Authority to regulate the U.S. electricity system is split between the Federal government and the States. Traditionally, States have exclusive jurisdiction over retail sales, generation siting, and fuel choices (i.e., whether to authorize regulated utilities to burn coal or harness the wind). Federal regulators, meanwhile, have authority over interstate transmission and wholesale sales.
Over the past two decades, many States have required or encouraged utilities to increasingly rely on interstate markets for procuring energy, and Congress and Federal regulators have enabled this transition. This shift to markets has opened a new front in the long-standing tension between State and Federal authority. A host of legal challenges filed since 2010 argue that in this new regulatory environment State power to require or encourage renewable energy is limited by Federal authority over interstate markets.
StatePowerProject.org provides summaries of litigation with the States and filed legal briefs and judicial or administrative decisions in those cases. The site also includes background about key concepts at issue in this litigation.
Twenty-nine States have Renewable Portfolio Standards, which typically require utilities to generate or purchase a certain percentage of their electricity from renewable sources. Challenges to these types of State renewable energy policies argue that these laws are barred or limited by the dormant Commerce Clause, a Constitutional doctrine that prohibits States from passing laws that discriminate against out-of-state businesses or unduly burden interstate commerce. The lawsuits posit that requiring renewable energy to be generated within a State or transmitted to customers in the State, or providing incentives to do so, is unconstitutional because it inhibits out-of-state generators from competing on a level playing field. States have defended their renewable portfolio standards, arguing that these laws regulate their own utilities, rather than interstate markets, do not burden Federally regulated markets, or are exempt from Commerce Clause scrutiny.
Lawsuits, in Federal or State courts or before administrative agencies, challenge other State renewable energy laws or approvals of specific renewable projects. Some of these lawsuits make similar challenges using the dormant Commerce Clause. A second line of attack is that States’ energy policies impermissibly intrude on exclusive Federal authority over wholesale electricity markets. Under the Constitution’s Supremacy Clause, Federal law can preempt State action.
No proceeding has yet resulted in a court or administrative agency striking down a renewable energy law as unconstitutional. However, litigation is ongoing in several States. Meanwhile, two successful challenges to State incentives for new gas-fired generation are currently on appeal before Federal Circuit Courts, the Supreme Court may review California’s low-carbon fuel standard, and a Federal District Court in Minnesota struck down a law that aimed to reduce greenhouse gas emissions from the State’s electricity consumption. Decisions in those cases could influence judges deciding cases about renewable energy policies. If Congress continues to sit on the sideline, it is likely that the Supreme Court will ultimately decide the Constitutional limits of State authority to deploy renewable energy.
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