## Facts

- Alliance for Clean Coal, a Virginia trade association representing western coal producers and coal-transporting railroads, challenged an Illinois statute affecting utility fuel choices.
- Coal is produced and sold in a competitive national market; western coal generally has lower sulfur content than coal from the Illinois Basin.
- Federal Clean Air Act regulation of sulfur dioxide allowed utilities to comply largely by either burning low-sulfur coal or installing scrubbers to reduce emissions while continuing to burn higher-sulfur coal.
- Illinois enacted the Illinois Coal Act (amending the Illinois Public Utilities Act) to protect the in-state coal industry as utilities faced incentives to switch to low-sulfur out-of-state coal.
- The Act required Illinois utilities to submit Clean Air Act compliance plans to the Illinois Commerce Commission for approval and directed the Commission to consider effects on the Illinois coal industry.
- The Act subjected certain utility actions to heightened review, including approval requirements when a utility sought a fuel reduction resulting in at least a 10% decrease in its use of Illinois coal.
- The district court held the Act unconstitutional under the dormant Commerce Clause and enjoined the Illinois Commerce Commission from enforcing it; Illinois commissioners appealed.

## Issues

1. Whether the Illinois Coal Act discriminated against interstate commerce by restricting utilities’ ability to switch from Illinois coal to out-of-state coal, in violation of the dormant Commerce Clause.
2. Whether Illinois could justify the statute as an environmental or regulatory measure tied to Clean Air Act compliance rather than economic protectionism.
3. Whether injunctive relief against enforcement of the Act was proper.

## Decision

- The Seventh Circuit affirmed the judgment invalidating the Illinois Coal Act.
- The court held the Act was economically protectionist and discriminatory in purpose and practical effect because it pressured utilities to continue purchasing Illinois coal and discouraged purchases of out-of-state coal.
- The court rejected Illinois’s attempt to justify the law as an environmental measure, noting that federal law permitted compliance through either low-sulfur coal or scrubbers without privileging either approach.
- The injunction barring enforcement of the Act was upheld.

## Legal Principles

- Under the dormant Commerce Clause, state laws that discriminate against interstate commerce are generally invalid absent a showing that the law serves a legitimate local purpose that cannot be achieved through reasonable nondiscriminatory alternatives.
- A state may not use public utility regulation to reserve market share for in-state producers or coerce in-state purchasing decisions that burden out-of-state competitors.
- Protection of a local industry, even when framed as part of an environmental or energy policy, is not a permissible basis for discriminatory restrictions on participation in a national market.
- State measures that restructure regulated entities’ federally permitted compliance choices to advantage in-state economic interests may be treated as discriminatory interference with interstate commerce.

## Conclusion

The Seventh Circuit held that Illinois’s effort to protect its coal industry by conditioning approval of utility compliance plans on continued use of Illinois coal discriminated against interstate commerce and violated the dormant Commerce Clause, warranting injunctive relief against enforcement.


Alliance for Clean Coal v. Miller, 44 F.3d 591 (7th Cir. 1995)