By Gabe Tabak

For renewable energy advocates, 2010 was a difficult year. After a lengthy struggle, the U.S. Senate failed to pass energy and climate change legislation. The proposed law (a version of which had passed the House of Representatives in 2009)1 would have included the first-ever national standards mandating renewable electricity and constraining carbon dioxide (CO2) emissions.2 With the failure to enact national
policies, state initiatives on renewables and CO2 remain the primary regulatory movers3 —and 2010 proved challenging for states as well. In a landmark lawsuit, TransCanada v. Bowles, the constitutionality of a state’s renewable portfolio standard (RPS) was attacked in court for the first time;4 in a separate instance, North Dakota threatened to sue its neighbor Minnesota over the latter’s restrictions on CO2 emissions from out-of-state electricity.5 Both instances used the same constitutional doctrine—the dormant Commerce Clause. With state policies remaining the only game in town for now,6 dormant Commerce Clause tension will become increasingly prominent, and these two examples from the past year can provide important insights for state regulators moving forward.

This paper will examine the policies of Massachusetts and Minnesota on renewable electricity and CO2 restrictions, and the recent and proposed litigation involving these policies. Part I briefly summarizes the
application of the dormant Commerce Clause. Part II discusses the major regulatory aspects of electricity markets, RPSs, and CO2. Part III reviews Massachusetts’s and Minnesota’s respective policies in these areas, and their constitutional challenges. Part IV briefly considers ways for states to defend themselves from dormant Commerce Clause issues in the absence of federal regulation.

...

This is an excerpt from an article that originally appeared in the July 2011 issue of the Energy Committee Newsletter of the American Bar Association. Read the full newsletter here.