Invenergy Thermal LLC v. Watson

The federal district court for the Western District of Washington ruled that neither an out-of-state company that alleged that it owned a Washington power plant through a chain of subsidiaries nor the in-state subsidiary that owned the power plant had standing for their constitutional challenges to the Washington Climate Commitment Act’s (CCA’s) allocation of greenhouse gas emissions allowances. The companies alleged that the CCA’s allocation of “no-cost” allowances to electric utilities but not to owners of electricity generating facilities violated the dormant Commerce Clause and the Equal Protection Clause. The court held that the parent company lacked standing for either claim because it did not own the power plant, while the subsidiary lack standing for the dormant Commerce Clause claim because, as an in-state entity, it could not allege an injury in fact. The court concluded, moreover, that their dormant Commerce Clause claims would fail even if the companies had standing because they failed to allege that the CCA discriminated against out-of-state economic interests on its face or in purpose or effect. In addition, the equal protection claim would fail because utilities and electricity generating facility owners are not similarly situated and because the different treatment of utilities and owners of electricity generating facilities was rationally related to the legitimate government purpose of mitigating the cost of electricity sold to public consumers.

The defendant moved to dismiss, arguing that the law’s benefits flow to both in-state and out-of-state entities and the compliance burdens fall equally on all electricity generators. The defendant also argued that the plaintiffs could not establish they were similarly situated to public utilities and could not show that any impact on interstate commerce outweighed the benefit of minimizing impacts on Washington consumers’ energy costs.

An independent power producer that owns a power plant located in Washington challenged the constitutionality of Washington’s Climate Commitment Act. The plaintiff contended that the law’s allocation of no-cost allowances violated the Dormant Commerce Clause and Equal Protection Clause by granting no-cost allowances only to local utilities and permitting those utilities to transfer the allowances to their power plants.