Update – November 6, 2017 – Electricity Regulation Scholars Defend State Authority, Urge Court to Reject Field Preemption in ZEC Appeal

On Friday, 18 energy law professors submitted an amicus brief in the Seventh Circuit appeal of a lower court decision upholding Illinois’ Zero Emission Credit (ZEC) program. The brief, co-authored by me and Professor Jim Rossi of Vanderbilt University Law School, argues that the Court should reject appellant EPSA’s overly broad reading of the Federal Power Act (FPA) because it would threaten state programs, is inconsistent with precedent, and would call into question long-standing FERC practice.

As discussed in last week’s update, EPSA argues that ZECs are preempted because by the FPA because they are payments “in connection with” a wholesale sale (quoting FPA s. 205). The amicus brief points out that EPSA provides no limiting principle that would differentiate between ZECs, renewable energy credits (RECs), environmental emission allowances, or financial products. As a result, accepting EPSA’s reading of the FPA would diminish state authority by threatening RPS laws, weaken FERC by denying it the opportunity to harmonize its market regulation with state programs, and increase the Commission’s regulatory burden by requiring it to regulate emissions allowances and financial products.

The amicus brief aims to inform the Court about the history and purpose of state electric utility regulation. Amici’s brief fit state energy credit programs, like Illinois’ Zero Emission Credit program, in historical context to demonstrate that these programs are consistent with long-standing objectives of state utility laws.

The brief also demonstrates that FERC has accommodated these state programs and explains how that accommodation is consistent with the FPA. The brief warns that sweeping preemption claims based on exclusive jurisdiction can hamstring regulators and threaten important public policy initiatives.

The brief is available on the Illinois page.