In key case, judges uphold Colo. renewable energy standard

Source: Jeremy P. Jacobs, E&E reporter • Posted: Tuesday, July 14, 2015

Federal judges today rejected a closely watched bid by a conservative legal group to undermine Colorado’s renewable energy standard on constitutional grounds.

The anti-regulatory Energy & Environment Legal Institute claimed Colorado’s requirement that 20 percent of all electricity sold in the state come from renewable sources violated the Commerce Clause.

The group claimed the renewable portfolio standard, or RPS, amounted to regulating economic activity outside Colorado’s borders because the state is part of an electric grid that serves 11 states and parts of Mexico and Colorado.

Consequently, the group argued that the law discriminated against coal and other fossil fuel generators located outside Colorado. Such provisions, the institute said, violated the “dormant” Commerce Clause, which is generally interpreted to mean that while the clause gives Congress the authority to regulate interstate commerce, the inverse is also true — states may not restrict interstate economic activity.

A three-judge panel of the Denver-based 10th U.S. Circuit Court of Appeals unanimously rejected that argument.

Judge Neil Gorsuch, a Republican appointee, wrote that the challengers failed to establish how the RPS would actually harm out-of-state producers compared to in-state generators.

“[A]s far as we know, all fossil fuel producers in the area served by the grid will be hurt equally and all renewable energy producers in the area will be helped equally,” he wrote. “If there’s any disproportionate adverse effect felt by out-of-state producers or any disproportionate advantage enjoyed by in-state producers, it hasn’t been explained to this court. And it’s far from clear how the mandate might hurt out-of-state consumers either.”

Gorsuch also said that the program “does not discriminate against out-of-staters.”

The Colorado case has been closely watched by environmental and industry groups as more states have adopted renewable requirements. The 9th U.S. Circuit Court of Appeals in San Francisco in 2013 rejected a similar challenge to California’s low-carbon fuel standard, a critical part of the state’s efforts to address climate change (Greenwire, Sept. 18, 2013). That case remains ongoing, but the court largely rejected extraterritorial claims raised by challengers including petroleum groups.

A similar argument was successful in federal district court litigation against Minnesota’s renewable energy standard. The state has since appealed that ruling.

And another lawsuit challenging Oregon’s regime recently filed.

Sean Donahue, an attorney who represented environmental groups in the California case but was not involved in the Colorado litigation, said today’s ruling is reassuring and sets an important precedent.

“Two very strong courts of appeals — the only courts of appeals to address this kind of claim — have rejected it very strongly,” Donahue said.

He added that if the extraterritorial argument were successful, it would significantly hamstring states’ ability to implement any sort of renewable requirement.

“It would really wreck havoc,” Donohue said. “This is a much-watched decision, and I think it’s right.”

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