Wyoming Challenges Oklahoma Coal Law

Article excerpt

A lawsuit is being filed in the United States Supreme Court by Wyoming officials challenging an Oklahoma law passed last year limiting the amount of coal Wyoming mines can sell to Oklahoma utilities.

Wyoming officials claim the "10 percent burn law" is unconstitutional, even though Wyoming has its own preference law benefitting Wyoming companies.

The Oklahoma law, passed in 1987, requires Oklahoma utilities to purchase at least 10 percent of their coal from in-state mines.

"It's the position of the state of Wyoming that this is in violation of interstate commerce and is unconstitutional," said Wyoming Gov. Mike Sullivan.

"It puts restrictions upon the interstate sale of products (and) it would cause some fairly significant drops in the coal production within Wyoming," Sullivan said.

"We were selling 99 percent of the coal that was being purchased by Oklahoma utilities. This would be a 10 percent reduction, it would decrease Wyoming severance taxes, if it was fully utilized, by approximately $1 million (annually)," said the Wyoming governor.

The lawsuit was mailed to the Supreme Court on Tuesday.

Oklahoma State Sen. Gene Stipe, D-McAlester, was the principal author of the law and he said Wednesday he did not think the state had "any problem" legally by virtue of the fact that Oklahoma coal is selling at prices that are cheaper than Wyoming's coal.

"I don't think they are on legally sound ground because they are overlooking the fact that Oklahoma coal is cheaper," Stipe said of the Wyoming lawsuit.

He said the law "can be further supported on the public policy argument that it creates jobs and economic development in the state."

Bennie Cox, director of the Oklahoma Department of Mines, said he hadn't heard about the lawsuit, but said he wasn't surprised that it was filed.

He called Oklahoma's law a "blessing to the mining industry because it went into effect last year" at a time when the industry was facing the loss of out-of-state markets "and our production would have been cut by a third had we not had the 10 percent burn law in effect."

Oklahoma produces about 3 millions tons of coal a year, Cox said, with Oklahoma utilities consuming about a third of that or approximately 1 million tons.

Oklahoma Gas and Electric Co. officials said last year, when the law was proposed, that they would spend about $17 million to buy Oklahoma coal and that the company would be investing about $13 million to construct new facilities needed to blend the Oklahoma coal with Wyoming coal.

The coal is mixed with other out-of-state supplies because Oklahoma coal generally has a higher sulphur content, although it also has a higher heat value.

OG&E spokesman Dow Dozier said the only thing the company would say now is that if the Oklahoma law is struck down, "that will mean that our legal obligation to buy Oklahoma coal is over.

"That's not to say or mean that we would or wouldn't (buy Oklahoma coal)," Dozier said, "but that just means that our legal obligation would be over. …