University of San Diego

San Diego Journal of Climate & Energy Law


Kelsey Gagnon

Library of Congress Authority File


The “dormant” Commerce Clause’s prohibition on extraterritorial regulation has tested state efforts to battle greenhouse gas-induced climate change using clean energy policies. This is partly due to the structure of the North American power grid. Simply put, the electricity generated by an in-state power facility might be consumed by any other state connected to that same interconnection during normal operations. This cross-border flow, sale, and consumption of electricity places the grid within the regulatory grasp of the United States Constitution’s Commerce Clause. Congress therefore has authority to regulate the interstate electricity market. The Supreme Court has also interpreted an implicit but “dormant” limitation in the Commerce Clause, prohibiting state legislation that regulates interstate commerce. As a result, the Federal Energy Regulatory Commission (FERC) has been granted authority by Congress over the transmission and wholesale sales of electricity in interstate commerce, leaving the regulation of local electricity generators and utility rates (retail markets) to the individual states.

Another reality states face is the uniform mixing of greenhouse gases in the atmosphere. Because of this, state regulations promoting renewable energy and targeting emissions reductions run the risk of being ineffective if they do not take into account the true measure of the emissions causing local harm. In other words, states’ climate change prevention policies chance falling short of actually reducing in-state emissions if they do not take into account out-of-state emitters that contribute to emissions felt in-state. Thus, the structure of the grid and the properties of greenhouse gases have left state efforts to battle climate change through clean energy regulation that promotes greenhouse gas reductions particularly vulnerable to challenges under the dormant Commerce Clause’s prohibition against extraterritorial regulation.

This Article analyzes the judicial application of the dormant Commerce Clause’s prohibition on extraterritorial regulation to challenges to state clean energy legislation. The Eighth, Ninth, and Tenth Circuits have each taken up the issue of whether such regulations have an improper extraterritorial reach, but their analyses and holdings on the issue appear to have muddied the waters with inconsistent applications of an already convoluted principle. However, climate change prevention policies target a broad range of industries, and the fact patterns before each of the circuits varied not only in the energy sector being regulated, but in scope. Thus, the question is whether the inconsistent holdings among the circuits were due solely to the differences in the particular facts of the case before it, solely as a result of differences in doctrinal interpretation, or some combination of the two.

The answer to that question could have important implications for states moving forward with aggressive policies seeking to reduce emissions. The paucity of federal involvement has prompted state governments to take the lead in enacting progressive legislation to mitigate the local harms of climate change. However, as it stands, states are left uncertain of whether their legitimate climate change goals and resulting legislation are vulnerable to dormant Commerce Clause challenges.