Very possible, depending on how your states are listed you split them and then do a foreach or while each (depending on your version of PHP).
This will work in PHP3:
If you list is seperated using breaks (\n)
$fp = fopen($filename, 'r');
$state_list = fread($fp, $lengthToRead);
fclose($fp);
$state_array = split("\n", $state_list);
while ($content = each($state_array)) {
echo "<option>$content[1]</option>";
}
.......
that should work