In a 2-1 decision, the Ninth Circuit Court of Appeals affirmed the dismissal with prejudice of a dormant Commerce Clause challenge to the Washington State Department of Ecology’s (Ecology’s) enforcement of the Washington Climate Commitment Act’s (CCA’s) decarbonization requirements. The plaintiff, which owns and operates a natural gas-fired electric generation facility in Chehalis, Washington, argued that Ecology impermissibly discriminated against out-of-state customers that consumed electricity generated at the facility by allocating no-cost allowances for greenhouse gas emissions associated with electricity sent to Washington utility customers while requiring the purchase of allowances at auction for emissions associated with electricity sent to other states. The Ninth Circuit concluded that the in-state and out-of-state customers were not “similarly situated entities” as required to establish a violation of the dormant Commerce Clause because Washington’s Clean Energy Transformation Act (CETA) independently imposed decarbonization obligations on in-state power generation that did not apply to exported electricity. The dissenting judge wrote that the majority’s application of the “similarly situated entities” test to exclude Ecology’s regulation from dormant Commerce Clause scrutiny would improperly allow “state regulation that increases the costs of intrastate commerce to justify facial discrimination against interstate commerce, without requiring any assessment of the degree to which interstate commerce is burdened.” He wrote that “the proper course here is to remand this case for factual development as to whether CETA’s compliance costs and the CCA allowances are ‘roughly equivalent’ in a way that would justify Washington’s otherwise discriminatory treatment of interstate electricity sales.”

Lawsuit challenging the allocation of “no-cost” allowances under Washington’s Climate Commitment Act to electric utilities that were already subject to the decarbonization mandate of an earlier statute.

PacifiCorp v. Sixkiller

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Ninth Circuit Rejected Dormant Commerce Clause Challenge to Allocation of Compliance Allowances for Implementation of Washington State Climate Law

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

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Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

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The management and allocation of funds, assets and investments to meet various objectives

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A subsidy is a direct or indirect payment to individuals or businesses, typically provided as a government cash payment or a specific tax reduction.

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A ban is a legal action that prevents the sale or supply of a product or service, or that recalls a product from the market. Examples are bans on SF6, greenwashing, fossil fuel advertisement or single-use plastics.

A target to reduce the prevalence of a greenhouse gas over a specific time frame

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Either money or something of monetary value is transferred between two or more organisations, people or countries.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Actions to reduce emissions in energy generation and supply.

Air pollution involves harmful contaminants in the air, affecting both indoor and outdoor environments. It can lead to health issues like respiratory diseases and heart problems, and climate impacts such as global warming. Pollutants can damage plants, trees, habitats, and water bodies like rivers and lakes.

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Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

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This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

Ninth Circuit Rejected Dormant Commerce Clause Challenge to Allocation of Compliance Allowances for Implementation of Washington State Climate Law

Target

Policy instrument

Risk

Impacted group

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Finance