Wyoming v. Oklahoma
112 S. Ct. 789, 1992 U.S. LEXIS 551, 502 U.S. 437 (1992)
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Rule of Law:
The dormant Commerce Clause prohibits states from enacting laws that discriminate against interstate commerce, subjecting such laws to a virtually per se rule of invalidity unless the discrimination is demonstrably justified by a valid local purpose that cannot be achieved through nondiscriminatory means. A state may have standing to challenge another state's discriminatory commercial legislation if it can demonstrate a direct injury in the form of lost tax revenues directly traceable to the challenged act.
Facts:
- Wyoming is a major coal-producing state and imposes a severance tax on coal extracted from its land, which is based on the coal's fair market value.
- Before the challenged Act, four Oklahoma electric utilities purchased virtually 100% of their coal requirements from Wyoming sources.
- In June 1985, the Oklahoma Legislature adopted a resolution requesting Oklahoma utilities to consider blending at least 10% Oklahoma coal, but these requests were not heeded.
- In March 1986, the Oklahoma Legislature adopted an Act requiring all Oklahoma coal-fired electric generating plants selling power in Oklahoma to burn a mixture of coal containing a minimum of 10% Oklahoma-mined coal.
- Following the Act's effective date in January 1987, the Oklahoma electric utilities reduced their purchases of Wyoming coal in favor of coal mined in Oklahoma.
- Since the Act's effective date, Wyoming has lost significant severance tax revenues (e.g., over $500,000 annually) due to decreased purchases of Wyoming coal by Oklahoma utilities.
- Wyoming has a significant excess mining capacity, meaning the loss of market due to the Act cannot be made up by sales elsewhere.
- One of the four Oklahoma electric utilities subject to the Act, the Grand River Dam Authority (GRDA), is an agency of the State of Oklahoma.
Procedural Posture:
- Wyoming submitted a motion for leave to file a complaint in the Supreme Court under its original jurisdiction, challenging an Oklahoma statute.
- The Supreme Court granted Wyoming leave to file its bill of complaint over Oklahoma’s objections regarding standing and the appropriateness of the Court's original jurisdiction.
- Oklahoma filed a motion to dismiss, raising the same arguments, which the Supreme Court denied, ordering Oklahoma to answer Wyoming's complaint.
- A Special Master was appointed to oversee discovery and factual stipulations.
- Both Wyoming and Oklahoma moved for summary judgment before the Special Master.
- The Special Master recommended findings of fact and conclusions of law generally supporting Wyoming’s motion for summary judgment and rejecting Oklahoma’s motion, finding the Act discriminatory and unconstitutional.
- The Special Master also recommended that Wyoming had standing and the case was appropriate for original jurisdiction.
- The Special Master recommended either dismissing the action as it related to an Oklahoma-owned utility without prejudice or finding the Act severable to that utility.
- The parties requested the Court to enter a stipulated decree adopting the Special Master's Report.
- The Supreme Court declined to enter a stipulated decree on the constitutionality of the Act without further briefing and argument, and set the case down for oral argument.
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Issue:
1. Does an Oklahoma statute requiring its coal-fired electric generating plants producing power for sale in Oklahoma to burn at least 10% Oklahoma-mined coal violate the dormant Commerce Clause of the U.S. Constitution? 2. Does the State of Wyoming have standing to challenge such a statute in the Supreme Court's original jurisdiction due to lost severance tax revenues?
Opinions:
Majority - Justice White
Yes, the Oklahoma Act violates the dormant Commerce Clause, and Wyoming has standing to challenge it in the Supreme Court's original jurisdiction. Wyoming has standing because it suffered a direct injury in the form of lost severance tax revenues, which are directly traceable to Oklahoma’s Act. This constitutes a specific, rather than general, loss of tax revenue sufficient for standing. The Court's exercise of original jurisdiction is appropriate given the 'seriousness and dignity' of the claim, as one sovereign state's action (Oklahoma's Act) directly affects another sovereign state's (Wyoming's) ability to collect taxes, and there is no other forum where Wyoming's interests would be directly represented. The Act itself constitutes economic protectionism and directly discriminates against interstate commerce, both on its face and in practical effect, by explicitly reserving a portion of the Oklahoma coal market for in-state coal. Such discrimination triggers a 'virtually per se rule of invalidity.' Oklahoma's justifications for the Act—lessening reliance on a single source of coal and conserving cleaner Wyoming coal—are not valid. States cannot use protectionist measures to achieve otherwise legitimate goals by isolating themselves from the national economy. Furthermore, the Federal Power Act's saving clause, reserving state authority over retail electric rates, does not permit such a discriminatory violation of the Commerce Clause, as it only preserves 'lawful authority' already existing under state law. Finally, the Act is not severable. The Court cannot rewrite the statute to apply only to the state-owned utility (GRDA), as the Act's language applies to 'all entities providing electric power,' and striking that provision leaves nothing to save without fundamentally altering legislative intent.
Dissenting - Justice Scalia
No, Wyoming does not have standing to bring this Commerce Clause challenge, and even if it did, summary judgment for Wyoming is unjustified due to disputed material facts regarding injury. Previous summary denials of Oklahoma's standing objections do not preclude reconsideration, as jurisdictional issues can always be revisited, and the litigation has reached a new stage with a more developed factual record. Wyoming failed to conclusively establish 'injury in fact' for summary judgment. While Oklahoma utilities bought less Wyoming coal, it is not sufficiently demonstrated that this resulted in fewer severances (taxable events) of coal in Wyoming, or that any coal not sold to Oklahoma wasn't simply sold elsewhere, or that those alternative sales wouldn't have occurred regardless. The claim of 'excess mining capacity' is ambiguous and doesn't definitively prove lost taxable activity. Moreover, Wyoming lacks prudential standing because its interest in collecting severance taxes does not fall within the 'zone of interests' protected by the dormant Commerce Clause. The Clause aims to foster a national free market by benefiting those directly engaged in interstate commerce, not to protect a state's tax revenues, which are inherently antagonistic to free trade as they burden commerce. The Court's expansion of standing based on lost tax revenue is unprecedented and risks opening federal courts to an immeasurable scope of litigation.
Dissenting - Justice Thomas
Even if Wyoming had standing (which I dispute for reasons given by Justice Scalia), the Supreme Court should decline to exercise its discretionary original jurisdiction in this case. While the Court has exclusive original jurisdiction over controversies between states, it has consistently exercised discretion to invoke this power sparingly. Both the nature of Wyoming’s claim and the availability of alternative forums weigh strongly against exercising jurisdiction here. Wyoming’s alleged injury—lost tax revenue resulting from decreased coal sales by private Wyoming mining companies to Oklahoma buyers—is entirely derivative. The primary dispute is between the private mining companies and the State of Oklahoma, not a direct clash between sovereigns requiring the Court's extraordinary original jurisdiction. The affected private mining companies, who are direct commercial actors, could have challenged the Oklahoma statute in lower federal or state courts, and Wyoming has not provided any reason why they could not have done so. Allowing a state to invoke original jurisdiction based on any loss of tax revenue, even a de minimis amount loosely traced to another state's actions, sets a troubling precedent that could lead to a flood of state-on-state Commerce Clause suits.
Analysis:
This case significantly clarifies and potentially expands the scope of state standing, particularly when one state's legislative action directly impacts another state's tax revenues. It reaffirms the rigorous application of the dormant Commerce Clause against protectionist state legislation, even when the volume of commerce affected is relatively small, emphasizing that any clear discrimination is problematic. The Court's refusal to sever the unconstitutional portion highlights the judiciary's role in interpreting, not rewriting, state statutes, and underscores that even state-owned entities are subject to Commerce Clause scrutiny when operating within the market unless Congress has clearly intended otherwise. Future cases involving state-imposed economic protectionism or state challenges based on tax revenue losses will likely cite this decision.
