AUTHOR:Peter Maloney@TopFloorPow Published Aug. 21, 2017

Dive Brief:

The U.S. Court of Appeals for the Second Circuit on Thursday rejected a request for a rehearing of a case in which the plaintiff challenged Connecticut’s renewable energy procurement program.

In denying a request for an en banc rehearing of Allco Finance Ltd. v. Klee, the appeals court let stand a lower court ruling that upheld Connecticut’s right to engage in renewable energy solicitations.

The Allco case was closely watched by both sides in recent court battles involving states’ legal rights to craft policies aimed at fostering clean energy goals.

In the Connecticut case, plaintiff Allco Financial argued that the state’s renewable portfolio standard violated the Federal Power Act by compelling a wholesale power transaction and violated the U.S. Constitution’s dormant Commerce Clause.

Both arguments have been invoked in legal challenges to zero emission credit (ZEC) programs that Illinois and New York have set up to provide subsidies for nuclear generators to compensate them for their emissions free output.

Opponents say those programs skew the outcome of wholesale power markets that are under federal jurisdiction.

The Allco case was also viewed as the first interpretation by a federal court of the Supreme Court’s Hughes v. Talen Energy Marketing decision, in which the high court upheld federal jurisdiction over wholesale power markets against state energy policies, but under a tight definition.

The Allco case adds another win for ZEC adherents who last month welcomed district court rulings that upheld nuclear subsidies programs in Illinois and New York. Supporters argue that the same laws that give states the right to conduct solicitations for renewable energy resources give them the right to create ZEC programs.

“The federal appellate court has yet again affirmed Connecticut’s bedrock authority to provide for expansive clean energy that protects public health and environment for Connecticut’s families and communities,” Michael Panfil, senior attorney for the Environmental Defense Fund, said in a statement.