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 Su๎olk 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 signi๎cant 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 plainti๎sโ 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. In๎๎ค๎๎๎๎ ๎๎๎๎ข๎๎๎๎๎๎๎๎๎๎๎ต๎๎๎๎๎๎๎๎๎ง๎ค๎ค,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 agencyโs interpretation of the scope of its
own statutory jurisdiction, stating that โstatutory ambi-
guities will be resolved, within the bounds of reasonable
1. City of Arlington, Tex. v. Federal Communications Commโn (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.โ3 โ[If] the agencyโs answer is based on a permissible
construction of the statute,โ the Court said, โthat is the end
of the matter.โ4 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 con๎icts 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 rami๎cations for how we construct the
sustainable energy future.
Power is treated di๎erently 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. ๎ค๎๎๎๎๎๎ ๎ข๎๎๎๎๎๎๎๎, 133 S. Ct. at 1868 (citing AT&T Corp. v. Iowa Utilities
Bd. 525 U.S. 366, 397 (1999)).
4. ๎ค๎๎๎๎๎๎๎๎ข๎๎๎๎๎๎๎๎, 133 S. Ct. at 1868 (citing Chevron, 467 U.S. at 842).
5. Federal Power Act (FPA), 16 U.S.C. ยงยง824 et seq.
6. U.S. C๎๎๎๎., art. VI, cl. 2.
7. American Trucking Assโns v. City of Los Angeles, 133 S. Ct. 927, 43 ELR
20128 (2013); ๎ค๎๎๎๎๎๎๎๎ข๎๎๎๎๎๎๎๎, 133 S. Ct. 1863.
8. Entergy Nuclear Vt. Yankee, LLC v. Shumlin, 733 F.3d 393, 43 ELR 20201
(2d Cir. 2013); Illinois Commerce Commโn v. Federal Energy Regulatory
Commโn (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-
467 (4th Cir. 2014); PPL Energyplus, LLC v. Hanna, 977 F. Supp. 2d 372
(D.N.J. 2013), afโd, PPL Energyplus, LLC v. Solomon, 766 F.3d 241, 44
ELR 20207 (3d Cir. 2014).
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๎ ๎๎๎๎ ๎ถ๎๎ฏ๎๎ ๎ฅ๎๎๎๎๎๎๎๎๎๎๎
Program on renewable and carbon reduction policies in developing
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Copyright ยฉ 2015 Environmental Law Instituteยฎ, Washington, DC. Reprinted with permission from ELRยฎ, http://www.eli.org, 1-800-433-5120.
