By Alexandra B. Klass & Jim Rossi. Full text here.
Interstate coordination presents one of the most difficult challenges for American federalism as well as for energy markets and policy. Existing laws vest the approval of large-scale energy infrastructure projects such as interstate oil pipelines and high-voltage, interstate electric transmission lines with state and local levels of government. At the same time, state siting and eminent domain regimes routinely enable and even encourage state regulators to hold out from approving interstate infrastructure projects, hobbling any hope for interstate coordination. This Article analyzes how judicial review under dormant Commerce Clause principles and doctrine can promote better interstate coordination by discouraging regulatory holdouts while still preserving state prerogatives to address land use issues. We draw on established doctrine, recent judicial developments, and federalism principles to argue for revitalized dormant Commerce Clause review of state and local regimes to improve interstate coordination in contexts where infrastructure projects require the approval of two or more states. We maintain that dormant Commerce Clause jurisprudence requires state regulators to apply a framework that allows them to consider benefits beyond their jurisdictional borders—particularly in instances where infrastructure projects are proposed by out-of-state developers or to create regional (as opposed to state-specific) benefits in energy markets. Applying such an approach would invalidate many existing state statutes that bar out-of-state applicants from seeking to build multi-state energy infrastructure projects in a state, and would require that a state grant eminent domain authority to out-of-state applicants on reciprocal terms to those offered to in-state incumbents.