Slow & Steady: A Gradual Approach to Federalization of Grid Regulation

Abstract

In the absence of meaningful state-level solutions, there is a pressing need for federal action to address regional and global environmental issues like ozone pollution and climate change. Answering this call, the Environmental Protection Agency has recently promulgated aggressive regulations under the Clean Air Act. These rules entail federal reach into traditional areas of state authority, particularly in the energy sector, and the Supreme Court has indicated that it might tolerate such strong-handed federal control where states have been shirking their statutory responsibilities. However, in light of the legal shift towards federalization of energy regulation, this Note cautions against initial federal regulations that dramatically constrain states’ discretion in electricity and environmental planning. Such an approach would constitute an abrupt shift from state to federal jurisdiction over aspects of the electricity grid. Because states still have an important role in ensuring electricity reliability and affordability, this Note proposes that federal agencies, when occupying areas of traditional state control for the first time, promulgate rules and standards that still preserve much of states’ regulatory flexibility. Then, in subsequent regulations, federal agencies can expand their reach by setting more stringent standards and limiting state options for compliance. This will allow for more enduring and effective federal regulation and enable both states and the federal government to ensure a clean, affordable, and reliable electricity grid.