State energy regulators have to design their rules respecting the chance that Federal preemption will vaporize their viability.  Some States want energy rules to push their policy choices, on things like global warming and renewables.  But State rules on energy can’t cross in to the areas regulated exclusively by the Federal Government.

A recent unanimous US Supreme Court Decision Hughes v Talen stopped Maryland and New Jersey from enforcing their State rules which were tethered to electric wholesale markets – those are exclusively governed by the Federal Energy Regulatory Authority (FERC).

Cases like Hughes raise questions about how far States can go in making energy regulations.  States may regulate retail electric matters, they can regulate in state generation.  Federal regulations apply exclusively to interstate transmission and wholesale electric terms and conditions. The boundaries between these will be subject to ongoing challenges by aggressive State rulemaking which will in turn be tested by challenges in Federal Court.

States vs Federal, Markets vs Regulation, hot politics –  energy law has it all.