Energy Michigan, Inc.; Association of Businesses Advocating Tariff Equity (abate) v. Michigan Public Service Commission

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 25a0011p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ENERGY MICHIGAN, INC.; ASSOCIATION OF BUSINESSES
ADVOCATING TARIFF EQUITY (ABATE),
Plaintiffs-Appellants/Cross-Appellees (23-1280/1323/1324),
v.
MICHIGAN PUBLIC SERVICE COMMISSION,
Defendant,
DANIEL C. SCRIPPS; ALESSANDRA CARREON; KATHERINE L.
PERETICK,
Defendants-Appellees/Cross-Appellants (23-1280/1324),
CONSUMERS ENERGY COMPANY,
Intervenor-Appellee/Cross-Appellant (23-1280/1323).
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Nos. 23-1280/1323/1324
Appeal from the United States District Court for the Eastern District of Michigan at Detroit.
No. 2:20-cv-12521—David M. Lawson, District Judge.
Argued: December 7, 2023
Decided and Filed: January 16, 2025
Before: BOGGS, SUHRHEINRICH, and READLER, Circuit Judges.
_________________
COUNSEL
ARGUED: Brion B. Doyle, VARNUM LLP, Grand Rapids, Michigan, for Energy Michigan,
Inc. Zachary C. Larsen, CLARK HILL PLC, Lansing, Michigan, for ABATE. Nicholas Q.
Taylor, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for
Michigan Public Service Commissioners. Spencer A. Sattler, CONSUMERS ENERGY
COMPANY, Jackson, Michigan, for Consumers Energy Company. ON BRIEF: Brion B.
Doyle, VARNUM LLP, Grand Rapids, Michigan, Zachary C. Larsen, CLARK HILL PLC,
Lansing, Michigan, for Energy Michigan, Inc. and ABATE. Nicholas Q. Taylor, Steven D.
Hughey, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for
>

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Michigan Public Service Commissioners. Spencer A. Sattler, Kelly M. Hall, CONSUMERS
ENERGY COMPANY, Jackson, Michigan, for Consumers Energy Company.
READLER, J., delivered the opinion of the court in which SUHRHEINRICH, J.,
concurred. BOGGS, J. (pp. 34–43), delivered a separate dissenting opinion.
_________________
OPINION
_________________
CHAD A. READLER, Circuit Judge. This appeal does not lack for challenging features.
The factual backdrop is the complex market for electricity generation, transmission, and
distribution in the United States. And the chief legal doctrine at play, the so-called dormant or
negative Commerce Clause, has been unflatteringly described as a “quagmire,” Nw. States
Portland Cement Co. v. Minnesota, 358 U.S. 450, 458 (1959), “hopelessly confused,” Kassel v.
Consol. Freightways Corp. of Del., 450 U.S. 662, 706 (1981) (Rehnquist, J., dissenting), and
“inherently unpredictable,” Am. Trucking Ass’ns, Inc. v. Smith, 496 U.S. 167, 203 (1990) (Scalia,
J., concurring in the judgment).
But in practice, today’s case turns on some relatively basic questions. Can the State of
Michigan require someone selling a product in Michigan to procure that product from the state?
Or, phrased in the language of the coin’s other side, can Michigan bar in-state retailers from
obtaining their merchandise from outside the state? On these issues, negative Commerce Clause
jurisprudence is straightforward. Whether the product at issue is milk, see Dean Milk Co. v. City
of Madison, 340 U.S. 349, 352 (1951), or coal-based electricity, see Wyoming v. Oklahoma, 502
U.S. 437, 440 (1992), the Commerce Clause prohibits such state restrictions unless they clear
strict scrutiny’s high bar, see Maine v. Taylor, 477 U.S. 131, 138 (1986).
At issue here are Michigan electricity market regulations that expressly restrict where
Michigan’s electricity retailers may procure their capacity. Accordingly, that regulatory regime
must be evaluated through the lens of strict scrutiny. To allow the district court to engage in that
analysis with the benefit of our views here, we reverse and remand.

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I.
A. The Market. At the heart of this appeal is a basic but ubiquitous product, electricity.
Described in its simplest terms, electricity is the flow of electrons resulting from the conversion
of other forms of energy, including coal, natural gas, the sun, uranium, water, and wind. See
FERC, Staff Report, Energy Primer: A Handbook for Energy Market Basics 33 (Jan. 2024)
(hereinafter “FERC Primer”). Ubiquity often signals demand. That is the case for the electricity
market. The United States spends roughly $419 billion annually on electricity, accounting for
more than one percent of America’s gross domestic product. See U.S. Energy Info. Admin.,
Inflation-Adjusted U.S. Energy Spending Increased by 25% in 2021 (Aug. 3, 2023),
https://perma.cc/F2ZG-JWXL. But electricity is unlike many goods bought and sold in our
economy. Demand is neither constant nor especially predictable. At any given moment, in fact,
it can be seemingly unquenchable. See Elec. Power Supply Ass’n v. FERC, 89 F.4th 546, 550
(6th Cir. 2023).
Meeting market demand thus requires more than a mere “flick of a switch.” Id. At least
three events play a role in assuring necessary supply: “electricity generation; high voltage, long-
distance power transmission . . . ; and . . . lower voltage, local distribution of electricity from the
transmission facilities to end users.” Niagara Mohawk Power Corp. v. FERC, 452 F.3d 822, 824
(D.C. Cir. 2006); FERC Primer 44. Each function requires considerable upfront costs. See
FERC Primer at 34. Historically, a self-contained utility provided all electricity generation,
transmission, and distribution services. Id. Traditionally, utility suppliers would, at great
expense, retain excess capacity in reserve to ensure reliable electric service. Elec. Power Supply
Ass’n, 89 F.4th at 550 (noting risks in investing in electric capital infrastructure that could “sit
unused” when demand dips). Over time, however, the market has adapted to meet demand in a
more economically efficient manner. See FERC Primer 34.
For one, electricity markets today no longer are dominated by vertically integrated
monopolies, but instead consist of many players involved in generation, transmission, or
distribution services. Id. at 35–37. These entities have coordinated their efforts so that
additional capacity can be more easily procured from a neighbor. Elec. Power Supply Ass’n, 89

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F.4th at 550. Through interconnected transmission lines, FERC Primer 34, a generator takes the
electricity it has created and then “mix[es] [it] with power from other plants on its way” to the
end user to meet immediate demand in a cost-effective way. Elec. Power Supply Ass’n, 89 F.4th
at 550. The modern electrical market thus involves “electricity flow[ing] . . . through an
interconnected ‘grid’ of near-nationwide scope.” FERC v. Elec. Power Supply Ass’n, 577 U.S.
260, 267 (2016).
In this modern distribution scheme, various players buy and sell electricity from each
other in a wholesale market, while suppliers then deliver electricity purchased at wholesale to
retail consumers. See generally Elec. Power Supply Ass’n, 89 F.4th at 550; Hughes v. Talen
Energy Mktg., LLC, 578 U.S. 150, 154–55 (2016). For suppliers in particular, the market is
dynamic. To meet constantly changing consumer need, suppliers forecast demand and regularly
purchase in advance—sometimes years in advance—a commitment from a generator to provide
electricity at a future point. See FERC Primer 40–41; Hughes, 578 U.S. at 155.
B. The Regulatory Scheme. Both federal and state regulators oversee this complex
market. The Federal Power Act (FPA) empowers the Federal Energy Regulatory Commission
(FERC) with exclusive authority over the sale of electric energy at wholesale—that is, the
purchase of electric energy for resale. See 16 U.S.C. § 824(b)(1), (d); Hughes, 578 U.S. at 154.
Exercising that authority, FERC issued orders encouraging nonprofit entities to “manage
wholesale markets on a regional basis.” Elec. Power Supply Ass’n, 577 U.S. at 267. Two
entities heeded that call: regional transmission organizations (RTOs), and independent system
operators (ISOs). RTOs and ISOs, while differing in their governance structure and management
protocols, function in largely indistinguishable ways. See Pub. Util. Dist. No. 1, v. FERC, 272
F.3d 607, 611–12 & n.3 (D.C. Cir. 2001); FERC Primer 37. As reflected by the map below,
RTOs and ISOs serve roughly two-thirds of the country’s electric load, with the Southeast,
Southwest and Northwest regions still generally operated by vertically integrated utilities. FERC
Primer 60–65; see also infra Figure 1.

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Figure 1. North American Regional Transmission Organization and Independent System Operator Regions.
See FERC, RTOs and ISOs, (Jan. 17, 2024) https://perma.cc/97S8-ZLUZ.
In addition to administering a part of the grid and affording access to transmission lines,
RTOs and ISOs conduct competitive auctions to set wholesale prices for electricity. Elec. Power
Supply Ass’n, 577 U.S. at 267–68. FERC “extensively regulates” RTOs and ISOs to ensure their
auctions “efficiently balance[] supply and demand” to produce a “just and reasonable clearing
price.” Hughes, 578 U.S. at 157.
At the same time, the FPA leaves it to the states to regulate “any other sale” of electricity.
See 16 U.S.C. § 824(b). That means states have authority over generation, intrastate
transmission, local distribution, and wholly intrastate sales of electricity, including retail sales
(i.e., sales directly to users). See § 824(b)(1); Hughes, 578 U.S. at 154; Elec. Power Supply
Ass’n, 577 U.S. at 267. State utility commissions tend to oversee those activities. Elec. Power
Supply Ass’n, 577 U.S. at 267.
While the federal and state roles in this sphere are distinct, their concerns are
“inextricably linked.” Id. at 265. That leads to areas of mutual interest. One is ensuring that
suppliers of electricity have sufficient capacity, leaving them the ability to provide electricity on
demand. In re Reliability Plans of Elec. Utils. for 2017–2021, 949 N.W.2d 73, 79 (Mich. 2020);

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Conn. Dep’t of Pub. Util. Control v. FERC, 569 F.3d 477, 479 (D.C. Cir. 2009). How the
respective federal and state electricity regulations play out in Michigan’s market is at the heart of
today’s case.
1. Start with the federal role. The RTO Midcontinent Independent System Operator
(MISO) covers parts of 15 states, including almost all of the Michigan wholesale electricity
market. See supra Figure 1. (The southwest corner of Michigan is under the RTO PJM
Interconnection. Id.) For resource capacity purposes, MISO has divided itself into ten local
resource zones. See infra Figure 2; Midcontinent Indep. Sys. Operator, Inc., 165 FERC
¶ 61,067, para. 2 (Oct. 31, 2018) (hereinafter “2018 MISO Order”). Zone 7 is located within the
lower peninsula; Zone 2 covers the overwhelming bulk of the upper peninsula.
Figure 2. MISO, Planning Year 2023–2024 Loss of Load Expectation Study Report 7,
(May 1, 2023), https://perma.cc/XAD3-6B9Y.
Note, that for certain zones, not at issue in this appeal (e.g., Zone 1), the Resource Zone extends beyond the MISO’s boundaries.
Within this framework, MISO imposes resource capacity requirements on any entity that
provides electricity to an end user in a MISO zone—in FPA parlance, a “Load Serving Entity” or
“LSE.” 2018 MISO Order, 165 FERC para. 2; Hughes, 578 U.S. at 155. This regulatory regime
is complex, but its details are largely unimportant here, save for MISO’s Local Clearing
Requirement (LCR). The LCR requires that, annually, a certain amount of capacity be

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physically located in a zone. 2018 MISO Order, 165 FERC para. 4. Because electricity
dissipates over long distances, the LCR, by ensuring access to local energy resources, promotes
grid reliability. See, e.g., Midwest Indep. Transmission Sys. Operator, Inc., 126 FERC ¶ 61,144,
paras. 43–47 (Feb. 19, 2009). The LCR, we note, focuses on total in-zone capacity. So under
MISO’s rules, an LSE can acquire all of its electricity outside of the local resource zone without
penalty so long as the total in-zone capacity from all LSEs is sufficient—a market condition that
has been satisfied to date.
2. Now turn to Michigan. Before discussing the Wolverine State’s rules on resource
adequacy, it is worth stepping back to consider broadly how the state regulates the non-
wholesale electricity market. The Michigan Public Service Commission (MPSC), an agency
created just before World War II, see Mich. Comp. Laws Ch. 460 (Act 3 of 1939), oversees
Michigan’s retail electricity market. Reliability Plans, 949 N.W.2d at 90. Echoing national
trends, Michigan’s electricity market has taken on a less anticompetitive bent during aspects of
MPSC’s existence. See Hughes, 578 U.S. at 154 (discussing the movement toward divestment of
energy monopolies in the late twentieth century); New York v. FERC, 535 U.S. 1, 7–8 (2002).
Traditionally, vertically integrated monopolies (i.e., utility companies) controlled the generation,
transmission, and distribution of electricity in Michigan. See Reliability Plans, 949 N.W.2d at
78. During these periods, the MPSC imposed price controls and other regulations on the utilities
to limit abuse of their market power.
In 2000, Michigan opted to restructure its electric power industry. See Mich. Comp.
Laws § 460.10 (Act 141). The generation and supply of electricity was opened to competitive
suppliers, dubbed alternative energy suppliers or AESs. Customers now had options. They
could continue to buy electricity from their incumbent electric utility. But they could also do so
from one of the new players. See Commission History, MPSC, https://perma.cc/5X94-7TFJ.
And while electricity distribution remained a regulated monopoly, Act 141 provided for the
incumbent utilities to divest their transmission assets. Id.; Mich. Comp. Laws § 460.10w(1).
What resulted was a hybrid system. Utilities continued to operate regulated generation and
distribution services. But AESs now could provide electricity to customers at a market rate by

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buying the electricity at wholesale and paying the utilities for use of their existing distribution
system to furnish electricity to end users.
In 2008, Michigan backed away from the deregulation movement by limiting what AESs
could contribute to the grid. From that point on, an incumbent utility’s distribution of electricity
from an AES was capped at ten percent of the utility’s average weather adjusted retail sales for
the preceding year. See Mich. Comp. Laws § 460.10a(1)(a) (Act 286). If the ten percent cap
was met, a customer seeking to obtain electricity from an AES was placed in a queue and was
otherwise limited to obtaining electricity from the utility itself. See Electric Customer Choice,
MPSC, https://perma.cc/6662-EUCS. At present, “[d]ue to the limit on participation,” no AESs
are enrolling new customers, and utilities control 90% of the marketplace. Id.
Against this backdrop, consider Michigan’s approach to regulating for resource
adequacy. See Mich. Comp. Laws § 460.6w (Act 341). Through Act 341, the Michigan
legislature directed the MPSC to require all LSEs (i.e., both utilities and AESs) to “demonstrate”
that they “own[]” or have “contractual rights” sufficient to meet certain capacity obligations
going forward. Id. § 460.6w(8). If an LSE fails to do so, it must buy capacity from either the
incumbent utility or an AES at a set capacity charge. Id. § 460.6w(7)–(8). As a practical reality,
because utilities dominate the local capacity market due largely to incumbency, utilities in effect
are positioned to be the supplier of last resort should an AES fail to meet its capacity obligations.
See In re Implementing Section 6w of 2016 PA 341 for Cloverland Elec. Coop., 942 N.W.2d 38,
43 (Mich. Ct. App. 2019).
Act 341 paved the way for the MPSC to set operating requirements for LSEs. Standards
such as what capacity each LSE must demonstrate, and what cost LSEs will incur for failing to
meet those minimum capacity requirements, were answered by the MPSC through a series of
orders, which together established the Individual Local Clearing Requirement (ILCR). The
ILCR echoes the MISO LCR in that it contemplates that some electric capacity be derived
locally for reliability purposes. And the ILCR largely piggybacks on the MISO LCR in that it is
based on MISO’s total capacity forecasts and MISO’s local resource zones. See In re the
Investigation, on the Comm’n’s Own Motion, into the Elec. Supply Reliability Plans of Mich.’s

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Elec. Utils. for the Years 2017 Through 2021, No. U-18197, 2017 WL 4155229, at *32 (MPSC
Sept. 15, 2017).
But the ILCR differs from the MISO rules in a few key respects. For starters, Michigan
requires LSEs to plan not just for the year ahead, but for four years into the future. See id. at
*32. The ILCR also requires each LSE to produce or purchase a certain amount of locally
generated energy. Id. This approach differs from MISO’s capacity requirements, which, recall,
operate in the aggregate and allow an LSE to avoid acquiring any in-zone capacity without
penalty so long as other in-zone generators supply sufficient capacity. In turn, if an LSE cannot
satisfy its individual capacity obligations to the MPSC, its customers must buy capacity from an
incumbent utility at a set price.
The MPSC did not apply the ILCR’s local generation requirement uniformly. Instead of
applying the mandate throughout Michigan, the MPSC set Zone 2’s (the upper peninsula’s) local
capacity metrics at zero percent of its total needed capacity. In re, on the Comm’n’s Own
Motion, to Open a Contested Case Proc., No. U-18444, 2018 WL 3302792 (MPSC June 28,
2018). So the ILCR, in its current form, is only operative with respect to Zone 7—an area
entirely within the lower peninsula. Id. And within Zone 7, the MPSC adopted an “incremental
need approach,” wherein each LSE would initially need to have 2.7% of the amount of electrical
capacity necessary to serve peak customer demand located in the zone, with that percentage
increasing over time. Id.
What does this all mean for an LSE serving the Michigan retail market? Save for a
voluntary stay of its orders during the pendency of this litigation, the MPSC’s orders require
each LSE serving Zone 7 to increase gradually the amount of its electrical capacity generated
locally in that zone, and, in turn, to guarantee that capacity for four years. In other words, every
LSE (whether a utility or AES) needs to procure some amount of its total capacity from within
the confines of Michigan’s lower peninsula.
C. This Litigation. Energy Michigan and the Association of Businesses Advocating
Tariff Equity (ABATE) sued the MPSC and its individual commissioners, challenging the ILCR
on dormant Commerce Clause grounds. Energy Michigan represents AESs, including entities

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with “substantial capacity resources” throughout the country. ABATE is an association of
industrial and manufacturing entities that purchase their electricity from AESs.
The case kept the district court occupied. An early motion resulted in MPSC’s dismissal
on Eleventh Amendment grounds, leaving its individual members as defendants. In the same
order, the district court rejected the argument that the FPA authorized the ILCR. Competing
motions for summary judgment followed, but they did not resolve the case. The district court
denied summary judgment to defendants on the view that the ILCR did not discriminate against
similarly situated entities. At the same time, the district court rejected plaintiffs’ argument that
the ILCR facially discriminates against interstate commerce, and determined that there were
several fact disputes remaining as to whether the ILCR otherwise ran afoul of the dormant
Commerce Clause. The district court then held a three-day bench trial, during which the parties
amassed a record totaling nearly 20,000 pages. In the end, the court concluded that the ILCR did
not violate the Commerce Clause.
Appeals and cross appeals followed. At bottom, each appeal centers on whether
Michigan’s ILCR offends the dormant Commerce Clause. We review questions of law de novo,
and review for clear error any questions of fact found by the district court. See Monasky v.
Taglieri, 140 S. Ct. 719, 730 (2020); S.C. v. Metro. Gov’t, 86 F.4th 707, 714 (6th Cir. 2023).
II.
A. To appreciate the history behind the key legal issue in this case, turn back the clock to
the years leading up to the Constitution’s ratification. In that era, where the colonies (and, later,
states) had plenary power to regulate and even prohibit the movement of goods across their
borders, regional economic rivalries were not uncommon. See Gibbons v. Ogden, 22 U.S. (9
Wheat.) 1, 224 (1824) (Johnson, J., concurring). States enacted their own tariffs on both foreign
and interstate commerce, even going so far as to embargo certain products from neighboring
states to protect domestic markets. See Brannon P. Denning, Confederation-Era Discrimination
Against Interstate Commerce and the Legitimacy of the Dormant Commerce Clause Doctrine, 94
Ky. L.J. 37, 59–66 (2006). Those measures were met with retaliatory ones by other states. Id. at
62–63. The ensuing infighting impaired the fledgling nation’s economy and general stability.

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Michael J. Klarman, The Framers’ Coup 23 (2016); see also James Madison, Vices of the
Political System of the United States (Apr. 1787), reprinted in 2 The Writings of James Madison
361, 362–63 (Gaillard Hunt ed., 1901). The national government, meanwhile, could do little to
intervene, as it lacked power under the Articles of Confederation to regulate commerce among
the states. See Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 571 (1997).
The Constitution was a direct reaction to the chaos wrought by these protectionist
measures. Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2460 (2019)
(“[R]emoving state trade barriers was a principal reason for the adoption of the Constitution.”);
see also Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 363–64 (2008) (Kennedy, J., dissenting)
(recounting pre-ratification history). The document’s text and structure reflect as much. It
empowers Congress “[t]o regulate Commerce with foreign Nations, and among the several
States, and with the Indian Tribes.” U.S. CONST. art. I, § 8, cl. 3. Juxtaposed with this grant of
authority are restrictions on the states, such as the general prohibition on imposing “Imposts or
Duties on Imports or Exports,” see id. art. 1, § 10, cl. 2, a similar prohibition on laying of any
“Duty of Tonnage,” id. art. 1, § 10, cl. 3, and the affirmation that citizens of each state are
entitled to the “Privileges and Immunities of Citizens in the several States,” id. art. IV, § 2 cl. 1.
These provisions underscore the “very structure” of the Constitution, which was “framed upon
the theory that the peoples of the several states must sink or swim together.” See Nat’l Pork
Producers Council v. Ross, 143 S. Ct. 1142, 1153 (2023) (cleaned up).
From this foundation, the Supreme Court would find a constitutional prohibition on states
impermissibly interfering with interstate commerce. See, e.g., Baldwin v. G.A.F. Seelig, Inc.,
294 U.S. 511, 522–23 (1935). Where precisely is that prohibition grounded in the Constitution?
The Supreme Court generally reads Article I, Section 8’s affirmative grant of authority to
Congress to regulate interstate commerce as likewise implicitly including a negative component
forbidding certain state regulations, even in the absence of congressional legislation. Nat’l Pork
Producers Council, 143 S. Ct. at 1152–53. But that is not a universal view. See Tenn. Wine &
Spirits Retailers Ass’n, 139 S. Ct. at 2460 (cataloging Justices Scalia’s, Thomas’s, and Gorsuch’s
views). In any event, the core quibble with much of this jurisprudence is not with its underlying
principles, but instead its source for those principles. Nat’l Pork Producers Council, 143 S. Ct.

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at 1152–53. All seem to agree that at the “very core” of the case law is an antidiscrimination
principle, one that even the dormant Commerce Clause’s fiercest critics would concede is
grounded in the original public meaning of the Constitution. Id. And a law that violates the
principle is “per se invalid,” “save in a narrow class of cases” in which the state can
show, “under rigorous scrutiny, that it has no other means to advance a legitimate local interest.”
C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 391 (1994) (citation omitted).
B. What, then, is the antidiscrimination principle? At a broad level, the rule prohibits
states from differentiating between “in-state and out-of-state economic interests” to benefit the
former and burden the latter. Granholm v. Heald, 544 U.S. 460, 472 (2005) (citation omitted).
So a state cannot “impose commercial barriers or discriminate against an article of commerce by
reason of its origin or destination out of State.” C & A Carbone, 511 U.S. at 391. The “clearest
example of such legislation is a law that overtly blocks the flow of interstate commerce at a
State’s borders.” City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978). The
antidiscrimination principle is sometimes justified by the belief that a state will not police itself
from imposing a discriminatory burden on those outside its borders, demanding judicial
intervention to enforce the constitutional norm. See S.C. State Highway Dep’t. v. Barnwell
Bros., 303 U.S. 177, 185 n.2 (1938); S. Pac. Co. v. Ariz. ex rel. Sullivan, 325 U.S. 761, 767 n.2
(1945) (collecting cases).
From these foundations, we recognize three ways a state law can violate the
antidiscrimination rule: facially, purposefully, or in practical effect. E. Ky. Res. v. Fiscal Ct. of
Magoffin Cnty., 127 F.3d 532, 540 (6th Cir. 1997). Of these, only the first and third are at issue
here.
Start with facial discrimination. It occurs when a law “expressly” differentiates to favor
in-state “commerce or entities” at the expense of out-of-state comparators. Truesdell v.
Friedlander, 80 F.4th 762, 769 (6th Cir. 2023). Think of laws whose benefits or burdens are
explicitly “territorially based”—that is, those concerned with city, county, or state lines.
Maharg, Inc. v. Van Wert Solid Waste Mgmt. Dist., 249 F.3d 544, 551 (6th Cir. 2001); see also
Interstate Towing Ass’n v. City of Cincinnati, 6 F.3d 1154, 1162 (6th Cir. 1993).

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Contrast that with discrimination occurring in practice. The Commerce Clause forbids
discrimination whether “forthright or ingenious.” Best & Co. v. Maxwell, 311 U.S. 454, 455
(1940). In limited ways, then, we can consider a law’s “effects” when looking at whether it is
discriminatory. Effects-based discrimination concerns seemingly neutral state laws that
necessarily create new market conditions that depend on geography. See Truesdell, 80 F.4th at
771–73; see, e.g., Foresight Coal Sales, LLC v. Chandler, 60 F.4th 288, 298 (6th Cir. 2023)
(recognizing effects-based discrimination in a Kentucky law that “artificially discounted” the
price of coal from states (including Kentucky) that imposed severance taxes, which necessarily
burdened states without such taxes). We sometimes look more broadly at whether a law happens
to impose more burdens on out-of-state entities than in-state counterparts. See Truesdell, 80
F.4th at 771; Garber v. Menendez, 888 F.3d 839, 843 (6th Cir. 2018). That function generally is
the job of Pike balancing. See Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970); Nat’l Pork
Producers Council, 143 S. Ct. at 1164 n.4 (explaining that Pike balancing seeks to “smoke out
purposeful discrimination” “as illuminated by those laws’ practical effects”). The parties,
however, do not ask us to engage on that question.
Two other asides about the antidiscrimination principle deserve mention. First, while our
focus is on discrimination between in-state and out-of-state “commerce or entities,” Truesdell, 80
F.4th at 769, that a law may also discriminate against in-state commerce is immaterial. See Dean
Milk Co., 340 U.S. at 354 n.4. A state thus cannot “avoid the strictures of the Commerce Clause
by curtailing the movement of articles of commerce” through part of the state, rather than all of
it. Fort Gratiot Sanitary Landfill, Inc. v. Mich. Dep’t of Nat. Res., 504 U.S. 353, 361 (1992).
Second, the “magnitude and scope of the discrimination have no bearing on the determinative
question whether discrimination has occurred.” Assoc. Indus. of Mo. v. Lohman, 511 U.S. 641,
650 (1994). In other words, a state’s partial import ban, for purposes of the threshold
discrimination inquiry, should be treated the same as a total ban, see Fort Gratiot Sanitary
Landfill, Inc., 504 U.S. at 363, leaving questions of magnitude and scope for consideration at
strict scrutiny. Waste Mgmt., Inc. v. Metro. Gov’t of Nashville & Davidson Cnty., 130 F.3d 731,
736 (6th Cir. 1997).

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C. Measured against these principles, the ILCR is facially discriminatory. Whether a
capacity requirement “count[s]” toward the ILCR hinges on the “zonal location” of the LSE’s
resources. And that “zonal location,” in turn, depends on whether the resource is in a particular
MISO Zone. Relevant here is a zone encompassing a subdivision of the State of Michigan. See
Fort Gratiot Sanitary Landfill, Inc., 504 U.S. at 363 (recognizing facial discrimination based on
a subdivision of a state). By requiring electricity to be generated from that zone, the ILCR relies
on almost a “near perfect proxy” for the State’s lower peninsula. Foresight Coal, 60 F.4th at 297
(noting facial discrimination when a state law contains a “near perfect proxy” for geography).
That leaves a law that is explicitly “territorially based,” requiring those that sell electricity in
Michigan’s lower peninsula to procure a certain percentage of its electrical capacity from that
region. Cf. Maharg, 249 F.3d at 551. Ignoring, as we must, the extent of the discrimination and
the reasons for such discrimination at the threshold step of determining whether a discriminatory
practice has in fact occurred, see Assoc. Indus. of Mo., 511 U.S. at 650, we can conceptualize the
ILCR in the same way we would think of a law that wholly prohibits the procurement of out-of-
state electrical capacity. That leaves perhaps the clearest example of a dormant Commerce
Clause violation: “a law that overtly blocks the flow of interstate commerce at a State’s
borders.” City of Philadelphia, 437 U.S. at 624.
1. History uniformly supports this conclusion. Lacking a clear textual anchor for the
antidiscrimination principle at issue here, see Nat’l Pork Producers Council, 143 S. Ct. at 1152–
53, we start by considering founding-era precedent undergirding the principle. See N.Y. State
Rifle & Pistol Ass’n, Inc. v. Bruen, 597 U.S. 1, 26–27 (2022) (considering first the text before
turning to historical examples to construe the Constitution); United States v. Rahimi, 144 S. Ct.
1889, 1912 (2024) (Kavanaugh, J., concurring) (“History can supply evidence of the original
meaning of vague text.”); Robert H. Bork, Neutral Principles and Some First Amendment
Problems, 47 Ind. L. J. 1, 8 (1971) (“Where constitutional materials do not clearly specify the
value to be preferred, . . . [t]he judge must stick close to the text and the history . . . .”). In this
vein, experiences under the Articles of Confederation are a powerful tool in attempting to
“discern the original meaning of the Constitution,” see New York v. United States, 505 U.S. 144,
163 (1992), or perhaps more precisely, “what the Constitution does not mean,” Rahimi, 144 S.

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Ct. at 1914 (Kavanaugh, J., concurring). See also Haaland v. Brackeen, 143 S. Ct. 1609, 1664
(2023) (Thomas, J., dissenting); Bruen, 597 U.S. at 34 (observing that “when it comes to
interpreting the Constitution, not all history is created equal,” and recognizing the primacy of
historical evidence near the time of enactment). Especially so, it has been said, as those
experiences inform the meaning of the Commerce Clause. See Tenn. Wine & Spirits Retailers
Ass’n, 139 S. Ct. at 2461 (“[O]ur cases have long emphasized the connection between the trade
barriers that prompted the call for a new Constitution and our dormant Commerce Clause
jurisprudence”); see also Gregory E. Maggs, A Concise Guide to the Articles of Confederation as
a Source for Determining the Original Meaning of the Constitution, 85 Geo. Wash. L. Rev. 397,
427 (2017).
Turning to that history, recall that the antidiscrimination principle is understood as a
response to protectionist state law measures that proliferated during the pre-ratification period.
See Tenn. Wine & Spirits Retailers Ass’n, 139 S. Ct. at 2460. One such law is a telling analog to
the ILCR. Before the advent of electricity, New Yorkers in the 1780s regularly used firewood
supplied from Connecticut as their primary source of home energy. See 1 John Bach McMaster,
A History of the People of the United States from the Revolution to the Civil War, at 404 (3d ed.
1883). Over time, this arrangement was thought to be “ruinous” to New York’s domestic
industry, prompting the state to incentivize New Yorkers to buy their firewood closer to home.
See John Fiske, The Critical Period of American History: 1783–1789, at 146 (3d ed. 1899). New
York imposed new taxes on imports from their neighbors in the Nutmeg State, meaning that “not
a cart-load of Connecticut firewood could be delivered at the back-door of a country-house in
Beekman Street [in Manhattan] until it should have paid a heavy duty.” Fiske, supra at 147;
McMaster, supra at 404–05. Retaliatory measures ensued, leading to “chronic quarrels [that]
were destroying . . . trade” between rival states. See Indep. Warehouses, Inc. v. Scheele, 331
U.S. 70, 94 (1947) (Jackson, J., dissenting). The later-ratified Constitution, Justice Robert
Jackson observed, aimed “to free trade from local burdens and controls” like the 1787 New York
firewood tax. Id. (discussing the same). Save for the fact that New York only taxed its out-of-
state source of energy, rather than wholly barring it from entering the state, Michigan’s approach

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to restricting the procurement of out-of-state energy echoes the experience from the Empire State
nearly two-and-a-half centuries earlier.
2. Turn next to legal precedent. See Gamble v. United States, 587 U.S. 678, 685–86
(2019) (considering legal precedent after examining text and history); Rahimi, 144 S. Ct. at 1920
(Kavanaugh, J., concurring) (recognizing that “text, as well as pre-ratification and post-
ratification history, may appropriately function as a gravitational pull” when interpreting existing
precedent). There is no shortage of cases applying strict scrutiny to state laws that ban or restrict
interstate transactions in favor of local ones. See, e.g., Heald, 544 U.S. at 493 (invalidating state
law allowing only local wineries to ship alcohol directly to consumers); C & A Carbone, Inc.,
511 U.S. at 394 (striking down local waste processing requirements); Taylor, 477 U.S. at 137–38
(subjecting a state law that blocked “all inward shipments of live baitfish” to strict scrutiny); City
of Philadelphia, 437 U.S. at 629 (invalidating state law prohibiting the importation of waste into
a state); Dean Milk Co., 340 U.S. at 354 (holding that a law requiring that any pasteurized milk
sold in Madison, Wisconsin, be processed within five miles of the city’s center “plainly
discriminates against interstate commerce”). That is no surprise. After all, it is black letter law
that “[s]tate and local governments may not use their regulatory power to favor local enterprise
by prohibiting patronage of out-of-state competitors or their facilities.” C & A Carbone, Inc.,
511 U.S. at 394. And it is hard to think of a more apt description of what the ILCR aims to do—
using the power of the state to favor local energy production at the expense of out-of-state
production.
We are not the first court to apply these principles in the realm of electricity markets.
Consider Wyoming v. Oklahoma, where the Supreme Court addressed whether an Oklahoma
energy law violated the dormant Commerce Clause. At the time, the Sooner State required that
all in-state electric utilities using coal-fired electric generating plants burn a mixture that
contained at least ten percent Oklahoma-mined coal. Wyoming, 502 U.S. at 440, 442–44. By so
doing, the Supreme Court concluded, Oklahoma impermissibly discriminated against out-of-state
coal. In “expressly reserv[ing] a segment” of its market for Oklahoma-mined coal, the Sooner
State’s law discriminated both on its face and in practical effect against interstate commerce. Id.
at 455. Accordingly, the Supreme Court subjected the law to strict scrutiny, which Oklahoma

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could not satisfy. Id. at 454, 456–57. Deeming the entire dispute “not a close case,” id. at 455
n.12, the Supreme Court invalidated the state law. Id. at 461. That was so even though the law’s
purported effect was minimal, setting aside only a “small portion” of the Oklahoma market. Id.
at 455. The scope of Oklahoma’s discrimination was of “no relevance,” the Supreme Court
explained, “to the determination whether a State has discriminated against interstate commerce.”
Id.
Thirty years later, the discriminatory nature of Michigan’s electricity distribution regime
would no doubt make even Oklahoma’s regulators blush. Consider the following. Instead of
regulating only a subset of electrical suppliers, the ILCR sweeps up all LSEs into its net. And
rather than imposing a buy-local requirement for only one source of energy, the ILCR
functionally mandates that all entities that supply any retail electricity in the lower peninsula of
Michigan buy some percentage of their electrical capacity locally or have their own local
generation. What was not a close case three decades ago is miles from what is constitutionally
permissible today. Just as Oklahoma could not reserve a segment of its coal market for
Oklahoma-mined coal to the exclusion of coal mined elsewhere, Michigan cannot reserve a
segment of its electricity market for Michigan electricity to the exclusion of that generated in
other states without being subject to strict scrutiny.
D. Defendants’ responses do not move the needle. They begin by arguing that the ILCR
does not facially discriminate because its language does not mention any state boundaries. As a
result, they say, the ILCR requires the “additional step” of considering whether the LSE has
demonstrated access to a resource within a “particular [MISO] zone.” But that is not much of a
step. MISO zones are geographic regions. And the relevant MISO zone corresponds with the
borders of Michigan’s lower peninsula. So the ILCR’s facial discrimination is obvious. If the
underlying resource is within the borders of the lower peninsula, it counts toward the ILCR.
Otherwise, it does not. In any event, the Constitution “deals with substance, not shadows.”
Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 143 S. Ct. 2141,
2176 (2023) (citation omitted). So we need not quibble with whether such a step puts the ILCR
under the rubric of facial discrimination or kicks it into the effects territory. See Foresight Coal,

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60 F.4th at 297. Either way, because the law discriminates between articles in interstate
commerce (here, electrical capacity), strict scrutiny applies.
Pressing ahead, defendants maintain that because the Michigan rules impose identical
burdens to “both incumbent utilities and the [AESs],” the latter of which may be based outside of
Michigan, no constitutional infirmity exists. Comm’rs Second Br. at 58. True, as defendants
suggest, a state can violate the Commerce Clause by imposing different burdens on in-state and
out-of-state entities. Truesdell, 80 F.4th at 769. And perhaps plaintiffs have not shown
sufficient discrimination between utilities and AESs. But the discrimination at issue here is not
isolated to the Michigan rules’ effects on those that supply electricity at retail. Instead, it is
primarily aimed at an article in commerce—electrical capacity. And the discriminatory policies
result in differential treatment between electricity generated in-state and that derived out-of-state.
Nor do we have any preservation concerns. Plaintiffs pressed this ground of
discrimination—that the ILCR discriminates between in-state and out-of-state energy—in the
district court. They likewise argued the point defendants refute here—that the ILCR
discriminates in practical effect against AESs in favor of utilities. On appeal, plaintiffs again
make both arguments. And they only need prevail on one. So even if defendants are correct in
their assessment of any purported discrimination between utilities and AESs in commerce, that
does not lessen plaintiffs’ theory of discrimination tied to the procurement of the underlying
commodity, electricity. Said differently, cases upholding laws that facially impose uniform
burdens on certain in-state and out-of-state entities on the same underlying product do little to
respond to the chief claim of facial discrimination here. See, e.g., Am. Beverage Ass’n v. Snyder,
735 F.3d 362, 371 (6th Cir. 2013) (holding that a Michigan law that requires all beverage
manufactures to impose a unique mark designation on all beverages is a facially neutral law).
Next, defendants and the dissenting opinion attempt to distinguish Wyoming on the basis
that the underlying purpose of the ILCR is to promote resource adequacy, not protect domestic
industry. Divining a law’s purpose, however, is tricky business. Indeed, it is the rare law from
which one can deduce a single underlying purpose. See Henson v. Santander Consumer USA
Inc., 582 U.S. 79, 89 (2017) (recognizing that no law “yet known” pursues one stated purpose at

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all costs (citation omitted)); Truesdell, 80 F.4th at 773 (questioning whether a “single ‘intent’
behind legislation” can be determined for purposes of Commerce Clause scrutiny). It is thus
perhaps no surprise that plaintiffs have a different understanding of the law, namely, that the
ILCR was intended to drive AESs out of the marketplace. See Oral Arg. at 10:30 (appellant
arguing that the ILCR is intended to “chase[]” AESs out of the market). In the end, any
assessment of purpose is irrelevant. When considering whether a state law violates the
Commerce Clause’s antidiscrimination principle, inquiry into purpose is distinct from inquiry
into the law’s text. See Truesdell, 80 F.4th at 769. Even the most benign purpose, for instance,
cannot save a facially discriminatory law from strict scrutiny. Defenders of Oklahoma’s locally
mined-coal requirement made a nearly identical argument—that the regulation there was needed
to ensure a reliable supply of energy in Oklahoma. 502 U.S. at 456–57 (addressing Oklahoma’s
argument that the coal rule serves to “lessens the State’s reliance on a single source of coal
delivered over a single rail line”). At most, “justifications” for a discriminatory law are a topic
for strict scrutiny, not for the threshold question whether the law is discriminatory in the first
place. Id. That is true whether those justifications address coal usage in Oklahoma or electrical
supply in Michigan.
It makes no difference that the ILCR does not limit an LSE’s ability to import electricity
into Michigan. Here, we note a distinction between electricity and electric capacity. Electricity
is the end product, whereas electric capacity refers to the ability to produce that product when
necessary—functionally an option contract to purchase electricity. See Conn. Dep’t of Pub. Util.
Control, 569 F.3d at 479; Entergy Ark., LLC v. FERC, 109 F.4th 583, 587–88 (D.C. Cir. 2024)
(describing capacity as a “commitment[] from a generator to produce set amounts of electricity
in the future” (alteration in original) (quotations omitted)). The ILCR regulates electrical
capacity; it requires LSEs to have a set percentage of electrical capacity based in Michigan. That
rule facially restricts how an article of commerce, specifically, electricity as procured through the
“call option[s]” that generators sell, can be obtained based on geography. Conn. Dep’t of Pub.
Util. Control, 569 F.3d at 479; see also C & A Carbone, 511 U.S. at 391 (recognizing that
unlawful discrimination under the Commerce Clause can extend beyond discriminating against
an underlying product to the means associated with processing that product). Because the

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amount of discrimination is irrelevant to the question of whether discrimination exists, we gauge
the ILCR the same way we would a requirement that a far larger amount of electrical capacity—
say 100% or 200% of peak demand—be procured from Michigan, or even an entire ban on
electricity supply derived outside the state’s borders. See Fort Gratiot Sanitary Landfill, Inc.,
504 U.S. at 363; Oral Arg. at 19:00 (intervenor-appellant conceding that “if the rule was . . . the
only energy you can supply had to be . . . produced in Zone 7” the analysis “doesn’t change
whatsoever”).
III.
Two remaining contentions deserve separate attention. One is that the ILCR is lawful
under what defendants view to be an exception to the dormant Commerce Clause enunciated in
General Motors Corp. v. Tracy, 519 U.S. 278 (1997). Two, that Congress authorized the ILCR
in the FPA. We turn to those arguments now.
A. General Motors v. Tracy. Some background on Tracy is necessary. The dispute there
concerned Ohio’s natural gas market as it existed in the latter part of the twentieth century. Like
the electrical market, our nation’s natural gas market traditionally had an organically
monopolistic structure, with large utilities controlling the local distribution of natural gas. Id. at
283. Federal deregulation in the late 1970s and early 1980s, however, opened access to interstate
natural gas pipelines, allowing producers and independent marketers of natural gas to sell to
those who purchased gas from the interstate market. Id. at 282–84. Ohio’s intrastate pipelines,
however, remained under the control of local utilities. Id. at 284. To gain access to the
competitive interstate market, large industrial end users in Ohio began constructing their own
pipelines in the Buckeye State. Id. With Ohio natural gas utilities at risk of losing these
customers, Ohio “took steps . . . to keep some income from large industrial customers within the
utility system” by allowing industrial users in Ohio to buy natural gas from the public utilities or
independent marketers in Ohio and pay fees to the utilities to use their intrastate pipelines. Id.
The result was two markets operating side by side: a new competitive market for large industrial
concerns along with a residual captive market for residential users who could purchase natural
gas from the utilities only. Id. at 293–94.

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Part and parcel of this regulatory scheme, Ohio law imposed general sales and use taxes
on all natural gas purchases but exempted public utilities from those taxes. Id. at 281–82. After
Ohio applied a use tax to GM’s purchases of natural gas from independent marketers, GM sought
an exemption in state court. Id. at 285. The auto giant argued in part that the tax exemption
violated the Commerce Clause as a facially discriminatory tax in that it granted a tax exemption
to sales from the utilities (all of which were located in Ohio) while imposing a tax on other
natural gas sales. Id. at 288. When the Ohio courts disagreed with GM, the company pursued its
claims before the United States Supreme Court.
Yet it fared no better. To start, the Supreme Court rejected GM’s theory on a “threshold”
ground. “[A]ny notion of discrimination” under the dormant Commerce Clause, the Supreme
Court explained, presupposes a “comparison of substantially similar entities,” that is, entities that
compete against each other in a single market. Id. at 298, 300. Ohio’s natural gas market,
however, consisted of two distinct (but related) markets, with utilities’ profits in the noncaptive
market helping subsidize the captive one. Id. at 301–02. With this understanding in mind, it was
left to the Supreme Court to decide whether to “accord controlling significance” to the
“noncaptive” market in which utilities and marketers compete, or, as Ohio urged, the
“noncompetitive, captive market in which the local utilities alone operate[.]” Id. at 303–04.
Ohio’s esteemed advocacy prevailed. Tracy opted to give “greater weight to the captive
market,” and thus “to treat marketers and [utilities] as dissimilar for present purposes” for three
largely pragmatic reasons. Id. at 304. One, invalidating the tax exemption could “imperil” the
captive market by reducing a competitive advantage in the noncaptive market—namely, eating
into the customer base of large industrial entities that help reduce costs for individual consumers.
Id. at 304–07. Second, judges lack expertise in predicting the effects of judicial intervention on
the utilities’ capacity to serve the captive market. Id. at 304, 308–09. And third, Congress was
best situated to strike the appropriate balance in this setting. Id. at 304, 309–10. In the end, far
from establishing an exception to the dormant Commerce Clause, Tracy simply clarified what
qualifies as discrimination in the unique regulatory setting in which that case arose.

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1. Noting some factual similarities between Tracy and this litigation, defendants and the
dissenting opinion maintain that the cases should have a similar outcome. To be sure, surface-
level comparisons can be made. Chief among them, both cases involve hybrid energy markets:
one part noncompetitive, consisting of only publicly regulated utilities serving residential
customers; the other part competitive with regard to a small segment of large companies.
Yet critical differences remain. Most notable is the nature of the discrimination at play.
In Tracy, the Supreme Court considered whether Ohio’s tax law discriminated between in-state
and out-of-state retailers, in particular, by treating a utility differently from a non-utility with
respect to each entities’ sales and use taxes. Here, on the other hand, the ILCR’s facial
discrimination concerns the geographic origins of a product purchased at wholesale, as Michigan
law explicitly favors local electrical capacity. In so doing, the ILCR expressly differentiates on a
geographic basis where an LSE can procure electrical capacity. If a Michigan LSE is seeking to
satisfy the ILCR’s local generation requirements, contracting with an Indiana wind farm or a
major Ohio electrical utility is of no use. Under the ILCR, remember, the LSE (and functionally
the Indiana and Ohio firms) would be penalized for doing so. Any differences between an AES
and a Michigan utility, therefore, are immaterial. The ILCR’s preference for in-state electrical
capacity harms a range of stakeholders in the energy supply chain seeking to sell electricity into
the Michigan grid.
That factual distinction makes all the difference. Much of defendants’ Tracy argument is
premised upon the idea that AESs and utilities are different creatures. The dissenting opinion
likewise would apply Tracy as if the only discrimination afoot here is between Michigan utilities
and AESs. See Dissenting Op. at 34–40. But the ILCR’s discrimination is not aimed—at least
facially—at AESs; indeed, the ILCR by its terms treats both utilities and AESs identically, as
both are LSEs. Instead, the ILCR’s wrath is turned on out-of-state electrical capacity—and, as a
result, those entities with “capacity resources” outside of Michigan, including some plaintiffs
here. There is no distinction between the electrical capacity these entities offer at wholesale to
AESs relative to what in-state utilities offer, save for geography. Indeed, LSEs regularly buy and
sell capacity at wholesale, as their products are interchangeable on a national grid at that part of
the stream of commerce. See Elec. Power Supply Ass’n, 89 F.4th at 550. Tracy simply demands

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that the “objects of the disparate treatment” be similarly situated before a law may be deemed to
have run afoul of the dormant Commerce Clause. Camps Newfound, 520 U.S. at 601 (Scalia, J.,
dissenting). Here, the most obvious objects of the ILCR’s discrimination, in-state and out-of-
state electrical capacity, so qualify.
After dismissing the argument that the Ohio tax exemption was discriminatory based on
how the law treated out-of-state marketers vis-à-vis in-state utilities, the Supreme Court
separately considered whether the exemption was discriminatory because it favored natural gas
purchases from in-state utilities as opposed to similar purchases from out-of-state utilities.
Tracy, 519 U.S. at 310. Tracy rejected this secondary argument. But not, it bears emphasizing,
by utilizing the just-discussed similarly situated analysis. It did so instead on the grounds that
the Ohio tax exemption was likely to be extended to out-of-state utilities. Id. at 311.
This appeal presents the same secondary issue as in Tracy: does the ILCR facially
discriminate between electrical generation from similarly situated entities, for example, in-state
and out-of-state utilities? And here, unlike in Tracy, there is no denying that discrimination is
afoot. The ILCR facially treats out-of-state generation differently than in-state generation.
2. What should we make of Tracy’s recognition of the public’s need for dependable
energy and the importance of the captive market in Ohio? At times, to be sure, Tracy speaks
warmly of the need for state regulation of energy markets and the desire for courts to avoid
interfering with state protectionism of public utilities. See id. at 304–10; Camps Newfound, 520
U.S. at 602 (Scalia, J., dissenting) (“Tracy paints a compelling image of people shivering in their
homes in the dead of winter without the assured service that competition-sheltered public utilities
provide.”). Whatever value one draws from those observations, they do not change our
conclusion here. Keep in mind the context in which Tracy arose. Against the backdrop of the
preexisting natural monopoly, Ohio regulated a narrow, noncaptive natural gas market for large
businesses to help prop up the public utilities in the captive market. Tracy, 519 U.S. at 282–84.
In the absence of a noncaptive market, utilities would lack an “adequate customer base” to
continue to serve Ohio’s captive natural gas market. Id. at 309. Customers in that market were
captured economically in that they depended on a stable rate and supply and had no economic

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ability to participate in the noncaptive market. Id. at 301–02. In the end, Tracy simply preserved
Ohio’s ability to retain its natural monopoly to ensure residential customers continued to obtain
needed services.
Michigan’s regulatory history tells a very different tale. The state’s captive market did
not result directly from a natural monopoly, as Michigan ended its natural electric monopoly in
2000 through the creation of its choice program. See 2000 Mich. Legis. Serv. P.A. 141 (S.B.
937) (codified at Mich. Comp. Laws § 460.10). Only later did Michigan opt artificially to create
a captive market and a noncaptive market with the ten percent choice cap rule. See 2008 Mich.
Legis. Serv. P.A. 286 (H.B. 5524) (codified at Mich. Comp. Laws § 460.10a(1)). At the time,
“utility customers vigorously resisted” the imposition of the choice cap. See Lisa Babcock and
Rodger Kershner, Changes in the Law Governing Public Utilities, Mich. Bar. J., Jan. 2011, at 37,
39, https://perma.cc/ZZV7-D2RH. Nor did all customers support Act 341 and the resulting
ILCR, which was pushed by the utilities themselves. To this day, there is a long waiting list to
obtain electricity from an AES in Michigan, as electricity prices have increased since the end of
full deregulation. See Electric Customer Choice, MPSC, https://perma.cc/6662-EUCS; A Policy
Guide to Energy Choice in Michigan, Mackinac Ctr. for Pub. Pol’y, https://perma.cc/26FX-
WL7E.
These distinct contexts deprive Tracy of any vitality here. Unlike the Buckeye State’s
retail natural gas customers, the Wolverine State’s residential electricity customers are not
economically captive to their utility. Quite the opposite, in fact. Rather, Michiganders are living
with an artificially created market due to rent seeking by the utilities. See Comm’rs’ Second Br.
at 34 (“The Tracy court makes clear that the two gas markets were divided on purely economic
grounds . . . . Michigan law, on the other hand, expressly limits the electric load that [AESs]
may serve.”). Relatedly, unlike the tax exemption at play in Tracy, there is no evidence that
Michigan utilities rely on the ILCR’s effects on the noncaptive market to subsidize or prop up
the captive one. See 519 U.S. at 309. The ILCR may help answer reliability concerns for the
energy market as a whole, although that is not a certainty, as defendants acknowledge. See
Comm’rs’ Br. at 39–40 & n.9 (recognizing that the interconnected nature of the grid coupled
with MISO procedures for service interruptions mean that service issues would not be uniquely

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experienced by retail customers). Either way, a state’s generic interest in local energy reliability
does not exempt it from Commerce Clause scrutiny. Wyoming, 502 U.S. at 456. In sum, Tracy
may justify a state’s efforts to retain a natural monopoly for economically dependent retail
consumers. But it does not bless a state’s efforts to aid an artificial monopoly, as defendants
would have us hold.
3. At bottom, defendants press for an aggressive, policy driven rule divorced from the
factual setting of Tracy. If a state has a captive market overseen by a public utility (e.g., the state
authorizes only one entity to provide a service and regulates the rate that entity charges, etc.),
then the state, they contend, can otherwise discriminate against interstate commerce with respect
to a parallel noncaptive market in which the utility also operates.
Perhaps there is a policy argument for such a public utility exception to the dormant
Commerce Clause. But a legal one? Not in the original public meaning of the Constitution. As
discussed, the founding generation saw no distinction between state laws discriminating in the
energy arena as opposed to any other means of trade. See supra 15–16. And there is nothing to
suggest that the Framers, well-familiar with the concept of public service companies, implicitly
sought to exempt state laws that favored such entities from the Constitution’s antidiscrimination
principle. See Biden v. Knight First Amend. Inst. at Columbia Univ., 141 S. Ct. 1220, 1222
(2021) (Thomas, J., concurring) (“[O]ur legal system and its British predecessor have long
subjected certain businesses . . . to special regulations, including a general requirement to serve
all comers.” (citation omitted)). When given a choice between an expansive reading of a
precedent on policy grounds and the original public meaning of the Constitution, we should pick
the latter. See Johnson v. Bauman, 27 F.4th 384, 394 (6th Cir. 2022); Rahimi, 144 S. Ct. at 1920
(Kavanaugh, J., concurring).
Nor does a public utility or energy exception to the dormant Commerce Clause derive
from Tracy itself. At least twice, the opinion recognizes that no such exception exists. See 519
U.S. at 291 n.8 (“[U]tilities should not be insulated from our contemporary dormant Commerce
Clause jurisprudence . . . .”); id. at 307 n.15 (“[I]f a state discriminates against out-of-state
interests by drawing geographical distinctions between entities that are otherwise similarly

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situated, such facial discrimination will be subject to a high level of judicial scrutiny even if it is
directed toward a legitimate health and safety goal.”).
Looking to other cases only makes matters worse. None from the Supreme Court
endorse defendants’ broad reading of Tracy. Its dormant Commerce Clause precedents, which
Tracy did not purport to touch, have long been applied to regulations concerning in-state utilities.
See, e.g., Wyoming, 502 U.S. at 461 (invalidating an Oklahoma law that required in-state utilities
to supply ten percent of their needs for fuel from Oklahoma coal); New England Power Co. v.
New Hampshire, 455 U.S. 331, 339 (1982) (invaliding a New Hampshire law prohibiting a utility
“from selling its hydroelectric energy outside the State”).
As for the circuit courts, we have applied Tracy narrowly for the more modest
proposition that Commerce Clause discrimination presupposes discrimination between two
similar entities or articles of commerce. See, e.g., LensCrafters, Inc. v. Robinson, 403 F.3d 798,
804 (6th Cir. 2005) (citing Tracy to recognize that a law that in effect harmed optical companies
to favor optometrists did not violate the Commerce Clause because its benefits and burdens were
meted out to non-similarly situated entities); Paul’s Indus. Garage, Inc. v. Goodhue County, 35
F.4th 1097, 1100 (8th Cir. 2022) (listing various examples of Tracy’s application to dissimilar
entities—vacation homes v. primary residences, humane societies v. for-profit breeders, brick-
and-mortar stores v. online counterparts); Allco Fin. Ltd. v. Klee, 861 F.3d 82, 105 (2d Cir. 2017)
(citing Tracy and concluding that a law distinguishing between two distinct inventions of state
law—Georgia renewable energy credits used for Georgia’s renewable portfolio standard and
credits issued under Connecticut law—did not discriminate). And our most recent
pronouncement on Tracy cited it for the rule opposite one defendants press here. As we
explained, “‘ordinary’ . . . negative Commerce Clause” principles apply “to all energy
regulations.” Truesdell, 80 F.4th at 780. This view echoes that of the Fifth Circuit, which held
that Tracy cannot be read to immunize public electric utilities from ordinary Commerce Clause
jurisprudence. NextEra Energy Cap. Holdings, Inc. v. Lake, 48 F.4th 306, 318–20, 325 (5th Cir.
2022) (“What is true for alcohol and milk under the dormant Commerce Clause must be true for
electricity transmission.”). What is more, both the Trump and Biden Departments of Justice
seem to agree that Tracy should be read in line with the “case specific factors” at play with the

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Ohio sale tax exemption, and thus should not be understood to create a broad “public utility”
exception to the dormant Commerce Clause. See Brief of the United States of America as
Amicus Curiae at 10–11, LSP Transmission Holdings, LLC v. Sieben, 954 F.3d 1018 (8th Cir.
2020) (18-2559), 2018 WL 5318514; Brief of the United States of America as Amicus Curiae at
14, Lake v. NextEra Energy Cap. Holdings, Inc., 144 S. Ct. 485 (22-601), 2023 WL 7002451.
Limiting Tracy to its unique factual setting makes good sense. The alternative would
exempt a major sector of the U.S. economy from the Commerce Clause. And it would license
blatant economic protectionism when a state favors a utility in a noncaptive market. As the Fifth
Circuit persuasively described things, “provid[ing] Commerce Clause immunity to any law that
grants a preference to a company that has at least one foot in a captive market” would allow
states to “grant in-state utilities the exclusive right to operate coal mines in the state (or, for that
matter, the exclusive right to sell ice cream in the state).” NextEra Energy, 48 F.4th at 320. That
a state might structure its market to enact discriminatory laws to support its utilities is not purely
fanciful. Remember Michigan’s approach here. The state artificially created a captive market,
going so far as to place utilities in the position of being the provider of last resort should any
competitor fail to meet its capacity obligations. See Cloverland Elec. Coop., 942 N.W.2d at 43.
Now, defendants and the dissenting opinion rely on those features of state law to argue that it is
exempt from ordinary dormant Commerce Clause principles. The Constitution stands in their
way.
4. Turning to the dissenting opinion, it offers two primary critiques. The first centers on
our reading of Wyoming and Tracy. Starting with Wyoming, the dissenting opinion characterizes
the express geographic discrimination at play here as both necessary and “different in kind” than
the discrimination at play there. See Dissenting Op. at 40–41 (maintaining that any
discriminatory aspects of Michigan’s regulatory scheme are lessened because the ILCR is built
on MISO Zones, whose connection to state borders is “incidental” and based on “technical
judgments about grid reliability”); id. at 42 (distinguishing Wyoming because the reliability
arguments here are “different in kind from Oklahoma’s”). But however significant one might
deem the “justifications” for a nonetheless facially discriminatory law, we view those
justifications, as did the Supreme Court in Wyoming and elsewhere, through the lens of strict

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scrutiny, not as a part and parcel of a threshold question concerning the proper level of scrutiny.
502 U.S. at 456–57; Assoc. Indus. of Mo., 511 U.S. at 650. And we see Tracy as largely
inapplicable here for reasons discussed above—that is, the ILCR facially discriminates with
respect to the wholesale market, as opposed to the retail side (the only issue at play in Tracy),
and because Michigan’s approach to energy regulation differs materially from the Ohio scheme
at issue in Tracy. See supra at 22–25. On the latter front, the dissenting opinion seemingly
misunderstands our position. We do not critique Michigan’s regulatory choices. See Dissenting
Op. at 39 n.8. Instead, we view the fact that Michigan created a captive market as distinctive
from Ohio’s experience and thus instructive as to Tracy’s reach. See supra at 23–25, 27. After
all, if Tracy were read as also honoring Michigan’s approach, states could simply create captive
markets, insulate market participants from all interstate competition, and immunize them from
any Commerce Clause scrutiny. See NextEra Energy, 48 F.4th at 320.
More broadly, the dissenting opinion faults us for failing to “give full weight to the
judgment of state and local regulators on a matter of state and local concern.” Dissenting Op. at
39. We appreciate this general sentiment. The Constitution, lest we never forget, envisions
states as separate sovereigns who are generally afforded discretion to enact a wide range of
policy choices, judgments we must respect. See New State Ice Co. v. Liebmann, 285 U.S. 262,
311 (1932) (Brandeis, J., dissenting); L.W. ex rel. Williams v. Skrmetti, 83 F.4th 460, 487 (6th
Cir. 2023); cf. Russo v. City of Cincinnati, 953 F.2d 1036, 1050 (6th Cir. 1992) (Suhrheinrich, J.,
concurring in part and dissenting in part) (“[W]hen a federal court reviews municipal or state
executive conduct or policy . . . it must be very careful not to violate principles of federalism . . .
[and] remain ever-mindful of its limited competence” in reviewing such laws); Daunt v. Benson,
999 F.3d 299, 326–27 (6th Cir. 2021) (Readler, J., concurring in the judgment) (criticizing
placing “a judge’s inherent policy preferences front-and-center” to invalidate state laws). Yet it
is beyond dispute that our precedent, to say nothing of the Constitution and our founding history,
contemplates a less passive role for the judiciary when a state interferes with interstate
commerce. See Tenn. Wine & Spirits Retailers Ass’n, 139 S. Ct. at 2460. Especially so in the
face of express discrimination. See Nat’l Pork Producers Council, 143 S. Ct. at 1152–53. In the
end, energy regulation, which is not excepted from this constitutional history, is simply not a

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matter of exclusive “state and local concern.” See supra at 10–12 (discussing the historical
foundation for the anti-discrimination principle); id. at 14–17 (applying founding-era precedent
supporting the anti-discrimination rule as applied to energy regulation, before turning to relevant
judicial precedent).
This understanding leads us to reject the dissenting opinion’s novel approach to
Commerce Clause challenges to state energy regulations: divining whether the underlying
purpose of the state law undermines “a national market for competition,” and, if so, weighing
any associated concerns against the benefits the law bestows upon the “vital” electricity market.
See Dissenting Op. at 43. Whatever the perceived merits of such a grand balancing test, see
Antonin Scalia, The Rule of Law as a Law of Rules, 56 U. Chi. L. Rev. 1175, 1180, 1187 (1989),
both the Constitution and our precedent place Congress—not this Court—as the primary body
that may ascertain the benefits and burdens of a facially discriminatory law. See Bendix Autolite
Corp. v. Midwesco Enters., Inc., 486 U.S. 888, 897–98 (1988) (Scalia, J., concurring in the
judgment); Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 154 (1982) (acknowledging
Congress’s role in limiting judicial review of facially discriminatory laws “[o]nce Congress acts”
and “has struck the balance it deems appropriate” as to a state’s role in burdening commerce).
When a state expressly discriminates against interstate commerce, including in the energy sector,
our role is simply to consider the state’s interests through the lens of strict scrutiny.
What is more, as a practical matter, the dissenting opinion’s approach seems to collapse
upon itself. After evaluating the Michigan market, the dissenting opinion would uphold
Michigan’s regulatory scheme by giving “full weight to the judgment of state and local
regulators.” See Dissenting Op. 36–39. But that evaluation is premised entirely on the trial
court’s findings, which followed a trial that entertained the parties’ competing views on the
ILCR’s benefits. See id. at 39–40 (quoting at length from the district court’s post-trial opinion).
Yet the dissenting opinion, remember, does not think that a trial should ever have come to pass,
believing the district court “erred” in not granting defendants’ summarfpay judgment motions.
See id. at 34. And those pretrial Tracy arguments, it bears emphasizing, never delved into the
policy considerations underlying Michigan’s regulatory approach; they instead were premised on
the mere existence of a captive retail energy market. Only by reverse engineering the district

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court proceedings and invoking an argument defendants never made in district court can the
dissenting opinion now give “full weight” to the views of local regulators expressed at trial. See
id. at 39.
Finally, we likewise reject the suggestion that our opinion is simply a veiled criticism of
how Michigan “chooses to organize its regulatory environment.” See id. at 39 n.8. Our analysis
of the underlying constitutional history and precedent belies that assertion. See Rahimi, 144
S. Ct. at 1920 (Kavanaugh, J., concurring) (“[R]eliance on history is more consistent with the
properly neutral judicial role than an approach where judges subtly (or not so subtly) impose
their own policy views on the American people.”). So too should notions of judicial modesty.
Like all jurists, we admittedly are poorly equipped to offer an informed view of energy
regulation, a deeply complex subject. See Am. Elec. Power Co. v. Connecticut, 564 U.S. 410,
427–28 (2011) (explaining that “[f]ederal judges lack the scientific, economic, and technological
resources” to evaluate fully the “competing” environmental and economic interests implicating
federal energy policy); Elec. Power Supply Ass’n, 577 U.S. at 295 (recognizing the judiciary’s
“limited role” in assessing electricity regulation).
B. The Federal Power Act. That leaves one remaining argument from defendants: that
the FPA authorizes the ILCR, functionally allowing Michigan to discriminate against interstate
commerce. This argument invokes a peculiarity of dormant Commerce Clause jurisprudence.
Ordinarily, Congress cannot license the states to violate the Constitution. See Tyler Pipe Indus.,
Inc. v. Wash. State Dep’t of Revenue, 483 U.S. 232, 263 n.4 (Scalia, J., concurring in part and
dissenting in part). That said, Congress can authorize state or local laws that the negative
Commerce Clause would otherwise prohibit. Prudential Ins. v. Benjamin, 328 U.S. 408, 418–27
(1946). This seemingly unusual practice stems in part from the text of Article I, which
authorizes Congress to “regulate Commerce,” see U.S. CONST. art. I, Sec. 8, cl. 3. That
provision has been understood to afford Congress the power to prohibit or restrict commerce
across the nation. Lottery Case, 188 U.S. 321, 328 (1903). Congressional intervention, it is said,
alleviates political process concerns driving the antidiscrimination principle. As Congress
reflects “all segments of the country,” when the national legislature acts to permit discriminatory
state conduct, the logic goes, there is “significantly less danger” that the action is meant merely

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to benefit one state exploiting another. S.-Cent. Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 92
(1984). But to ensure that there has been “such a collective decision,” the Supreme Court
imposes a clear statement rule in this context. Id. Congress must “manifest its unambiguous
intent” before a federal law is read to allow a state to “discriminat[e] against interstate
commerce.” See Nw. Airlines, Inc. v. County of Kent, 510 U.S. 355, 373 n.19 (1994) (citation
omitted).
What provision of the FPA amounts to a clear statement authorizing Michigan to
discriminate against out-of-state energy through the ILCR? Defendants point to § 201(b)(1),
which removes from federal jurisdiction (and preserves for the states) “facilities used for the
generation of electric energy.” 16 U.S.C. § 824(b)(1). Fairly read, the provision does recognize
state authority over local generation, which presumably extends to regulating for resource
adequacy. But it is difficult to see how this provision authorizes, let alone unambiguously so,
Michigan to use its authority over local energy generation to discriminate against interstate
commerce through the ILCR. True, § 201 provides a “clear and specific grant of jurisdiction to
FERC over interstate transmissions.” See New York, 535 U.S. at 22 (quotations omitted). But
that tells us little about whether the same provision is clear enough to immunize a state from
Commerce Clause scrutiny.
In the end, defendants run headlong into a familiar foe: Wyoming. Recall that after
agreeing that Oklahoma’s ten percent ban on outside coal violated the Commerce Clause, the
Supreme Court considered whether the FPA’s reserving to the states the authority to regulate
local retail electric rates (also found in § 201(b)(1)) authorized the discrimination. 502 U.S. at
458. That provision, Wyoming recognized, simply left “standing” a state’s rate-regulating
authority. Id. (citing New England Power Co., 455 U.S. at 341). Accordingly, Congress in the
FPA did not clearly and unambiguously “permit the discrimination against interstate commerce
occurring” because of the Oklahoma coal law. Id. While defendants highlight a different part of
the FPA’s savings provision, one that preserves a state’s authority over generation, the logic of
Wyoming applies with equal force here—recognition of a state’s general authority to regulate
does not amount to a clear and unambiguous statement immunizing the state from Commerce
Clause scrutiny when it acts under that general authority.

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IV.
Given our view that the ILCR facially discriminates against interstate commerce and that
the FPA does not immunize the ILCR, strict scrutiny governs. That imposing standard requires
defendants to show that the ILCR “advances a legitimate local purpose that cannot be adequately
served by reasonable nondiscriminatory alternatives.” New Energy Co. of Ind. v. Limbach, 486
U.S. 269, 278 (1988); Maine, 477 U.S. at 138. The district court, we note, engaged in the strict
scrutiny calculus as an alternative holding to its determination that the ILCR was
nondiscriminatory. In concluding that the ILCR would survive strict scrutiny, the district court
considered two purposes of the law—ensuring grid reliability and doing so in an equitable
manner (framed as “all customers bear[ing] the cost of providing reliability through local
resources”)—against four alternatives to the ILCR offered by plaintiffs. In the end, the district
court concluded that “[n]one” of plaintiffs’ proposed “alternatives” would satisfy the purposes
served by the ILCR.
We see at least two problems with this approach. First is the purported “legitimate local
purpose[s]” advanced by the law. See New Energy Co., 486 U.S. at 278. Ensuring a reliable
energy supply is an understandable issue of local interest. Cf. Hughes v. Oklahoma, 441 U.S.
322, 337 (1979) (recognizing state interest in health and safety of its citizens). But, for purposes
of the dormant Commerce Clause, an interest in achieving reliability in an equitable manner—
that is, a manner that ensures everyone procures energy locally—is not. See Chem. Waste
Mgmt., Inc. v. Hunt, 504 U.S. 334, 344 (1992) (“The burden is on the State to show that the
discrimination is demonstrably justified by a valid factor unrelated to economic protectionism
. . . .”) (cleaned up). After all, this formulation simply repackages a per se violation of the
dormant Commerce Clause as an interest in discriminating against those retailers who do not
procure their goods locally. Any other understanding would seemingly nullify all dormant
Commerce Clause scrutiny. Oklahoma, for example, could have justified its ten percent coal law
in Wyoming simply by arguing that utilities using out-of-state coal needed to contribute equitably
to local coal usage. Where equity becomes a proxy for discrimination against interstate
commerce, that purported local interest should not be part of the strict scrutiny analysis.
Or. Waste Sys., Inc. v. Dep’t of Env’t Quality of State of Or., 511 U.S. 93, 106 (1994)

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(rejecting similar cost-spreading rationale); see also Foresight Coal, 60 F.4th at 304 (recognizing
that “level[ing] the playing field” is not a legitimate local concern).
With equity removed from the equation, the strict scrutiny inquiry becomes whether the
state demonstrated that the ILCR is the only means of achieving its goal of securing a reliable
energy supply. The district court, however, never reached that question. Instead, it looked at
plaintiffs’ alternatives to the ILCR to see how they stacked up against the ILCR vis-à-vis the
interests of the state. But the burden was on defendants to make this showing. See C & A
Carbone, Inc., 511 U.S. at 392; Maine, 477 U.S. at 138. And more than simply demonstrating
that the ILCR is desirable against the backdrop of the status quo or in the abstract, defendants
need to prove that the ILCR is superior in achieving its goals relative to all other alternatives that
do not expressly discriminate based on geography. Defendants might contend that allowing
LSEs to procure electrical capacity from northern Indiana or Ohio (as opposed to similar
capacity from the upper reaches of the lower peninsula) would fail to achieve the state’s
interests. Yet that is no easy task. Remember, state laws that discriminate explicitly against
interstate commerce are “almost always invalid.” Garber, 888 F.3d at 843. Either way, as the
district court never engaged on the issue, we leave it to that court to resolve this narrow question
in the first instance. See Taylor v. City of Saginaw, 11 F.4th 483, 489 (6th Cir. 2021)
(recognizing that we are “a court of review, not first view”).
V.
We reverse the judgment of the district court and remand for proceedings consistent with
this opinion.

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_________________
DISSENT
_________________
BOGGS, Circuit Judge, dissenting. This case lies at the intersection of two highly
complicated fields: energy regulation on one axis and the Commerce Clause on the other.
Although the majority offers an earnest attempt at navigating these difficulties, it ultimately
reaches the wrong conclusion. In my view, this case clearly falls beyond the scope of the
Commerce Clause and, under General Motors Corporation v. Tracy, 519 U.S. 278 (1997), is
exempt from constitutional scrutiny on the basis that the Michigan Public Service Commission’s
(MPSC’s)1 orders impermissibly discriminate against interstate commerce.
When “allegedly competing entities provide different products,” the dormant Commerce
Clause applies only if “the companies are indeed similarly situated.” Id. at 299. The
Commissioners argue that public utilities and alternative electric suppliers (AESs) serving retail
customers in Michigan are not similarly situated entities, and thus do not meet the threshold
requirement of a dormant Commerce Clause claim, because public utilities (1) serve residential
customers; (2) have an obligation to serve such customers; and (3) are heavily regulated by the
Commission in how they may earn a profit. By contrast, the record illustrates that “[t]ypical
choice participants are large industrial manufacturers and mid-size commercial customers.”
AESs, unlike public utilities, have no obligation to serve any customer and are unregulated when
it comes to their rates. The district court, however, concluded that public utilities and AESs are
similarly situated because AESs “provide the same commodity in the same markets” as other
load-serving entities. The district court erred—public utilities and AESs are not similarly
situated under the Court’s Commerce Clause jurisprudence.
The Commerce Clause’s “fundamental objective” is “preserving a national market for
competition.” Ibid.; see Wyoming v. Oklahoma, 502 U.S. 437, 469 (1992) (Scalia, J., dissenting)
1The Michigan legislature delegated regulatory authority to the MPSC to “regulate all rates, fares, fees,
charges, services, rules, conditions of service, and all other matters pertaining to the formation, operation, or
direction of public utilities.” Mich. Comp. Laws § 460.6(1).

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(“Our negative Commerce Clause jurisprudence grew out of the notion that the Constitution
implicitly established a national free market . . . .”). Prohibiting state regulation of different
products that target distinct markets, with or without the allegedly discriminatory regulation,
does not advance this fundamental objective. Tracy, 519 U.S. at 299. That is, the dormant
Commerce Clause is implicated only when eliminating the state law at issue would improve
competition in a market. Id. at 303–04.
Energy Michigan and ABATE argue that utilities and AESs are similarly situated because
“[e]lectricity sold in the interstate wholesale market is comparable wherever a watt is generated.”
“A watt is a watt, and electricity is fungible,” they argue. But this is the exact argument that the
Court rejected in Tracy—there, the Court made clear that two entities that provide ostensibly the
same end product are not necessarily similarly situated under the Commerce Clause.2 See id. at
302–03.
Tracy involved Ohio’s regulation of its retail natural-gas market. The state imposed
general sales and use taxes on natural-gas purchasers from all sellers except regulated public
utilities. Id. at 281–82. When Ohio partially deregulated its retail natural-gas market,
“marketers”—essentially the natural-gas equivalent of Michigan’s AESs3—began to provide
“unbundled” natural-gas service, typically to larger industrial customers. Id. at 284, 301–02.
The regulated utilities continued to provide natural-gas service that was “bundled” with
distribution service and state-mandated rights and obligations, which was usually the only viable
natural-gas service for household and small retail customers. Id. at 297–98. Marketers, who
tended to purchase out-of-state natural gas, were taxed more than utilities because the Ohio
Supreme Court held that marketers did not qualify for the tax exemption given to regulated
public utilities. Id. at 285. The Commerce Clause challenge followed.
2This court rejected a somewhat similar argument in LensCrafters, Inc. v. Robinson, 403 F.3d 798 (6th Cir.
2005). There, this court found that retail optical stores and licensed optometrists are not similarly situated under
Tracy “because they provide different services to the market.” Id. at 804. While both retail optical stores and
licensed optometrists sell eyeglasses, “licensed optometrists are healthcare providers and, as such, have unique
responsibilities and obligations to their patients that are not shared by optometric stores.” Ibid.
3Independent natural-gas marketers purchase gas from producers, pay interstate pipelines for common-
carriage services, and sell the gas to retail customers. Tracy, 519 U.S. at 284.

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The Tracy Court determined that marketers and utilities were not similarly situated, even
though both types of entities provided some type of natural-gas service to some customers
directly. Id. at 310. Focusing on the Commerce Clause’s core objective of protecting
competition in interstate markets, the Court first noted that the “bundled product” of the
regulated utilities “reflects the demand of a market neither susceptible to competition by the
interstate [marketers] nor likely to be served except by the regulated natural monopolies that
have historically supplied its needs.” Id. at 303. In that situation, “the dormant Commerce
Clause has no job to do.” Ibid. But there was a different market where utilities and marketers
did compete: a “noncaptive” market of customers with sufficient natural-gas needs to justify
trading the protections of state regulation for the lower prices of unbundled service. Id. at 302–
03. Nonetheless, the Court refused to treat utilities and marketers as similarly situated, even for
only this small noncaptive market. Ibid.
Here, public utilities and AESs interact in fragmented markets like those discussed in
Tracy. The public utilities here provide electricity service to a large captive market. That is,
because Michigan law caps AESs’ market share at ten percent of the retail market,4 the
remaining 90 percent is effectively captive to the utilities. See Mich. Comp. Laws § 460.10a(1).
The only market in which AESs and utilities compete is the noncaptive market of the ten
percent—effectively large industrial customers—that choose to purchase electricity from AESs.
See ibid. Courts must consider the entire relationship between allegedly competing entities,
rather than the competitive markets in isolation. See Tracy, 519 U.S. at 297–98. In these
circumstances, the small noncaptive market is thus not enough to render the entities comparable
under the Commerce Clause. That should be the end of this case.
Any doubts about this outcome should be assuaged after examining the policy
considerations involved, which are like the policy considerations emphasized by the Tracy Court.
See id. at 304–10. By way of background, the “individual local clearing requirement” (LCR)
challenged here essentially prescribes the percentage of capacity that suppliers—load serving
4Public Act 286 caps AESs’ market share by mandating that “no more than 10% of any utility’s average
retail sales are supplied with electricity from an alternative electric supplier.” See In re Reliability Plans of Elec.
Utilities for 2017-2021, 949 N.W.2d 73, 78 (Mich. 2020) (citing Mich. Comp. Laws § 460.10a(1)(a)).

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entities (LSEs) including both utilities and AESs—must obtain from a specific geographic area
to reduce blackout risk. This case’s dormant Commerce Clause challenge concerns the LCR’s
application to Zone 7,5 a zone located entirely in Michigan’s lower peninsula but not completely
coterminous with the peninsula.6
While the MPSC’s LCR differs in a few respects from the MISO rules, as outlined by the
majority and court below, the LCR did not redefine Zone 7’s operative boundaries. The
boundaries of Zone 7, like the boundaries of all of the Local Resource Zones (LRZs), are defined
by MISO to “reflect the need for an adequate amount of Planning Resources to be in the
appropriate physical locations within the MISO Region to reliably meet Demand and [Loss of
Load Expectation] requirements.” MISO, Business Practices Manual No. 011: Resource
Adequacy, at 79 (2023). More precisely, the geographic boundaries of each zone are set based
upon analysis that considers: “(1) the electrical boundaries of Local Balancing Authorities;
(2) state boundaries; (3) the relative strength of transmission interconnections between Local
Balancing Authorities; (4) the results of previous [Loss of Load Expectation] studies; (5) the
relative size of LRZs; and (6) market seams compatibility.” Ibid.
Bear in mind that MISO is not a Michigan agency or arm of the state in any sense.
Rather, MISO is an independent “quasi-autonomous nongovernmental organization” regulated
by the Federal Energy Regulatory Commission (FERC). See Regional Transmission
Organization Backgrounders, Sustainable FERC Project, https://perma.cc/JER9-X7CH; see also
Participation in Midcontinent Independent System Operator (MISO) Processes, An Introductory
5MISO establishes a Planning Reserve Margin Requirement (PRMR) for each electricity provider. See
Energy Michigan, Inc. v. Scripps, 658 F. Supp. 3d 511, 516 (E.D. Mich. 2023). “Under this planning requirement,
electricity providers must ensure that a certain amount of electricity is available to meet its customers’ demands for
the upcoming year. To meet part of that requirement, electricity providers also must demonstrate that they will
generate enough capacity locally (the LCR).” Ibid. (internal citations omitted). The LCR “percentages were set on
August 1, 2018, at 2.7% of the LSEs’ PRMR for 2022/2023 and 5.3% of the LSEs’ PRMR for 2023/2024.” These
percentages affect the amount of electrical capacity that must be located in the zone. On September 13, 2018, the
MPSC issued a stay of the June 18, 2018, order, which the commission has voluntarily continued during this
litigation.
6The southwest corner of Michigan is in PJM Interconnection territory, while Michigan’s upper peninsula
is in MISO Zone 2. See In re the Investigation, on the Comm’n’s Own Motion, into the Elec. Supply Reliability
Plans of Mich.’s Elec. Utils. for the Years 2017 Through 2021, No. U-18197, 2017 WL 4155229, at *5 n.5 (MPSC
Sept. 15, 2017).

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Guide to Participation in Midcontinent Independent System Operator (MISO) Processes, FERC,
https://perma.cc/Q8UH-BJ2C.
While the majority gives a mild nod to “the public’s need for dependable energy,” it
gives short shrift to that interest “under the banner of the dormant Commerce Clause.” United
Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 347 (2007).
“The size of the captive market, its noncompetitive character, [and] the values served by its
traditional regulation” counsel against overriding the MPSC’s judgments and strongly suggest
that eliminating the LCR will jeopardize utilities’ capacity to serve the large captive market. See
Tracy, 519 U.S. at 307.
Thus, to some degree, this case involves a judgment about the proper trade-off between
maintaining the reliability of household electric service and the prerogatives of a home-state
regulator on the one hand and amplifying competition on the other.7 Should this court insert
itself into a complex web of regulation in hopes of increasing competition within a sliver of the
market? This court should err on the side of refusing to do so because the Commerce Clause
“does not elevate free trade above all other values,” Maine v. Taylor, 477 U.S. 131, 151 (1986),
and because this court is operating in a space that is traditionally the province of the states. See
Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm’n, 461 U.S. 375, 377 (1983) (“[T]he
regulation of utilities is one of the most important of the functions traditionally associated with
the police power of the States.”); see also Metro. Life Ins. v. Massachusetts, 471 U.S. 724, 756,
(1985) (“The States traditionally have had great latitude under their police powers to legislate as
to the protection of the lives, limbs, health, comfort, and quiet of all persons.” (internal quotation
marks and citation omitted)); United Haulers, 550 U.S. at 344 (“We should be particularly
hesitant to interfere with the Counties’ efforts under the guise of the Commerce Clause because
waste disposal is both typically and traditionally a local government function.” (internal
quotation marks and citation omitted)); S. Pac. Co. v. Arizona ex rel. Sullivan, 325 U.S. 761, 770
(1945) (holding that states have a “wide scope for the regulation of matters of local state
7Because customers of alternative suppliers tend to be large industrial purchasers, the captive 90 percent
are mostly household customers for whom grid reliability is arguably most important.

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concern, even though [these laws] in some measure affect[ ] commerce, provided [they] do[ ] not
materially restrict the free flow of commerce across state lines, or interfere with it in matters with
respect to which uniformity of regulation is of predominant national concern”).
Declining to give full weight to the judgment of state and local regulators on a matter of
state and local concern is a fraught exercise, particularly considering the intricate area of energy
regulation at play here and the small, non-captive market in which the majority hopes to amplify
competition.8 Eliminating the local clearing requirement “might well intensify competition” in
the noncaptive market, but “the importance of traditional regulated service to the captive market
makes a powerful case against any judicial treatment that might jeopardize [the utilities’]
continuing capacity to serve the captive market.” See Tracy, 519 U.S. at 302–04. That is, as
suggested above and as found by the district court, eliminating the local clearing requirement
would likely jeopardize the public utility’s ability to serve the market of household and small
retail consumers that is not subject to competition from the AESs and whose customers are owed
nothing from those suppliers. See Energy Michigan, 658 F. Supp. 3d at 533 (observing that
Energy Michigan and ABATE “baldly contend that the defendants failed to demonstrate that the
individual LCR provides a reliability benefit despite nearly every witness testifying to the
contrary”).
Geographic proximity to generation improves grid reliability, and without the
requirement to secure in-state capacity, Michigan would be at risk of falling short of federal
reliability standards. As the district court noted, “[o]ne physical reality incorporated into
planning decisions is that electrical energy degrades when it is transmitted over long distances
due to energy losses that naturally occur over transmission facilities and ‘transmission
constraints,’ terms that refer to the current-carrying capability of the facilities in the transmission
8As Tracy reminds us, courts of review are “institutionally unsuited to gather the facts upon which
economic predictions can be made, and professionally untrained to make them.” See Tracy, 519 U.S. at 308.
Indeed, a critique of how Michigan chooses to organize its regulatory environment seems to underlie the majority
opinion. See Maj. Op. at 24 (stating that “Michiganders are living with an artificially created market due to rent
seeking by the utilities”); id. at 25 (casting the LCR as supporting a “generic interest in local energy reliability”).
One must keep in mind, however, that “[t]he dormant Commerce Clause is not a roving license for federal courts to
decide what activities are appropriate for state and local government to undertake, and what activities must be the
province of private market competition.” United Haulers, 550 U.S. at 343.

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system.” Id. at 516. Again, even with the emergence of AESs, Michigan utilities must serve the
captive market defined by Mich. Comp. Laws § 460.10a(1), while AESs have neither the
obligation nor ability to serve that market.9 Because AESs’ market share is capped by statute at
ten percent of the retail market, they cannot pick up the slack if utilities are unable to provide
reliable service to the remaining 90 percent of the market.
As suggested by the MPSC and as recognized by the court below, Zone 7 is in a
precarious position because of its unique circumstances: Zone 7’s local capacity requirement is
relatively high due to “the age and reliability of resources within the zone, the geographic nature
of the zone (a peninsular state with limited interconnection), and the amount of available
transmission import capacity.” See id. at 517, 525 (recounting testimony that Zone 7 has a
particular need for resources to be located within the zone “due to constraints within the
transmission system”). The district court found that “Zone 7 presently faces a loss-of-load
expectation of nearly twice the excepted [sic] risk standard.” Id. at 536.
The majority relies heavily on Wyoming v. Oklahoma, 502 U.S. 437 (1992). While this
court need not grapple with Wyoming because Tracy dictates the outcome of this case, Wyoming
is distinguishable. There, Wyoming challenged an Oklahoma law that required Oklahoma coal-
fired electric generating plants producing power for sale in Oklahoma to burn a mixture of coal
containing at least 10% Oklahoma-mined coal. Id. at 440. Prior to Oklahoma’s enactment of the
law, several Oklahoma utilities purchased nearly all of their coal from Wyoming sources. Id. at
444–45. The Court held that Oklahoma’s legislation violated the dormant Commerce Clause
because the legislation “expressly reserve[d] a segment of the Oklahoma coal market for
Oklahoma-mined coal, to the exclusion of coal mined in other States.” Id. at 455. The Court
found that “[s]uch a preference for coal from domestic sources cannot be characterized as
anything other than protectionist and discriminatory.” Ibid. Indeed, the protectionism of
Oklahoma’s legislation was almost called out by name in the Oklahoma Legislature’s recitals
and resolutions, which, among other things, emphasized that requiring plants to burn a blend of
9Likewise, without an individual requirement to maintain locally generated capacity, “AESs lack any
incentive to own local generation or add capacity in Zone 7.” See Energy Michigan, 658 F. Supp. 3d at 533 (internal
quotation marks and citation omitted).

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Oklahoma-mined coal “would assure at least a portion of the ratepayer dollars remain[] in
Oklahoma and enhanc[e] the economy of the State of Oklahoma.” Id. at 443 (internal citation
omitted).
Concerns about economic protectionism are at the core of the Court’s dormant
Commerce Clause jurisprudence. See, e.g., Nat’l Pork Producers Council v. Ross, 598 U.S. 356,
369 (2023). While those concerns animated Wyoming, they are not present here. First, note that
the Oklahoma Act at issue in Wyoming, on its face, required the purchase of coal based on its
origin within the state of Oklahoma. 502 U.S. at 456. Here, while Zone 7 is, in fact, entirely
within Michigan’s lower peninsula, it is not coterminous with the state (or the lower peninsula),
and, more to the point, a multitude of factors beyond state borders were considered in MISO’s
creation of Zone 7.10 As stated above, those factors included, among other things, “the relative
strength of transmission interconnections between Local Balancing Authorities” and “the results
of previous [Loss of Load Expectation] studies.” See Business Practices Manual No. 011, at 79.
Insofar as Zone 7’s geographic location is in large part a product of technical judgments about
grid reliability and the engineering reality that a reliable grid must have some amount of
electricity generated close to where it is consumed, its connection to state borders is incidental
10The majority finds that the MPSC’s orders facially discriminate on the basis that the orders “result in
differential treatment between electricity generated in-state and that derived out-of-state.” The district court found
that the orders do not facially discriminate because the orders do not distinguish between entities based on their in-
state or out-of-state status; that is, the orders do not explicitly target out-of-state actors. See Energy Michigan, 658
F. Supp. 3d at 532 (“It is not evident, however, that local economic actors are favored by the individual LCR. To the
contrary, witnesses offered extensive testimony at trial establishing that the requirement imposes the same burdens
on utilities that it imposes on AESs.”). As the MPSC presses in its brief, and as credited by the district court, the
LCR applies equally to in-state and out-of-state entities, as well as to both incumbent utilities and AESs.
Tracy itself concerned facial discrimination. 519 U.S. at 291; see Camps Newfound/Owatonna, Inc. v.
Town of Harrison, 520 U.S. 564, 582 n.16 (1997) (noting that Tracy “premised its holding that the statute at issue
was not facially discriminatory on the view that [marketers and utilities] were principally competing in different
markets”). But because Tracy’s threshold “similarly situated” determination dictates the outcome of this case, it is
unnecessary to opine on whether the order here is indeed facially discriminatory.
Tracy paints the “similarly situated” requirement using broad strokes. See 519 U.S. at 298–99
(“Conceptually, of course, any notion of discrimination assumes a comparison of substantially similar entities.”
(emphasis added)). And the Supreme Court has repeatedly declined to distinguish under Tracy between facial and
non-facial discrimination. See Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 342–43 (2008) (describing Tracy’s
substantially-similar-entity requirement as a “fundamental element of dormant Commerce Clause jurisprudence”);
United Haulers, 550 U.S. at 342 (applying Tracy to uphold an ordinance that was not facially discriminatory).

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and far afield from the ostensibly deliberate act of economic favoritism found in Oklahoma’s
Act.
Second, and perhaps more importantly, the Court appreciated that nothing in Wyoming’s
record could plausibly explain the Oklahoma Act’s preference for coal from domestic sources,
aside from economic protectionism. The majority likens the MPCS’s power-grid-reliability
argument to Oklahoma’s unsuccessful and “briefly” made argument that the regulation at issue
in Wyoming was needed to lessen Oklahoma’s “reliance on a single source of coal delivered over
a single rail line.” 502 U.S. at 456. However, there was nothing about Oklahoma coal qua
Oklahoma coal that made the legislation necessary for energy reliability. Oklahoma was content
with up to 90% of its coal coming from Wyoming, showing the single-source argument is best
understood as a thinly veiled (and speculative)11 explanation for why the state felt it important to
engage in economic protectionism; it aspired to strengthen its own coal industry by insulating it
from competition.
And finally, electricity transmission is fundamentally different from the transportation of
coal. Oklahoma could have purchased coal from other sources and stockpiled it. See id. at 457.
Electricity cannot be stockpiled like coal can; electricity is instantaneous and grid reliability
depends on the dispatchability of electricity—for instance, a state’s local control and
accessibility to electricity sources are crucial on a hot day when a disproportionately high
number of residents turn on their air conditioners at the same time. See In re Reliability Plans of
Elec. Utilities, 949 N.W.2d at 77. MPCS’s reliability arguments are thus different in kind from
Oklahoma’s passing mention of reliability concerns.12
11In its reply brief, Oklahoma stated that its Act “prevents the State from becoming solely reliant on a fuel
supply far removed from the State of Oklahoma. Certainly the State of Oklahoma does not have to wait for a coal
strike or a rail strike before anticipating this obvious potential problem and insisting on the development of local
coal supplies.” Reply Brief for the State of Oklahoma at 9, Wyoming v. Oklahoma, 502 U.S. 437 (1992) (No. 112),
1989 WL 1642575, at *9.
12See Energy Michigan, 658 F. Supp. 3d at 533–34 (finding that “[t]he plaintiffs’ witnesses did not refute
[the] reliability benefit [of the LCR]” and recounting one expert’s statement that “without the MPSC’s individual
local clearing requirement, ‘over 1,400 MW of capacity could be excluded from the State’s long-term planning
requirement of being sited within Michigan,’ translating to ‘over 300,000 customers in Michigan’ being served by
resources ‘potentially located nowhere close to where it’s needed to be delivered”’).

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At bottom, eliminating the local clearing requirement would do nothing to further the
Commerce Clause’s “fundamental objective of preserving a national market for competition,”
Tracy, 519 U.S. at 299, and it would undermine the reliability of the state’s grid. The majority of
Michigan’s retail electricity market remains in the hands of the public utilities, who have an
unshakable obligation to serve that vital market. The district court should have determined that,
under Tracy, the local clearing requirement is not subject to review under the dormant
Commerce Clause.13 Accordingly, I dissent.
13To be sure, nothing in this opinion should be read as a suggestion that utilities are universally “immune
from [ ] ordinary Commerce Clause jurisprudence.” Tracy, 519 U.S. at 291 n.8. Tracy rejected that contention,
while still carving out the “similarly situated” requirement as a limiting principle. See id.

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