October 02, 2020

New Frontiers in Coal vs. Climate: The Commerce Clause and the Clean Water Act

Sam Boden

The fight over how to address climate change has long inflamed tensions between states that view themselves as energy producers versus those that are largely seen as energy consumers. For coastal states, ambitious environmental goals are necessary to protect their populations from sea-level rise and heightened risks from extreme weather. In contrast, coal-producing states in the interior of the nation prioritize getting their states’ coal to market. When these competing values clash, as they do in Montana and Wyoming’s recent suit filed in the U.S. Supreme Court, there are bound to be broad repercussions. 

The dispute centers on the scope of a bedrock federal environmental law—the Clean Water Act (CWA)—and the constitutional division of powers between states and the federal government. Montana and Wyoming filed their suit against Washington in the U.S. Supreme Court in January of 2020, invoking the Court’s original jurisdiction for disputes between states. They argue that Washington’s failure to issue a CWA approval for a coal terminal on its coast is a violation of the Commerce Clause, because the action is simply Washington’s backhanded attempt to “regulate commerce” by stopping Montana and Wyoming coal from reaching international markets.

In their original filing in January 2020, Montana and Wyoming characterize Washington’s action—the denial of a Section 401 water quality certificate for the Millennium Bulk Terminal— as a Commerce Clause violation and “a matter of political posturing,” just the latest move in accomplishing the coastal state’s “extraterritorial environmental objectives,” which include stopping coal exports. Not only does Washington overreach with its environmental policy objectives, they argue, but Washington is engaging in economic protectionism: “The State claimed that ‘increased coal trains from the Millennium proposal would compete with . . . Washington’s important agricultural products.” Bill of Complaint at 13–14, Montana v. Washington, No. 22O152 (S. Ct. Jan. 21, 2020).

If the Court agrees, Washington’s denial would likely be a violation of the Dormant Commerce Clause under precedents like Philadelphia v. New Jersey, where the Supreme Court held that a “legitimate goal [cannot] be achieved by the illegitimate means of isolating the State from the national economy.” 437 U.S. 617, 627 (1978). There, as Montana and Wyoming contend here, the Court found that the action in question, “while outwardly cloaked ‘in the currently fashionable garb of environmental protection,’ . . . is actually no more than [an effort] to suppress competition.” Id. at 625–26. Further, because Washington’s permit denial obstructs the coal-producing states’ access to international markets, the plaintiffs contend that Washington’s denial also violates the Foreign Commerce Clause.

Unsurprisingly, Washington disputes all of Montana’s and Wyoming’s substantive arguments as well as their jurisdictional claims. In its response, Washington argues that its denial of Millennium’s Section 401 water quality certification application was merely a logical outcome of the state’s mandate under the CWA. According to Washington, the state’s Department of Ecology denied the application because of a straightforward application of the law: the final environmental impact statement for the project identified significant environmental harms and the applicant failed to prove that the terminal would meet water quality standards. Moreover, because Washington utilized its delegated authority under the CWA, the state argues that its decision was immune from Commerce Clause attacks as it acted under a plain authorization of congressional power. Brief in Opposition to Motion for Leave to File Complaint at 20, Montana v. Washington, No. 22O152 (S. Ct. June 8, 2020) (citing Northeast Bancorp, Inc. v. Bd. of Governors of Fed. Reserve Sys., 472 U.S. 159, 174 (1985)). As a standard exercise of its CWA authority, Washington argues that the dispute only concerns a private party’s application and does not rise to the level of a dispute between states that would warrant the Supreme Court’s original jurisdiction. As such, this case is unlike many of the other recent environmental cases that have invoked the Court’s original jurisdiction, which have involved competing claims to interstate water resources.

The suit is also significant because the plaintiffs offer a provocative interpretation of Washington’s exercise of its delegated permitting authority under the CWA. Montana and Wyoming characterize the state’s Section 401 water quality certification denial as a manipulation of the CWA for political ends, and, therefore, the Act as an exploitable instrument by which one state can obstruct the commercial power of others in violation of the Dormant Commerce Clause. The traditional formulation of the Dormant Commerce Clause is that the Constitution prevents state regulation of interstate commercial activity, even when Congress has not acted under its Commerce Clause power to regulate that activity. Black’s Law Dictionary (2019). Here, the coal-producing states base their Dormant Commerce Clause claim on the theory that Washington “manipulate[d] [its] environmental review process over energy producing resources, to serve political ends,” thereby engaging in a regulation of interstate commerce that the constitution reserves for the federal government. Brief in Support of Motion for Leave to File Bill of Complaint at 29.

The case was distributed for conference on September 29, 2020. If the Court decides to take the case, environmental law practitioners should pay close attention to the Court’s evaluation of Washington’s use of its CWA authority, as an affirmative ruling on plaintiffs’ claims could trigger similar claims in other parts of the country (e.g., with respect to New York’s denial of Section 401 certificates for interstate pipeline projects). Even the Court’s denial of jurisdiction would have unique precedential value, as such a decision would set clearer parameters on what constitutes a dispute between states and provide further clarification on the limits of environmental standing. In a time of economic uncertainty and bold action on climate change, these coal-producing states have brought constitutional claims worth watching. 

Sam Boden

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Sam Boden is a 3L at the University of Maryland Francis King Carey School of Law, focusing on environmental law.