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Appeals Court: Maryland Failed To Justify Restriction On Retail Suppliers' Green Power Marketing, But Failure Of That Statutory Provision Does Not Require Enjoining Entire SB1 At This Stage, Court Rules
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Update #1, 4:19 pm, May 15
Retail Energy Advancement League provided the following statement concerning the court's decision:
Retail Energy Choice Advocates Win Free Speech, Renewable Energy Battle over Maryland Legislation Harming Consumer Options
ARLINGTON, VA (May 15, 2026) –– The Retail Energy Advancement League (REAL) today announced a significant legal victory after the U.S. Court of Appeals for the Fourth Circuit ruled in favor of REAL and its co-plaintiff, Green Mountain Energy Company, in their challenge to Maryland’s Senate Bill 1 (2024).
The court reversed the lower court’s decision in part and ordered a preliminary injunction against key provisions of Senate Bill 1 that prohibited retail energy suppliers from truthfully marketing their renewable energy products as “green,” “clean,” “100% renewable,” or other similar claims.
“This is a significant win for free speech, consumer choice, and competitive energy markets,” said Chris Ercoli, president and CEO of the Retail Energy Advancement League.
“From the outset, Senate Bill 1 was a far-reaching attempt to limit consumer access to competitive energy choice. Maryland residents were promised consumer protection, but instead got a law that stripped away their choices, forced customers off competitive products, drove suppliers out of the market, and blocked affordable electricity options — only for provisions of that same law to now be ruled unconstitutional.
“Today’s decision by the U.S. Court of Appeals vindicates the First Amendment right of suppliers to accurately sell electricity products to consumers.
“Consumers benefit from energy suppliers providing truthful information — not arbitrary restrictions on how products can be explained, unless they are from government preferred sources. Competitive suppliers play an important role in expanding access to innovative, affordable and renewable energy options, and they must be able to communicate those offerings appropriately.
“We look forward to continuing the fight of ensuring state policies support — not undermine — consumer access to diverse energy options.”
The U.S. Court of Appeals Fourth District ruled that Maryland failed to demonstrate that the terms used to describe energy products are inherently misleading, and deemed that the district court erred in denying the preliminary injunction requested by REAL and Green Mountain Energy Company.
Earlier (May 16, 3:54 pm ET):
The U.S. 4th Circuit Court of Appeals has held that while retail suppliers are likely to show that renewable energy marketing limitations under 2024's SB1 fail the required precedential tests supporting state limits on speech, the impermissibility of the renewable energy provisions does not, at this stage, require an order enjoining the entirety of SB1 and its other retail market limitations
As previously reported, Green Mountain Energy and the Retail Energy Advancement League (plaintiffs) had filed a federal suit against Maryland and SB1, alleging that the law's provisions governing how suppliers may offer green energy, and the prohibition on using certain green-related terminology for products which do not meet the definitions under SB1, amount to an impermissible restriction on speech
Further, the plaintiffs argued that these impermissible green energy provisions could not be severed from the rest of SB1, and argued that a federal court must strike down the entire law as a result
See full background here
The 4th Circuit was specifically addressing an appeal from plaintiffs regarding a lower court's order declining to implement a preliminary injunction
The 4th Circuit reversed the lower court in part, remanding the green power marketing issue to the federal district court, with instructions to issue a preliminary injunction related to the green power provisions under SB1
However, the 4th Circuit declined to find at this stage that the impermissible green power speech regulations are not severable from the other provisions of SB 1
The 4th Circuit said, "In Maryland, unless stated otherwise in the statute itself, 'the provisions of all statutes . . . are severable,' and a court’s finding 'that part of a statute is unconstitutional or void does not affect the validity of the remaining portions of the statute, unless the court finds that the remaining valid provisions alone are incomplete and incapable of being executed in accordance with the legislative intent.' Md. Gen. Provisions § 1-210; see also Leavitt v. Jane L., 518 U.S. 137,139 (1996) ('Severability is of course a matter of state law.')."
"At this stage, we do not consider the remaining provisions of S.B. 1 incomplete or incapable of being executed in accordance with legislative intent to override the 'strong presumption' that an invalid portion of a statute 'be severed.' Jackson v. Dackman Co., 30 A.3d 854, 869 (Md. 2011)," the 4th Circuit said
These other provisions of SB1 which are not enjoined include rate caps for residential service (since updated under a recently signed new law, as noted in our story earlier this week), and, most notably, a prohibition on residential POR
The 4th Circuit did remand the to the district court the renewable energy provisions of SB1, with instructions for the district court to preliminarily enjoin section 7-707(c) of Maryland’s Public Utility Code
Section 7-707(c) only contains SB1's provisions regarding green energy offers to residential customers, including price limits and product definitions for the product to qualify as green
The 4th Circuit directed that the district court shall review the constitutionality of the green power disclosures required by a PSC order implementing SB1, with such required disclosures different from the SB1 language
"[W]e find that Plaintiffs have established the requisite preliminary injunction factors as to their speech restriction challenge [concerning green energy]," the 4th Circuit held
"Regarding the statute’s [green power] disclosure requirement, because the State has since promulgated new disclosure language, we remand the question of the constitutionality of this newly imposed compelled speech to the district court for initial review," the 4th Circuit said
The 4th Circuit said that "Plaintiffs are likely to prevail in showing S.B. 1’s [green] speech restriction fails even under intermediate scrutiny[.]"
The 4th Circuit said that Maryland failed to justify the green power restrictions because, among other reasons, the state failed to show that certain terms were misleading
The 4th Circuit said, "Maryland argues S.B. 1 regulates inherently misleading speech that should receive no First Amendment protection. We disagree. The State contends, for example, that 'representations of delivering ‘100% wind electricity’' would be 'untrue unless the customer’s residence is physically connected to a windmill, and [suppliers’] representations of delivering ‘100% solar electricity’ are untrue unless the residence is
physically connected to solar panels.'"
"But in this argument, the State only demonstrates that one possible use of these terms is misleading, which is not enough to deprive the language of any First Amendment protection," the 4th Circuit said
"Furthermore, S.B. 1 covers terms and phrases beyond the mere '100% wind' and '100% solar' examples cited by the State—the statute prohibits suppliers’ use of terms such as 'clean, green, eco-friendly, environmentally friendly or responsible, . . . or similar claims,'" the 4th Circuit said
"Maryland fails to demonstrate how the use of these terms is inherently misleading," the 4th Circuit said
"Maryland further argues that 'consumers will likely be confused' about the complexity of the energy grid and REC system, perhaps in an effort to show that the regulated speech is actually misleading. But the State cites no authority for the proposition that potentially confusing speech is not protected by the First Amendment, and the Supreme Court has in fact provided guidance to the contrary," the 4th Circuit said
Furthermore, the 4th Circuit found that the speech restrictions were not supported because the speech restrictions failed to achieve the state's argued goal of reducing customer confusion. The green power market created by SB1 is still likely to result in customer confusion concerning the use of RECs, and therefore the Court concludes that the limitation on speech is not advancing a compelling interest as is required for such speech restriction
Moreover, in light of the fact that the green power provisions do not reduce customer confusion, the 4th Circuit does notably conclude that, "[t]he contemporaneous evidence surrounding S.B. 1’s drafting, endorsement, and passage overwhelmingly supports the notion that consumer protection was the State’s concern," not the regulation of green energy
"Maryland does not adequately show that it asserted an interest in promoting renewable energy within the PJM region prior to litigation," the 4th Circuit said
Specifically, by allowing PJM RECs, sourced from as far as Chicago, to be used for "green" products allowed under SB1, the 4th Circuit found that customers would still be confused about what constitutes "local" green power.
The Court found that SB1 allows the following: "[A] supplier advertising to a customer in Baltimore may still refer to its product as '100% renewable' as long as just 51% of the electricity is backed by RECs generated outside Chicago (within the PJM region), whereas a supplier purchasing RECs generated from renewable sources in Texas (outside the PJM region) may not. Consequently, S.B. 1 problematically allows for confusing marketing to persist -- defeating the State’s asserted interest in protecting consumers from misleading information, rather than advancing it."
"Although it may seem counterintuitive that a speech restriction targets too little speech, that S.B. 1 tolerates green advertising with in-region RECs but not out-of-region RECs 'raise[s] doubts about whether the government is in fact pursuing the interest it invokes' and 'reveal[s] that [the] law does not actually advance a compelling interest,'" the 4th Circuit said
"Based on the evidence before us at this stage in litigation, Maryland fails to show that S.B. 1’s restriction materially alleviates the real harm it has identified, thus failing Central Hudson’s [a precedential case] third factor. The State therefore fails to successfully defend the speech restriction," the 4th Circuit said
"We do not doubt that consumers are confused about the general nature of the electricity grid and structure of the REC system. The host of evidence on this point clearly shows that the harms the State cites are real. Even so, Central Hudson requires an adequate fit between the speech restriction and the harms the State intends to alleviate, not merely a 'link.' Here, there simply is not a close enough fit," the 4th Circuit said
"Ultimately, S.B. 1’s 'regulatory regime is so pierced by exemptions and inconsistencies that the [State] cannot hope to exonerate it [with respect to the green power speech limits],'" the 4th Circuit said
As noted above, the 4th Circuit directed the lower district court to preliminarily enjoin the green power rules and undertake a new review of their constitutionality and the PSC's implementation of such. The 4th Circuit did not order the enjoinment of any other provision of SB1, such as the residential POR prohibition
No. 25-1012
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May 15, 2026
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Reporting by Paul Ring • ring@energychoicematters.com
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