Law Commons^™

Promoting Cost-Effective Grid Modernization, Jim Rossi

Vanderbilt Law School Faculty Publications

Recent legislative reforms enacted in several states grant incumbent utilities a right-of-first-refusal (ROFR) over new electric power transmission lines. Regional grid planners, who typically defer to state law, often avoid running competitive solicitations for regional transmission projects located in these states. As a result, state ROFR laws expose customers to excessive regional transmission costs.

Such state ROFR laws are constitutionally dubious, and ultimately harmful to customers. Customers affected by ROFR laws do not realize the cost savings and other benefits of competition, including superior cost containment and innovative grid modernization solutions. States can promote cost-effective grid modernization by encouraging competitive …

Regulation And The Geography Of Inequality, Ganesh Sitaraman, Christopher Serkin, Morgan Ricks

Vanderbilt Law School Faculty Publications

We live in an era of widening geographic inequality. Around the country, the spread between economically and culturally thriving places and those that are struggling has been increasing. "Superstar" cities like New York, San Francisco, Boston, and Atlanta continue to attract talent and grow, while the economies of other cities and rural areas are left behind. Troublingly, escalating geographic inequality in the United States has arrived hand in hand with serious economic, social, and political problems. Areas that are left behind have not only failed to keep up with their thriving peers; in many ways, they have stagnated and seen …

Energy Federalism's Aim, Jim Rossi

Vanderbilt Law School Faculty Publications

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 …

Revisiting The Public Utility, Jim Rossi, Morgan Ricks

Vanderbilt Law School Faculty Publications

This foreword introduces "Revisiting the Public Utility," a series of essays published in a special issue of Yale Journal on Regulation. We cluster the contributions to this issue around public utility regulation’s core rationales and its scope, its implications for innovation and industry stability, and its evolving approach to price regulation. The scholarship represented in this issue challenges the notion that public utility ideas are obsolete or irrelevant to modern issues in economic regulation. It questions whether public utility regulation has fallen short of its goals, and shows that there are some good reasons to question many embedded regulatory practices. …

Environmental Law At The Borders, J.B. Ruhl

Vanderbilt Law School Faculty Publications

Pipelines to the north. Walls to the south. Between President Trump's issuance of a permit for the Keystone XL pipeline crossing from Canada and his promise to build "The Wall," the politics of our national borders rarely have been in as much turmoil as they are today. And as with any infrastructure project, environmental policy has been deeply in play all the way. But the environmental law of the borders might surprise you. Indeed, arguably there isn't any for these two projects.

Reconstituting The Federalism Battle In Energy Transportation, Jim Rossi, Alexandra B. Klass

Vanderbilt Law School Faculty Publications

This article explores the growing federalism tensions in efforts to expand the nation’s energy transportation infrastructure — the electric transmission lines, natural gas pipelines, natural gas import and export terminals and related infrastructure that power the U.S. electricity and transportation systems. It uses two illustrations — one involving an interstate electric transmission line (subject to state jurisdiction) and one involving and an interstate natural gas pipeline (subject to federal jurisdiction) — to highlight how the clear jurisdictional lines between federal and state authority over these projects created decades ago is no longer adequate for today’s energy needs. We believe that …

Carbon Taxation By Regulation, Jim Rossi

Vanderbilt Law School Faculty Publications

This Article argues that, even though a carbon tax remains politically elusive, a 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. …

Stranded Costs And Grid Decarbonization, Jim Rossi, Emily Hammond

Vanderbilt Law School Faculty Publications

Over the past half century, energy law has endured many stranded cost experiments, each helping firms and customers adjust to a new normal. However, these past experiments have contributed to a myopic regulatory approach to past stranded cost recovery by: (1) endorsing a preference for addressing all stranded costs only after energy resource investment decisions have been made; and (2) fixating on the firm’s financial costs and protection of investors, rather than on the broader impacts of each on the energy system.

The current transition to decarbonization is already giving rise to stranded cost claims related to existing energy assets …

In Defense Of Ecosystem Services, J.B. Ruhl

Vanderbilt Law School Faculty Publications

The path of ecosystem services as a theme in environmental law and policy spans my practice (1982-1994) and academic (1994-present) careers. The importance of nature to human well-being seems so obvious one would think it has been front and center in environmental law and policy since the beginning, but, until recently, that has not been the case. Lately, however, the ecosystem services framework has catapulted this theme into prominence, if not dominance, in environmental discourse.

Ferc V. Epsa, Jim Rossi, Jon Wellinghoff

Vanderbilt Law School Faculty Publications

This Essay explores the implications of the U.S. Supreme Court's decision in FERC .v. EPSA for state regulation of customer energy resource initiatives, such as net metering policies for rooftop solar and energy storage programs. Unlike many past judicial decision that fixate on a jurisdictional "bright line," EPSA does not define a turf for state policymaking as beyond FERC's reach but instead recognizes how state policies operate adjacent to FERC's regulation of practices affecting wholesale rates. As the first Supreme Court case to explicitly recognize cooperative federalism programs in the regulation of modern energy markets under the FPA, ESPA is …

Revitalizing Dormant Commerce Clause Review For Interstate Coordination, Jim Rossi, Alexandra B. Klass

Vanderbilt Law School Faculty Publications

Interstate coordination presents one of the most difficult challenges for American federalism as well as for energy markets and policy. Existing laws vest the approval of large-scale energy infrastructure projects such as interstate oil pipelines and high-voltage, interstate electric transmission lines with state and local levels of government. At the same time, state siting and eminent domain regimes routinely enable and even encourage state regulators to hold out from approving interstate infrastructure projects, hobbling any hope for interstate coordination. This Article analyzes how judicial review under dormant Commerce Clause principles and doctrine can promote better interstate coordination by discouraging regulatory …

Electric Power Resource "Shuffling" And Subnational Carbon Regulation: Looking Upstream For A Solution, Jim Rossi, Andrew J.D. Smith

Vanderbilt Law School Faculty Publications

"Resource shuffling" occurs when different subnational approaches to carbon regulation create variations in the costs of production across jurisdictions. California is the most aggressive jurisdiction in the United States to address climate change and has adopted a cap & trade program for its greenhouse gas (GHG) emissions. This Article addresses the resource shuffling issue presented by California's cap-and-trade program and evaluates the merits of various legal and regulatory solutions to the problem.

Federal Preemption And Clean Energy Floors, Jim Rossi, Thomas Hutton

Vanderbilt Law School Faculty Publications

Federal policies regarding renewable and clean energy often lack clear definition, are incomplete, and are scattered across multiple statutes and agencies. Yet at the same time, recent decisions of both federal agencies and courts have attributed a preemptive effect to federal statutes that threatens to hobble innovation in renewable and clean energy policy by subnational regulators. One consequence of this approach is that most significant policies promoting clean and renewable energy are channeled toward subsidies from the federal fisc, rather than diverse policies undertaken independently by state governments or regional customers and suppliers. This Article argues that, contrary to many …

Clean Energy And The Price Preemption Ceiling, Jim Rossi

Vanderbilt Law School Faculty Publications

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 - 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 …

Good For You, Bad For Us: The Financial Disincentive For Net Demand, Jim Rossi, Michael P. Vandenbergh

Vanderbilt Law School Faculty Publications

This Article examines a principal barrier to reducing U.S. carbon emissions — electricity distributors’ financial incentives to sell more of their product — and introduces the concept of net demand reduction (“NDR”) as a primary goal for the modern energy regulatory system. Net electricity demand must decrease substantially from projected levels for the United States to achieve widely-endorsed carbon targets by 2050. Although social and behavioral research has identified cost-effective ways to reduce electricity demand, state-of-the-art programs to curtail demand have not been implemented on a widespread basis. We argue that electric distribution utilities are important gatekeepers that can determine …

Supply And Demand: Barriers To A New Energy Future, Jim Rossi, Michael P. Vandenbergh, J. B. Ruhl

Vanderbilt Law School Faculty Publications

Like many fields, energy law has had its ups and downs. A period of remarkable activity in the 1970s and early 1980s focused on the efficiencies arising from deregulation of energy markets, but the field attracted much less attention during the 1990s. In the last decade, a new burst of activity has occurred, driven largely by the implications of energy production and use for climate change. In effect, this new scholarship is asking what efficiency means in a carbon-constrained world. Accounting for carbon has induced scholars to challenge the implicit assumption of the early scholarship that the price of energy …

Good For You, Bad For Us: The Financial Disincentive For Net Demand Reduction, Michael P. Vandenbergh, Jim Rossi

Vanderbilt Law School Faculty Publications

This Article examines a principal barrier to reducing U.S. carbon emissions — electricity distributors’ financial incentives to sell more of their product — and introduces the concept of net demand reduction (“NDR”) as a primary goal for the modern energy regulatory system. Net electricity demand must decrease substantially from projected levels for the United States to achieve widely-endorsed carbon targets by 2050. Although social and behavioral research has identified cost-effective ways to reduce electricity demand, state-of-the-art programs to curtail demand have not been implemented on a widespread basis. We argue that electric distribution utilities are important gatekeepers that can determine …

Regulation In The Behavioral Era, Lisa Schultz Bressman, Michael P. Vandenbergh, Amanda R. Carrico

Vanderbilt Law School Faculty Publications

Administrative agencies have long proceeded on the assumption that individuals respond to regulations in ways that are consistent with traditional rational actor theory, but that is beginning to change. Agencies are now relying on behavioral economics to develop regulations that account for responses that depart from common sense and common wisdom, reflecting predictable cognitive anomalies. Furthermore, political officials have now called for behavioral economics to play an explicit role in White House review of agency regulations. This is a significant development for the regulatory process, yet our understanding of how behavioral insights should alter regulatory analysis is incomplete. To account …

Siting Transmission Lines In A Changed Milieu: Evolving Notions Of The "Public Interest" In Balancing State And Regional Considerations, Jim Rossi, Ashley C. Brown

Vanderbilt Law School Faculty Publications

This Article discusses how state public utility law presents a barrier to the siting of new high voltage transmission lines to serve renewable resources, and how states could approach its evolution in order to preserve a role for state regulators in a new energy economy in which renewable energy will play a significant role. The traditional approach to determining the "public interest" in siting transmission lines is well on its way to obsolescence. Two developments over the past fifteen years have begun to challenge this paradigm. First, policies at the federal level and in many states have encouraged increased competition …

The Limits Of A National Renewable Portfolio Standard, Jim Rossi

Vanderbilt Law School Faculty Publications

In this Commentary Article, Professor Rossi highlights some of the distributional and operational problems presented by a national renewable portfolio standard ("RPS") in electric power. He also offers several solutions to these problems as a way of advancing a cautionary defense of a national RPS. Ultimately, Professor Rossi concludes that addressing climate change will need to involve more systemic and larger scale modifications to regulation of the electric power industry, including addressing infrastructure issues such as transmission and carbon pricing.

The Political Economy Of Energy And Its Implications For Climate Change Legislation, Jim Rossi

Vanderbilt Law School Faculty Publications

Public choice themes have arisen throughout the history of U.S. energy regulation and continue to be relevant today, particularly with widespread discussion of deregulation and increased attention to climate change. This Article surveys how public choice themes are relevant to understanding a host of issues of importance to the electric power industry today, including the structure of the industry, the significance of wholesale markets, and the division of regulatory power between state and federal authorities. The Article highlights how an understanding of how public choice has contributed to these features of the electric power industry will prove important to the …

The Trojan Horse Of Electric Power Transmission Line Siting Authority, Jim Rossi

Vanderbilt Law School Faculty Publications

Reform proposals pending in the U.S. Congress would increase federal and regional power to preempt states in siting transmission lines on order to allow the development of a high-votage transmission grid for renewable resources. This Article recognizes the inadequacy of existing state siting authority over transmission, but takes a skeptical approach to expanding federal siting jurisdiction as a solution to the problem and argues that the over-attention to transmission line siting authority is a bit of a Trojan horse in the climate change debate. Specifically, because it ignores the more difficult issues of how the costs and benefits of transmission …

Individual Carbon Emissions: The Low-Hanging Fruit, Michael P. Vandenbergh, Jack Barkenbus, Jonathan Gilligan

Vanderbilt Law School Faculty Publications

The individual and household sector generates roughly 30 to 40 percent of U.S. greenhouse gas emissions and is a potential source of prompt and large emissions reductions. Yet the assumption that only extensive government regulation will generate substantial reductions from the sector is a barrier to change, particularly in a political environment hostile to regulation. This Article demonstrates that prompt and large reductions can be achieved without relying predominantly on regulatory measures. The Article identifies seven "low-hanging fruit:" actions that have the potential to achieve large reductions at less than half the cost of the leading current federal legislation, require …

The Carbon-Neutral Individual, Michael P. Vandenbergh, Anne C. Steinemann

Vanderbilt Law School Faculty Publications

Reducing the risk of catastrophic climate change will require leveling off greenhouse gas emissions over the short term and reducing emissions by an estimated 60-80% over the long term. To achieve these reductions, we argue that policymakers and regulators should focus not only on factories and other industrial sources of emissions but also on individuals. We construct a model that demonstrates that individuals contribute roughly one-third of carbon dioxide emissions in the United States. This one-third share accounts for roughly 8% of the world's total, more than the total emissions of any other country except China, and more than several …

Transmission Siting In Deregulated Wholesale Power Markets: Re-Imagining The Role Of Courts In Resolving Federal-State Siting Impasses, Jim Rossi

Vanderbilt Law School Faculty Publications

During most of the twentieth century, state and local regulatory bodies coordinated the siting or power plants and transmission lines. These bodies focused on two important issues: 1) the determination of need, so as to avoid unnecessary economic duplication of costly infrastructure; and 2) environmental protection, so as to provide local land use and other environmental concerns input on the placement of necessary generation and transmission facilities. With the rise of a deregulated wholesale power market, the issue of need is increasingly determined by the market, not regulators. Environmental concerns with siting, however, frequently remain contested - especially locally - …

From Smokestack To Suv: The Individual As Regulated Entity In The New Era Of Environmental Law, Michael P. Vandenbergh

Vanderbilt Law School Faculty Publications

A debate between advocates of command and control regulation and advocates of economic incentives has dominated environmental legal scholarship over the last three decades. Both sides in the debate implicitly embrace the premise that regulatory measures should be directed almost exclusively at large industrial polluters. This Article asserts that for many pollutants the premise is no longer supportable, and that much of the focus of regulation in the future should turn to individuals and households. Examining a wide range of empirical data, the Article presents the first profile of individual behavior as a source of pollution. The profile demonstrates that …

Beyond Elegance: A Testable Typology Of Social Norms In Corporate Environmental Compliance, Michael P. Vandenbergh

Vanderbilt Law School Faculty Publications

Social norms scholarship faces the challenge of becoming a mature discipline. Norms theorists have proposed several elegant, widely applicable theories of the origin, evolution and function of norms. For the most part, these theories have suggested that social norms can be viewed as a refinement to the behavioral assumptions of rational choice theory. Although this approach at least implicitly suggests that accounting for norms will improve the predictive capacity of rational choice models, the work must overcome substantial hurdles if it is to do so. The wide range of norms and mechanisms of norm influence on behavior complicate the 'formal …

Universal Service In Competitive Retail Electric Power Markets: Whither The Duty To Serve?, Jim Rossi

Vanderbilt Law School Faculty Publications

This article addresses whether traditional service obligations can coexist with retail competition. A rationale often given for universal service obligations in the telecommunications industry is that universal service, by promoting interconnectivity, enhances network system benefits for all customers. While the network economies argument may have worked to sustain universal service in the face of telecommunications deregulation, it is tenuous when applied to the natural gas and electricity industries. Many reformers look askance at the duty to serve in competitive retail utility service markets, often pointing to conflict between retail competition in electricity and the duty to serve. This article argues, …

The Irony Of Deregulatory Takings, Jim Rossi

Vanderbilt Law School Faculty Publications

This is a critical review essay, exploring the thesis advanced by Gregory Sidak and Daniel Spulber in their book Deregulatory Takings and the Regulatory Contract (Cambridge University Press 1997). Sidak and Spulber argue that deregulation of the electric utility and local telephony industries can constitute an unconstitutional taking to the extent the state does not provide compensation for the investment-backed expectations of firms in the industry. In addition, they argue that economic efficiency requires this result. This review takes Sidak and Spulber to task for their reading of the case law. In addition, the review criticizes their argument for giving …

Lessons From The Procedural Politics Of The "Comprehensive" National Energy Policy Act Of 1992, Jim Rossi

Vanderbilt Law School Faculty Publications

This Article examines the political and procedural history of the EPAct in order to arrive at some general lessons and recommendations regarding congressional formation of energy policy. At least two commentators on the EPAct praise it as the "second generation" of federal energy policy, based in laws that achieve "their mandates more by consensus than coercion." The EPAct's history, however, was far from smooth. Procedural obstacles, such as filibuster, inter-committee conflict, and inter-chamber conflict, led many to declare the EPAct dead on several occasions prior to its passage.