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 Suolk University Law School.
I. Tripwires for State Regulation of
Notwithstanding the technical merits of distributed gen-
eration, state incentives for and regu lation of t he power
sector have come under signicant 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 plaintis’ 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).
Chevron, U.S.A., Inc. v. Natural Res. Def
. Council, Inc., 467 U.S. 837
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 conicts 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 ramications for how we construct the
sustainable energy future.
Power is treated dierently 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).
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.
Entergy Nuclear Vt.
Yankee, LLC v
. Shumlin, 733 F.3d 393
, 43 ELR
(2d Cir. 2013); Illinois Commerce Comm’n v. Federal Energy Regulatory
Comm’n (FERC), 721 F.3d 764
(7th Cir. 2013); Rocky Mtn. Farmers
ELR 20029 (D. Vt. 2012); Rocky Mtn. Farmers Union v. Goldstene, 843
(D.N.J. 2013), af’d
, PPL Energyplus, LLC v. Solomon, 766 F.3d 241
ELR 20207 (3d Cir. 2014).
Program on renewable and carbon reduction policies in developing
Copyright © 2015 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.