Jenner & Block

Firm Wins Another Appellate Victory for Exelon in Zero-Emissions Credit Dispute

The firm won a second appellate victory in a month for Exelon Corp. when the Second Circuit upheld the dismissal of a lawsuit challenging New York’s zero-emission credit (ZEC) program, which benefits three Exelon-owned nuclear power plants.

ZEC programs compensate nuclear power plants for producing energy without emitting greenhouse gases.  Owners of fossil-fuel power plants sued, contending that the ZEC program was preempted by federal law and violated the dormant Commerce Clause.  The Second Circuit affirmed the district court’s rejection of those claims.

“Under the program, the production of zero-emissions energy results in the creation of ZECs; how those plants sell their electricity is a business decision that does not raise preemption concerns,” Judge Dennis Jacobs wrote for the panel.

This is the second appellate victory this month for Exelon regarding a state’s ZEC program.

On September 13, the Seventh Circuit affirmed an Illinois district court’s dismissal of a case challenging the Illinois ZEC program.  Exelon had intervened in defense of the program.   In the initial complaint, independent power producers and a group of Illinois energy consumers argued that the program was preempted by the Federal Power Act because it affected wholesale electricity markets regulated by the Federal Energy Regulatory Commission.  The district court dismissed the case in July 2017, ruling in Exelon’s favor on every issue presented.  The plaintiffs appealed, but the Seventh Circuit affirmed the district court’s ruling.

The appellate team in both cases included Partners David W. DeBruin and Matthew E. Price and Associates William K. Dreher and Zachary C. Schauf.