Navigating Constitutional Issues Raised byState And Regional Efforts to Address “Leakage”

David K. Mears, Vermont Law School

Supremacy ClauseSupremacy Clause

“This Constitution, and the Laws of the United States which “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the authority of the United States, which shall be made, under the authority of the United States, shall be the supreme Law of the Land; and the Judges in every shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”Laws of any State to the Contrary notwithstanding.”

U.S.C.A. Const. Art. VI, cl. 2.U.S.C.A. Const. Art. VI, cl. 2.

Effects of the Supremacy Clause – Effects of the Supremacy Clause – Preemption of State RegulationPreemption of State Regulation

““The Supremacy Clause of Art. VI of the Constitution The Supremacy Clause of Art. VI of the Constitution provides Congress with the power to pre-empt state law. provides Congress with the power to pre-empt state law. Pre-emption occurs when Congress, in enacting a federal Pre-emption occurs when Congress, in enacting a federal statute, expresses a clear intent to pre-empt state law, statute, expresses a clear intent to pre-empt state law, when there is outright or actual conflict between federal when there is outright or actual conflict between federal and state law, where compliance with both federal and and state law, where compliance with both federal and state law is in effect physically impossible, where there is state law is in effect physically impossible, where there is implicit in federal law a barrier to state regulation , where implicit in federal law a barrier to state regulation , where Congress has legislated comprehensively, thus occupying Congress has legislated comprehensively, thus occupying an entire field of regulation and leaving no room for the an entire field of regulation and leaving no room for the States to supplement federal law, or where the state law States to supplement federal law, or where the state law stands as an obstacle to the accomplishment and execution stands as an obstacle to the accomplishment and execution of the full objectives of Congress. Pre-emption may result of the full objectives of Congress. Pre-emption may result not only from action taken by Congress itself; a federal not only from action taken by Congress itself; a federal agency acting within the scope of its congressionally agency acting within the scope of its congressionally delegated authority may pre-empt state regulation.”delegated authority may pre-empt state regulation.”

Louisiana Public Service Commission v. F.C.C.Louisiana Public Service Commission v. F.C.C., 476 U.S. 355, 368-69 (1986)., 476 U.S. 355, 368-69 (1986).

Express PreemptionExpress Preemption

““A fundamental principle of the A fundamental principle of the Constitution is that Congress has the Constitution is that Congress has the power to preempt state law.”power to preempt state law.”

Crosby v National Foreign Trade CouncilCrosby v National Foreign Trade Council, 530 U.S., 530 U.S.

363, 363 (2000).363, 363 (2000).

Field PreemptionField Preemption

““When Congress intends federal law When Congress intends federal law to ‘occupy the field,’ [all] state law in to ‘occupy the field,’ [all] state law in that area is preempted.”that area is preempted.”

Crosby v National Foreign Trade CouncilCrosby v National Foreign Trade Council, 530 U.S., 530 U.S.

363, 363 (2000).363, 363 (2000).

Conflict PreemptionConflict Preemption “ … “ … state law is naturally preempted to the state law is naturally preempted to the

extent of any conflict with a federal statute.”extent of any conflict with a federal statute.” ““We will find preemption where it is impossible We will find preemption where it is impossible

for a private party to comply with both state and for a private party to comply with both state and federal law, and where, ‘under the circumstances federal law, and where, ‘under the circumstances of [a] particular case, [state law] stands as an of [a] particular case, [state law] stands as an obstacle to the accomplishment and execution of obstacle to the accomplishment and execution of the full purpose and objectives of Congress.’”the full purpose and objectives of Congress.’”

Crosby v National Foreign Trade CouncilCrosby v National Foreign Trade Council, 530 U.S., 530 U.S.363, 363 (2000).363, 363 (2000).

Preemptive Effects of the Federal Power ActPreemptive Effects of the Federal Power Act:: FERC sets the price but does FERC sets the price but does

not regulate the sale of electricitynot regulate the sale of electricity

1. Congressional regulation of wholesale 1. Congressional regulation of wholesale transactions in electricity through the FPA transactions in electricity through the FPA and FERC preempts state regulation of and FERC preempts state regulation of wholesale power sales: wholesale power sales:

““A State must … give effect to Congress' desire to giveA State must … give effect to Congress' desire to give

FERC plenary authority over interstate wholesale rates,FERC plenary authority over interstate wholesale rates,

and to ensure that the States do not interfere with thisand to ensure that the States do not interfere with this

authority.”authority.”Nantahala Power and Light Co. v. ThornburgNantahala Power and Light Co. v. Thornburg, 476 U.S. 953, 966 , 476 U.S. 953, 966

(1986).(1986).

Preemptive Effects of the Federal Power Preemptive Effects of the Federal Power ActAct: (continued): (continued)

3.3. States have the authority to States have the authority to regulate retail salesregulate retail sales

““the regulation of utilities is one of the most the regulation of utilities is one of the most important of the functions traditionally important of the functions traditionally

associated with the police power of the States”associated with the police power of the States”

Arkansas Elec. Co-op. Corp. v. Arkansas Public Service Arkansas Elec. Co-op. Corp. v. Arkansas Public Service

Com'nCom'n, 461 U.S. 375 (1983), 461 U.S. 375 (1983)

CommerceCommerce ClauseClause “The Congress shall have power … to regulate “The Congress shall have power … to regulate Commerce with foreign Nations, and among the Commerce with foreign Nations, and among the

several States, and with the Indian Tribes”several States, and with the Indian Tribes”

U.S.C.A. Const. Art. I, § 8, cl. 3.U.S.C.A. Const. Art. I, § 8, cl. 3.

States Cannot Purposely Discriminate against States Cannot Purposely Discriminate against

Interstate CommerceInterstate Commerce

1.1. Economic Protectionism is per se invalidEconomic Protectionism is per se invalidWelton v MissouriWelton v Missouri, 91 U.S. (1 Otto) 275 1876)., 91 U.S. (1 Otto) 275 1876).

2.2. In general, states may not purposefully In general, states may not purposefully discriminate against Interstate discriminate against Interstate CommerceCommerce

““When a state statute clearly discriminatesWhen a state statute clearly discriminatesagainst interstate commerce, it will be struckagainst interstate commerce, it will be struckdown unless the discrimination is demonstrablydown unless the discrimination is demonstrablyjustified by a valid factor unrelated to economicjustified by a valid factor unrelated to economicprotectionism.”protectionism.”Wyoming v. OklahomaWyoming v. Oklahoma, 502 U.S. 437, 454-55 (1992)., 502 U.S. 437, 454-55 (1992).

States may enact Evenhanded Regulations which States may enact Evenhanded Regulations which

have an Incidental Impact on Interstate Commercehave an Incidental Impact on Interstate Commerce

Pike balancing test

“Where a state regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.”

Pike v Bruce Church, 397 U.S. 137 (1970).

States may enact regulations which

discriminate against interstate commerce

Discriminatory Regulations are Strictly Scrutinized

Maine v Taylor, 477 U.S. 131 (1986).

Legitimate Local Purpose

a state has “broad authority to protect the health and safety of its citizens and the integrity of its natural resources” Maine at 151

states have a “legitimate interest in guarding against imperfectly understood environmental risks” Maine at 148

Maine v Taylor, 477 U.S. 131 (1986).

No less discriminatory alternative exists

“the purpose must be one that cannot be served as well by available nondiscriminatory means.”

Maine v Taylor, 477 U.S. 131, 140 (1986).

States do not have States do not have extraterritorial jurisdictionextraterritorial jurisdiction

Healy v. Beer Institute, 491 U.S. Healy v. Beer Institute, 491 U.S. 324, 336 (1989)324, 336 (1989)

Congress can grant the Congress can grant the states power to regulate states power to regulate

interstate commerce where interstate commerce where they would otherwise be they would otherwise be

forbidden to do soforbidden to do so Wilkerson v RahrerWilkerson v Rahrer, 140 U.S. , 140 U.S.

545 (1891). 545 (1891).