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Alliance for Clean Coal v. Bayh

ELR Citation: 26 ELR 20546
Nos. No. IP94-0890-C-T/G, 888 F. Supp. 924/(S.D. Ind., 03/27/1995)

The court holds that provisions of Indiana's Environmental Compliance Plans Act (ECPA) that favor a utility's use of Indiana coal violate the Commerce Clause of the U.S. Constitution. The ECPA allows a utility to seek an early review by the Indiana Utility Regulatory Commission (IURC) of the utility's plan for complying with the Clean Air Act Amendments of 1990. Following the review, a utility may include the capital costs of facilities in its consumer rate base and recover the costs of development and implementation of its compliance plan. The challenged provisions require a utility that proposes a change in fuel type that would lead to a diminished use of Indiana coal to submit tothe IURC an analysis of the effects of the fuel change on Indiana coal mining. Also, the provisions require the IURC, before it approves a plan, to find that the plan provides for continued or increased use of Indiana coal or that economic considerations justify the plan's failure to so provide. In addition, the provisions require annual reviews of plans that result in diminished use of Indiana coal. The court first holds that a trade association of western coal interests has standing to challenge these provisions because the ECPA favors in-state coal producers over out-of-state producers. The causal connection between that injury and the challenged provisions is clear, and a resolution of this matter in the association's favor would redress the injury.

The court next refuses to abstain from deciding the case. Under Burford v. Sun Oil Co., 319 U.S. 315 (1943), a federal court should abstain when the federal case depends on resolving unsettled questions of state law within the competence of an administrative agency. In this case, however, the plaintiff seeks a determination concerning the facial constitutionality of a statute, not an individualistic review of particular fact-specific regulatory decisionmaking. Under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), a federal court may stay or dismiss a suit in exceptional circumstances when there is a concurrent state proceeding and the stay or dismissal would promote "wise judicial administration." Although a state court proceeding is, in part, considering the constitutional question at issue in this case, the two proceedings are not parallel. In addition, this case does not involve any property over which the state has assumed jurisdiction, the federal forum is a particularly appropriate place to decide the instant question, and decision of the instant question will not lead to piecemeal litigation. Furthermore, the law governing the instant question is federal, this proceeding is ripe for decision, removal of the state court proceeding is not appropriate, and the federal claim is meritorious.

The court next holds that the challenged provisions of the ECPA facially violate the Commerce Clause. Indiana cannot justify the ECPA on the grounds that it protects the state and its citizens from economic harm that could result from a decline in the state's coal industry as a consequence of compliance with the 1990 Clean Air Act Amendments. The provisions' obvious intent was to limit or eliminate the use of western coal in Indiana generating plants in order to promote the use of high-sulfur coal, preferably that mined in Indiana. Therefore, the provisions fail to promote any legitimate local interest. Although defendants claim that the statute is voluntary, the only way for a utility to ensure that it will receive the necessary rate increases to finance its plan for complying with the 1990 Clean Air Act Amendments is to avail itself of the procedure provided by the ECPA. The court holds that the challenged provisions should be severed from the ECPA. The Indiana Code contains a severability clause that applies to every provision of the Code. The challenged provisions are not essential to achieving the ECPA's objective, and the exceptions to the presumption of severability set forth in the severability statute are not applicable to the ECPA.

[The circuit court's opinion is published at 26 ELR 20557.]

Counsel for Plaintiff
Robert W.Geddes
Hume, Smith, Geddes & Green
54 Monument Circle, Indianapolis IN 46204
(317) 632-4402

Counsel for Defendants
Virgil Beeler
Baker & Daniels
300 N. Meridian St., Indianapolis IN 46204
(317) 237-0300