Description: Challenge to Illinois law that created a Zero Emissions Credit program allegedly to support uneconomic nuclear plants.
Village of Old Mill Creek v. Star
Filing Date Type File Action Taken Summary 07/14/2017 Memorandum Opinion and Order Download Memorandum opinion and order issued dismissing action. Illinois Federal Court Upheld “Zero Emission Credits” Program. The federal district court for the Northern District of Illinois upheld a “zero emission credit” (ZEC) program allegedly intended to subsidize old nuclear power plants in Illinois. Illinois’s ZEC program was created by the Future Energy Jobs Act, which granted ZECs to qualifying facilities, which the Illinois court noted were “likely to be two nuclear power plants owned by Exelon in Illinois.” Plaintiffs challenging the program were electric generators and their trade groups in one case and utility customers in a second case. The plaintiffs unsuccessfully argued that the ZEC programs were unconstitutional because they were preempted and violated the dormant Commerce Clause, and the utility customers also made an equal protection claim. The court concluded that the plaintiffs largely lacked Article III standing for the preemption and dormant Commerce Clause claims but proceeded to address the merits. The court held that it did not have equity jurisdiction over the plaintiffs’ claims that the Federal Power Act (FPA)—which grants the Federal Energy Regulatory Commission (FERC) exclusive jurisdiction over the interstate wholesale electricity market—preempted the state programs. The court concluded that Congress intended to foreclose a private right of action, citing the FPA’s provisions for a detailed remedial scheme before FERC and the Public Utility Regulatory Policies Act’s addition to the FPA of a private cause of action for a narrow scope of challenges to state action. The court also found that the relief sought by the plaintiffs would require the court to apply “judicially unadministratable” standards. The court also held that the FPA preemption claims would, in any event, fail on the merits. The court—looking to the Supreme Court’s 2016 opinion in Hughes v. Talen Energy Marketing, LLC—said the states’ ZEC programs did not impermissibly “tether” ZEC payments to participation in the wholesale capacity auctions and did not directly affect wholesale rates. The ZEC program therefore avoided field preemption. The court also found that the plaintiffs did not state a plausible claim for conflict preemption because the ZEC program did not run afoul of FERC’s goal of competitive energy markets. The court held that the plaintiffs did not have Article III standing to make their dormant Commerce Clause claim, and also concluded that no dormant Commerce Clause claim was stated because Illinois’s statute did not preclude out-of-state generators from submitting bids for ZECs and was therefore not facially discriminatory, and there were no plausible allegations that the procurement process would be facially discriminatory. The Illinois court also concluded there was a substantial possibility that the implementation of the statute would be non-discriminatory in effect, rejected the argument that the statute had a discriminatory purpose, and said the state-created ZECs only indirectly burdened other generators’ ability to participate in the wholesale market. The Illinois court also dismissed the utility customer plaintiffs’ equal protection claim, finding that the ZEC program had rational basis grounded in the legislative goals of increasing reliance on zero-emission energy. 04/24/2017 Memorandum Download Memorandum filed by plaintiffs in opposition to motions to dismiss. In response to the motions to dismiss, the plaintiffs argued that their complaint stated claims of field and conflict preemption and of a dormant Commerce Clause violation. The plaintiffs also contended that FERC did not have primary jurisdiction over the conflict preemption claim, and that the court had equitable jurisdiction to consider the preemption claims. The plaintiffs also disputed the foundation of the defendants’ arguments—that the ZEC program and the statute that created it were environmental programs aimed at reducing carbon emissions. 04/12/2017 Amicus Brief Download Proposed amicus brief filed by American Wind Energy Association in support of neither party. 04/12/2017 Amicus Brief Download Proposed amicus brief filed by Natural Resources Defense Council. 04/12/2017 Amicus Motion Download Motion by American Wind Energy Association for leave to file brief as amicus curiae in support of neither party. The American Wind Energy Association filed a proposed brief on behalf of neither party, asserting that it had a substantial interest in the case “because state-conducted resource procurement efforts for renewable energy could be called into question by a verdict for the Plaintiffs that is not narrowly tailored to the facts at hand.” 04/12/2017 Amicus Motion Download Motion for leave to file a brief amici curiae in support of defendants' motion to dismiss filed by Environmental Defense Fund, Citizens Utility Board, Elevate Energy, and Respiratory Health Association. 04/12/2017 Amicus Motion Download Motion for leave to file amicus brief in support of defendants' motion for dismiss and in opposition to plaintiffs' motion for preliminary injunction filed by Natural Resources Defense Council. 04/10/2017 Memorandum Download Memorandum in support of motion to dismiss filed by state defendants. 04/10/2017 Motion to Dismiss Download Motion to dismiss filed by intervenor Exelon Generation Company, LLC. 04/10/2017 Motion to Dismiss Download Motion to dismiss filed by state defendants. The state defendants and the owner of nuclear plants eligible for ZEC credits filed motions to dismiss the two lawsuits, arguing that the plaintiffs failed to state valid claims, that the plaintiffs lacked a cause of action for bringing their preemption claims, and that the plaintiffs lacked standing to bring their dormant Commerce Clause claims. 03/15/2017 Motion to Intervene Download Motion to intervene filed by Exelon Generation Company, LLC. 02/14/2017 Complaint Download Complaint filed.
Electric Power Supply Association v. Star
Filing Date Type File Action Taken Summary 07/17/2017 Notice of Appeal Download Notice of appeal filed by generator plaintiffs. 07/10/2017 Brief Download Brief submitted by generator plaintiffs regarding Second Circuit's decision in Allco Finance Ltd. v. Klee. 07/10/2017 Memorandum Download Memorandum submitted by state defendants regarding Second Circuit's decision in Allco Finance Ltd. v. Klee. 04/26/2017 Letter Download Letter submitted by FERC. FERC Declined Invitation to Weigh in on Nuclear Subsidies in Illinois Federal Court. On April 24, 2017, the federal district court for the Northern District of Illinois invited the Federal Energy Regulatory Commission (FERC) to submit an amicus brief stating “its views, if any, on the intersection of Illinois’s Zero Emission Credit [(ZEC)] program and the Federal Power Act and/or FERC’s jurisdiction over wholesale electricity sales.” The court sought FERC’s views in the context of two lawsuits challenging the ZEC program in which the plaintiffs claimed that the program was preempted and violated the Commerce Clause. On April 26, 2017, FERC submitted a letter to the court indicating that it would not submit a brief. FERC noted that a complaint related to the ZEC program and filed by one of the plaintiffs in the lawsuits was currently pending before FERC. FERC also noted that it was operating without a quorum and would not be able to act on the pending complaint until the quorum was restored, after which it would be able to address the complaint and potentially provide a more definitive statement on its views. 04/24/2017 Amicus Brief Download Amicus brief submitted by Midcontinent Independent System Operator, Inc. in support of defendants' motion to dismiss. Other parties sought to intervene or to file amicus briefs in the lawsuits, including both of the regional transmission operators that oversee the electric grid in Illinois. Midcontinent Independent System Operator, Inc. (MISO)—which oversees the electric grid in 15 states (including in southern Illinois) and the Canadian province of Manitoba—submitted an amicus brief arguing that the case should be dismissed because a decision by the court could prematurely limit ongoing efforts before FERC involving MISO stakeholders to resolve questions related to issues before the court. 04/24/2017 Amicus Brief Download Amicus brief filed by PJM Interconnection, L.L.C. in opposition to motions to dismiss. PJM Interconnection, L.L.C. (PJM)—the grid operator for 13 states (including northern Illinois) and the District of Columbia—filed an amicus brief opposing the motion to dismiss, arguing that the ZEC program would substantially harm the wholesale energy markets PJM operated. 04/24/2017 Memorandum Download Memorandum filed by plaintiffs in opposition to motion to dismiss. 04/24/2017 Not Available Download FERC invited to submit amicus brief. 04/12/2017 Amicus Motion Download Motion for leave to file a brief amici curiae in support of defendants' motion to dismiss filed by Environmental Defense Fund, Citizens Utility Board, Elevate Energy, and Respiratory Health Association. A group of four non-profit groups that included Environmental Defense Fund sought leave to file an amicus brief urging dismissal of the lawsuit, arguing that the ZEC program operated within the “collaborative federalism” framework and was within Illinois’s authority to craft energy policy to address environmental and public health concerns. 03/16/2017 Motion to Intervene Download Motion to intervene as plaintiff filed by the Independent Market Monitor for PJM. The Independent Market Monitor for PJM earlier moved to intervene as a plaintiff “to promote and protect the competitive wholesale electric power markets and to avoid the burden that would be imposed on its resources in efforts to avert failure of the market if Defendants prevail.” 02/14/2017 Complaint Download Complaint filed. Power Producers Challenged Illinois Law That Created Zero Emissions Credits for Nuclear Power Facilities. A trade association representing independent power producers and four power producers filed a lawsuit in Illinois federal court challenging an Illinois law that created a Zero Emissions Credit (ZECs) program allegedly to “prop up … two uneconomic nuclear power plants” in the state. The law, known as the Future Energy Jobs Act (FEJA), provides that certain zero-carbon resources (which the complaint says are limited to the two failing nuclear plants) will receive ZEC payments in an amount tied to the social cost of carbon and wholesale energy prices. The plaintiffs claimed that FEJA intruded on the Federal Energy Regulatory Commission’s exclusive authority to regulate the sale of electric energy at wholesale in interstate commerce under the Federal Power Act. The plaintiffs contended that FEJA therefore was preempted on both field preemption and conflict preemption grounds. The plaintiffs also asserted that the ZEC program was invalid under the dormant Commerce Clause. They stated that “[a]though the reduction of carbon emissions is important, this can be achieved much more effectively by means that would neither discriminate against interstate or international commerce nor frustrate the progress competitive markets have been delivering in the form of environmental benefits.”