Legal History Repeats Itself on Climate Change: The Commerce Clause and Renewable Energy

AuthorSteven Ferrey
PositionProfessor of Law at Suffolk University Law School and served as Visiting Professor of Law at Harvard Law School
Pages489-549
Legal History Repeats Itself on Climate Change:
The Commerce Clause and Renewable Energy
STEVEN FERREY*
TABLE OF CONTENTS
Introduction: Circuit Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490
I. The Renewable Portfolio Standard Legal Mechanism . . . . . . . . . . . . . . . 492
A. State Renewable Portfolio Standards for Solar Power . . . . . . . . . . . 492
B. Solar Srecs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
1. States with SREC Programs . . . . . . . . . . . . . . . . . . . . . . . . . 496
2. Impact on U.S. Solar Capacity . . . . . . . . . . . . . . . . . . . . . . . 497
3. The SMART Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
4. The States and RPS REC Prices . . . . . . . . . . . . . . . . . . . . . . 501
C. The Cost to Consumers of REC and SREC Program Subsidies . . . . 503
D. The Dormant Commerce Clause Restricts State Power Regulation . 505
II. The Legal Controversy Surrounding State Renewable Energy
Discrimination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
A. The Legal Posture of the Twenty-Nine RPS States When the
Dormant Commerce Clause Was First Raised Regarding RPS State
Discrimination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
B. The Federal Court Legal Pivot to the Present . . . . . . . . . . . . . . . . . 511
III. How States Responded Legally (Or Not) to Their Geographic
Discrimination Regarding Renewable Power . . . . . . . . . . . . . . . . . . . . . 512
A. The Evolving Geographically Discriminatory Commerce Clause
Structure of Certain RPS States . . . . . . . . . . . . . . . . . . . . . . . . . . 513
1. In-State REC Multipliers . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
2. Preference or Indirect Requirements for In-State RPS REC
Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518
* Steven Ferrey is Professor of Law at Suffolk University Law School and served as Visiting
Professor of Law at Harvard Law School. Since 1993, Professor Ferrey has been primary legal
consultant to the World Bank and the U.N. Development Program on their renewable and carbon
reduction policies in developing countries, where he has worked extensively in Asia, Africa, and Latin
America. He holds a B.A. in Economics from Pomona College, a Juris Doctorate degree and a Master’s
degree in Regional Energy & Environmental Planning both from U.C. Berkeley and was a postdoctoral
Fulbright Fellow at the University of London between his two graduate degrees. He is the author of
seven books on energy and environmental law and policy, the most recent of which are STEVEN FERREY,
UNLOCKING THE GLOBAL WARMING TOOLBOX (2010); STEVEN FERREY, ENVIRONMENTAL LAW:
EXAMPLES AND EXPLANATIONS (8th ed. 2019) (9th ed. forthcoming 2022).; and Law of Independent
Power (56th ed. 2021). He also is the author of more than 100 articles on these topics. Professor Ferrey
thanks the assistance of his research assistants, Alex Bloom, Briana Mansour, and Abe Wurster. © 2021,
Steven Ferrey.
489
3. California’s Unique Indirect In-State RPS Preference
Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
4. In-Region REC Requirements . . . . . . . . . . . . . . . . . . . . . . . . 523
5. Defining Eligible Resources as In-State or In-Region REC
Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529
6. RPS REC Benefits for In-State Components and Labor . . . . . . 530
B. How States Structure Their RPS Geographic Preferences . . . . . . . . 532
1. States Which No Longer Maintain or Ceased Geographic RPS
REC Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532
2. States Which Continue to Include Geographic Preferences . . . 533
IV. Emerging Federal Circuit Court Conflict Regarding the Commerce Clause 538
A. Two Circuits Equivocate on ZEC Commerce Discrimination . . . . . 539
B. Inflection of the Commerce Clause . . . . . . . . . . . . . . . . . . . . . . . . 544
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547
INTRODUCTION: CIRCUIT DISCRIMINATION
History repeats itself,
that’s one of the things that’s wrong with history.
Clarence Darrow (18571938), American lawyer
Discrimination and power: Federal courts have found that some state renew-
able power laws violate the U.S. Constitution’s Commerce Clause by discrimi-
nating against out-of-state renewable energy. At stake is climate change and the
near-term future of the planet. After being warned almost a decade ago about
their constitutional violations, which states conformed their laws as the Earth has
warmed? This Article analyzes which of twenty-two U.S. states flagged as having
potentially unconstitutional, discriminatory renewable energy laws a decade ago
have conformed their discriminatory renewable energy laws and which have
allowed legal history to repeat itself.
The Supreme Court has consistently held that the Constitution’s Dormant
Commerce Clause bars states from enacting laws or regulations that discriminate
by favoring their own commerce or burdening external commerce.
1
The Supreme
Court declared that nothing is more in interstate commerce in the U.S. than elec-
tric power as every continental U.S. state imports interstate power from adjacent
states to meet its needs.
2
Electricity is widely regarded as the second-most impor-
tant invention since the wheel.
3
Electric power has delivered a value in the
1. See infra section I.D.
2. FERC v. Mississippi, 456 U.S. 742, 757 (1982).
3. James Fallows, The 50 Greatest Breakthroughs Since the Wheel, THE ATLANTIC (Nov. 2013),
https://perma.cc/X77Y-WC68. (Electricity finished behind only the movable type printing press;
electricity is essential to operate seven other ‘top 50’ inventions of all time: The Internet, computers, air-
conditioning, radio, television, the telephone, and semiconductors). Electronic books and messaging,
displayed only through electricity, are now significantly replacing use of the movable-type press, which
490 THE GEORGETOWN ENVT LAW REVIEW [Vol. 33:489
United States of approximately $390 billion annually,
4
exceeding the total
amount of corporate income taxes collected in the U.S, even before the corporate
tax rate was dramatically reduced in 2018.
5
The Second and Seventh Circuit Courts of Appeals in the last decade struck
down state energy regulations that discriminate geographically against interstate
commerce in renewable and zero-carbon-emitting electricity.
6
However, different
panels of these same Second and Seventh Circuits recently issued identical deci-
sions contrary to their own circuit precedent and Supreme Court precedent in
order to allow state geographic discrimination to support in-state nuclear power.
7
This intra-circuit legal stand-off between different panels in the same circuit
courts clouds the Constitution’s Commerce Clause which has become the legal
fulcrum to leverage the determination of the U.S. technical and policy response
on climate.
This Article determines whether legal history is repeating itself: How many of
the twenty-two states that could have been discriminating geographically a dec-
ade ago against out-of-state renewable energy, after admonitions from circuit
courts, have ceased such discrimination and which others have not. Part I
describes the legal mechanism of state Renewable Portfolio Standard (RPS)
Renewable Energy Credits (RECs) programs now operating in twenty-nine states.
It examines the first beginnings and evolution of RPS programs in the states, their
costs, and impacts. Twenty-two of these twenty-nine states were determined to
have discriminatory renewable energy statutes regarding interstate commerce a
decade ago. Part I also analyzes the nuances of key Supreme Court Dormant
Commerce Clause decisions that prohibit geographic discrimination.
Part II examines the handful of different means by which state RPS programs
originally a decade ago may have discriminated against out-of-state renewable
energy projects, and groups the states by their different mechanisms. Certain
courts reacted: Part II analyzes key Seventh Circuit and Second Circuit Courts of
Appeals’ decisions, as well as Federal Energy Regulatory Commission (FERC)
orders, that found several state energy laws violated the Commerce Clause.
8
Part III tracks this changing U.S. renewable energy law over time, examining
each of the involved twenty-nine state’s energy laws then
9
and how each state has
was invented in China in 1041. See Robert Leche
ˆne, Printing, ENCYCLOPEDIAS BRITANNICA (last visited
Aug. 30, 2021), https://perma.cc/SF6J-LYNT. After this transition, movable print presses were invented
in Korea and by Gutenberg in Europe in approximately 1450.
4. Bruna Alves, Revenue of the Electric Power Industry in the United States from 19702017,
STATISTA (July 5, 2021), https://perma.cc/98LF-2TXQ.
5. Amount of Revenue by Source, TAX POLY CTR. (June 7, 2021), https://perma.cc/K6YJ-AQ6J.
6. See infra section I.D.
7. See infra at section IV.A.
8. See infra at section II.B.
9. See infra at section II.A.
2021] LEGAL HISTORY REPEATS ITSELF ON CLIMATE CHANGE 491

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