Massachusetts Legislature Passes Controversial Solar Energy Bill
After months of negotiation, the Massachusetts Legislature finally reached a compromise to raise the caps on the state’s controversial “net metering” program. The net metering program enables solar (and other alternate energy) producers to sell excess power their systems produce back to the grid for a credit on their account. However, the previous law capped the amount of energy that power companies can accept as a percentage of each company’s highest historical peak load. That is, power companies are currently limited by law from accepting more than 4% at private companies and 5% at public companies of the most electricity historically consumed by their customers at any one time. These restrictions threatened to make the fledgling solar energy industry in Massachusetts a victim of its own success. By the end of 2015, some advocates reported that 171 Massachusetts communities had already reached their cap, including much of Eastern Massachusetts. As these caps were reached, new solar projects were stuck in the shade—with owners unable to capitalize on their solar investments. Time was also of the essence because federal renewable energy tax credits—which help further incentivize solar development—are set to expire at the end of 2016. Solar projects hoping to take advantage of these credits need to begin construction soon, and some worried that without an update to the law would result in millions of dollars in solar investment moving out of state.
Although the Senate introduced legislation to alter the cap in July 2015, and Governor Baker introduced his own legislation a month later, the House waited until November 17—two days before the legislature was scheduled to enter a recess—to file it’s version: H. 3854. Although members of the House and Senate joint committee tried to quickly negotiate a compromise between the two proposals, after a short 90-minute session they conceded the issue was too complex and that it would take more time than they had before the recess to reach an agreement. The House bill—which was considerably more conservative than the Senate or Governor’s versions—was quickly decried by many solar advocacy groups. While the House agreed with the Senate that the cap should be raised to 1,600 megawatts—a 2 percent increase over existing caps—it also included utility industry friendly provisions allowing for the addition of a “minimum monthly reliability contribution” to net metering bills, reduced future net metering compensation rates from retail to wholesale prices above the 1600 megawatt cap, included a provision switching all net metering compensation rates to wholesale rates after 15 years, and organized a solar incentive program under the ultimate oversight of the Department of Public Utilities. The House’s last-minute submission drew objections from some lawmakers, including Senate President Pro Tempore Marc Pacheco, who referring to the House’s proposal as “the utility bill.”
Of course, the question remains whether the net metering program is in the best interest of the public. Some argue that net metering—particularly residential net metering— essentially shifts electricity distribution costs onto energy customers that do not produce solar energy. This amounts to a subsidy for alternate energy producers from non-alternate energy producers. In fact, a recent MIT study and a report from the Louisiana Public Service Commission both concluded that residential net metering should be abolished altogether, in part because pushback from utilities companies will threaten solar power development in general. However, many solar advocates dispute these conclusions. In fact, several other state reports have found either neutral or positive effects from net metering programs—including studies from Vermont, Nevada, and Mississippi. And while net metering remains controversial, states have overwhelmingly chosen to adopt some sort of net metering approach, with only 4 states (South Dakota, Tennessee, Mississippi, and Alabama) currently rejecting any sort program. However, states almost all impose some sort of cap on net metering credits, with only 3 states (Arizona, New Jersey, and Ohio) imposing no net metering capacity limits.
With the mixed opinions on the effectiveness of net metering credits, Massachusetts lawmakers cannot be blamed for taking a cautious approach, and ultimately, that is what happened when Governor Baker signed a compromise bill into law in April 2016. The new law raises the net metering cap by 3% for public and privately owned installations while decreasing the value of the credits for power sold by many of the solar producing customers by 40%. Residential customers, municipalities and small commercial projects will continue to receive retail rate credits and existing projects will be grandfathered in at the retail rates they receive now for 25 years. According to the State House News, lead Senate negotiator Sen. Benjamin Downing (D-Pittsfield) stated, “Solar will continue to grow and play a vital role here in Massachusetts and its going to do so in a cost effective way.”
This, however, is not the end of the issue. The Legislature will likely have to revisit the caps within a year when they are again reached. California and New York have both put into place a long-term and comprehensive plan for increased solar energy production and net metering. Massachusetts should do the same in the next session, which begins in January 2017.
Tyler L. Spunaugle is from Miami, Oklahoma and graduated from Dartmouth College majoring in both Philosophy and Native American Studies. Tyler is scheduled to graduate from Boston University with a Juris Doctor in Spring 2016, with active participation in two of BU’s clinics. After graduation, Tyler will be working as a staff attorney for the Government Accountability Office in Washington, DC.
Déjà Vu for a Computer Programmer: A New York Statute’s Language Saves Him Again
A former Goldman Sachs computer programmer who had a federal jury conviction for illegally taking proprietary computer code from his employer overturned in 2012 was found guilty again—only to have the conviction reversed again by a judge. The verdict came in a New York state prosecution, People v. Aleynikov. This high profile case not only inspired a character in Michael Lewis’s book Flash Boys, but it also provides an interesting example of how a statute’s text can play a pivotal role in a case’s outcome.
According to the facts in his federal appeal, Sergey Aleynikov worked as a computer programmer for
Goldman Sachs from 2007-2009 where he developed complicated code for the company’s high frequency trading (HFT) system. He left the company in June 2009 to go work for a start-up trading company. However, on his last day, he uploaded more than 500,000 lines of code from Goldman Sachs’ HFT system to a server in Germany. When he arrived home, he downloaded the code to this personal computer and copied some of the files to other devices. On July 2, 2009, he traveled to attend meetings at his new company and took a flash drive with him containing some of the source code. The next day he was arrested. He was charged with violating the federal Economic Espionage Act (EEA) and the National Stolen Property Act (NSPA). After only a few hours of deliberation, a jury found Aleynikov guilty of violating both acts. However, on appeal, the Second Circuit reversed both verdicts and held that Aleynikov’s behavior did not violate either the EEA or the NSPA.
What caused the reversal despite a seemingly confident jury? The language of both statutes. Aleynikov argued that the computer code was not a “product” that was “produced for or placed in interstate commerce” as required by the EEA and that the computer code was not a “good” or “ware” under the NSPA because it was a purely intangible product. The Second Circuit agreed and adopted these fairly narrow readings of both statutes when it determined that Aleynikov’s behavior did not violate either act.
Starting with the EEA charge, the court did not resolve the question of whether intangible computer code is a “product” because it determined that Goldman’s HFT system was not “produced for” or “placed in” interstate commerce (discussion at U.S. v. Aleynikov, 676 F.3d 71 at 82). The court read these words as requirements for a person to be found guilty of violating the EEA after relying on both the act’s plain language and legislative history (discussion at pages 79-80). The court ultimately held that an internally used computer program that a company has no intention of selling was not “produced for” or “placed in” interstate commerce (discussion at page 82).
The court did address whether computer code qualified as a “good” when it looked at the NSPA because the term is undefined in the statute (discussion at page 76). The court heavily relied on precedent, including the Supreme Court’s decision in Dowling v. United States, to determine that a “good” must be a tangible piece of property taken over state lines and because code is purely intangible it does not fall under the NSPA (discussion at page 77). In Dowling, the Supreme Court held that the NSPA “clearly...contemplate[s] a physical identity between the items unlawfully obtained and those eventually transported.” (discussion at Dowling v. U.S., 473 U.S. 207 page 216). The Second Circuit also relied on similar decisions by the Tenth, Seventh, and First Circuits to conclude the NSPA does not cover the theft of intangible things and therefore, Aleynikov is not guilty of violating the act. (discussion at U.S. v. Aleynikov, 676 F.3d 71 pages 77-78).
However, the story does not end there. After his federal charges were overturned, the Manhattan District Attorney’s office decided to prosecute Aleynikov under state law. Aleynikov was charged with two counts of unlawful use of secret scientific material and one count of unlawful duplication of computer related material. The jury recently issued a split verdict and found Aleynikov guilty on one of the secret scientific material charges. The jury could not reach a decision on the second scientific material charge, and acquitted him on the duplication charge (which is a bit odd since both charges require a finding that the protected material was reproduced). For the purposes of a potential appeal, it is important to focus on the secret scientific material statute to determine whether it is likely an appeals court will overturn Aleynikov’s guilty verdict.
The statute states a “person is guilty of unlawful use of secret scientific material when...he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material.” (emphasis added). Similar to the federal case, because the New York statute fails to define “tangible” or whether computer code qualifies as a tangible item, the jury was required to make this decision to determine whether Aleynikov’s transferring of source code to a flash drive violated the law. The jury spent over a week deliberating and had to have the jury instructions re-read several times before the instructions were eventually provided in writing. The jury also sent the presiding justice over a dozen notes asking for clarity on the meaning of the law, which suggested the statute is unclear. As the New York Times reported, even the justice who presided over the case expressed concern about whether Aleynikov’s actions fell within the statute. Despite the long deliberation and some odd twists and turns (including avocadogate), the jury ultimately decided Aleynikov violated the law. In July, 2015, however, the conviction was overturned by the New York State Supreme Court. Justice Daniel Conviser said prosecutors “did not prove [Aleynikov] committed this particular obscure crime.”
This case is interesting because it highlights the difficulty jurors and judges face when interpreting statutes—especially in light of advancing technology. The federal and state statutes were drafted prior to the creation of much of the technology involved in this case. After the Second Circuit’s ruling on the EEA, Congress actually amended the statute’s language.
Given the judge’s disagreement with the jury in this case, the New York statute’s language is ambiguous and clearly a barrier to prosecutors bringing future criminal charges. Like Congress, the New York Legislature will have to make amendments to the current statutes, or create a new statute that reflects current technology—and hope the language remains relevant for more than a few months.
Amanda Hesse is from Princeton, New Jersey and graduated from American University with a dual major in Law & Society and Public Communication. She anticipates graduating from Boston University School of Law with a Juris Doctor in Spring 2016. During Summer 2015, Amanda will intern at the Southern Poverty Law Center in Jackson, Mississippi, where she will focus on juvenile justice and prison conditions reform.