Energy & Environment Legal Institute v. Epel , 793 F.3d 1169 ( 2015 )

FILED
United States Court of Appeals
Tenth Circuit
July 13, 2015
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
ENERGY AND ENVIRONMENT
LEGAL INSTITUTE; ROD LUECK,
Plaintiffs - Appellants,
v.
JOSHUA EPEL; JAMES TARPEY;
PAMELA PATTON, in their official
capacities as Commissioners of the
Colorado Public Utilities Commission,
Defendants - Appellees,
No. 14-1216
and
ENVIRONMENT COLORADO;
CONSERVATION COLORADO
EDUCATION FUND; SIERRA
CLUB; THE WILDERNESS
SOCIETY; SOLAR ENERGY
INDUSTRIES ASSOCIATION;
INTERWEST ENERGY ALLIANCE,
Defendants Intervenors -
Appellees.
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:11-CV-00859-WJM-BNB)
David W. Schnare of Free Market Environmental Law Clinic, Burke, Virginia
(Michael D. Pepson of Cause of Action, Washington, D.C., with him on the
briefs) for Plaintiffs-Appellants.
Will V. Allen, Assistant Attorney General, Denver, Colorado, for Defendants-
Appellees.
John E. Putnam of Kaplan Kirsch & Rockwell LLP, Denver, Colorado, (Neil
Levine, Denver, Colorado; Michael S. Freeman and Michael A. Hiatt of
Earthjustice, Denver, Colorado; and Erin Overturf of Western Resource
Advocates, Boulder, Colorado, with him on the brief), for Defendants
Intervenors-Appellees.
Before TYMKOVICH, EBEL, and GORSUCH, Circuit Judges.
GORSUCH, Circuit Judge.
Can Colorado’s renewable energy mandate survive an encounter with the
most dormant doctrine in dormant commerce clause jurisprudence? State law
requires electricity generators to ensure that 20% of the electricity they sell to
Colorado consumers comes from renewable sources. Under the law, too, this
number will rise over time. It may be that Colorado’s scheme will require
Coloradans to pay more for electricity, but that’s a cost they are apparently happy
to bear for the ballot initiative proposing the renewable energy mandate passed
with overwhelming support. So what does this policy choice by Coloradans
affecting Colorado energy consumption preferences and Colorado consumer
prices have to do with the United States Constitution and its provisions regarding
interstate commerce? The Energy and Environment Legal Institute points out that
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Colorado consumers receive their electricity from an interconnected grid serving
eleven states and portions of Canada and Mexico. Because electricity can go
anywhere on the grid and come from anywhere on the grid, and because Colorado
is a net importer of electricity, Colorado’s renewable energy mandate effectively
means some out-of-state coal producers, like an EELI member, will lose business
with out-of-state utilities who feed their power onto the grid. And this harm to
out-of-state coal producers, EELI says, amounts to a violation of one of the three
branches of dormant commerce clause jurisprudence.
In the end, the district court disagreed with EELI’s assessment and so must
we.
*
The Constitution extends to Congress the power to “regulate Commerce . . .
among the several states.” U.S. Const. art. I, § 8, cl. 3. Most everyone accepts
that this language grants Congress authority to pass laws concerning interstate
commerce and to direct courts to disregard state laws that impede its own. U.S.
Const. art. VI, cl. 2; see also Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824). Yet
some see even more than that here. For many years — perhaps since Gibbons and
at least since Cooley v. Board of Wardens, 53 U.S. (12 How.) 299 (1851) — the
Supreme Court has read the clause as embodying a sort of judicial free trade
policy. Employing what’s sometimes called “dormant” or “negative” commerce
clause jurisprudence, judges have claimed the authority to strike down state laws
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that, in their judgment, unduly interfere with interstate commerce. Detractors
find dormant commerce clause doctrine absent from the Constitution’s text and
incompatible with its structure. See, e.g., Comptroller of Treasury of Md. v.
Wynne, 135 S. Ct. 1787, 1808 (2015) (Scalia, J., dissenting); Hillside Dairy, Inc.
v. Lyons, 539 U.S. 59, 68 (2003) (Thomas, J., concurring in part and dissenting
in part). But as an inferior court we take Supreme Court precedent as we find it
and dormant commerce clause jurisprudence remains very much alive today, as
but a glance at this term’s slip opinions will confirm. See, e.g., Wynne, 135 S. Ct.
at 1792 (majority opinion).
On the usual telling, dormant commerce clause cases are said to come in
three varieties. The farthest reaching of these may be associated with Pike v.
Bruce Church, Inc., 397 U.S. 137 (1970). There the Court read the Commerce
Clause as allowing judges to strike down state laws burdening interstate
commerce when they find insufficient offsetting local benefits. By any
reckoning, that’s a pretty grand, even “ineffable,” all-things-considered sort of
test, one requiring judges (to attempt) to compare wholly incommensurable goods
for wholly different populations (measuring the burdens on out-of-staters against
the benefits to in-staters). Am. Beverage Ass’n v. Snyder, 735 F.3d 362, 379 (6th
Cir. 2013) (Sutton, J., concurring). Whether because of the difficulties associated
with applying such an unwieldy test or for some other reason, the Court has
devised two firmer rules applicable to discrete subsets of cases. The first might
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be associated with cases like City of Philadelphia v. New Jersey, 437 U.S. 617(1978), and applies to state laws that “clearly discriminate” against out-of-staters.
New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 274 (1988). Legislation of this
stripe is condemned as “virtually invalid per se and can survive only if the
discrimination is demonstrably justified by a valid factor unrelated to economic
protectionism.” KT & G Corp. v. Att’y Gen. of Okla., 535 F.3d 1114, 1143 (10th
Cir. 2008) (quoting Grand River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158,
168 (2d Cir. 2005)). The second finds its roots in Baldwin v. G.A.F. Seelig, Inc.,
294 U.S. 511 (1935), and is said to apply to certain price control and price
affirmation laws that control “extraterritorial” conduct — that is, conduct outside
the state’s borders. Here too laws of that sort are deemed almost per se invalid.
KT & G. Corp., 535 F.3d at 1143.
It might be fair to describe the law as it’s developed in this area a bit like
the law as it’s developed in antitrust, another pocket of federal jurisprudence
characterized by a long and evolving history of almost common-law-like judicial
decisionmaking. As there we find here a kind of “rule of reason” balancing test
providing the background rule of decision with more demanding “per se” rules
applied to discrete subsets of cases where, over time, the Court has developed
confidence that the challenged conduct is almost always likely to prove
problematic and a more laborious inquiry isn’t worth the cost. See, e.g., Broad.
Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 8-9 (1979) (“[I]t is only
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after considerable experience with certain business relationships that courts
classify them as per se violations” rather than apply the “rule of reason” to them
(internal quotation marks omitted)).
Before us in this case only the final, Baldwin, test is at issue. Yes, EELI
asked the district court to invalidate Colorado’s law under all three tests, Pike,
Philadelphia, and Baldwin. Yes, the district court rejected all three arguments.
But for reasons known only to it, EELI has appealed just the district court’s
disposition under Baldwin. So whether Colorado’s law survives the Pike or
Philadelphia tests may be interesting questions, but they are ones that will have
to await resolution in some other case some other day.
Baldwin’s extraterritoriality principle may be the least understood of the
Court’s three strands of dormant commerce clause jurisprudence. See Donald H.
Regan, Siamese Essays: (I) CTS Corp. v. Dynamics Corp. of America and
Dormant Commerce Clause Doctrine; (II) Extraterritorial State Legislation, 85
Mich. L. Rev. 1865, 1884 (1987). It is certainly the most dormant for, though the
Supreme Court has cited Baldwin in passing a number of times, a majority has
used its extraterritoriality principle to strike down state laws only three times.
IMS Health, Inc. v. Mills, 616 F.3d 7, 29 n.27 (1st Cir. 2010), vacated on other
grounds sub nom. IMS Health, Inc. v. Schneider, 131 S. Ct. 3091 (2011).
What do these three cases have in common? In Baldwin, New York
prohibited out-state companies from selling milk in the State unless they
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purchased their milk from dairy farmers at the same price paid to New York dairy
farmers — all to insulate the in-state dairy industry from price competition by
out-of-state producers. In Brown-Forman Distillers Corp. v. New York State
Liquor Authority, 476 U.S. 573 (1986), New York law required liquor merchants
to list their prices once a month and affirm that the prices they charged in New
York were no higher than those they charged in other states. Because a seller
couldn’t lower price elsewhere without first doing so in New York on its monthly
timetable, the scheme had the effect of preventing price competition out-of-state.
In Healy v. Beer Institute, Inc., 491 U.S. 324 (1989), the Court struck down
another price affirmation scheme that, due to its interaction with similar
regulations elsewhere, again had the effect of inhibiting out-of-state price
competition. In all three cases, then, the Court thus faced (1) a price control or
price affirmation regulation, (2) linking in-state prices to those charged
elsewhere, with (3) the effect of raising costs for out-of-state consumers or rival
businesses. See id. at 339 (“States may not deprive businesses and consumers in
other States of ‘whatever competitive advantages they may possess’ based on the
conditions of the local market.” (quoting Brown-Forman, 476 U.S. at 580 (citing
Baldwin, 294 U.S. at 528))).
In this light, you might ask whether the Baldwin line of cases is really a
distinct line of dormant commerce clause jurisprudence at all. The usual telling
of the law in this area suggests it is one of three separate strands of authority.
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But a careful look at the holdings in the three leading cases suggests a concern
with preventing discrimination against out-of-state rivals or consumers. And
given this, one might see Baldwin and its progeny as no more than instantiations
of the Philadelphia anti-discrimination rule. In this vein it’s worth noting that
Baldwin was decided before the anti-discrimination rule solidified and might be
said simply to have anticipated it. Indeed, one of the Court’s earliest anti-
discrimination cases, Dean Milk Co. v. City of Madison, conceived of Baldwin in
just this way. 340 U.S. 349, 353-54 (1951). Healy applied Baldwin’s rule only as
an alternative holding to an application of anti-discrimination doctrine, 491 U.S.
at 335-41 — and only over the objection that the Baldwin analysis was therefore
unnecessary, id. at 344-45 (Scalia, J., concurring in part and concurring in the
judgment). And you might even read Brown-Forman — where Baldwin’s rule
seemed to do the most independent work — as treating Baldwin simply as an
application of the anti-discrimination rule. See 476 U.S. at 580 (discussing
Baldwin together with anti-discrimination cases).
But whatever doctrinal pigeonhole you choose to place them in, we don’t
see how Baldwin, Healy, and Brown-Forman require us to strike down Colorado’s
mandate. For that mandate just doesn’t share any of the three essential
characteristics that mark those cases: it isn’t a price control statute, it doesn’t
link prices paid in Colorado with those paid out of state, and it does not
discriminate against out-of-staters. EELI doesn’t even seriously attempt to
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suggest otherwise. While Colorado’s mandate surely regulates the quality of a
good sold to in-state residents, it doesn’t directly regulate price in-state or
anywhere for that matter. And state laws setting non-price standards for products
sold in-state (standards concerning, for example, quality, labeling, health, or
safety) may be amenable to scrutiny under the generally applicable Pike balancing
test, or scrutinized for traces of discrimination under Philadelphia, but the Court
has never suggested they trigger near-automatic condemnation under Baldwin.
In saying this much, we hardly mean to suggest non-price regulations don’t
impact price in or out of state. In today’s interconnected national marketplace
such a suggestion would be beyond naive. We readily recognize that state
regulations nominally concerning things other than price will often have ripple
effects, including price effects, both in-state and elsewhere. So, for example,
when one or more states impose quality mandates manufacturers may find the
cheapest way to comply isn’t to produce a special product for them but to
redesign their product as it’s sold nationwide, with an increased cost felt by
consumers everywhere. Still, without a regulation more blatantly regulating price
and discriminating against out-of-state consumers or producers, Baldwin’s near
per se rule doesn’t apply. See generally Quik Payday, Inc. v. Stork, 549 F.3d
1302 (10th Cir. 2008); Snyder, 735 F.3d at 379 (Sutton, J., concurring).
The reason, again, takes us to the question of certainty. In antitrust many
agreements among market participants will affect price and all may be scrutinized
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under the rule of reason test. It’s only when the parties’ agreement involves
“naked price fixing” or something else experience teaches to be clearly invidious
that we will forgo that searching inquiry in favor of a shortcut and declare the
agreement per se anticompetitive. See NCAA v. Bd. of Regents, 468 U.S. 85, 100-
01 (1984). Similarly here, state regulations and standards across a wide spectrum
may invite Pike balancing. But only price control or price affirmation statutes
that link in-state prices with those charged elsewhere and discriminate against
out-of-staters are considered by the Court so obviously inimical to interstate
commerce that we will forgo that more searching inquiry in favor of Baldwin’s
shortcut.
Our case illustrates the point. How can we have the sort of steadfast
conviction the Baldwin Court did that interstate commerce will be harmed when,
if anything, Colorado’s mandate seems most obviously calculated to raise price
for in-state consumers? EELI offers no story suggesting how Colorado’s mandate
disproportionately harms out-of-state businesses. To be sure, fossil fuel
producers like EELI’s member will be hurt. But as far as we know, all fossil fuel
producers in the area served by the grid will be hurt equally and all renewable
energy producers in the area will be helped equally. If there’s any
disproportionate adverse effect felt by out-of-state producers or any
disproportionate advantage enjoyed by in-state producers, it hasn’t been explained
to this court. And it’s far from clear how the mandate might hurt out-of-state
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consumers either. The mandate does have the effect of increasing demand for
electricity generated using renewable sources and (under the law of demand) you
might expect that to lead to higher prices for electricity of that sort for everyone
in the market (here, presumably, everyone connected to the grid). But the
mandate also reduces demand for and might be expected to reduce the price
everyone in the market has to pay for electricity generated using fossil fuels. So
the net price impact on out-of-state consumers is far from obviously negative and,
for all we know, may tip in favor of those willing to shift usage toward fossil fuel
generated electricity. To reach hastily for Baldwin’s per se rule, then, might lead
to the decidedly awkward result of striking down as an improper burden on
interstate commerce a law that may not disadvantage out-of-state businesses and
that may actually reduce price for out-of-state consumers.
We acknowledge that EELI reads Baldwin, Brown-Forman, and Healy as
standing for a (far) grander proposition than we do. Exploiting dicta in Healy,
EELI contends that these cases require us to declare “automatically”
unconstitutional any state regulation with the practical effect of “control[ling]
conduct beyond the boundaries of the State.” See Br. for Appellants at 30
(quoting Healy, 491 U.S. at 336) (emphasis omitted). But, as we’ve explained,
the Court’s holdings have not gone nearly so far and have turned instead on the
presence of three factors not present here. In fact, the Supreme Court has
emphasized as we do that the Baldwin line of cases concerns only “price control
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or price affirmation statutes” that involve “tying the price of . . . in-state products
to out-of-state prices.” Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644,
669 (2003). The Ninth Circuit has made the same point, too, explaining that
“Healy and Baldwin are not applicable to a statute that does not dictate the price
of a product and does not ‘t[ie] the price of its in-state products to out-of-state
prices.’” Assoc. des Eleveurs de Canards et d’Oies du Quebec v. Harris, 729
F.3d 937, 951 (9th Cir. 2013) (quoting Walsh, 538 U.S. at 669).
EELI’s contrary position would also risk serious problems of overinclusion.
After all, if any state regulation that “control[s] . . . conduct” out of state is per se
unconstitutional, wouldn’t we have to strike down state health and safety
regulations that require out-of-state manufacturers to alter their designs or labels?
See supra at 9. Certainly EELI offers no limiting principle that might prevent
that possibility or others like it. Instead, it seems to embrace such results and, in
this way, it seems to call on us not merely to respect the actual holdings of the
most dormant authorities in all of dormant commerce clause jurisprudence but to
revive and rebuild them on the basis of dicta into a weapon far more powerful
than Pike or Philadelphia. That’s an audacious invitation we think the Court
unlikely to take up, especially given its remarks about the limits of Baldwin
doctrine in Walsh, and it’s a novel lawmaking project we decline to take up on
our own. See Brannon P. Denning, Extraterritoriality and the Dormant
Commerce Clause: A Doctrinal Post-Mortem, 73 La. L. Rev. 979, 998-99 (2013)
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(noting the “lack of a limiting principle” in the “sweeping” dicta in Healy on
which EELI relies); Jack L. Goldsmith & Alan O. Sykes, The Internet and the
Dormant Commerce Clause, 110 Yale L.J. 785, 806 & n.90 (2001) (characterizing
that dicta as “overbroad”). 1
*
If it cannot prevail on substance, EELI pins its hopes on a separate
procedural complaint. The dormant commerce clause question comes to us by
way of the district court’s ruling on Colorado’s motion for summary judgment.
As part of its opposition to Colorado’s summary judgment motion in district
court, EELI said the motion was premature, more discovery was necessary, and it
filed an affidavit pursuant to Fed. R. Civ. P. 56(d) asking the court to defer its
ruling until that additional discovery could take place. The district court rejected
EELI’s suggestion. This, EELI says, was improper, leaving it without sufficient
time to prepare and the case should be remanded for further discovery.
1
Colorado briefly questions whether EELI has suffered an “injury-in-fact”
sufficient to afford it Article III standing to pursue its dormant commerce clause
challenge. But Colorado defers this potentially dispositive jurisdictional
argument, usually something parties present right up front, to the end of its brief.
And it does so for a reason. EELI member Alpha sells coal to Colorado
electricity generators and by all accounts Colorado’s law reduces the demand for
coal and limits the portion of the Colorado electricity-generation market Alpha
may serve. Many cases confirm this is more than enough to satisfy Article III’s
“injury-in-fact” requirement. See, e.g., Clinton v. City of New York, 524 U.S.
417, 432-33 (1998); N.E. Fla. Chapter of the Associated Gen. Contractors of Am.
v. City of Jacksonville, 508 U.S. 656, 666 (1993).
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In one respect EELI has a point. The district court stated that its written
“practice standards” require parties who want the court to do anything to file a
separate piece of paper denominated a “motion.” Because EELI didn’t file such a
paper requesting a deferral of decision on the summary judgment motion — a
motion to defer a motion, if you will — the district court ruled that the group’s
request was procedurally deficient and could be rejected on this basis alone.
This much was in error. The Federal Rules of Civil Procedure allow a good
deal of leeway for local rules and individual judicial practice standards. But the
rules also show a degree of mercy for the practicing lawyer who, like the
medieval glossator, must account not just for the text but all the marginalia
surrounding it — in this case not only all the federal rules, but all the advisory
notes that underlie them, all the local rules on top of them, all the individual
judicial practice standards that accompany them — not to mention all the (often
most important and individualized) unwritten rules that apply in every courtroom.
See generally William H. Erickson, Colorado’s Answer to the Local Rules
Problem, 16 U. Mich. J.L. Reform 493 (1983) (discussing the challenges lawyers
face by the proliferation of rules). The federal rules specify that district courts
may create additional procedural rules only if and to the extent they are
“consistent with” the federal rules themselves. Fed. R. Civ. P. 83(a)(1). And that
mandate poses a problem here. For the federal summary judgment rule expressly
specifies that, when you think summary judgment is premature and should wait
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for additional discovery, you may present an “affidavit or declaration” to register
the point. Fed. R. Civ. P. 56(d). The district court may be able to specify a
different form of submission when the federal rules do not speak to the question.
The district court may even allow the parties to present a request for additional
discovery by way of a formally denominated “motion” as well as by “affidavit or
declaration.” All these results might be “consistent with” the federal rules. But
we don’t see how the district court could hold an affidavit or declaration
insufficient to request the deferral of a summary judgment motion when the
federal rules expressly indicate that those modes of communication are sufficient
to the task. By any fair account, that’s just not “consistent with” what the federal
rules say and we remind the district courts within our jurisdiction that their
considerable leeway for personal practice and local rules remains subject to Rule
83. Cf. Reed v. Bennett, 312 F.3d 1190, 1194-95 (10th Cir. 2002) (Rule 83
prohibits a district court from granting a summary judgment motion based only on
a local rule deeming failure to respond to a motion consent to the relief it seeks).
The district court, however, did offer an alternative ground for denying the
Rule 56(d) request. And here it had the better of it. EELI filed its Rule 56(d)
affidavit seeking more time for discovery in October 2013. Yet discovery didn’t
close until January 2014 and the district court didn’t get around to ruling on the
motion until May 2014. So while EELI may have fairly conveyed its need for
more discovery as of October 2013, it wound up getting exactly what it asked for:
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months more of discovery. And not once at any point did EELI seek to
supplement its summary judgment opposition papers with new evidence acquired
from the additional discovery it received — even as it repeatedly called the
district court’s attention to additional and new legal authorities. Neither did EELI
seek to explain to the district court after January 2014 what discovery (if any) it
still needed by that point. Given these facts, the district court said it saw “no
reason to defer ruling” on the motion past May 2014. This conclusion we find
hard to fault, especially given that even now EELI is unable to cite to this court
any discovery that it needed but lacked time to pursue after the close of discovery
in January 2014. Indeed, in similar cases we have held that the district court did
not abuse its discretion in proceeding to rule and we cannot find a sound reason to
distinguish them here. See, e.g., Alpine Bank v. Hubbell, 555 F.3d 1097, 1114
(10th Cir. 2009); Wilson v. Vill. of Los Lunas, 572 F. App’x 635, 637-40 (10th
Cir. 2014). So it is that, by the end of it all, we fail to see here any procedural or
substantive error that might warrant reversal.
The judgment is affirmed.
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