What's It to You?: The Difficulty of Valuing the Benefits of Climate-Change Mitigation and the Need for a Public-Goods Test Under Dormant Commerce Clause Analysis

• Author: Mary Bede Russell
• Position: J.D. Candidate, The University of Iowa College of Law
• Pages: 03

J.D. Candidate, The University of Iowa College of Law, 2009; B.A., Boston University, 2003. I would like to thank my parents, Joyce and David Russell, for their dedication to my education.

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I Introduction

California Senate Bill 1368 prohibits California utilities from entering into long-term contracts to purchase electrical power from in-state and out-of-state plants that produce more greenhouse gases ("GHG") than natural-gasfired plants.¹ The statute reaches beyond the state's borders to ensure an actual reduction in emissions instead of simply moving emissions into neighboring states.² This restriction on interstate trade in GHG-intensive electrical power raises the question of the statute's validity under dormant Commerce Clause analysis.³

Under dormant Commerce Clause analysis, courts invalidate state laws that inhibit the free flow of commerce between the states if the laws lead to inefficient results.⁴ This can be true even if, like California Senate Bill 1368, the state law burdens both in-state and out-of-state businesses.⁵ Under the Supreme Court's dormant Commerce Clause analysis, courts balance the state interest served by a statute with the national interest in a single, unburdened marketplace to determine if the result is inefficient. This Page 731 balancing necessarily requires courts to define the value of the state's interest served by a statute.

To define the interest that California Senate Bill 1368 serves, the courts must answer a question that economists and scientists have been struggling to answer for decades: What is the value of California's interest in reducing its GHG emissions?⁶ This question is inappropriate for judicial resolution because it falls under the Court's political-question doctrine as set forth in Bakerv. Carr.⁷ Under this doctrine, the judicial branch abstains from answering questions that the Constitution's text gives another branch of government the authority to answer and that lack judicially discoverable and manageable standards for determining the answer.⁸ The value of California's interest in reducing GHG emissions is a political question because the text of the Constitution gives the legislative branch authority over the issue and there are no judicially manageable standards for defining an appropriate answer.⁹

It is difficult to define the value of reducing GHG emissions because it depends on a community's valuation of both the risk of climate change itself and how its own emissions contribute to this global problem.¹⁰ The wide variation among valuations of climate-change mitigation arises because climate-change mitigation is a public good.¹¹ This Note proposes a threshold test for public goods under dormant Commerce Clause analysis to address two unique characteristics of public goods that necessitate special treatment.¹² First, public goods are exceedingly difficult for scientists, economists, and politicians to value, which naturally brings them under the scope of the political-question rule against resolving questions with no judicially manageable standards.¹³ Second, as Kirsten Engel has argued, it is necessary to burden interstate commerce to create public goods.¹⁴Environmental regulations give companies incentives to move out of state to avoid the regulations. If a state wants to create the public good of reducing the GHG emissions that contribute to the global problem of climate change, Page 732 it must do more than forbid coal-fired plants within its borders. It must regulate outside its borders to prevent utilities from purchasing power from out of state while still providing the same GHG-intensive power to in-state residents. Otherwise, the plants will still be emitting GHGs, just in another locale.

This Note argues that courts should avoid addressing the political question of the value of California's GHG-emission reductions created by California Senate Bill 1368. Instead, courts should apply a threshold question to screen and avoid valuing such public goods before applying dormant Commerce Clause analysis: Is the statute necessary to create a public good that is most effectively valued by the political process?¹⁵ If so, the courts should presume the statute's validity under the dormant Commerce Clause without performing the traditional dormant Commerce Clause analysis.

This threshold question would reduce the class of state laws subject to dormant Commerce Clause scrutiny. Some would argue that applying such a threshold question would effectively eliminate dormant Commerce Clause analysis and allow an inefficient patchwork of state regulation to create public goods that traditional dormant Commerce Clause analysis would invalidate.¹⁶ In Part IV, this Note addresses this problem in two ways. First, it argues that courts need to adopt this threshold test to avoid answering political questions nestled within its dormant Commerce Clause analysis. Second, it argues that the threshold test is not a departure from past precedent; rather, it logically extends Supreme Court precedents, which have deferred to local valuations of environmental benefits and have acknowledged the necessity of addressing climate change in small, incremental steps.¹⁷

II Background

A California and the State-Level Movement to Reduce Greenhouse Gas Emissions

California Senate Bill 1368 is part of a nationwide movement among states and regional organizations to reduce their contributions to climate Page 733 change by mandating reductions in GHG emissions.¹⁸ California's legislature enacted the bill as part of the California Global Warming Solutions Act, which commits the state to reducing its GHG emissions to the 1990 level-twenty-five percent below today's levels-by 2020.¹⁹ California Senate Bill 1368 established a GHG performance standard requiring utilities to purchase power from plants with GHG emissions less than or equal to the GHG emissions of natural-gas-fired power plants.²⁰ This requirement effectively prohibits the purchase of power from traditional coal-fired power plants, both inside the state and across state lines.

Other state governments and regional organizations across the country have also passed legislation and made interstate agreements mandating GHG-emission reductions.²¹ These include low-carbon electricity policies, transportation policies, agricultural policies, emission targets, and climate-action plans.²² The focus of the most ambitious state plans is the regulation of carbon-dioxide emissions from power plants.²³ Page 734

The state plans imitate the efforts of the many foreign nations that have committed to GHG reductions. Under the Kyoto Protocol ("Kyoto"),²⁴ a treaty organized under the U.N. Framework Convention on Climate Change ("UNFCCC"),²⁵ thirty-six developed countries have committed to reducing their GHG emissions between 2005 and 2012.²⁶ Each country is bound to reduce its emissions by an assigned percentage below a baseline level or to purchase emissions credits from countries that have exceeded their prescribed reductions.²⁷ The United States has chosen not to ratify the Kyoto Protocol.²⁸

B The Science of Climate Change

State and international actions are emerging as the international scientific community is achieving consensus about the causes and dangers of climate change. The Intergovernmental Panel on Climate Change ("IPCC"),²⁹ a scientific body that gathers and analyzes scientific information for the world's policy makers, recently published its fourth report on the...