Decentralization and Deference: How Different Conceptions of Federalism Matter for Deference and Why That Matters for Renewable Energy

Date01 November 2017
11-2017 NEWS & ANALYSIS 47 ELR 10963
and Deference:
How Different
Conceptions of
Federalism Matter
for Deference and
Why That Matters
for Renewable
by Ben Raker
Ben Raker is a recent graduate of Vanderbilt University Law
School who is currently clerking on the U.S. District Court
for the District of Maryland, and will clerk on the U.S. Court
of Appeals for the Sixth Circuit in 2018. is Article won the
Environmental Law Institute’s 2016-2017 Henry L. Diamond
Constitutional Environmental Law Writing Competition.
It was written entirely before he began his clerkship and
does not reect the views of his employers in any way.
is Article poses a question about deference that remains
surprisingly unresolved: when Congress delegates to both
state and federal agencies under a “cooperative federalism”
scheme, who gets deference when interpreting that law, the
state or federal agency? is question has special signicance
for energy and environmental law because of how com-
mon cooperative federalism is to those elds. e Article
discusses a recent series of challenges relating to the Public
Utility Regulatory Policies Act that pose this question, and
presents an answer: courts should consider whether Con-
gress chose “federalism” or “decentralization,” and deference
should operate dierently depending on that choice.
In 2014, the U.S. Court of Appeals for the Fifth Circuit
did a curious thing. In response to a challenge by a
wind power developer, the court granted deference to a
Texas state agency’s interpretation of a federal regulation,
even though the federal agency tasked with implement-
ing the act, the Federal Energy Reg ulatory Commission
(FERC), disagreed with that interpretation.1 In 2013, the
Supreme Court of Idaho found that an Idaho state agency
had correctly ruled on a matter involving a dierent wind
power developer.2 e majority opinion failed to mention a
decision by FERC that had held to the contrary.3 In 2016,
solar energy developers in Montana found themselves on
the losing end of a decision by a Montana state agency.4
FERC later held that decision to be improper under federal
law,5 but the state agency has not changed course.6 What
is going on?
While each of these cases diers in important ways,
they are similar in two respects. First, they all originate
in areas of the country where the mandatory purchase
requirements of §210 of the Public Utility Regulatory Poli-
cies Act (PURPA) of 19787 still apply. Second, because
these c ases a rise under PURPA’s “cooperative federalism”
scheme,8 they present a question that remains for the most
part surprisingly unanswered: who gets deference when the
U.S. Congress delegates power to implement an act to both
federal and st ate agencies?9 Put dierently, how does the
logic of Chevron operate when Congress was not implicitly
delegating to a federal a gency, but explicitly delegating to
federal and state agencies?
ese questions are important, primarily for t wo rea-
sons. First, on a particularized level, PUR PA remains a
crucial part of the puzzle of how to make renewable energy
a v iable commercial option, which is itself a crucial part
1. See Exelon Wind 1, LLC v. Nelson, 766 F.3d 380, 391, 394, 44 ELR 20202
(5th Cir. 2014); infra Part I.B.1.
2. Idaho Power Co. v. Idaho Pub. Utils. Comm’n, 316 P.3d 1278 (Idaho
3. Grouse Creek Wind Park, 142 FERC ¶61187 (Mar. 15, 2013); see also infra
notes 111-16, 136-46 and accompanying text.
4. See Complaint of Vote Solar et al. for Violations of the Public Utilities
Regulatory Policies Act of 1978 (Sept. 19, 2016) [hereinafter Complaint
of Vote Solar],les/3114/7430/5616/Complaint_
of_MT_Commission_PURPA_Violation_before_FERC.pdf; see also infra
notes 117-27 and accompanying text.
5. FLS Energy, Inc. et al., Notice of Intent Not to Act and Declaratory Order,
157 FERC ¶61211 (Dec. 15, 2016).
6. For the most part. See notes 117-27 and accompanying text, for an
explanation of this matter.
7. 16 U.S.C. §824a-3, Pub. L. No. 95-617, 92 Stat. 3117, 3144. After the
2005 Amendments to PURPA, the provision of the law at issue here, §210,
is not mandatory for utilities operating in competitive markets. See Michael
D. Hornstein & Jette S. Gebhart Stoermer, e Energy Policy Act of 2005:
PURPA Reform, the Amendments, and eir Implications, 27 E L.J. 25,
31-34 (2006).
8. See infra Parts I.A. and III.A.
9. See, e.g., Emily Stabile, Federal Deference to State Agency Implementation of
Federal Law, 103 K. L.J. 237 (2015); Philip J. Weiser, Chevron, Cooperative
Federalism, and the Telecommunications Reform, 52 V. L. R. 1 (1999).
Copyright © 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.
of our national energy puzzle.10 While there may be some
benets to diverse interpretations of federal law through-
out the country,11 certainty is a necessa ry commodity in
the eld of renewable power generation,12 and the risk of
individual states or circuits clashing with FERC in rega rd
to PURPA’s implementation presents serious problems for
renewable energy generation.
Second, on a more general level, cooperative federal-
ism schemes a re a well-established part of the repertoire
of federal policy construction options.13 For example,
cooperative federalism is particu larly common in our
major environmenta l laws, and the question of deference
is bubbling up there a s well. In 2016, the U.S. Cour t of
Appeals for the Ninth Circuit decided a case in which
Arizona argued that it deserved deference over t he U.S.
Environmental Protect ion Agency (EPA) when it came to
Arizona’s state implementation plan under the Clean Air
Act.14 Challenging the assumption t hat federal agencies
should always get deference in questions of interpretation
of federal law se ems to be in the air. Solving this defer-
ence riddle, therefore, will help provide a more coherent
framework for addres sing the inevitable problems of simi-
lar cooperative federalism schemes.15
is Article aims to solve that riddle, at least in regard to
PURPA, and aims to provide a data point for how to solve
that riddle with regard to other statutes. Specically, it will
borrow from the work of Edward Rubin and Ma lcolm
Feeley and argue that “federalism” is sometimes better
thought of as “decentralization.”16 A common assumption
is that federalism, and perhaps cooperative federalism espe-
cially, is intended to capitalize on the experimental benets
of using states as laboratories, and to a llow locally tailored
solutions.17 is assumption overlooks another primary
goal of decentralization: that it makes administration of
complex statutes easier.
10. See infra Part III.B.
11. See infra Part II.C.
12. See Exelon Wind 1, LLC v. Nelson, 766 F.3d 380, 404, 44 ELR 20202
(5th Cir. 2014) (Prado, J., dissenting) (noting that in order “to encourage
[renewable power] production, [FERC] regulations had to provide the
certainty that comes with having a long-term obligation”); see also infra Part
13. See infra Part II.A.; see also infra Part III.A. (discussing the Clean Air and
Clean Water Acts).
14. Arizona ex rel. Darwin v. Environmental Prot. Agency, 815 F.3d 519,
530 (9th Cir. 2016) (“Arizona (with the support of [Salt River Project
Agricultural Improvement and Power District]) contends, to the contrar y,
that Section 169A’s allocation of initial [best available retrot technology]
authority to the states requires that we defer to ‘the state’s expert judgments,
not to EPA’s.’”).
15. For instance, the Clean Power Plan involved a cooperative federalism
approach that, like PURPA, involves a federal agency promulgating
regulations that will then be implemented by states. See Federal Plan
Requirements for Greenhouse Gas Emissions From Electric Utility
Generating Units Constructed on or Before January 8, 2014, 80 Fed. Reg.
64966 (proposed Oct. 23, 2015).
16. See M M. F  E R, F: P
I  T C (2008); Edward L. Rubin & Malcolm
Feeley, Federalism: Some Notes on a National Neurosis, 41 UCLA L. R. 903
17. See Rubin & Fe eley, s upra not e 16 , at 917-2 6 (d iscus sing the
comm on ju stifi catio ns for feder alism , incl uding “citiz en cho ice”
and “exper iment ation” ).
If we assume that federalism is justied primarily by
state-by-state experimentation and locally tailored admin-
istration, then deference to the state agency in the face of
disagreement with the federal agency may ma ke sense. If,
however, we think of federalism as decentralization, and
decentralization simply as an administrative tool, then the
justication for deference to state agencies erodes. I arg ue
that PURPA is an example of “managerial decentraliza-
tion,” and therefore courts should not gra nt deference to
state agency interpretations of PURPA or FERC regula-
tions when FERC has a contrary interpretation.
Part I of this Article will explain the background of the
immediate issue by discussing the framework and history
of PURPA, as well as an overview of the dierent decisions
by recent courts and state agencies interpreting provisions
of PURPA §210. Part II will justify the conceptual frame-
work of thinking about dierent recipients of deference
based on dierent conceptions of federalism; discuss how
courts have dealt with deference in the context of coopera-
tive federalism; and discuss the confusion surrounding fed-
eralism a nd the concept of decentralization and present a
counterexample of “experimentalist decentralization.” Part
III will argue that PURPA §210 should be thought of as
a manageria l decentralization statute, and therefore defer-
ence should not be given to state agencies in interpretive
decisions that conict with FERC. Part IV concludes.
I. Power, PURPA, and Public Utility
Commissions: The Law at Issue
and Its Interpretation
is section will focus primarily on a 2014 decision by the
Fifth Circuit, Exelon Wind 1, LLC v. Nelson,18 in which a
federal court upheld a Texas state agency’s interpretation
of a FERC regulation in the face of a contrary opinion by
FERC, and will explore similar cases that involve litigation
under the same statute and disagreements between state
agencies and FERC. Before discussing these cases in detail,
the section will orient the reader with the basic history and
function of PUR PA and the provision of that law at issue
in these cases.
A. PURPA §210
e 1970s began with an oil shock that caused tremendous
turmoil in the United States.19 As the decade progressed,
gas lines, oil rationing, and c ardigan s weaters20 came and
went, but the realization that the United States had an
energy problem remained. e Richard Nixon, Gerald
18. Exelon Wind 1, LLC v. Nelson, 766 F.3d 380, 44 ELR 20202 (5th Cir.
19. M J , P    P : T E  C  
T   A  P    197 0s 49-85
(201 6) (disc ussing the Arab oil emba rgo and social a nd poli tical
turm oil th at res ulted) .
20. See Video: President Carter—Report to the Nation on Energy
(Miller Center of Public Aairs 1977),
Copyright © 2017 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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