State Clean Energy Policies at Risk: Courts Should Not Preempt Zero Emission Credits for Nuclear Plants

Abstract

In 2016, the Illinois Legislature and New York Public Service Commission enacted nearly identical policies to induce economically struggling nuclear power plants to continue operating. Competing power generation companies filed suits in federal district courts, arguing that the states’ policies are preempted by the Federal Power Act (FPA) and violate the dormant Commerce Clause.

The disputes over the states’ Zero Emission Credits (ZECs) for nuclear plants are just the latest controversies about the roles of state and the federal governments in overseeing the electricity industry. Recent federalism cases highlight the incongruity of applying the New-Deal-era Federal Power Act (FPA) to today’s dynamic and evolving industry.

This article argues that ZECs are not preempted by Federal Power Act. These programs adapt traditional state authority over power generation and utility portfolios to today’s restructured electric grid. Courts should reject plaintiffs’ requests to enlarge the scope of FERC’s exclusive authority over wholesale rates and should conclude that ZECs, like other state clean energy programs, do not conflict with FERC’s regulatory regime.

Keywords: Electricity, Preemption, Electricity Law, Electricity Regulation, Nuclear

JEL Classification: K23, K32, L50, L51, L94