Supremacy and Clean Energy Commerce: Understanding Federalism vs. States' Rights in Renewable Energy Project Development

States and federal energy regulators are increasingly challenging each other's traditional understanding of the balance of power between the federal government and states' rights to adopt incentives to promote renewable energy and this year's Supreme Court term has presented the opportunity for the Court to issue a trio of decisions that clarify the balance of energy regulatory power between the federal and state governments when it comes to regulating the electricity and natural gas industries. 

Renewable energy project developers and their financiers are finding new legal frameworks that are helping to clarify a renewed spirit of cooperative federalism across the U.S., especially in organized competitive wholesale power markets. The recent Supreme Court decisions are helping to clarify the applicability of the Federal Power Act's balance of powers to emerging clean energy demand response technologies, including the roles of demand response, energy efficiency and net metering policies across state lines. 

One recent case dealt with whether the Federal Energy Regulatory Commission (FERC) went too far and infringed on states' rights when FERC issued a 2010 rule, called Order No. 745, that requires wholesale power market operators to pay electric consumers for commitments not to use power at certain key times. And Order No. 745 required that these payments be equal to the same amount that wholesale power generators were to be paid for generating electricity. In this way, FERC was essentially ordering that "megawatts" equal megawatts.  Another case challenged that certain Mid Atlantic region states went too far in trying to incentivize new wholesale power generators with long-term contracts. A third case dealt with states' ability under antitrust law to review transactions in the wholesale natural gas industry regulated by FERC. Taken together, renewable energy project developers and their financiers have new guidance on the cooperative federalism at play in various states.

This course, presented by Stephen J. Humes of Holland & Knight's New York City Office, reviews the legal issues arising in the development of renewable energy projects and the roles of FERC and the states in establishing rules and promoting project incentives to meet clean energy standards.

Learning Objectives:

I.     Understand the statutory federalism vs. states' rights framework of the Federal Power Act and Natural Gas Act

II.    Learn about the trio of recent U.S. Supreme Court Cases interpreting the role of cooperative federalism in electric and gas projects

III.    Identify the federalism vs. states' rights issues in renewable energy project development

IV.    Provide practice guidance to reduce legal risk and avoid surprises in renewable energy project deal structuring