Constitutional challenges to State renewable energy policies are typically based on the dormant Commerce Clause and/or the Supremacy Clause.
The Commerce Clause of the Constitution gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” The “dormant” Commerce Clause is a restriction on States’ authority to regulate interstate commerce.
The Supremacy Clause states that the “Constitution, and the laws of the United States . . . shall be the supreme law of the land.” It empowers Federal action to preempt State law.
One major theme of the challenges is that a State mandate or incentives for renewable energy is an unconstitutional interference with interstate electricity markets. Several challenges target State Renewable Portfolio Standards, which mandate that regulated utilities or electric distribution companies procure energy from renewable sources. Companies typically demonstrate compliance by holding Renewable Energy Credits, or RECs.