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Carbon and the Constitution

State GHG policies confront federal roadblocks.

Fortnightly Magazine - April 2009

emissions. The motive appears even more integrated when states propose to utilize the revenues earned from this auction to fund a variety of programs that could reduce GHG production within the state.

However, jurisprudentially, motive matters according to the Supreme Court. RGGI lead states officially have expressed their purpose of this auction is to increase the price for certain high-carbon-emitting power plant operations (coal in particular), as a way to change the dispatch order of which plants are allowed to run by the FERC-regulated ISO. The announced objective is to make the operation of certain high-carbon-emitting plants so expensive that they become the last plants called on or allowed to operate by the regional ISO.

When unit dispatch order and operation, solely a function of federal jurisdictional pricing in modern electricity markets, is manipulated indirectly by states that attempt to inflate the federally-approved wholesale price at which certain facilities operate, it becomes constitutionally at issue under the Supremacy Clause. Nowhere is the line of demarcation of federal-state responsibility pursuant to the Supremacy Clause more firmly etched in the legal precedent than in power-sector regulation. In fact, Supremacy Clause jurisprudence in the power area has its own distinct nomenclature—the filed-rate doctrine. This bright line between federal and state jurisdiction has been firmly and consistently carved in the judicial firmament over three-quarters of a century.

Legally defensible and bullet-proof carbon policy is imperative. Some of the most respected climatologists argue that we have until 2015 to radically reduce the emission of CO 2, or face a very different planet. 68 But it does little toward this imperative to accelerate carbon restrictions at the state level, only to walk into protracted constitutional conflicts that could truncate or halt the implementation of these initiatives. Both Governor Schwarzenegger’s energy advisor and industry groups looking at RGGI implementation forecast litigation. 69 In the end, it may be that either carefully designed state regulation or federal carbon legislation is necessary not only for certainty, but to eliminate the issues of Constitutional conflict surrounding state carbon-regulation methods.



1.  See Reg’l Greenhouse Gas Initiative, Participating States, (last visited Nov. 30, 2008).

2. Cal. Health & Safety Code §§ 38500-38599 (West 2007) .

3. The Western Climate Initiative is a group of six western states and two Canadian provinces aiming to reduce GHG emissions 15 percent below 2005 levels. Lisa Weinzimer, California Regulators Call for ‘First-Seller’ Variation of Cap-and-Trade GHG Approach, Electric Util. Week , Feb. 18, 2008, at 17.

4. See generally, Midwestern Governor’s Ass’n, Midwestern Greenhouse Gas Accord , 2007 (Nov. 15, 2007). Mike Granstaff,, Cap and Trade-A Primer (Jan. 21, 2008), These states include Iowa, Illinois, Kansas, Michigan, Minnesota and Wisconsin, and the Canadian province of Manitoba. Indiana, Ohio and South Dakota have opted out of the Midwestern Greenhouse Gas Reduction Accord and are now observers.

5. See RGGI Emissions Leakage Multi-State Staff Working Group, Reg’l. Greenhouse Gas Initiative (RGGI), Potential Emissions Leakage and the Regional Greenhouse Gas Initiative: Evaluating Market Dynamics, Monitoring Options, and Possible Mitigation Mechanisms (2007) [hereinafter