Wyoming v. Oklahoma

1992-01-22

Headline: Oklahoma's 10% in-state coal purchase rule struck down as unconstitutional, blocking the law and restoring market access for Wyoming coal while protecting Wyoming's tax revenues and coal producers.

Holding: The Court held that Oklahoma's law forcing utilities to buy at least 10% Oklahoma-mined coal discriminates against interstate commerce, violates the Commerce Clause, and is therefore unconstitutional and enjoined in its entirety.

Real World Impact:

Strikes down Oklahoma's 10% in-state coal purchase requirement for utilities.
Restores protected market access for Wyoming-mined coal and potential lost severance tax revenue.
Limits states' ability to favor local producers over out-of-state competitors.

Topics: interstate commerce, state coal purchase rules, state tax revenue, energy regulation, standing and original jurisdiction

Summary

Background

Wyoming, a major coal-producing State, sued over an Oklahoma law that required coal-fired power plants selling electricity in Oklahoma to burn at least 10% Oklahoma-mined coal. Wyoming said the law reduced purchases of Wyoming coal, costing the State severance tax revenue. The record shows Oklahoma utilities formerly bought almost all their coal from Wyoming, then increased purchases of Oklahoma-mined coal after the law took effect. The parties submitted facts and cross-motions after a Special Master heard the case.

Reasoning

The main question was whether the Oklahoma law unfairly favored in-state coal and therefore violated the constitutional limit on state laws that discriminate against interstate trade (the Commerce Clause). The Court adopted the Special Master’s findings and ruled the law discriminated on its face and in practical effect. Oklahoma’s arguments — that the law served local rate regulation or conserved cleaner Wyoming coal — were rejected. The Court also considered but refused to keep any portion of the law in force by severing it to apply only to Oklahoma’s state-owned utility.

Real world impact

The Court declared the entire statute unconstitutional and enjoined its enforcement, which restores the ability of Wyoming coal producers to compete for Oklahoma utility business and protects Wyoming’s severance-tax base. The ruling affects the four named utilities (three private and one state-owned) and preserves the general rule that states may not erect protectionist market preferences.

Dissents or concurrances

Two dissents argued Wyoming lacked the right to bring this suit based on lost tax revenue and that the Court should not have exercised original jurisdiction; they warned the decision could expand state-versus-state Commerce Clause suits.