## Facts

- Colorado’s Renewable Energy Standard (RES), Colo. Rev. Stat. § 40-2-124, requires covered retail utilities to ensure an increasing percentage of electricity sold to Colorado consumers comes from qualifying renewable sources.
- Utilities may comply by generating qualifying renewable electricity, purchasing qualifying renewable electricity, or purchasing renewable energy credits (RECs) approved under a state-administered system.
- The RES does not bar utilities from purchasing electricity from out-of-state generators; it limits only what electricity or RECs can be counted toward the renewable quota.
- Plaintiffs Energy and Environmental Legal Institute and an individual affiliated with coal interests sued Colorado Public Utilities Commission commissioners in their official capacities.
- Plaintiffs sought declaratory and injunctive relief, alleging the RES violates the Dormant Commerce Clause by (i) discriminating against interstate commerce, (ii) regulating extraterritorially, and (iii) imposing excessive burdens under Pike balancing.
- The case came before the district court on cross-motions for summary judgment.

## Issues

1. Whether Colorado’s RES discriminates against interstate commerce on its face, in purpose, or in practical effect by favoring in-state renewable generation or disfavoring out-of-state nonrenewable generation.
2. Whether the RES is an impermissible extraterritorial regulation by controlling commerce occurring wholly outside Colorado.
3. Whether, if non-discriminatory, the RES’s incidental burdens on interstate commerce are clearly excessive in relation to its putative local benefits under Pike v. Bruce Church, Inc.

## Decision

- The court granted defendants’ motion for summary judgment and denied plaintiffs’ motion.
- The court held the RES is not discriminatory because it applies the same eligibility criteria to in-state and out-of-state renewable electricity and RECs and does not require in-state sourcing.
- The court held the RES is not impermissibly extraterritorial because it regulates only retail electricity sales to Colorado consumers and does not dictate the terms of wholly out-of-state transactions.
- The court held that any incidental interstate effects were not clearly excessive compared to the RES’s environmental and energy-policy benefits, so the statute survives Pike balancing.

## Legal Principles

- A state law violates the Dormant Commerce Clause if it discriminates against interstate commerce on its face, in purpose, or in practical effect; neutral laws that incidentally affect interstate commerce are generally reviewed under Pike balancing.
- The extraterritoriality doctrine targets state laws that directly control commerce occurring wholly outside the state, including statutes that effectively set prices or dictate transaction terms in other states.
- A state may condition access to its retail market on compliance with in-state requirements without regulating out-of-state commerce, so long as the law governs in-state sales and participation is voluntary for out-of-state firms.
- Under Pike, a non-discriminatory law with incidental interstate effects is upheld unless the burden on interstate commerce is clearly excessive in relation to the law’s putative local benefits.

## Conclusion

The district court upheld Colorado’s renewable energy quota, concluding it neither discriminated against interstate commerce nor regulated extraterritorially, and that any incidental effects on out-of-state producers were outweighed by the statute’s legitimate environmental and energy-policy benefits.


Energy & Env’t Legal Inst. v. Epel, 43 F. Supp. 3d 1171 (D. Colo. 2014)