Minimizing Constitutional Risk in State Energy Policy: A Survey of the State of the Law

Date01 May 2015
Risk in State
Energy Policy:
A Survey of the
State of the Law
by Kate Konschnik and Ari Peskoe
Kate Konschnik is Director of Harvard Law School’s
Environmental Policy Initiative. Previously, she served as Chief
Environmental Counsel to U.S. Sen. Sheldon Whitehouse
(D-R.I.), and was an environmental enforcement trial
attorney at the U.S. Department of Justice. Ari Peskoe is the
Energy Law Fellow at Harvard Law School’s Environmental
Policy Initiative. He was an associate in the energy advisory
group of an international law rm, where he represented
clients before the Federal Energy Regulatory Commission.
Constitutional challenges to new state energy policies
have been mounting in state and federal courts. is
Article surveys the state of the relevant law, focusing
on the dormant Commerce Clause and the Suprem-
acy Clause, and draws ve conclusions to guide states
in achieving their energy policy goals: (1) locational
requirements may be va lid if based on reasons other
than economic protectionism; (2) locational require-
ments may be valid if they do not impede interstate
commerce or if the beneting in-state economic
interests do not compete with out-of-state businesses;
(3)policies should place lega l obligations only on in-
state entities and may also set standards for entities
that voluntarily do business with in-state entities;
(4) because wholesale power prices are regulated by
FERC, state policies that set a wholesale price may be
preempted; and (5) limited incentives for fuel-ecient
commercial vehicle eets are permissible.
I. Introduction
Since 2008, more than one dozen constitutional challenges
to state energy policies have been led in state and federal
courts. e cha llenges have been mounting in response to
growing competition on the grid and the creation of new
policies to tackle climate cha nge and air pollution. Chal-
lengers contend that state energy policies are impermis-
sibly regulating interstate commerce, or discriminating
against it in favor of in-state industries. How these cases
are resolved has implications for the state and federal roles
in energy policy going forward.
is Article surveys t he state of constitutional law,
focusing on the dormant Commerce Clause and the
Supremacy Clause. ese provisions have been front and
center in current and recent legal disputes over state energy
policies. We provide an overview of each of these a reas of
the law, and present summaries of recently led claims and
court decisions. e resolutions of these disputes suggest
ways in which states can act w ithin constitutional bounds
to achieve their energy policy goals. We conclude with ve
recommendations on achieving these policy goals within
constitutional limits.
II. Dormant Commerce Clause
e Commerce Clause of the U.S. Constitution grants the
U.S. Congress the authority to “regulate commerce . ..
among the severa l states and with the Indian tribes.” Into
this positive grant of authority, courts have read a constraint
on state power to interfere with interstate commerce, in
order to “preserv[e] a national market for competition.1
e judicial doctrine is k nown as the “dormant C om-
merce Clause.” e precise contours of the dormant Com-
merce Clause continue to be debated in federal courts.2
1. General Motors Corp. v. Tracy, 519 U.S. 278, 299 (1986).   Phila-
delphia v. New Jersey, 437 U.S. 617, 623, 8 ELR 20540 (1978); Wyoming
v. Oklahoma, 502 U.S. 437, 469 (1992) (noting “our negative Commerce
Clause jurisprudence grew out of the notion that the Constitution implic-
itly established a national free market”).
2. , Tyler Pipe Indus. v. Washington State Dep’t of Revenue, 483 U.S.
232, 260 (1987) (Scalia, J., dissenting) (“our applications of the doctrine
have, not to put too ne a point on the matter, made no sense,” perhaps
because of the “lack of any clear theoretical underpinning for judicial ‘en-
forcement’ of the Commerce Clause”); American Beverage Ass’n v. Snyder,
735 F.3d 362, 371 (6th Cir. 2013) (Sutton, J., concurring) (rejecting the
extraterritorial doctrine in dormant Commerce Clause case law). Justice
Authors’ Note: We would like to thank the following people for their
insight and feedback: Laurie Burt, President, Laurie Burt LLC;
       
       
    
 
Assistance Project.
Copyright © 2015 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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