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The Federal Power Act (FPA) has endured for eighty-five years, in part because it does not embrace a single regulatory approach for the energy industry. Nor does the FPA favor a single approach to federal- ism: it delegates broad authority to the Federal Energy Regulatory Commission (FERC) to regulate the wholesale sale and transmission of energy in interstate commerce, while leaving states considerable leeway to regulate not only retail rates but also power generation and distribution. The statute expanded federal authority over wholesale electric power sales, with the primary purpose of closing regulatory gaps in interstate energy markets. For the FPA's first fifty or so years, the division of authority between the federal government and the states was clearly understood. During this time, courts routinely invoked a "bright line" rule to keep federal and state regulators in their own lanes as they pursued the common goal of setting rates to protect consumers based on the cost of service. Then, in the 1990s, FERC shifted its policies away from setting rates based on cost to promoting competition in interstate energy markets. FERC's most recent market policies aim to level the playing field in energy re- source bidding, an approach that has little appetite for state programs that favor specific energy resources regardless of price. The bright line seems to have faded.

In recent years, the federal government's efforts to open up competitive electricity markets have transformed how we think about the regulation of energy. In many respects, the Federal Energy Regulatory Commission's (FERC) broad "deregulatory" efforts, which commenced in the 1990s, might appear to be a case of paradigmatic regulatory exit as defined by J.B. Ruhl and Jim Salzman. But our case study of FERC's restructuring of wholesale electricity markets reveals some important institutional features that make exit in federalism contexts, and under federal statutory duties, a rich and difficult problem. In the context of energy, exit from one regulatory sphere can create regulatory gaps. This has led FERC, which largely exited the regulation of wholesale electricity rates, to increase regulation in other spheres. It has also invited forms of intergovernmental exchange, as states have emulated or otherwise responded to FERC's regulatory modifications in the areas in which states have jurisdiction. In this sense, the transition to competitive energy supply markets has involved constrained exit characterized by a hydraulic back-and-forth between regulators and institutions in an effort to ensure that statutory duties are fulfilled and other public needs are met. This assessment of regulatory exchange has a prescriptive implication: a federal regulator seeking to exit specific forms of conventional regulation needs to proactively develop strategies to facilitate regulatory exchange, while simultaneously preserving its authority over important substantive values related to its regulatory mission. Attention to "offsetting" regulations is often necessary to ensure that problematic regulatory gaps will not arise. In the energy context, these strategies might also include the use of mechanisms that give other institutions a voice in implementing exit strategies, as well as better ex ante regulatory planning for market enforcement that will continue after partial exit. We argue that it is not only a good strategy for ...

This Article argues that, even though a carbon tax remains politically elusive, "carbon taxation by regulation†has begun to flourish as a way of financing carbon reduction. For more than a century, energy rate setting has been used to promote public good and redistributive goals, akin to general financial taxation. Various non-tax subsidies in customer energy rates have enormous untapped potential for promoting low-carbon sources of energy, while also balancing broader economic and social welfare goals. While carbon taxation by regulation offers many benefits, regulators' narrow fixation on consumer protection and economic goals has hobbled realization of its potential. In comparison to a national carbon tax, customer subsidies in regulation are piecemeal, isolated in focus, and fragmented. They also have not been sufficiently attentive to revenue shortfalls and burden allocation, important fairness and equity issues, or negative and positive jurisdictional spillovers. Using a carbon tax as a benchmark, this Article identifies some principles to help guide efforts to reform, recalibrate and scale up customer rate subsidies to promote low-carbon sources of energy. State and federal agencies can better promote efficiency and social welfare in modern energy markets by aligning customer rate subsidies with the same principles that would inform optimal design of a carbon tax.

This Article provides a comprehensive analysis of state constitutional limits on legislative incorporation of dynamic federal law, as occurs when a state legislature incorporates future federal tax, environmental or health laws. Many state judicial decisions draw on the nondelegation doctrine to endorse an ex ante prohibition on state legislative incorporation of dynamic federal law. However, the analysis in this Article shows how bedrock principles related to separation of powers under state constitutions, such as protecting transparency, reinforcing accountability, and protecting against arbitrariness in lawmaking, are not consistent with this approach. Instead, this Article highlights two practices that can make dynamic incorporation of federal law more compatible with state separation of powers: a) accountable intermediaries, such as administrative agencies, as a was of preserving political accountability with incorporation of dynamic federal sources of law; and b) ex post judicial review, as a mechanism to provide standards and safeguards to protect against arbitrariness in lawmaking. The analysis highlights serious flaws with judicial interpretations of state constitutions that impose an ex ante barrier to the adoption of dynamic federal law. It also advances "hard look federalism†as a novel approach to judicial review by state appellate courts that can allow states to both protect their own separation of powers concerns and improve the operation of federalism, particular by enhancing state participation in adoption, interpretation, and implementation of federal standards.

For much of the past 80 years courts have fixated on dual sovereignty as the organizing federalism paradigm under New Deal era energy statutes. Dual sovereignty's reign emphasized a jurisdictional "bright line," with a fixed, legalistic boundary between federal and state regulators. This Article explores how recent Supreme Court decisions limit dual sovereignty's role as the organizing federalism principle under energy statutes. These recent decisions do not approach federal-state jurisdiction as either/or proposition, but instead recognize it is concurrent in certain contexts. Concurrent jurisdiction opens up a brave new path of possibilities for energy federalism but also has been target of criticism, including in Justice Scalia's last published dissent. This Article defends concurrent jurisdiction as consistent with the history, structure and language of energy statutes, as well as their primary purposes of closing regulatory gaps. At the same time, energy federalism's path continues to confront a thicket of doctrinal relics from dual sovereignty's reign, such as field preemption. These doctrines must cleared from federalism's path if regulators are to succeed in addressing the challenges presented by modern energy markets, such as the expansion and integration of clean energy resources into the grid, protecting reliability, addressing energy security, and the monitoring of anti-competitive conduct that is harmful to consumers. The Article concludes by calling on courts and regulators to be attentive to promoting democratically accountable agency preemption as they address the challenges of new forms of energy federalism.

While the federal government has been slow to address problems such as climate change, many states have adopted innovative approaches to address the climate impact of using natural resources to produce energy, including aggressive approaches to regulating carbon emissions and renewable and clean energy standards. This Article identifies an emerging challenge that subnational regulation faces in the energy and environmental context -- what I will call "maladaptive†federalism -- and argues that federalism discussions need to account for its possibility. Part I highlights adaptive regulation as a form of federalism, echoing a vision for subnational regulation many federalism scholars and policymakers have endorsed over the past two decades. Part II argues that policy choices by subnational units of government that fail to account for or consider these coordination benefits should not be celebrated as a form of adaptive federalism merely because they are state policy choices. I identify subnational recalcitrance (on inaction by states) and backlash (or reversing course) as two potential types of maladaptation, provides examples of each, and use these to illustrate the structural features of subnational governments that make maladaptation most likely. Part III argues in favor of pro-adaptation tools that federal agencies can use to address the enactment costs of states taking maladaptive approaches. In certain contexts, focusing on enactment costs associated with the structure of state governments will superior to federal policies that preempt subnational units of government altogether by making the policy choice for them. Such tools not only make maladaptation less likely; they also help to ensure that when a state does opt for an maladaptive policy path that it does so because it is making explicit tradeoffs in ways that are more likely to be welfare-enhancing and politically accountable.

Linda Cohen and Matthew Spitzer's study, "The Government Litigant Advantage," sheds important light on how the Solicitor General's litigation behavior may impact the Supreme Court's decision making agenda and outcomes for regulatory and administrative law cases. By emphasizing how the Solicitor General affects cases that the Supreme Court decides, Cohen and Spitzer's findings confirm that administrative law's emphasis on lower appellate court decisions is not misplaced. Some say that D.C. Circuit cases carry equal-if not more-precedential weight than Supreme Court decisions in resolving administrative law issues. Cohen and Spitzer use positive political theory to provide a novel explanation for some of this bias towards circuit court decisions in defining the rule of law in administrative law practice and scholarship. However, this Comment argues that what Cohen and Spitzer's empirical finding of "government litigant advantage" means more generally for the rule of law in the regulatory context requires further elaboration.

Since the New Deal, federal preemption has precluded many state and local regulatory decisions that depart from wholesale electric prices determined under federal standards. Recent decisions treat prices that meet the federal standard as a preemption ceiling, which prohibits states from setting prices that exceed the wholesale price set in a competitive market. Both appellate courts and the Federal Energy Regulatory Commission ("FERCâ€) - the primary federal agency responsible for the electric power sector - have recently applied a price preemption ceiling to clean energy policies. I argue in this Article that this price ceiling preemption approach hobbles the advancement of clean energy policy under both federal and state laws. State and local governments, along with regional institutions, have adopted a number of clean energy innovations, including feed-in tariffs for renewable power, novel approaches to transmission siting and cost allocation, and energy conservation policies. As subnational governments today consider how to encourage clean energy investments, they are increasingly bumping into limitations imposed by FERC and the courts under the Supremacy Clause of the U.S. Constitution. Imposing a legal preemption ceiling on clean energy prices thwarts the ability of subnational governments to adopt policies that advance conservation and renewable energy goals. I argue that reassessing application of wholesale price ceiling preemption to regional, state and local clean energy innovations will allow courts and federal regulators to more effectively imagine the ability of federal energy laws to advance clean energy goals.