A federal appeals court has rejected a challenge to
Colorado's renewable portfolio standard, finding that the standard does not
disproportionately harm out-of-state businesses.
The U.S. Court of Appeals for the Tenth Circuit upheld a
lower court ruling against the Energy and Environment Legal Institute (EELI),
which argued that Colorado's renewable portfolio standard means that some
out-of-state coal producers will lose business with out-of-state utilities who
feed power onto an interconnected grid serving 11 Western states, Canada and
Mexico.
The institute had argued that, because electricity can go
anywhere on the grid and come from anywhere on the grid, and because Colorado
is a net importer of electricity, the out-of-state coal producers would be
harmed, the court noted.
The institute cited Baldwin v. G.A.F. Seelig Inc., 294
U.S. 511 (U.S. 1935) , which held that certain price control and price
affirmation laws controlling “extraterritorial” conduct are per se invalid
under the dormant commerce clause.
Not Price Control
The court disagreed. Colorado's voter-approved renewable
portfolio standard, which requires power generators to ensure that 20 percent
of the electricity they sell to state consumers comes from renewable sources,
is not a price control or price affirmation law, the court said.
Additionally, the court asked, “How can we have the sort of steadfast
conviction the Baldwin Court did that interstate commerce will be harmed when,
if anything, Colorado's mandate seems most obviously calculated to raise price
for in-state consumers?”
Fossil fuel producers such as the EELI's members will be
hurt, the court acknowledged. “But as far as we know, all fossil fuel producers
in the area served by the grid will be equally hurt and all renewable energy
producers in the area will be helped equally,” the court ruled.
“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,” it said in a 16-page
ruling.
Could Benefit Fossil Fuels
The net price impact on out-of-state consumers is “far from
obviously negative,” and the renewable energy standard could result in lower
demand for fossil fuels, meaning it could “tip in favor of those willing to
shift usage toward fossil fuel generated electricity.”
“To reach hastily for Baldwin's per se rule, then, might
lead to the decidedly awkward result of striking down as an improper burden on
interstate commerce a law that may not disadvantage out-of-state businesses and
that may actually reduce price for out-of-state consumers,” the opinion said.
David W. Schnare of the Free Market Environmental Law Clinic
in Burke, Va., lead attorney for the institute, told Bloomberg BNA July 13 the
court “didn't get it right.”
“We believe they failed to take into consideration the
arguments we made, but this is not the time or place to go forward with an
appeal,” he said, adding that the institute is awaiting a ruling by the U.S.
Court of Appeals for the Eighth Circuit to rule in a similar case.
Eighth Circuit Decision Pending
The core question of the cases is, “Can a state export its
renewable energy policy into another state?” he said. “We'll now have to wait
for the Eighth Circuit.”
The ruling clears a path toward a clean energy future,
according to a statement by four environmental groups—Conservation Colorado
Education Fund, Environment Colorado, Sierra Club and The Wilderness
Society—who intervened in the case and joined as defendants with the state
Public Utilities Commission.
“It is time for the climate deniers and dirty energy lobby
to end their frivolous lawsuits and recognize that clean, renewable energy is
here to stay,” Carrie Curtiss, deputy director for Conservation Colorado, said
in the July 13 statement.
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