Legal After-Shocks on the Energy Seismograph: Judicial Prohibition of Recent State Regulation and Promotion of Power

• Date: 01 June 2015

6-2015 NEWS & ANALYSIS 45 ELR 10523

Legal After-Shocks on the Energy

Seismograph: Judicial Prohibition

of Recent State Regulation

and Promotion of Power

by Steven Ferrey

Steven Ferrey is Professor of Law at Suolk University Law School.

I. Tripwires for State Regulation of

Energy

Notwithstanding the technical merits of distributed gen-

eration, state incentives for and regu lation of t he power

sector have come under signicant legal attack during the

past ve years. In 23 constitutional challenges to state sus-

tainable and distributed energy regulation, the states lost

at some level in 17 of the 23 cases, or the cases were settled

in favor of the chal lengers; ve were dismissed on proce-

dural grounds or are still pending. States that lost legal

challenges can be ordered to pay plaintis’ legal fees into

the millions of dollars. States a re discovering that they

have only a highly circumscribed and restricted ability to

regulate the new wholesale energy markets that character-

ize 21st century America.

A 2013 U.S. Supreme Court decision further tightened

that restriction by granting greater federal agency discre-

tion to draw the line. In ,1

the C ourt addressed whether a federal regulatory agency

could broadly construe its own jurisd iction pursuant to

judicial Chevron2 deference. e Court ruled that Chev-

ron applies to an agency’s interpretation of the scope of its

own statutory jurisdiction, stating that “statutory ambi-

guities will be resolved, within the bounds of reasonable

1. City of Arlington, Tex. v. Federal Communications Comm’n (FCC), 133 S.

Ct. 1863, 43 ELR 20112 (May 20, 2013).

2. Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 14

ELR 20507 (1984).

interpretation, not by the courts but by the administering

agency.”3 “[If] the agency’s answer is based on a permissible

construction of the statute,” the Court said, “that is the end

of the matter.”4 As will be shown later in the Comment,

this decision has increased the power of the Federal Energy

Regulatory Commission (FERC).

In the last three years, courts have held that leading

states including California, Mar yland, Michigan, Minne-

sota, New Jersey, and Vermont have acted in an uncon-

stitutional manner by promulgating and enforcing energy

regulation that conicts with federal regulation, in viola-

tion of the Supremacy a nd Commerce Clauses. e after-

shocks from this legal epicenter now radiate through state

renewable energy and distributed energ y programs, caus-

ing serious policy ramications for how we construct the

sustainable energy future.

Power is treated dierently from all other commodities in

the United States due to the Federal Power Act (FPA)5 and

the Supremacy Clause of the U.S. Constitution.6 In 2013

and 2014, federal courts, including the Supreme Court,7

federal circuit courts of appeals,8 and federal district courts,9

3.  , 133 S. Ct. at 1868 (citing AT&T Corp. v. Iowa Utilities

Bd. 525 U.S. 366, 397 (1999)).

4. , 133 S. Ct. at 1868 (citing Chevron, 467 U.S. at 842).

5. Federal Power Act (FPA), 16 U.S.C. §§824 et seq.

6. U.S. C., art. VI, cl. 2.

7. American Trucking Ass’ns v. City of Los Angeles, 133 S. Ct. 927, 43 ELR

20128 (2013); , 133 S. Ct. 1863.

8. Entergy Nuclear Vt. Yankee, LLC v. Shumlin, 733 F.3d 393, 43 ELR 20201

(2d Cir. 2013); Illinois Commerce Comm’n v. Federal Energy Regulatory

Comm’n (FERC), 721 F.3d 764 (7th Cir. 2013); Rocky Mtn. Farmers

Union v. Corey, 730 F.3d 1070, 43 ELR 20216 (9th Cir. 2013).

9. Entergy Nuclear Vt. Yankee, LLC v. Shumlin, 838 F. Supp. 2d 183, 233, 42

ELR 20029 (D. Vt. 2012); Rocky Mtn. Farmers Union v. Goldstene, 843

F. Supp. 2d 1071, 1099, 42 ELR 20013 (E.D. Cal. 2011); PPL Energy-

plus, LLC v. Nazarian, 974 F. Supp. 2d 790 (D. Md. 2013), af’d, 753 F.3d

467 (4th Cir. 2014); PPL Energyplus, LLC v. Hanna, 977 F. Supp. 2d 372

(D.N.J. 2013), af’d, PPL Energyplus, LLC v. Solomon, 766 F.3d 241, 44

ELR 20207 (3d Cir. 2014).

     

         

Program on renewable and carbon reduction policies in developing

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

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