The Not-So-Dormant Commerce Clause and Coal-Based Electricity

 

Finally, in 2011, in perhaps the most perplexing case at issue, a non-profit organization representing and promoting coal interests challenged the State of Colorado’s renewable energy standard (RPS), which requires Colorado utilities to provide up to 30% of their retail electricity sales from renewables. The challengers argued that the renewable mandate burdened out-of-state energy producers who sought to export electricity to Colorado but were now subject to the RPS. The court held that this state regulation did not violate the dormant Commerce Clause because, while it would possibly influence the profits of out-of-state companies whose electricity could not be used to fulfill the mandate, the dormant Commerce Clause “neither protects the profits of any particular business, nor the right to do business in any particular manner.” On appeal, the Tenth Circuit affirmed this ruling, holding that the Colorado RPS “isn’t a price control statute, it doesn’t link prices paid in Colorado with those paid out of state, and it does not discriminate against out-of-staters.” The court concluded that in the absence of “a regulation more blatantly regulating price and discriminating against out-of-state consumers or producers,” a dormant Commerce Clause challenge could not succeed.

As these cases demonstrate, the intersection of state energy policies and the dormant Commerce Clause yields unpredictable results. One thing that is clear is that—perhaps to its chagrin—the coal-based electricity sector cannot always rest on state primacy. Rather, the federal government must also be enlisted to protect important interests. Environmental and energy regulation was designed to be a cooperative undertaking shared by the states and the federal government. While the federal government is limited by the Tenth Amendment, which states that“[t]he powers not delegated to the United States by the Constitution . . . are reserved to the States respectively, or the people,”14 states are likewise limited by the dormant Commerce Clause in designing laws and regulations that do not burden the flow of interstate commerce or discriminate against other states. While the path forward on dormant Commerce Clause challenges is still being charted, the coal-based electricity sector—now more than ever—must be savvy and informed about the laws both inside and outside of those states in which it plays such an important role in providing reliable and low-cost electricity.

Paul M. Seby is a Partner and Matthew B. Miller is an Associate Attorney in the Denver office of law firm Greenberg Traurig, LLP (http://www.gtlaw.com).

References

  1. U.S. CONST. art. I, § 8, cl. 3.
  2. See e.g., New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273–74 (1988).
  3. Dean Milk v. Madison, 340 U.S. 349, 354 (1951).
  4. Pike v. Brice Church, Inc., 397 U.S. 137, 142 (1970).
  5.  ocky Mountain Farmers Union v. Goldstene, 843 F. Supp. 2d 1071, 1094 (E.D. Cal. 2011).
  6. Id.
  7. See Rocky Mountain Farmers Union v. Corey, 740 F.3d 507 (9th Cir. 2014) (denial of en banc review).
  8. Id. at 512–17 (Smith, J. dissenting).
  9. Id. at 509–12 (Gould, J. concurring).
  10. American Fuels & Petrochemical Mfrs, Ass’n v. Corey, No. 1:09-cv-02234-LJO-BAM, at *46 (E.D. Cal. Aug 13, 2015).
  11. Id.
  12. Complaint at 27–29, 34–35, North Dakota v. Swanson, No. 0:11-cv-03232 (D. Minn. 2011).
  13. Am. Tradition Inst. et al v. Joshua Epel, et al., Case No. 1:11-cv-00859 (D. Colo., May 9, 2014).
  14. U.S. CONST., amend. X