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Alliance for Clean Coal v. Miller

ELR Citation: 25 ELR 20510
Nos. No. 94-1369, 44 F.3d 591/39 ERC 2025/(7th Cir., 01/09/1995) aff'd

The court holds that the Illinois Coal Act, which requires utilities and the Illinois Commerce Commission to take into account the need to use high-sulfur coal mined in Illinois when developing and approving Clean Air Act (CAA) compliance plans, violates the Commerce Clause of the U.S. Constitution. The Act also encourages the use of scrubbers instead of low-sulfur western coal for CAA compliance, requires certain large utilities to install scrubbers and guarantees that the costs of these scrubbers can be passed through to consumers, and requires Commission approval before a utility can make a change in fuel that would result in a 10-percent or greater decrease in the utility's use of Illinois coal. The court first holds that plaintiff trade association, whose members include western coal companies and railroads that transport coal, have standing to challenge the Act. The members have suffered injury-in-fact from the Act's alleged impingement on their right to compete on an equal footing in interstate commerce, and this injury is particular to suppliers and others who deal or attempt to sell western coal to Illinois utilities. Despite the lack of evidence of any specific lost deals, this competitive injury is neither conjectural nor hypothetical. Because of the Act, compliance plans allegedly will be less likely to include the use of western coal. The court next holds that the Act violates the Commerce Clause. It has the same effect as a tariff or customs duty, neutralizing the advantage possessed by out-of-state producers. Moreover, the express purpose of the Act is to preserve Illinois coal mining and to prevent Illinois electric utilities from switching to low-sulfur western coal as a CAA compliance option. This amounts to discriminatory state action. Although the Act does not facially compel the use of Illinois coal or forbid the use of out-of-state coal, by "encouraging" the use of Illinois coal, it discriminates against western coal by making it a less viable compliance option for Illinois utilities. Further, the requirement that particular generators be equipped with scrubbers essentially mandates that these generators burn Illinois coal. Similarly, the guaranteed pass-through of the scrubber cost to ratepayers is equivalent to minimum price fixing for the benefit of local producers, which is unconstitutional. That Illinois ratepayers are "footing the bill" for pollution control devices does not cure the discriminatory impact on western coal producers. The court holds that the state's characterization of the Act as an agreement to subsidize the cost of generating electricity through the use of Illinois coal does not suffice to fit this case into the market participant exception to the negative Commerce Clause, because Illinois is not acting as a purchaser of coal or electricity, but as a regulator of utilities. And the state's desire to protect Illinois and its citizens from economic harm resulting from a decline in the local coal industry does not justify discrimination against out-of-state producers. The court thus invalidates the Act and the compliance plans that the Commission approved thereunder.

[The district court opinion is published at 24 ELR 20739.]

Counsel for Plaintiff
R.R. McMahan
Lord, Bissell & Brook
Harris Bank Bldg.
115 S. La Salle St., Chicago IL 60603
(312) 443-0328

Counsel for Defendants
Rita M. Novak,
Attorney General
Attorney General's Office
State of Illinois Ctr.
100 W. Randolph St., Chicago IL 60601
(312) 814-5659

Before CUMMINGS, CUDAHY and RIPPLE, Circuit Judges.