West Virginia Files Constitutional Challenge To In-State Renewable Energy Requirements

On September 3, 2026, the state of West Virginia brought in a federal district court in Pennsylvania a Dormant Commerce Clause challenge to parts of Pennsylvania's renewable portfolio standards, alleging that they impermissibly barred certain out-of-state electricity generators from selling renewable energy credits in Pennsylvania.

Many states require that a minimum percentage of the electricity supply come from renewable energy sources. These requirements are known as renewable portfolio standards. Sometimes, different renewable energy sources (e.g., solar, wind, geothermal) are placed in different categories, with each category having its own minimum percentage based on a state's sourcing goals. To measure compliance with these renewable portfolio standards, states often rely on tradeable certificates called renewable energy credits or alternative energy credits. These credits are issued when an eligible energy resource generates electricity and delivers it to the grid.

Pennsylvania and West Virginia both are part of a multistate regional energy grid, such that electricity generated in one of those states can be used to satisfy electricity demands in the other. Yet, as alleged in West Virginia's complaint, Pennsylvania has imposed eligibility requirements for certain renewable energy generators that require them to be physically located in Pennsylvania to participate in its credit market. The result, according to the complaint, is that, as state legislators intended, Pennsylvania has "close[d] the borders" to credits from two groups of generators: (1) out-of-state solar generators and (2) out-of-state generators of electricity from what Pennsylvania calls "Tier II" sources, which include, among other things, waste coal and large-scale hydropower. The complaint also alleges that Pennsylvania's laws have inflated solar and Tier II credit prices in Pennsylvania while limiting the restricted West Virginia generators to less lucrative markets.

West Virginia claims that these laws violate the "Dormant" Commerce Clause by clearly discriminating against out-of-state commerce and by failing the Supreme Court's Pike balancing test, under which state laws violate the Commerce Clause if they impose burdens on interstate commerce clearly excessive in relation to the putative local benefits they offer.

This lawsuit poses a serious risk to the validity of Pennsylvania's renewable portfolio standards and resulting credit markets. Moreover, if West Virginia's lawsuit succeeds, then the validity of various other states' renewable portfolio standards and credit markets could likewise be at serious risk. Pennsylvania's restrictive laws are similar to those of other states—including Massachusetts, New Jersey, and Virginia. Given the predominantly legal nature of the constitutional question, a decision may be issued relatively quickly, though however the district court rules, an appeal will likely follow.