Maryland's Supreme Court Loss: A Win for Consumers, Competition and States

Due to generation shortages in transmission-constrained areas, PJM capacity auctions were producing high wholesale prices in Maryland. The Maryland Commission designed a three-part solution: (1) Select through competition a wholesale generator to serve in the constrained area. (2) Order Maryland's retail utilities to contract for long-term capacity from the winning generator, at the price offered by that generator in that competition. (3) Draft the contract so that the utility, using retail ratepayer dollars, will pay the generator any difference between the FERC-authorized PJM price and the generator's contract price—with the payment conditioned on the generator being selected in the PJM capacity auction. New Jersey passed a statute mandating a similar solution.

Federal district courts and circuit courts struck both efforts, holding that the Federal Power Act preempted the state actions. Maryland appealed to the U.S. Supreme Court.

In April 2016, the Supreme Court invalidated Maryland's order. By guaranteeing the wholesale generator a level of compensation different from PJM's FERC-authorized compensation, Maryland had "disregard[ed] an interstate wholesale rate required by FERC." Because under the Federal Power Act, Congress had made wholesale rate-setting FERC's exclusive domain, the state order was invalid under the doctrine of "field preemption." The Court's vote was 8-0.


Testimony, Papers, and Presentations

This expert report was submitted to a federal trial court in May 2016 on behalf of City of Jacksonville, Florida. The litigation, and report, involve a 1943 disaffiliation of a gas corporation from its holding company, as mandated by the Public Utility Holding Company Act of 1935. The report explains why the disaffiliation did not prevent liability for the costs of environmental cleanup, if such liability exists under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, from passing to the new corporation.

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Working with Scott Hempling is both a pleasure and an honor. Ethical, fair-minded, and dedicated—these are a few of the attributes that Scott brings to his work and his clients. His pursuit of justice is to ensure that a practical outcome will ensue. Scott recognizes the significance of every issue and its implications for any person involved either directly or indirectly. His wide-angle lens encompasses a broad and deep technical legal knowledge that allows him to decipher and give insight into every challenge.
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