Second Circuit affirms dismissal of challenge to ZEC program on constitutional grounds

Plaintiffs, who are groups/trade groups of electrical generators, brought suit alleging that the New York Public Service Commission’s (PSC) Zero Emissions Credit (ZEC) program is unconstitutional and preempted by the Federal Power Act and the dormant Commerce Clause. Plaintiffs argued that ZEC “influences the prices that result from the wholesale auction system established by [FERC]…[distorting] the market mechanism for determining which energy generators should close.” The U.S. District Court for the Southern District of New York granted the motion to dismiss filed by the Defendants, members of PSC, and Intervenors, nuclear generators. The Second Circuit affirmed holding that the “ZEC program is not field preempted, because Plaintiffs have failed to identify an impermissible ‘tether’ … between the ZEC program and wholesale market participation; that the ZEC program is not conflict preempted, because Plaintiffs have failed to identify any clear damage to federal goals; and that Plaintiffs lack Article III standing as to the dormant Commerce Clause claim.”

Coal. for Competitive Elec., Dynergy Inc. v. Zibelman, No. 17-2654-CV, 2018 WL 4622696 (2d Cir. Sept. 27, 2018).