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Attack on Colorado’s Renewable Energy Standard Law Denied

A three-judge panel of the 10th Circuit Court affirmed on July 13th that Colorado’s voter-approved renewable energy mandate does not violate the U.S. Constitution, ruling that the state’s renewable energy standard (RES) does not impose unlawful regulations on out-of-state commerce.

Renewable EnergyIn 2004, Colorado voters passed Amendment 37, which required investor-owned utilities to obtain at least ten percent (10%) of the energy they sell from renewable energy sources by the year 2015 (this mandate has since been increased to thirty percent (30%) by the year 2020).  That act made Colorado the first state to adopt an RES by a vote of the people.

Several years later, in a case originally filed in 2011, plaintiff Energy and Environment Legal Institute (EELI) claimed that the clean energy standard enacted in Colorado violated the dormant Commerce Clause of the U.S. Constitution.  Dormant Commerce Clause case law provides authority to courts to strike down state laws that unduly interfere with interstate commerce, particularly those laws that discriminate against out-of-state business.

EELI argued that because (1) Colorado consumers receive their electricity from an interconnected grid serving eleven (11) states and portions of Canada and Mexico, (2) electricity can go anywhere on the grid and come from anywhere on the grid, and (3) Colorado is a net importer of electricity, Colorado’s renewable energy mandate unfairly and adversely impacted out-of-state companies.  More pointedly, EELI argued that Colorado’s RES effectively meant out-of-state fossil fuel producers would lose business with out-of-state utilities who feed their power onto the grid in Colorado.

Ultimately, the 10th Circuit Court held that Colorado’s RES did not violate the dormant Commerce Clause and thus does not violate the U.S. Constitution.  Writing for the three-judge panel of the 10th Circuit Court, Judge Gorsuch noted that while out-of-state fossil fuel producers would likely be hurt, such harm was not disproportionate.  Indeed, financial harm to fossil fuel companies would likely be equal across the board.

“To be sure, fossil fuel producers like EELI’s member will be hurt,” Judge Gorsuch wrote.  “But as 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.  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.”

A full text of the July 13, 2015, ruling can be found here.

© 2019 Foley & Lardner LLP

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About this Author

Jason W. Allen, Foley Lardner, Energy Industry Lawyer, Finance Attorney
Partner

Jason Allen is a partner and business lawyer with Foley & Lardner LLP, where he is a member and co-chair of the Energy Industry Team. He is a member of the Finance & Financial Institutions, Transactional & Securities, and Private Equity & Venture Capital Practices. Mr. Allen’s practice focuses in the areas of mergers and acquisitions, private equity, finance, and general corporate and commercial law, with a particular emphasis on transactions in the energy industry. 

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Thomas Mullooly, Energy Attorney, Foley and Lardner, Renewable project develop
Of Counsel

Thomas Mullooly is an energy lawyer with Foley & Lardner LLP. He has in depth experience across all regulatory aspects of the energy industry and provides counsel on contracts, mergers and acquisitions, renewable project development, and state and federal and ISO compliance issues. He has led regulatory proceedings and litigation before FERC and in state commissions across the country. Mr. Mullooly is vice chair of the firm’s Energy Industry Team.

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Justus Britt, Solar Energy Project Attorney, Foley Lardner Law Firm
Associate

Justus Britt is a business lawyer and special counsel with Foley & Lardner LLP. Mr. Britt focuses on the development and acquisition of solar energy projects. His project development experience includes advising clients on real estate, permitting, and construction matters, including negotiating supply, EPC, and O&M agreements. Mr. Britt’s acquisition experience includes leading due diligence efforts and assisting on stock and asset purchase agreements, as well as joint venture agreements. He is a member of the firm’s Energy Industry Team and the Transactional...

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