On July 13, 2015, the United States Court of Appeals for the Tenth Circuit (“Tenth Circuit”) upheld the State of Colorado’s renewable portfolio standard (“RPS”) as valid under the dormant commerce clause.  In doing so, the Tenth Circuit held that the RPS (1) was not a price control statute, (2) did not link prices in Colorado with those paid out of state, and (3) did not discriminate against out-of-state electric generators.  As a result, Colorado may continue to require that 20 percent of all electricity sold to Colorado consumers, regardless of where it is produced, comes from renewable sources.

In 2011, the Energy and Environment Legal Institute (“EELI”) challenged Colorado’s RPS, arguing that it was a violation of the dormant commerce clause – jurisprudence that prohibits states from enacting legislation that unduly interferes with interstate commerce.  EELI argued that because the power grid is interconnected, and because Colorado is a net importer of electricity, Colorado’s RPS will harm out-of-state electricity producers that feed into Colorado who do not employ renewable resources.  After the U.S. District Court for the District of Colorado (“District Court”) rejected EELI’s challenge that the RPS violated all three tests of the dormant commerce clause in 2014, EELI appealed to the Tenth Circuit.

EELI specifically appealed the District Court’s decision on only one of the dormant commerce clause’s three tests – the Baldwin test.  The Baldwin test is the result of a U.S. Supreme Court decision that forbids states from regulating certain intrastate prices by prohibiting the importation of less expensive goods in interstate commerce.  Under the Baldwin test, if a court deems that states have attempted to control “extraterritorial” conduct, then the law is deemed almost per se invalid.

In rejecting EELI’s appeal, the Tenth Circuit held that the RPS did not attempt to regulate prices in Colorado or outside of Colorado.  Specifically, the Tenth Circuit stated that “[w]hile Colorado’s [RPS] surely regulates the quality of a good sold to in-state residents, it doesn’t directly regulate price in-state or anywhere for that matter.”  While the Tenth Circuit noted that even though the RPS is a non-price regulation statue, that does not mean that prices in-state or out-of-state are not impacted.  However, “without a regulation more blatantly regulating price and discriminating against out-of-state consumers or producers, Baldwin’s near per se rule doesn’t apply.”

EELI also argued that the District Court erred when it dismissed EELI’s challenge in summary judgment.  EELI stated that the District Court acted too quickly in granting Colorado’s summary judgment motion, thereby denying EELI the time to conduct additional discovery.  The Tenth Circuit disagreed, noting that EELI requested additional time for discovery in October 2013, that discovery did not end until January 2014, and that the District Court did not grant summary judgment until May 2014.  Therefore, the Tenth Circuit held that EELI was implicitly granted the additional time it requested.

A copy of the Tenth Circuit’s opinion is available here.