Amicus Brief — Commonwealth Edison Co. v. Montana

:

’

'

~~ ee, ee” ~

ru

No. 80-581

IN THE

Supreme Court of the United tates

OcTOBER TERM, 1980

COMMONWEALTH EDISON COMPANY, CENTRAL IL-

LINOIS LIGHT COMPANY, DAIRYLAND POWER CO-

OPERATIVE, DETROIT EDISON COMPANY, INTER-

STATE POWER COMPANY, LAKE SUPERIOR DIS-

TRICT POWER COMPANY, LOWER COLORADO RIV-

ER AUTHORITY/CITY OF AUSTIN, MINNESOTA

POWER & LIGHT COMPANY, NORTHERN STATES

POWER COMPANY, UPPER PENINSULA GENER-

ATING COMPANY, WISCONSIN POWER & LIGHT

COMPANY, DECKER COAL COMPANY, PEABODY

COAL COMPANY, WESTMORELAND RESOURCES,

INC. and WESTERN ENERGY COMPANY,

Appellants,

—against —

STATE OF MONTANA, TED SCHWINDEN, GOVERNOR

OF MONTANA, HELEN J. FEAVER, DIRECTOR OF

THE STATE DEPARTMENT OF REVENUE, and MAU-

RICE L. BRUSETT, DIRECTOR OF ADMINISTRATION

AND STATE TREASURER,

Appellees.

ON APPEAL FROM THE SUPREME COURT

OF THE STATE OF MONTANA

AMICUS CURIAE BRIEF OF

ENVIRONMENTAL DEFENSE FUND,

NATURAL RESOURCES DEFENSE COUNCIL,

AND SIERRA CLUB IN SUPPORT OF APPELLEES

Davin B. ROE

Counsel of Record

Patricia L. WELLS

2606 Dwight Way

Berkeley, California 94704

(415) 548-8906

JONATHAN LASH

1725 I Street, N.W.

Washington, D.C. 20006

(202) 223-8210

Attorneys for Amici Curiae

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

COMMONWEALTH EDISON COMPANY, et al.,

Appellants,

—against—

STATE OF MONTANA, et al.,

Appellees.

ON APPEAL FROM THE SUPREME COURT

OF THE STATE OF MONTANA

AMICUS CURIAE BRIEF OF

ENVIRONMENTAL DEFENSE FUND,

NATURAL RESOURCES DEFENSE COUNCIL,

AND SIERRA CLUB IN SUPPORT OF APPELLEES

This brief addresses two questions:

1. Whether trial is necessary to apply the test of Complete

Auto Transit v. Brady, 430 U. S. 274 (1977), and

2. Whether trial is necessary to evaluate the putative

conflict between state and federal policy that appellants pose.

TABLE OF CONTENTS

eer

SUMMARY OF ARGUMENT. ............cccccccsssessereeeseeeeees

I ichdidnsiscabrvinhandasvenesbonsnssececsevnonevensceesneseess

I.

THE “FAIRLY RELATED” ISSUE CAN

AND SHOULD BE DETERMINED WITH-

gp ae SB Be at errr

A. Montana’s severance tax is well within con-

stitutional bounds since it is non-

discriminatory and it imposes no practical

burden on interstate COMMETCE. ..............00000e

B. States are entitled to wide latitude in gaug-

ing the present and future impact costs of

developing non-renewable resources. ............

C. How large the burdens of present and future

coal development will be on Montana’s

environment and economy is a question

particularly suitable for legislative judgment,

since the costs cannot be sharply quantified...

Il. NO NATIONAL ENERGY POLICY CON-

FLICTS WITH MONTANA’S IMPOSITION

OF A SEVERANCE TAX ON COAL DE-

SIGNED TO COMPENSATE THE STATE

FOR THE EFFECTS OF COAL MINING.

FEDERAL POLICIES TOWARD ENERGY

ARE EXPRESSED IN STATUTES WHICH

SHOULD BE INTERPRETED BY _ THIS

I aks 1 cateashhosnnawsseosenapaite

A. Federal policies toward energy are stated in

many statutes designed to achieve diverse

objectives. No uniform policy exists..............

B. Federal statutes relating to energy generally,

and coal in particular, firmly link devel-

opment with environmental considerations,

and with prices high enough to meet mul-

ahah siihinkcntatviinsscedicnanstuveesteseuvpseccee

C. The statutes relied upon by appellants do

not manifest a Congressional policy favoring

low sulfur western coal at the lowest possible

ah ich aces inlnahadehankedtiwnseasentenssvensss

D. Even assuming arguendo that there is a

discernible policy to favor coal development

over other values and alternatives, Mon-

tana’s tax should be upheld without trial. ......

Neen oa. ssacescaneubsesebdatenniusoesoness

APPENDIX

Steven R. Weiss in preparing this brief.

10

10

16

17

19

* We gratefully acknowledge the excellent assistance of

ii

TABLE OF AUTHORITIES.

PAGE

Cases.

Capitol Greyhound Lines v. Brice, 339 U. S. 542

(1950) ...ccccccssssssssssssssssssserenserenssssssseassnsesorenseresensesens 7

Complete Auto Transit v. Brady, 430 U. S. 274

(1977) ...ccccscsccsssscsscessssesscsersscsncesesessessnsncsesessnnsnsesensenes 4,6n.5,7

Commonwealth Edison v. Montana, 615 P. 2d 847

(1980 ).......ccccssssssssccssesvessrsscecesenrssessssnsessesesossnsesensesens 6n.6,9n.9

Evansville-Vanderburgh Airport Authority District v.

Delta Airlines, Inc., 405 U.S. 707 (1972)... 7

Exxon v. Hughes, 437 U.S. 117 (1978) ...ccccseeeseseesees 6n.8

Geer v. Connecticut, 161 U.S. 519 (1896)......:cccceeeeee 4n.1

General Telephone Co. v. Michigan Public Service

Commission, 78 Mich. App. 528, 260 N. W. 2d 874

( 1977) .cerceccercssssesscevsssccesnococrscnssesessnssuscsvescounsensnsessees 6n.7

Heisler v. Thomas Colliery Co., 260 U.S. 245 (1922). 4n.1

Hines v. Davidowitz, 312 U.S. 52 (1941) wc eeeeeeeeeees 18

Hughes v. Oklahoma, 441 U.S. 322 ( bg: nn 4n.1

Lewis v. BT Investment Managers, Inc., —_— U. S.

64 L. Ed 2d 702, 712 ( 19GO) ...ccrcccccccccsssscseeess 7

Minnesota v. Clover Leaf Creamery Co., U. S.

49 U.S. L. We TTT CISGL ) cvvccsccsrcccssescaccocecess 5,8

Mobil Oil. Corp. v. Commissioner of Taxes of Ver-

mont, U.S. , 100 S. Ct. 1223 (1980)....... 4n.1,7

Western Live Stock v. Bureau of Revenue, 303 U. S.

250 ( 1938) ...ceccoscsersscscevcoseseorecssoasecoronsenscsassensenccensnvene 6n.8

Statutes.

U. S. CONSTITUTION, Art. I, § 8, cl. 3 (Commerce

CRB RIOD Yo cncccnicoasvesinssocsersvasvensconessneesscsnsnsesbenequssensonsonioes passim

Crude Oil Windfall Profits Tax Act of 1980, Pub. L.

96-223, 94 Stat. ZZ9 (19GO ) ..ccseserocersoscceseseecessscescesoes 11n.14,

12n.16,

13n.18,

19

Department of Energy Organization Act, 42 U. S. C.

BE FETT aOR: sevcssvssvssssocenseceenseoesancvssortaseosncecsesesesiensses 12n.16,

13n.18,

19,

14n.20

Emergency Energy Conservation Act of 1979, 42

12n.16,

U. S.C. 88 8501-8541... cccceeecsteeeteeeeneeeeeeeeeeenenens

13n.19

Emergency Petroleum Allocation Act, is v. 3.

S§ 751- 760M .....ccsscsssssseseseeseseensseessscesseenesenesnenanensesees 12n.16,

13n.19

Energy Conservation and Production Act, Pub. L. 94-

385, 90 Stat. 1125 (1976) ....cccseseresserssseeeeeenneneeneees 11n.14,

13n.18,

19,

14n.20

Energy Reorganization Act of 1974, 42 U. S. C.

SE SBO1-SB91 oc. cescssescsesseseseesenenensesssesesseesenenenneneneneens 12n.16,

13n.18,

19,

14n.20

Energy Policy and Conservation Act, Pub. L. 94-163,

BO Stat. 871 (1975) ..ccecccsceseeseeseeseeteesseeseeeseeeeneenaes 11n.14,

12n.16,

13n.18,

19,

17n.28

Energy Security Act, Pub. L. 96-294, 94 Stat. 611

(1980) ...cccccccscssssssssssssssescsesencnsssseesesensesenenenenensnenesesees 11n.14,

12n.16,

13n.18,

19,14

Energy Supply and Environmental Coordination Act

of 1974, Pub. L. 93-319, 88 Stat. 246 (1974).......0:. 12n.16,

13n.18,

17n.28

Energy Tax Act of 1978, Pub. L. 95-618, 92 Stat.

11n.14,

3174 (1978) ...cccccsssssscsssseseeresseeeeenenensssenseneeeesenensenanes

12n.16,

13n.18,

19

Federal Coal Leasing Amendments Act of 1975, Pub.

L. 94-377, 90 Stat. 1083 (1976 ).....::ccccseesesereeereeeees 12n.16,

13n.18,

14n.20,

16n.26

iV

Federal Nonnuclear Energy Research and Devel-

opmeht Act of 1974, 42 U.S.C. 88 §901-5917........

Geothermal Energy Research, Development, and

Demonstration Act of 1974, 30 U. S. C. §§ 1101-

Magnetic Fusion Energy Engineering Act of 1980, 42

U.S. C. §§ 9301-9312 (1980)... eeeeeccreeeeeeereeneneeees

National Energy Conservation Policy Act, 42 U.S. C.

SS 8211-8278 .......ccscccrcsssssceccooroecceccesrensssssssscrecsonsensens

National Energy Extension Service Act, 42 U. S. C.

SS TOOM-7ON | .......ceccsscescsccoscccccersercscescrsrsessscsscsecsenrees

Natural Gas Policy Act of 1978, 15 U. S. C. §§ 3301-

II ccisanainicoddseidatseniedintcivndeiieiinbatihadoasenehuaiaainsiananiianete

Ocean Thermal Energy Conversion Act, Pub. L. 96-

310, 94 Stat. 941 (1980) oo... eeeeeeeseeeeeeeees

Pacific Northwest Electric Power Planning and Con-

a Act, Pub. L. 96-501, 94 Stat. 2697

1DED) ...nccscserscersserscsnisesnoserensenecssessoenovesnensuscesousoveonsnes

Powerplant and Industrial Fuel Use Act of 1978,

Pub. L. 95-620, 92 Stat. 3289 (1978) oe eee

Public Utilities Regulatory Policies Act of 1978, Pub.

ic UNE Fg Ue Ie EET 1 OVE Picersccsessaseicccctscasessneens

Solar Energy Research, Development, and Demon-

stration Act of 1974, 42 U.S. C. §§ 5551-55666 ........

Solar Heating and Cooling Demonstration Act of

PR AR Gis ais Gs BG PIPED ET carsccczsstvesixetsvivsovssensees

Solar Photovoltaic Energy Research, Development,

and Demonstration Act of 1978, 42 U. S. C.

| __RRR REERPRRTaPEe See sme nOs EC mea ON

Surface Mining and Reclamation Act of 1977, 30

ls thle dh sinssmassesauheiinnsstuncmibun

Wind Energy Systems Act of 1980, Pub. L. 96-345,

OID ee cecestciserasssicsachnnssebsnenssacsenidacses

Clean Air Act, as amended, 42 U.S. C. §§ 7401-7642

Clean Water Act Amendments to the Federal Water

Pollution Control Act, 33 U.S. C. §§ 1251-1376 .....

National Environmental Policy Act of 1969, as

amended, 42 U.S. C. §§ 4321-4361 oo...

Resource Conservation and Recovery Act of 1976, 42

BE FE SEATS a ae

Uranium Mill Tailings Radiation Control Act of

197B, 42 U. S.C. $9 7901-794... .ccrcocesvcescososcesescsees

vi

Federal Land Policy and Management Act of 1976,

BERET Be PE OE GO, cvccescssnnstievesecscsienrssensosvnesnerts

Federal Mine Safety and Health Act of 1977, 30

CTE, Be Bere Oe OD: passscnssiccacriencrsevescensnsscseszscosscenes

State Laws.

Sitnnis Asn: Seat. Ch. EEF SD Bo csccsreceocgrsvssescocsecssessess

Michigan Comp. Laws Ann. § 460.6 ...........:sssseeseees

Minnesota Stat. Ann. § 216B.01, § 216B.03.................

Wisconsin Stat. Ann. § 196.03( 1) ..............cceeeeeeeeeeeeeees

Legislation.

H.R. 6625, 96th Cong., 2d Sess. (1980 )..........::ccecceeeees

H.R. 6654, 96th Cong., 2d Sess. (1980 )..........:eseceeeees

H.R. 7163, 96th Cong., 2d Sess. (1980 ).........:::cceeeeeees

S. 178, 97th Cong., Ist Sess. (1981) ........ccceceeeeeeenneees

Legislative History.

H.Rep.No. 95-218, 95th Cong., Ist Sess. (1977).........

H.Rep.No. 95-294, 95th Cong., Ist Sess. (1977).........

H.Rep.No. 94-681, 94th Cong., Ist Sess. (1975).........

S.Rep.No. 95-141, 95th Cong., 2d Sess. (1978)..........

H.Rep.No. 95-294, 95th Cong., Ist Sess. (1977).........

Miscellaneous.

Allen Kneese and Charles Schultze, POLLUTION

PRICES AND PUBLIC POLICY (1975)................

Executive Branch Review of Environmental Regu-

lations; Hearing before the Subcommittee on

Environmental Pollution of the Committee on

Environment and Public Works of the United

States Senate, 96th Cong., Ist Sess. 406 (Statement

OE FI TEA ic cotccscesciniescttlbanitncecepteamapiantaninnevits

Ayres and Doniger, New Source Standard for Power

Plants: Consider the Law, 3 HARV. ENV. L. REV.

0 FOE Picsinstilniicsnstennicciiesegianeciccntyluimninigbeceentinetinianeess

PAGE

16n.20

16n.20

DNDN DW

18

18

18

18

14n.21

14n.21

16n.26

14n.21

17

15n.23

Vil

PAGE

Arthur Sampson, THE SEVEN SISTERS ( 1975)....... 11n.12

ENERGY FUTURE (R. Stobaugh and D. Yergin,

SR BOF P viissvctccscesstrieasonnsieacivniaehenbedaiaesaaiaaaie 11n.12

ENERGY POLICY IN PERSPECTIVE (D. Good-

SR, GEE, TI Bint kescandesevcabiveetecssividaiaianiienmmaaaaiaead 11n.14,15

AN ANALYSIS OF FEDERAL INCENTIVES

USED TO STIMULATE ENERGY PRODUC-

TION, Battelle Laboratories (1980) .................eeeeee l1n.13

HISTORICAL ENERGY SALES (October 1980)..... 5n.1

Annual Report of Montana Power Company (1979) ... 5n.3

Executive Order 12287, 46 Federal Register 9909

O FIRES F :isvisssvvdncimidacnindissetenigncsinalbnaena etiam 11n.15

IN THE

Supreme Court of the United States

OCTOBER TERM, !|980

COMMONWEALTH EDISON COMPANY, et al.,

Appellants,

—against—

STATE OF MONTANA, et al.,

Appellees.

ON APPEAL FROM THE SUPREME COURT

.OF THE STATE OF MONTANA

AMICUS CURIAE BRIEF OF

ENVIRONMENTAL DEFENSE FUND,

NATURAL RESOURCES DEFENSE COUNCIL,

AND SIERRA CLUB IN SUPPORT OF APPELLEES

INTEREST OF AMICI

Amici are three national organizations dedicated to protec-

tion of the environment and to the responsible use and pres-

ervation of natural resources. The combined membership of

amici in the United States exceeds 275,000. All amici have a

strong interest in evaluating the environmental consequences of

energy development, in minimizing undesirable consequences,

and in assuring that unavoidable damage to the environment

be repaired insofar as possible. A more detailed description of

each amicus appears in the Appendix to this brief.

In this case, appellants seek to constrict the ability of a

state to impose a non-discriminatory tax, and to set aside tax

revenues in a trust fund, in order to defray the costs of present

and future environmental damage from coal extraction. Amici

support the state’s efforts to mitigate the uncertain and partially

unpredictable harm to its environment.

Counsel for the parties have consented to the filing of this

brief in support of appellees, and letters of consent have been

filed with the Clerk.

2

SUMMARY OF ARGUMENT

At stake in this case is a state’s power to levy a non-

discriminatory tax on the extraction of coal, in order to defray

the present and future costs of that extraction as they fall on the

state’s environment, economy, and society. Appellants do not

contend that such taxes are invalid altogether, but they argue

that in this case the Constitution requires Montana’s tax to be

lowered; and they insist that trial is necessary in order to

quantify the short- and long-term burdens that coal extraction

will impose on Montana. They also seek trial, in state court, to

delineate “national energy policy,” and then to set a dollar

ceiling on the amount of tax Montana can levy on coal

producers without “substantially frustrating” the policy thus

delineated.

The constitutionality of Montana’s tax can readily be

determined without trial in this case, because the case in its

present posture demonstrates that the tax is non-discriminatory

and that it has not operated to hinder commerce in Montana

coal.

The challenged tax falls with equal weight on Montana

consumers and consumers out of state; its practical effect is

neither discriminatory nor tailored. Manifestly, the tax is not

preventing very large amounts of Montana coal from being

mined and sold in interstate commerce, at prices which appel-

lant utilities seem to find competitive with other energy sources.

Whether Montana’s tax fairly relates to the burdens of coal

extraction is an issue particularly unsuitable for trial. As a

matter of constitutional law, the state is entitled to wide latitude

in deciding what level of taxes is fairly related to the present

and future impacts of extracting its non-renewable resources.

In addition, the full cost of many important impacts is not

quantifiable with objective precision. The degree of impacts in

the future is necessarily speculative in part. Some impacts are

highly subjective, such as the value of clean air and unscarred

land. Other impacts may not be discovered for several years.

Appellants have not suggested any judicial standards that could

govern a fact-finding process, either at trial or on review.

3

The challenged tax does not conflict with federal statutes,

as the Court can determine for itself without trial. Even

assuming a partial federal policy in favor of coal development,

balanced against environmental concerns and other energy

sources exists, there is no discernible policy in favor of coal

production in disregard of those balancing factors, or at the

cheapest possible prices—the policy appellants require to sup-

port their argument. As a whole, “national energy policy” as

expressed in federal statutes is a far more elusive concept than

appellants contend.

4

ARGUMENT

I. THE “FAIRLY RELATED” ISSUE CAN AND

SHOULD BE DETERMINED WITHOUT TRIAL IN

THIS CASE.

Appellants concede that a coal severance tax imposed by a

state is constitutional in principle. However, they argue that the

Commerce Clause entitles them to have their taxes lowered in

this case, to a level to be set at trial. They insist that trial is

necessary to apply the test of Complete Auto Transit v. Brady,

430 U. S. 274 (1977), which requires in part that a tax be

“fairly related to the services provided by the State.” 430 U. S.

at 279. At trial, appellants would attempt to quantify the total

impacts of coal extraction on the state of Montana and to fix a

dollar value on the costs of avoiding or repairing them.

Appellants’ brief at 12. Appellants recognize that those total

impact costs are what define the permissible scope of the tax.

Amici agree that the “fairly related” test of Complete Auto

Transit is applicable,’ and that the total impact costs of coal

extraction activity are the proper constitutional boundary for

Montana’s severance tax. But from those premises, the necessi-

ty for trial does not follow. Nothing in the Complete Auto

Transit test, either as formulated or as subsequently applied by

this Court, indicates that a quantification of impacts at trial 1s

required in every case, or even that it is desirable to subject the

legislative judgment of a state in this context to a detailed

second-guessing.

A. Montana’s severance tax is well within constitutional

bounds, since it is non-discriminatory and it imposes

no practical burden on interstate commerce.

In support of their argument for trial, appellants rely

heavily on the claim that the challenged tax is discriminatory,

and tailored to fall disproportionately on out-of-state taxpayers

' Applying the practical rule of Complete Auto Transit, rather than the

convenient but formalist rule of Heisler v. Thomas Colliery Co., 260 U.S. 245

(1922) is consistent with recent cases. See, e.g., Mobil Oil Corp. v.

Commissioner of Taxes of Vermont, ___. U.S. ____., 100 S. Ct. 1223, 1234

(1980). In Hughes v. Oklahoma, 441 U. S. 322, 325 (1979), the Court

discarded the similarly formalist rule of Geer v. Connecticut, 161 U.S. S19

(1896).

and consumers. But it is not. Over sixty percent of Montana’s

electricity customers are served by the Montana Power Co.?

Appellants cannot be unaware that Montana Power buys coal

and burns it at three large, coal-fired electric generating plants

located within the state, since appellant Western Energy Co. is

the sole supplier of coal for all three plants (Western Energy is

a wholly owned subsidiary of Montana Power Co.).3 Nor can

they be unaware that the coal sold to Montana Power for in-

state consumption is taxed at the same rate as coal sold out of

state, since appellant Western Energy is the taxpayer of record

for that coal.4 In-state coal purchasers receive no tax advantage

under Montana’s tax. Nor is there any advantage to ultimate

electricity customers located in Montana, whose electricity is

made from taxed coal and who are therefore affected by the tax

in exactly the same way as customers of any of the utilities

seeking relief here.

In the absence of discrimination, the principal factor to be

assessed is the degree of burden on interstate commerce.

Minnesota v. Clover Leaf Creamery Co., ___, U. S. —-_, 49

USLW 4111, 4115 (1981):

Since the statute does not discriminate between inter-

state and intrastate commerce, the controlling question is

whether the incidental burden imposed on interstate com-

2In calendar year 1979, Montana Power Co. sold 7,026,040,015

kilowatt-hours of electricity in Montana. See Montana Power Co., Rate

Increase Application, Montana Public Service Commission Docket #80.4.2.

Overall sales within the state for the same period were 11,066,000,000

Kilowatt-hours. See Montana Department of Natural Resources and Conser-

vation, Historical Energy Sales (October 1980), at 21.

3 See Securities and Exchange Commission Form 10-k, Annual Report of

Montana Power Company dated 12-31-79, SEC file #1-4566, at 17, 25. The

three plants are Colstrip Units | and 2, located at Colstrip, Montana (50%

ownership by Montana Power Co. ), and the Corette plant, located at Billings,

Montana (100% ownership). /d.

4 See Statement of Coal Produced and Severance Tax for Quarter

, submitted quarterly by Western Energy Company to the State of

Montana Department of Revenue. Together, the three in-state plants burn in

excess of three million tons of coal per year. /d., statements for 3-31-80, 6-30-

80, 9-30-80, and 12-31-80.

6

merce by the Minnesota Acct is ‘clearly excessive in relation

to the putative local benefits.’ [citation omitted ]§

In this case, interstate commerce in Montana coal has flour-

ished in the presence of the challenged tax. The tax has not

prevented Montana coal production from quadrupling in the

last decade,® nor has the tax prevented appellant utilities from

buying Montana coal at what they must have considered fair

and reasonable prices, in comparison to other energy sources.”

The utility appellants here do not contend that their coal

purchases would substantially increase if the challenged tax

were reduced, nor that the proportion of coal they intend to rely

on, as compared to other energy sources, would substantially

change. Thus, even as a matter of pleading, no practical

interference with interstate commerce appears in this case.®

5 The fair relation of burdens and benefits. so discussed in the quoted

passage, is the non-tax equivalent of the “fairly related” test as set Out in

Complete Auto Transit. The challenged state law in Minnesota v. Clover Leaf

Creamery was a ban on one type of milk container, and the Court looked to

the relationship between the disadvantage to commerce on the one hand, and

the advantage to the state on the other. Where the challenge is to a non-

discriminatory state tax, as in Complete Auto Transit and this case, the

disadvantage to commerce is simply the amount of the tax, and the advantage

to the state is the legitimate end to which the tax revenues are pul. The

constitutional requirement, that there be a fair relationship between them, is

the same.

6 See the decision by the Montana Supreme Court below, 615 P. 2d 847,

849-850 (1980).

7 Regulated public utilities are under a duty to provide service, including

the generation of electricity, at reasonable cost. See, e. g., Illinois Ann. Stat.

ch. 111%, § 32; Michigan Comp. Laws Ann: § 460.6, General Telephone Co. v.

Michigan Public Service Comm'n, 78 Mich. App. 528, 260 N. W. 2d 874, 877

(1977): Minnesota Stat. Ann. § 216B.01, § 216B.03; Wisconsin Stat. Ann.

§ 196.03(1). It would therefore be illegal for appellant utilities to pay

unreasonably high rates for their coal. .

8 For Commerce Clause purposes, burdens on taxpayers must be dis-

tinguished from burdens on interstate commerce. Exxon v. Hughes. 437

U. S. 117. 126 (1978). Montana’s tax obviously raises the price of coal, and

thus the cost of doing business for coal sellers; but by itself, an increased cost

of doing business is unobjectionable. See Western Live Stock v. Bureau of

Revenue, 303 U. S. 250, 254 (1938). The same is true of a regulation that

raises costs to ultimate consumers. Exxon v. Hughes, supra, 437 U.S. at 127-

128.

7

The teaching of Complete Auto Transit and succeeding

cases has been to focus on the “practical effect” of a challenged

statute in operation. See, e.g., Lewis v. BT Investment Man-

agers, Inc., ___ U.S. —_, 64 L. Ed. 2d 702, 712 (1980);

Mobil Oil Corp. v. Commissioner of Taxes of Vermont, ——

U. S. ___, 100 S. Ct. 1223, 1234 (1980). Montana’s tax has

not hindered interstate commerce in practice, and it has fallen

even-handedly on all commerce and all parties concerned,

whether located outside the state or within its borders. Since

trial is not required to determine either point, the tax should

therefore be upheld.

B. States are entitled to wide latitude in gauging the

present and future impact costs of developing non-

renewable resources.

Although the Commerce Clause imposes a rule of fairness,

it does not require state taxes affecting interstate commerce to

be narrowly constrained by a precise calculation of the burdens

imposed by that commerce.

Complete fairness would require that a state tax vary

with every factor affecting appropriate compensation ...

These factors, like those relevant in considering the con-

stitutionality of other state taxes, are so countless that we

must be content with ‘rough approximation rather than

precision’ [citation omitted J.

Evansville-Vanderburgh Airport Authority District v. Delta Air-

lines, Inc., 405 U. S. 707, 716 (1972), quoting Capitol

Greyhound Lines v. Brice, 339 U. S. 542, 546-547 ( 1950). The

purpose of trial in this case could only be to substitute

“precision” for rough approximation, and thereby to constrict

the legislative judgment of the state in gauging the present and

future magnitude of coal development impacts. The Court has

been invited to make this substitution before, and has declined.

In Capitol Greyhound v. Brice, appellants argued that Maryland

road taxes should more precisely correlate with actual road use,

determined as a factual matter. The Court recognized the

“infirmities” of Maryland’s taxing formula, but observed that

“we are by no means sure that the remedies suggested by

appellants would not bring about greater ills.” 339 U. S. at 546.

8

In the most recent case, faced with Minnesota’s judgment

that plastic nonrefillable milk containers posed a large enough

environmental hazard to justify a total ban, the Court applied a

“clearly excessive” standard to the state’s assessment, and

upheld the ban. Minnesota v. Clover Leaf Creamery, supra, 49

USLW at 4115-4116. If anything, the standard in this case

should be even less restrictive, since the subject is a tax rather

than an absolute ban on one form of commerce, and since the

legislative judgment in question—Montana’s assessment of the

environmental, social and economic hazards of coal mining on

a massive scale—covers an area much less susceptible to precise

measurement. But under any standard, the Court can safely

defer tv Montana’s judgment in this case, knowing that the

practical effect of Montana’s tax has been neither to hinder

interstate commerce nor to discriminate against it.

Appellants argue that to uphold Montana’s tax without

trial in this case will be to give states unlimited discretion to

raise taxes, even to 1000% or 2000%. Appellants’ brief at 24.

But states are not empowered to put excessive burdens on

commerce: if and when Montana actually starts to constrict

commerce in coal, either through taxes or otherwise, review of

its legislative judgment will be available.

C. How large the burdens of present and future coal

development will be on Montana’s environment and

economy is a question particularly suitable for legis-

lative judgment, since the costs cannot be sharply

quantified.

Some effects of coal development can be predicted, and the

cost of repairing them can be quantified. But other costs are

necessarily speculative. The extent to which groUndwater will

be polluted, and the cost of purifying it or obtaining another

water source in an arid state; the long-term health effects of

increased pollution, both from mining and from associated

boom town growth, and the resulting burden on Montana’s

health facilities; the effect on wildlife (including among other

species the trout, elk, and ducks long prized by Montana

sportsmen) of temporary or permanent disruption of the land

9

surface and associated streams: all these are impossible to

estimate today with any reasonable precision.®

Also, the “cost” of even some well-known impacts depends

on highly subjective judgments. A generation’s worth of open

strip mines, blasting, and fugitive dust in the atmosphere will be

felt—and valued—very differently by an adjacent Montana

rancher, by a Chicago tourist on a fishing vacation, and by

appellants. The state’s sense of subjective value, decided

through its political process, will determine how hard it tries to

avoid or repair those impacts, and thus how much it spends.

One party might feel that the state’s intended efforts are

excessive, and another that they are inadequate, but trial now

will not resolve their differences.

Finally, there are environmental and social impacts which

are simply not yet known, and therefore not predictable at all.

During World War II, for example, no one would have

predicted that breathing asbestos in a Navy shipyard would

cause a virulent form of cancer. What the analogous con-

sequences of coal mining might be, or even whether they exist,

is uncertain; but it is certain that, whatever they are, Montana

will bear them.

Appellants attack Montana’s use of a trust fund mecha-

nism, arguing that by setting aside revenues for future use, the

state concedes that it does not presently need them, and thus

that there is no “fair relation” of tax revenues to governmental

needs. Appellants’ brief at 11, 30. Amici submit that the

contrary is true. That Montana chooses to set aside substantial

revenues in a trust fund, against the day when impacts will be

better known, reflects its awareness of the present uncertainty;

and it is a highly appropriate response by the state to the fact of

that uncertainty. It, or a similar mechanism, may be the only

way a State can “fairly relate” the tax on extraction of a non-

renewable resource to the impacts which that extraction will

have over time. The Court should specifically endorse the

9 Experience is no guide. As the Montana Supreme Court pointed out

below, strip mining in Montana has increased more than four-fold in the last

ten years, 615 P. 2d at 849-850. Today's experience is therefore based on

yesterday's much lower volume of extraction.

10

state’s use of a trust fuad, fed with revenues from the extraction

of a non-renewable resources, to help insure that extraction

costs which today are uncertain or unknown will be able to be

met as they are recognized, both during the extraction process

and later, after the resource—and the taxable activity—is

irretrievably exhausted.

Il NO NATIONAL ENERGY POLICY CONFLICTS

WITH MONTANA’S IMPOSITION OF A_ SEV-

ERANCE TAX ON COAL DESIGNED TO COM-

PENSATE THE STATE FOR THE EFFECTS OF

COAL MINING. FEDERAL POLICIES TOWARD

ENERGY ARE EXPRESSED IN STATUTES WHICH

SHOULD BE INTERPRETED BY THIS COURT.

Federal energy policy is not singular, it is diverse. Federal

policies affecting energy production and use have been ex-

pressed in dozens of statutes, some of which appellants discuss,

but most of which they ignore.10 The crux of appellants’

argument is that the Montana tax, because it increases the price

to the user of Montana coal, interferes with what they contend

is a Federal policy that favors the use of “low sulfur western

coal over alternate forms of energy.”'' To prevail, appellants

must show that such a policy exists, that Congress intended that

policy to be effectuated, in part, by keeping the price of low

sulfur western coal low, and that a tax that adds to the price of

the coal the social, economic, and environmental costs of coal

mining frustrates that policy. Appellants fail to meet that

burden.

A. Federal policies toward energy are stated in many

statutes designed to achieve diverse objectives. No

uniform policy exists.

Historically, United States policy with regard to energy has

been neither consistent nor coherent. For example, Federal

laws have, at different times during this century, alternately

10 Compare, Brief of appellants at 5, n.*, 36-39, with list in n.16, infra.

"1 Jd., at 35,

discouraged and encouraged the importation of foreign oil.'2

For most of the last three decades, federal laws had the effect of

massively subsidizing the use of conventional forms of energy; '?

recently, new laws have emphasized subsidies for less con-

ventional sources of energy,'4 while allowing the price of

conventional sources to rise to market levels in order to

encourage increased production and to discourage con-

sumption.'5 Since the oil embargo of 1973, Congress has

enacted at least 26 separate laws dealing specifically with

12 See generally A. Sampson, THE SEVEN SISTERS at Ch. 8 (1975):

ENERGY FUTURE at Ch. 2 (R. Stobaugh and D. Yergin, ed. 1979).

13 See generaly AN ANALYSIS OF FEDERAL INCENTIVES USED

TO STIMULATE ENERGY PRODUCTION, Battelle Laboratories ( 1980).

Battelle estimates that over $252 billion have been spent since 1918 to

promote the production of oil, coal, natural gas, electricity and the construc-

tion of nuclear powerplants. /d., Executive Summary at Table |.

14 See, e.g., Crude Oil Windfall Profits Tax Act of 1980, Pub. L. 96-223,

Title II, 94 Stat. 229 (1980); Energy Conservation and Production Act, Pub.

L. 94-385, § 461, 90 Stat. 1125 (1976); Energy Policy and Conservation Act,

Pub. L. 94-163, §§ 102, 363, 89 Stat. 871 (1975); Energy Security Act, Pub.

L. 96-294, Titles I, Il, V, 94 Stat. 611 (1980); Energy Tax Act of 1978, Pub.

L. 95-618, §§ 221, 402, 92 Stat. 3174 (1978); Federal Nonnuclear Research

and Development Act of 1974, 42 U.S. C. §§ 5905-5907; Geothermal Energy

Research, Development, and Demonstration Act, 30 U. S. C. §§ 1141-1145,

1164; Magnetic Fusion Energy Engineering Act of 1980, 42 U.S. C. §§ 9301-

9312 (1980); National Energy Conservation Policy Act, 42 U.S. C. §§ 8224

8231, 8244; National Energy Extension Service Act, 42 U.S. C. § 7010; Ocean

Thermal Energy Conversion Act, Pub. L. 96-310, § 10, 94 Stat. 941 (1980);

Solar Energy Research, Development, and Demonstration Act of 1974, 42

U. S. C. § $566; Solar Heating and Cooling Demonstration Act of 1974, 42

U. S. C. § 5517; Solar Photovoltaic Energy Research, Development, and

Demonstration Act of 1978, 42 U.S. C. § 5594; Wind Energy Systems Act of

1980, Pub. L. 96-345, § 14, 94 Stat. 1139 (1980) See, generalh, ENERGY

POLICY IN PERSPECTIVE at 564-87 (Goodwin, ed. 1980).

5 See, e.g., Executive Order 12287, 46 Fed. Reg. 9909 (Jan. 30, 1981)

( Decontrol of Crude Oil and Refined Petroleum Products ); Pacific Northwest

Electric Power Planning and Conservation Act, 16 U S. C. § 839 et seq.;

Public Utilities Regulatory Policies Act of 1978, 16 U.S. C. § 2601 ef seg.

See, generally, ENERGY POLICY IN PERSPECTIVE, supra n. 14, at 564-

587.

—_——

12

energy production and use.'6 They cover a wide variety of

topics, but express no coherent policy.

Appellants would infer from three federal statutes a gener-

al policy favoring low-sulfur western coal at low cost although

none of those statutes state any such policy specifically.1”7 There

is no reason, however, to examine only a few statutes relating to

energy and ignore the majority in the endeavor to determine

what, if any, general federal policy exists.

There are three themes that run, more or less consistently,

through the various statutes that express federal energy con-

cerns. They are the promotion of domestic energy production

16 Crude Oil Windfall Profits Tax Act of 1980, Pub. L. 96-223, 94 Stat.

229 (1980); Department of Energy Organization Act, 42 U.S.C. §§ 7101-

7352; Emergency Energy Conservation Act of 1979, 42 U.S.C. §§ 8501-8541;

Emergency Petroleum Allocation Act, 15 U.S.C. §§ 751-760h; Energy Con-

servation and Production Act, Pub. L. 94-385, 90 Stat. 1125 (1976); Energy

Reorganization Act of 1974, 42 U.S.C. §§ 5801-5891; Energy Policy and

Conservation Act, Pub. L. 94-163, 89 Stat. 871 (1975); Energy Security Act,

Pub. L. 96-294, 94 Stat. 611 (1980); Energy Supply and Environmental

Coordination Act of 1974, Pub. L. 93-319, 88 Stat. 246 (1974); Energy Tax

Act of 1978, Pub. L. 95-618, 92 Stat. 3174 (1978); Federal Coal Leasing

Amendments Act of 1975, Pub. L. 94-377, 90 Stat. 1083 (1976); Federal

Nonnuclear Energy Research and Development Act of 1974, 42 U.S.C.

§§ 5901-5917; Geothermal Energy Research, Development, and Demonstra-

tion Act of 1974, 30 U.S.C. §§ 1101-1164; Magnetic Fusion Energy Engineer-

ing Act of 1980, 42 U.S.C. §§ 9301-9312 (1980); National Energy Con-

servation Policy Act, 42 U.S.C. §§ 8211-8278; National Energy Extension

Service Act, 42 U.S.C. §§ 7001-7011; Natural Gas Policy Act of 1978, 15

U.S.C. §§ 3301-3432; Ocean Thermal Energy Conversion Act, Pub. L. 96-310,

94 Stat. 941 (1980); Pacific Northwest Electric Power Planning and Con-

servation Act, Pub. L. 96-501, 94 Stat. 2697 (1980); Powerplant and

Industrial Fuel Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289 (1978); Public

Utilities Regulatory Policies Act of 1978, Pub. L. 95-617, 92 Stat. 3117

(1978); Solar Energy Research, Development, and Demonstration Act of

1974, 42 U.S.C. §§ 5551-5566; Solar Heating and Cooling Demonstration Act

of 1974. 42 U.S.C. §§ 5501-5517; Solar Photovoltaic Energy Research,

Development, and Demonstration Act of 1978, 42 U.S.C. §§ 5581-5594;

Surface Mining and Reclamation Act of 1977, 30 U.S.C. § 1201; Wind Energy

Systems Act of 1980, Pub. L. 96-345, 94 Stat. | 139 (1980).

17 The statutes upon which appellants rely do not establish even a

general policy in favor of western low sulfur coal at low cost. See Section

IL.C.. infra.

13

from all sources,'® the encouragement of improved efficiency in

energy use,'9 and the assurance that energy production and use

18 See e.g., Crude Oil Windfall Profits Tax of 1980, Pub. L. 96-223, Title

Il, 94 Stat. 229 (1980); Department of Energy Organization Act, 42 U.S. C.

§§ 7111-7112; Energy Conservation and Production Act, Pub. L. 94-385,

§§ 121-124, 90 Stat. 1125 (1976); Energy Reorganization Act of 1974. 42

U.S. C. § 5801; Energy Policy and Conservation Act, Pub. L. 94-163, §§ 101-

106, 89 Stat. 871 (1975); Energy Security Act, Pub. L. 96-294, Titles I, II, IV,

V, 94 Stat. 611 (1980); Energy Supply and Environmental Coordination Act

of 1974, Pub. L. 93-319, § 2, 88 Stat. 246 (1974); Energy Tax Act of 1978,

Pub. L. 95-618, §§ 221, 402, 92 Stat. 3174 (1978); Federal Coal Leasing

Amendments Act of 1975, Pub. L. 94-377, 90 Stat. 1083 (1976); Federal

Nonnuclear Energy Research and Development Act of 1974, 42 U. S. C.

§§ 5901-5904; Geothermal Energy Research, Development, and Demonstra-

tion Act, 30 U.S. C. §§ 1101-1164; Magnetic Fusion Energy Engineering Act

of 1980, 42 U. S. C. §§ 9301-9312 (1980); National Energy Conservation

Policy Act, 42 U.S. C. §§ 8271-8278; National Energy Extension Service Act,

42 U. S. C. §§ 7003-7007; Natural Gas Policy Act of 1978, 15 U. S. C.

§§ 3301-3432; Ocean Thermal Energy Conversion Act, Pub. L. 96-310, §§ 2-

10, 94 Stat. 941 (1980); Pacific Northwest Electric Power Planning and

Conservation Act, Pub. L. 96-501, § 2, 94 Stat. 2697 (1980); Powerplant and

Industrial Fuel Use Act of 1978, Pub. L. 95-620, § 102, 92 Stat. 3289 (1978):

Public Utilities Regulatory Policies Act of 1978, Pub. L. 95-617, §§ 210, 40i-

408, 92 Stat. 3117 (1978); Surface Mining and Reclamation Act of 1977, 30

U. S. C. §§ 1201-1202 (1977); Solar Photovoltaic Energy Research, Devel-

opment, and Demonstration Act of 1978, 42 U.S. C. §§ 5581-5594.

19 Crude Oil Windfall Profits Tax Act of 1980, Pub. L. 96-223, Title II,

94 Stat. 229 (1980); Department of Energy Organization Act, 42 U. S. C.

§§ 7111-7112; Emergency Energy Coordination Act of 1979, 42 U. S. C.

§§ 8501-8541; Emergency Petroleum Allocation Act, 15 U.S. C. §§ 751-760h;

Energy Conservation and Production Act, Pub. L. 94-385, §§ 301-451, 90

Stat. 1125 (1976); Energy Policy and Conservation Act, Pub. L. 94-163,

Titles II], V, 89 Stat. 871 (1975); Energy Reorganization Act of 1974, 42

U. S. C. § 5801; Energy Security Act, Pub. L. 96-294, Title V, 94 Stat. 611

(1980); Energy Tax Act of 1978, Pub. L. 95-618, §§ 101, 210, 222, 231, 232,

233, 241, 242, 92 Stat. 3174 (1978); Federal Nonnuclear Energy Research

and Developmen: Act of 1974, 42 U. S. C. § 5904; National Energy

Conservation Policy Act, 42 U. S. C. §§ 8211-8261; National Energy Exten-

sion Service Act, 42 U. S. C. §§ 7003, 7007; Natural Gas Policy Act of 1978,

15 U. S. C. §§ 3301-3432; Pacific Northwest Electric Power Planning and

Conservation Act, Pub. L. 96-501, §§ 2, 6, 94 Stat. 2697 (1980); Powerplant

and Industrial Fuel Use Act of 1978, Pub. L. 95-620, § 102, 92 Stat. 3289

(1978); Public Utilities Regulatory Policies Act of 1978, Pub. L. 95-617, 92

Stat. 3117 (1978).

14

will not cause serious injury to the human environment.20 In

addition, federal laws and executive orders have recently

stressed the importance of letting prices rise, both to reflect true

market prices for energy and to allow the environmental and

social costs of energy production to be internalized in energy

prices."

Most surprisingly, appellants fail to cite the Energy Secu-

rity Act of 1980, Pub L. 96-294, 94 Stat. 611, Congress’s most

recent and one of its most comprehensive efforts to deal with

energy problems on a broad scale. The Energy Security Act is a

good illustration of the wide range of topics that Congress

considers to be part of its approach to energy problems. The

Act includes programs for synthetic fuels, § § 101-195; energy

from biomass, § § 201-274; solar energy and energy con-

20 See, e.g., Department of Energy Organization Act, So tt 2 x

§§ 7111-7112; Energy Conservation and Production Act, Pub. L. 94-385,

§ 402, 90 Stat. 1125; Energy Reorganization Act of 1974, 42 U.S. C. § 5801;

Energy Security Act, Pub. L. 96-294, §§ 601-644, 94 Stat. 611 (1980);

Federal Coal Leasing Amendments Act of 1975, Pub. L. 94-377, 90 Stat. 1083

(1976); Federal Nonnuclear Energy Research and Development Act of 1974,

42 U. S. C. § 5901; Geothermal Energy Research, Development, and

Demonstration Act, 30 U. S. C. § 1161; Pacific Northwest Electric Power

Planning and Conservation Act, Pub. L. 96-501, § 2, 94 Stat. 2697 (1980);

Powerplant and Industrial Fuel Use Act of 1978, Pub. L. 95-620, § 102, 92

Stat. 3289 (1978); Solar Heating and Cooling Demonstration Act of 1974, 42

U. S. C. § 5501; Surface Mining Control and Reclamation Act, 30 U.S. C.

§§ 1201, 1251-1279; Wind Energy Systems Act of 1980, Pub. L. 96-345, § 2,

94 Stat. 1139 (1980). In addition to energy statutes with specific references to

environmental protection, several environmental protection laws directly and

indirectly affect energy conservation and production. See, e.g., Clean Air Act,

as amended, 42 U. S. C. §§ 7401-7642; Clean Water Act Amendments to the

Federal Water Pollution Control Act, 33 U. S. C. §§ 1251-1376; National

Environmental Policy Act of 1969, as amended, 42 U. S. C. §§ 4321-4361;

Resource Conservation and Recovery Act of 1976, 42 U. S. C. §§ 6901-6987;

Uranium Mill Tailings Radiation Control Act of 1978, 42 U.S. C. §§ 7901-

7942.

21 See, e.g., H. Rep. No. 95-218, 95th Cong., Ist Sess., reprinted in 1977

U. S. CODE CONG. & AD. NEWS 593, 599 (Surface Mining and

Reclamation Act); H. Rep. No. 95-294, 95th Cong., Ist Sess.. reprinted in

1977 U. S. CODE CONG. & AD. NEWS 1077, 1150-51 (Clean Air Act

Amendments of 1977); cf. S. Rep. No. 95-141, 95th Cong.. 2d Sess..,

reprinted in 1978 U. S. CODE CONG. & AD. NEWS 7660, 7679 (Public

Utilities Regulatory Policies Act).

15

servation, § § 501-597; geothermal energy, § § 601-744; and the

study of environmental problems, § § 701-712.

B. Federal statutes relating to energy generally, and

coal in particular, firmly link development with

environmental considerations, and with prices high

enough to meet multiple goals.

The theme of environmental protection found in federal

statutes relating to energy is particularly relevant, because the

regulatory standards imposed by the Congress to protect the

environment frequently have the effect of raising the price of

energy resources. Congress has recognized that normal eco-

nomic forces—supply, demand, price, and competition—do not

operate to protect the environment, and consequently regu-

latory measures are necessary.22 Although the effect of those

measures may be to increase the price of energy, the higher

prices more accurately communicate to energy consumers the

real cost to the Nation of the energy they use. As the then

Chairman of the Council on Wage and Price Stability explained

in Congressional testimony:

With our recently enhanced recognition of the many ways

in which unrestrained economic activities may impose

damage on the environment.... it is widely recognized

that economic efficiency alone requires that all pertinent

social costs, internal and external, be levied in one way or

another on the particular acts of production or con-

sumption causally responsible for them. This will elimi-

nate the subsidization; by confronting consumers with

prices reflecting the full social costs of supplying them, it

will ensure that no activities will be carried on whose fotal

incremental costs exceed their benefits. And it will ensure,

also, that production will be carried on by methods that

minimize total costs, rather than only those costs that

happen to fall on the producer.23

22 See sources listed supra, n. 21.

23 Executive Branch Review of Environmental Regulations; Hearing

before the Subcommittee on Environmental Pollution cf the Committee on

Environment and Public Works of the United States Senate, 96th Cong., Ist

Sess. 406 (Statement of Alfred Kahn). See also Allen Kneese and Charles

Schultze, POLLUTION PRICES AND PUBLIC POLICY (1975) at 5-6.

16

This policy of internalizing the environmental and social

costs of energy production and use is applied to coal by many

federal statutes.24

The federal statute most directly concerned with the

mining of coal is the Surface Mining Control and Reclamation

Act of 1977, 30 U. S. C. 88 1201 ef seg. (Supp. Ill 1979),

which appellants unaccountably do not discuss. The Surface

Mining Act explicitly states Congress’s intention to “strike a

balance between protection of the environment and agricultural

productivity and the Nation’s need for coal as an essential

source of energy”, § 102(f), 30 U. S. C. § 1202(f), and to

“assure that surface coal mining operations are so conducted as

to protect the environment,” § 102(d), 20 U. S. C. § 1202(d).

In achieving this goal, Congress stated that “the primary

governmental responsibility” in this area “should rest with the

States.” § 101(f), 30 U. S. C. § 1201(f). Congress expressly

authorized states to adopt standards regulating surface mining

which are more stringent (and therefore more costly to comply

with) than the minimum standards set by the Act.?5 Thus,

Congress has ackn wledged and approved state policies fash-

ioned to remedy environmental harms which increase the price

of coal.26

C. The statutes relied upon by Appellants do not mani-

fest a Congressional policy favoring low sulfur west-

ern coal at the lowest possible price.

Appellants rely specifically upon three statutes to support

their contention that federal policy requires that the price of

Montana coal be kept as low as possible. The most directly

24 See, e.g. Surface Mining Control and Reclamation Act, supra; Federal

Coal Leasing Amendments Act, 30 U. S. C. §§ 181 ef seq., Federal Land

Policy and Management Act of 1976, 43 U.S. C. § 1701 ef seq.; Federal Mine

Safety and Health Act of 1977, 30 U.S. C. § 801 ef seq.

2530 U. S. C. § 1225. The Clean Air Act allows the states similar

discretion in deciding whether to meet or exceed Federal standards. 42 U.S.

C. § 7416.

26 Moreover, in managing its own coal resources, the federal government

is required by law to seek maximization of its economic returns rather than to

set low prices to promote development. Federal Coal Leasing Amendments

Act, supra n. 20, 30 U.S. C. §§ 201, 207 (1975). This policy was adopted in

response to evidence that too much federal coal was being leased at too low a

price. H. Rep. No. 94-681, 94th Cong., Ist Sess., 8-12 ( 1975).

17

relevant of those statutes, the Clean Air Act, in fact strongly

indicates that Congress did not intend to favor western coal.

The promulgation of uniform national emission standards by

the Environmental Protection Agency under the original ver-

sion of the Act, Pub. L. 91-604, 84 Stat. 1676 (1970), resulted

in low sulfur western coal enjoying a significant advantage over

high sulfur eastern coal. H.Rep.No. 294, 95th Cong., Ist Sess.,

184-87 (1977). In reaction to this situation, Congress amended

the Act in 1977 to “strengthen incentives for new plants to use

locally available coal.” Jd. at 166. The clear purpose of this

change was to eliminate the advantage enjoyed by western

coal, not to promote its use ai cheap prices.27

The other statutes relied upon by appellants simply do not

address either the price or the geographical origin of coal.

Rather they emphasize a variety of mechanisms to reduce

consumption of oil and natural gas.26

D. Even assuming arguendo that there is a discernible

policy to favor coal development over other values

and alternatives, Montana’s tax should be upheld

without trial.

As discussed above in the context of the Commerce Clause,

Montana’s tax offers no hindrance in practice to the interstate

flow of its coal. Thus, even if federal policy favors the

27 See, Ayres & Doniger. New Source Standard for Power Plants 1]:

Consider the Law, 3 HARV. ENV. L. REV. 63, 66-67 (1979).

26 First, the Energy Policy and Conservation Act of 1975, 42 U.S. C.

§§ 6201 ef seg. (1976 & Supp. HI 1979), does not mention coal in its

statement of purposes. Instead, like the Energy Security Act, it establishes an

assortment of programs dealing with energy conservation, Title III oil prices,

Title IV, and emergency planning, Title Il. Appellants emphasize one section,

which merely strengthens the requirement in an earlier statute that certain gas

and oil burning facilities be converted to coal. Energy Supply and

Environmental Coordination Act of 1974, Pub. L. 93-319, 88 Stat. 246 § 2, 15

U.S. C. § 792 (1976 and Supp. II] 1979). The earlier statute was intended to

help meet the need for fuels “in a manner which is consistent, to the fullest

extent practicable, with existing National commitments to protect and

improve the environment.” § 1(b), 15 U. S.C. § 791(b).

The second statute relied upon by appellants, the Power Plant and

Industrial Fuel Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289, 42 U.S. C.

§§ 8301 ef seg. (Supp. II] 1979), likewise incorporates multiple purposes. It

focuses on reduction of oil imports through conservation.

18

development and use of western low sulfur coal, Montana’s tax

does not constitute “substantial frustration” of that policy

because Montana coal is being developed and used.

A trial on this question would be inappropriate, for the

issue is whether the Montana tax “stands as an obstacle to the

accomplishment and execution of the full purposes and objec-

tives of Congress.” Hines v. Davidowitz, 312 U. S. 52, 67

(1941). What the “purposes and objectives of Congress” are

with respect to energy is a question of law to be resolved by

reference to statutes and legislative history, not a factual issue to

be resolved at trial.

If the federal policy appellants claim to find—favoring

western coal development at low cost over other consid-

erations—were in fact the clear intention of Congress, the

question would remain as to what level of state taxes could be

imposed without substantially impairing that policy. Appel-

lants argue that Congress has implicitly set such a limit, and

seek trial to determine it. But Congress during 1980 failed to

pass legislation that would have set explicit limits on state coal

severance taxes. H.R. 6625, H.R. 6654, H.R. 7163, 96th Cong.

2d Sess. (1980). Similar legislation is now pending. S. 178,

97th Cong., Ist Sess. (1981). Thus, to justify a trial, appellants

seek to persuade this Court that Congress has already done by

implication what it has chosen not to do expressly. Appellants

would then have a trial court do exactly what Congress has

declined to do: determine what specific state tax rate is appro-

priate.

In effect, appellants ask for special attention in this case

because the subject is energy. They stress the Arab oil embargo

of 1973, the resulting atmosphere of energy crisis, and the

spectre of “energy rich states” exploiting their dependent kin.

Appellants’ brief at 24-25. But the rhetoric of energy crisis is

nothing new, even in this exact legal context. Nine states raised

exactly these same arguments almost sixty years ago in Heisler

v. Thomas Colliery Co., 260 U.S. 245 (1921). The debate over

energy policy is of vital importance, but resolution of this case

does not require the development of new or ad hoc con-

stitutional principles.

19

CONCLUSION

The record before the Court in this case demonstrates that

Montana’s coal severance tax is non-discriminatory, and that in

practical effect it is not hindering interstate commerce in

Montana coal. The tax is therefore constitutional.

In the absence of any practical burden on interstate

commerce, no set of facts could be proven at trial that would

show the burden of the tax to be clearly excessive, in relation to

the burdens imposed on the state. The “fairly related” test is

therefore satisfied. Trial on the issue would unduly and

unnecessarily restrict the legislative judgment of the state in

assessing the present and future burdens of coal extraction,

without leading to any more satisfactory precision in quan-

tifying those burdens.

Montana’s use of a trust fund to set aside revenue for

future impacts is a highly appropriate response to the problems

of uncertainty and unpredictability, and should be encouraged.

To the extent that any conherent national policy with

respect to coal can be discerned, it is to balance coal devel-

opment with other energy sources and with environmental

factors, allowing energy prices to reflect the full cost of the

resource including the cost of environmental protection, and

granting wide latitude to the states to set the conditions for coal

development. Montana’s tax is wholly consistent with that

policy. Even if the policy were otherwise, the demonstrated

lack of interference with the flow of Montana coal in interstate

commerce is enough to show that the tax is not operating to

frustrate the development and use of Montana coal throughout

the nation.

20

The judgment below should therefore be affirmed.

Respectfully submitted,

DavID B. ROE

Counsel of Record

PaTRICIA L. WELLS

2606 Dwight Way

Berkeley, California 94704

(415) 548-8906

JONATHAN LASH

1725 I Street, N.W.

Washington, D.C. 20006

(202) 223-8210

Attorneys for Amici Curiae

Dated: February 23, 1981

Appendix

DESCRIPTION OF AMICI

1. Amicus Environmental Defense Fund, Inc. (EDF) is a

not-for-profit, public interest membership corporation, or-

ganized and existing under the laws of the state of New York,

with its principal place of business located at 475 Park Avenue

South, New York, N.Y. 10016, and with additional offices in

Washington, D.C., Denver, Colorado, and Berkeley, California.

EDF has more than 45,000 members nationwide.

EDF is dedicated to the protection and rational use of

natural resources and to the preservation and enhancement of

the human environment. It and its staff of scientists, econo-

mists, and lawyers seek to pursue these goals through scientific

research, monitoring, and administrative and judicial action on

behalf of itself and its members.

2. Amicus Natural Resources Defense Council, Inc.

(NRDC)—a national environmental organization with more

than 44,000 members residing in all states and territories, as

well as abroad—has as one of its principle goals the preserva-

tion and wise use of the natural resources of the earth, including

those resources such as clean air and clean water held in

common by all people. NRDC has sought, through the advo-

cacy of effective federal, state, and local laws, to assure that

those commonly held resources are protected.

3. Amicus Sierra Club is a non-profit corporation or-

ganized and existing under and by virtue of the laws of the

State of California, having its principal place of business at 530

Bush Street, San Francisco, California 94108. The Sierra Club

is a national conservation organization having approximately

188,000 members.

The objectives of the Sierra Club include conservation, the

protection and sound management of natural resources, and the

preservation and enhancement of our environment. The stated

corporate purposes of the Sierra Club are:

To enhance and protect by all lawful means the natural

resources and human environment of the United States

2a

and the earth in general; to explore, enjoy, and preserve

the scenic resources of the United States and its forests,

waters, wildlife and wilderness; to undertake and to pub-

lish scientific, literary, and educational studies concerning

them; to educate the people with regard to the national

and state forests, parks, monuments, and other natural

resources of especial scenic beauty and to enlist public

interest and cooperation in protecting them.

For many years the Sierra Club has fostered these objec-

tives by its activities, including the representation of its mem-

bers and persons similarly situated before courts and adminis-

trative agencies.