas Reporter - October 2020 - 20

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crude exported, and "the charge does
not fairly match the exporter's use of
the services provided by the funds
raised from the charge." The court has
deferred its decision as to the remedy.
For the tax periods in question, the
law firm details, Trafigura paid more
than $4.2 million in taxes on its crude oil
exports. After being denied a refund by
the Internal Revenue Service, Trafigura
filed a lawsuit in the U.S. District Court
for the Southern District of Texas.
Trafigura argued that §4611(b)
violated the Export Clause of the U.S.
Constitution, which states, "No tax or
duty shall be laid on articles exported
from any state." Chamberlain Hrdlicka
says the government did not dispute that
Trafigura paid the taxes, but argued that
§4611(b), though deemed a tax, was a
user fee paid by exporters in exchange
for statutorily-capped liability under the
OPA. If characterized as a user fee
instead of a tax, the government
maintained, the export clause would not
forbid the charge.
According to analysts at Deloitte, the
ruling does not impact the oil spill tax
imposed under Internal Revenue Code
§4611(a).
"Further, the U.S. district court has

not yet ruled on whether a taxpayer
seeking a refund of §4611(b) taxes
previously paid will need to
demonstrate that it ultimately bore the
economic liability of the tax by not
effectively passing the burden of the
tax on to its customers," Deloitte
relates. "Finally, to the extent that the
taxes imposed (by) §4611(b) were
deducted in the computation of
taxable income in prior periods,
companies should consider whether
any refunds granted may need to be
included in taxable income to avoid
any double benefit.
"In the meantime, companies that
pay the oil spill tax under IRC §4611(b)
should consider whether to file
protective refund claims pending a
decision by the court on the remedy
issue and/or a potential appeal of the
constitutional issue," Deloitte adds. ❒

More Lawsuits Filed
Against Trump Actions
Blue states and environmental
groups continued legal challenges to
Trump administration regulatory
rollbacks and leasing decisions in
August and September.

Two environmental groups-the
Southern Environmental Law Center
(SELC) on behalf of six environmental
organizations, and the Sierra Club on
behalf of itself and three tribal groups-
filed lawsuits against the Environmental
Protection Agency's final rule clarifying
procedures states must use in performing
Section 401 water quality certifications
under the Clean Water Act.
On Sept. 9, 15 attorneys general led
by Maura Healey of Massachusetts and
Bob Ferguson of Washington, challenged
the U.S. Department of Interior's decision
to allow oil and gas leasing on the Arctic
National Wildlife Refuge Coastal Plain.
In other legal developments, the
states of Delaware and Connecticut and
the cities of Hoboken, N.J., and
Charleston, S.C., became the latest to
sue oil companies for climate change.
EPA released its final rule on Section
401 on June 1. It requires states to
conclude water quality reviews within one
year of receiving a certification request,
and limits the scope of states' reviews to
assuring a discharge from a federally
permitted activity will comply with
"water quality requirements" as defined in
the rule (AOGR, June 2020, pg. 46).
The SELC filed its lawsuit against the

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American Oil and Gas Reporter - October 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2020
