Court Upholds Colorado's Renewable Portfolio Standard

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By Tripp Baltz

July 13 — 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.

To contact the reporter on this story: Tripp Baltz in Denver at abaltz@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com