State Preemption

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Case Name: Hughes v. Talen Energy Marketing, LLC

Case No.: 14-614

A state law is preempted where Congress has legislated comprehensively to occupy an entire field of regulation.

“That Maryland was attempting to encourage construction of new in-state generation does not save its program. States may regulate within their assigned domain even when their laws incidentally affect areas within FERC’s domain. But they may not seek to achieve ends, however legitimate, through regulatory means that intrude on FERC’s authority over interstate wholesale rates, as Maryland has done here. See Mississippi Power & Light Co. v. Mississippi ex rel. Moore, 487 U. S. 354, 373; Nantahala Power & Light Co. v. Thornburg, 476 U. S. 953, 966. Maryland and CPV analogize the contract for differences to traditional bilateral contracts for capacity. Unlike traditional bilateral contracts, however, the contract for differences does not transfer ownership of capacity from one party to another outside the auction. Instead, Maryland’s program operates within the auction, mandating LSEs and CPV to exchange money based on the cost of CPV’s capacity sales to PJM. Maryland’s program is rejected only because it disregards an interstate wholesale rate required by FERC. Neither Maryland nor other States are foreclosed from encouraging production of new or clean generation through measures that do not condition payment of funds on capacity clearing the auction.”

Affirmed

Concurring: SOTOMAYOR

Dissenting: THOMAS

Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.