By Tom Kleckner

The U.S. Department of Justice last week again threw its weight behind NextEra Energy’s ongoing effort to repeal a Texas law giving incumbent transmission companies the right of first refusal to build new power lines in the state.

Attorneys with the department’s Antitrust Division filed an amicus brief with the 5th U.S. Circuit Court of Appeals in New Orleans (20-50160), where NextEra Energy Capital Holdings and four other NextEra transmission owner/developer entities have appealed a U.S. district court’s February decision to not overturn Texas Senate Bill 1938. (See NextEra Appeals Court Decision on Texas ROFR Law.)

Assistant Attorney General Makan Delrahim and other division attorneys urged the 5th Circuit to vacate the district court’s judgment and remand the motion to dismiss. The division also filed a brief in NextEra’s lawsuit before the U.S. District Court for the Western District of Austin. (See DOJ Weighs in on Texas ROFR Lawsuit.)

DOJ questioned whether the district court properly dismissed a dormant Commerce Clause challenge to SB 1938. The legislation, passed last May, essentially allows only incumbent transmission companies to build new power lines in Texas by granting regulatory certificates of convenience and necessity to the owners of the endpoints of a new transmission line.

Delrahim noted that the Commerce Clause gives Congress the power to regulate interstate commerce and that the Supreme Court has interpreted the clause to contain the negative implication that “strikes at one of the chief evils that led to the adoption of the U.S. Constitution, namely, state tariffs and other laws that burdened interstate commerce.”

NextEra has used the same argument in its appeal before the 5th Circuit.

In its brief, DOJ said the district court made three analytical errors in its decision, including:

• Erring in its evaluation of discrimination, improperly distinguishing “binding Supreme Court precedent articulating principles of ‘ordinary Commerce Clause jurisprudence,’” failing to consider in-state physical presence requirements that are “viewed with particular suspicion” and affording improper significance to the location of a utility’s parent company.
• Misreading and misapplying precedent from the Supreme Court ruling in General Motors Corp. v. Tracy to a “noncompetitive, captive market in which the local utilities alone operate.” DOJ said, “The unique factors and concerns for utility markets that determined the outcome in Tracy are not present here and were not evaluated by the district court.”
• Failing to weigh whether any of the alleged burdens from SB 1938 “substantially outweigh the law’s putative benefits,” as required under precedent.