texas passing a law saying that you have to be a resident for a couple of years in order to operate a liquor store and get a license and that happens to be exactly what the united states supreme court struck down as a violation of the commerce clause just last term even though there is an express authority in the st amendment given to the states to regulate alcoholic beverages now i know here by contrast we're dealing with interstate transmission lots not local distribution lines and run throughout our communities and halts but the high voltage transmission lines that are part of an interstate grid lines that are planned and put out for getting by multi state in the pendant system whether or not you're making a face to challenge because under salerno and you would have to show that there could be no constitutional application and anyway if you are conceding that in the where  are caught is that it could be in that seems to be a problem if you are truly making a facial challenge rather than an as applied challenge in our complaint your honor we've indicated we're making both a facial and an as protocol so the only reason this was passed in the only affects of the law is within those regions of texas which are part of my so s p t and other independent system o that reverses and carts out because we are not seeking to change the status quo with the clock this law was passed because of what was happening with respect to rule one thousand by st which opened up competitive because there you had it incumbent waste company and in fact the supreme court said in response to the argument that it's similar to the texas argument here that they're just one company that the fact that the state was favoring a sole incumbent made the situation of protectionism even worse and hands that with respect to cologne that was a case by the th circuit which did not prevent out of state companies qualifying for certificate of need it simply had to go through that process just like we are prepared to go through the process and before the public utilities commission before texas came along and said you can't get a certificate of convenience in this  you no matter what so we think that it's a different situation with respect to to discrimination in carbone just preferences to incumbents if the rule here just said one factor in deciding who the who to grant these licenses to is is whether there's a demonstrated history of constructing transmission lines in texas maintaining those wants i think they would have to be open to allowing that demonstrated record to be performance throughout the united states i don't think it would be appropriate to drafted an ordinance or statute which said only the incumbent's record of performance can be considered because that's winning the scales against competition for about a stak cargo is the case that controls because they're dealt with services the service of constructing and provided waste services and the court made clear that was unconstitutional the response that has been given is well these nice united holt's but you're not going to haulers is a case where the government was a participant in the market not where you're dealing with private parties like entergy here and others affected by this law and in fact several turns after united haulers the supreme court in the davis case said that if we were dealing with a private enterprise it and united following we would not have hesitated to strike it down on their car ball now we think it is carbone rather than in tracy that applause to begin with tracey recognize that they were not creating some public utility exception to the commerce clause they wrecked recognize that cases going back as far as i only against oklahoma distribution why doesn't that texas have an interest in bain should be protecting those companies that build the state needs of supplying electricity to everyone even you know rural people where it's not cost effective well texas  can do so in a nondiscriminatory way as it did before this law was passed in fact the this is that unusual case where i'm able to quote the texas attorney general himself who went before the state  for electric utilities which provided only transmission services and with respect to those services next care needs to receive a certificate that certificate would be evaluated by the public utility commission we would have to meet all the requirements of a utility that applies to transmission companies for example there's parts of the utility that say we have obligations to furnish services that are safe adequate efficient and reasonable to construct a facilities in accordance with the code in the law and i would know that as things practical matter other companies from transmission lines are built cost of transmission lines of the retail service provider in that area so it's not like if one dollar goes out there now the only lines are those of the retail service provider and that was a point which was made by the attorney general of texas in the applications of the texas courts as well particular area the law it really only changes things within those areas subject to the interstate system operates but nd as applied challenge would be right because the law on its face is a law which says we cannot get our qualify for a certificate of convenience or necessity so there is there's nothing to be done under the law in the at the administrative level the only thing that is needed is to judge the constitutionality rely on the pacific gas and electric case from the supreme court in one thousand nine hundred and three dealt with a right to his challenge and it's in one of the footnotes there and the challenge to this type of situation with nuclear plants where it was clear that they out of state ownership mattered and there's no supreme court case or case with a circuit that has ever said that one looks to get back to my parents ownership of the company to determine whether or not there's discrimination the t over effect in a nd market a competitive market here we're dealing with one product in one market a service market of building owning and operating these interstate transmission last particularly interstate markets where myself is the one which is deciding where these want to keep you know when it needs these winds and it should go out for competitive bidding and determine in this case that next year offer to expand outstanding combination of value and cost and some of those costs by the way are yes what do you say to the argument though that existing utility owners most of whom are there are they are out of state so we go on to say that it's favoring texas and new out of state no company had ownership out of state or in granholm whether the wineries were owned by out of state in a price that is not question the question is whether or not you're rewarding and in state press so this argument which circuits case but we think fundamentally that case was wrongly decided because it did not properly consider that the fact that something is a police  then have to ask whether or not it violates the commerce clause and here we have three separate loves in which the commerce clause is being violated on its face in its effects which goes to the fact that the ownership out of state doesn't change things and also  purposeful discrimination and there that's an intensely factual analysis we have statements and these are not stray remark by non legislative this is the official statement of the house sponsor before committee saying that we are circumstances for competitive that now we think it is also heavily factual as to whether or not there can be any justification shown for such discriminatory law because that has been established by the supreme court to be a rule of virtual per se have shown that that is subject into a virtual per se rule of invalidity and with that rule i think it could stay you talked about that in your brief yes we have been in the last part of our brief in our reply we there's some discussion by both sides if you're right that the new twelve should have been granted to take especially the discriminatory purpose you just said that's highly act bound and putting aside whether an injunction should issue going to be an actual old trial with the full word resolution by the district court if you're right about all these legal issues that could take quite a while there's going to be an appeal and back to i mean i don't see i guess any way this under your view i mean we have permit the obvious they could get the whole matter is going to be over but under your view how this really ever gets to a quick decision in your favor so how much of a problem is it really with all the you know that you're going to lose the  agrees yes so we think that it can be done on a very quick and expeditious basis because of that and because of the nature of facial discrimination and effects discrimination which are clear because of promoting and preserving competition interstate commerce is an important part of our mission that's why we seek to ensure that the bomb and commerce clause is applied properly and consistently and challenges like this one our position here is a limited one our grief identifies three discrete deficiency in that is record analysis which we think warrant vacating the opinion  on what are purely legal questions that just seems like the way well we think in this case because the district court was not applying the correct legal principle to the complaints we think that the district court in the st instan don't think it should have been done more will bust like that's absolutely correct your honor the district court just gave a cursory statement that basically no burden could possibly overcome the benefits of the law without even specifying with the benefits are we take a position on the question that i've asked about facial challenges and likeness and all of that not on rightness your honor on the baseball challenge yes i do want to draw with me sounds like a fine distinction but we think that the discrimination at issue here is the potentially basal discrimination it may also be discrimination affects but that does not amount to just a condemnation of the law that st if you do prove facial discrimination present so to address the lp case just very briefly we do not think you have to create a circuit split now we had issues with the minnesota law as well however we do think it is easy to distinguish it because the th circuit analysis in two places actually if you look at the were there were ways for non local indices to enter there and the court found that a compelling justification for affirming that that's not present here and in fact this law is much more pernicious in that it like i said before if in common the ability to helps to define what we mean by an incumbent and incumbent they get the right of st refusal is the one that owns the end point that you're connecting to you won't part a of a transmission line you get to build part b so that's primarily what we're talking about and when we're talking about transfer those transfers are not simply allowed to go to any other entity that has done business in texas before which is what the implication seems to be and what what my opposing counsel is is saying if that were line next door gets a bill that so we're still talking about getting the benefits of having within a within a given region we're having a limited number of companies that the silicate reliability and and and of the entities that have a right or person refusal or if you don't use that term have the ability to build these additional lines are from out of state i think it's eleven out of fourteen in the relevant regions so it can hardly be were looking to a public corporations versus nonpublic corporations so that was very much at issue and in that case this court upheld a a distinction that was being made by the state between public and nonpublic corporations on the basis of accountability and that's a big part of what we're seeing here when we're having legislators talking about having boots on the ground that quote is talking about having companies that are accountable to the local service areas as it is and another distinction that i'm not sure if that's your interpretation it's a rule twelve especially when it comes to discriminatory purpose it seems to me it's hard to justify a ru dismissal when there's at least allegations from which people can draw competing inferences so the st thing i would say about the purpose is that the court also in the wal mart case discussed that it would be a very bizarre result to find a discriminatory purpose or a discriminatory intent on behalf of the legislature that didn't actually lead to a discriminatory effect it would be a bizarre result they said in that case the bans effect on all public corporations whether they were in state or out of state provide strong evidence that the legislature did not purposely discriminate against out of state corporations so they look to a fact and in fact the fact is really a is basically the st prong of the arlington heights factors which the court has used in the purpose test so i think that that's the st reason that but purpose is appropriate to determine based on the law and the nd is simply that the court while it is required to accept as true the facts that are pleaded these are the only facts but there are and they've presented the legislative history all the legislative statements we've got the videos  you know of all the testing on the name that was heard what this court is not required to do is accept the point of law on the legal interpretation of the facts so we we have no dispute about what was said but it simply is going to help us because you've already you know what are right or oil and gas regulations are and we can be more more certain you're going to be able to comply with texas regulations so going forward only incumbent oil well drillers can drill new wells in texas would that integration in that context and i think that's really where the business form distinction makes a difference so i take your honour's hypothetical again to completely interchangeable companies certainly understand why that may make it more justifiable i guess just on this this ritual question of whether it's discriminatory i'm not sure how why how is this different than my boil well example again i understand it may be more justifiable tele but if the companies are not the same kind of companies there can be no discrimination because you're not comparing apples to apples you're comparing apples to oranges and in the case of my son at p p why the really important point that i'd like to t about on this is great jurisdiction so burke has jurisdiction at that rate over wholesale prices will fail sale prices whereas hector has the right to set the retail price when transmission is bundled with generation and retail as it is in one hundred percent of the public utilities in the my so and at p p areas then texas still gets to set the transmission rate because they're part of a bundle package so that was one of the purposes also that was laid out in the build statement and that really shows a legal distinction about why it's different to have a vertical and integrated umber and organizations that sort of alternately provides all the levels of electricity production distribution but also in or cried with the state legislature has recognized that the transmission and distribution payments there even when the other pieces have been subjected to market forces and competition per the legislature's will transmission and distribution its bills a monopoly and it still fully regulated so your honor is right that it does go beyond vertical integration but the key point there is is is is that the transmission piece is characterized by natural monopoly and it's probably regulated  and also that they do have a service area which means even that they can be required to for example build new generation facilities to to serve more areas next year i just want to curb off the transmission only piece which i don't think anyone to the most lucrative piece of this puzzle made while we have these these vertically integrated utilities at the starkest example of entities that have a whole set of obligations that maybe need maybe me become more economically unfeasible as a result of introducing competition just in this one area and so what tracy told us to do i when we're comparing to say whether an earnings are similarly situated for purposes that discrimination analysis is we don't look at whether two different types of companies might be able to provide one function in a similar way we look at entire  and to the next year i'll move now to the discrimination piece and we've talked about some aspects of this already and but there are three main points but that i'd like to communicate  be unconstitutional in all of its applications it does when we're talking about the facial facial challenge there's two ways in which i'm referring to facial your honor is absolutely right that a facial challenge of the type that you discussing is inappropriate because there has to be no scenario in which its application would be constitutional here ninety percent of the power in texas is provided by her to say that that's simply you know we can just just take that piece out and disregard the rest of the statute and it's it's further difficult for me to understand how it's a declaration that or right of st refusal was was unconstitutional could  talking about the script sorry and at the end of the i said are you using the term loosely or something so i did the way i was using it just then is when we talk about the discrimination we look at the face of the statute in other words the text of the got to but they refer to it as but the case of the statute we look at the effect of the statute and we look at the purpose you're applying this that under the door make commerce clause your crack tell us that the statutes actually  facial challenge is inappropriate and and as if you're right no the point is well we we had argued a similar point with respect to the injunction because that injunction the thinking extraordinary relief that that that something needs to be banned now in order to let next year i have their project go forward now and there's no injunction that could be crafted that would allow that to happen because there are all these other steps that have to take place that ought to take of wine so st no one disputes that transmission lines themselves have to be built in texas geography and here or in transmission siting in a way that it simply does not in alcohol production granholm in tennessee buying the geographic when the taishan being imposed were inventions of the legislatures for purposes of protection second the state in the utilities contact you know this is this is a traditional historic could just make a shipment of wine or some other product unless the state comes in and tells you you can hear the entire industry of transmission exist because of the state regulations so it's simply not the thing kind of  anti competitive as a different question than whether it's discriminatory brush it aside it's discriminatory under these two separate accounts if it's discriminated strongly on it's on the face of the statute in effect or what purpose should one balancing test  has the power to make any number of of determination and also can you have to the pie question it just seems very difficult and seems to be the hardest part of the case for you know that it's twelve b and they stated to the contrary so how came to the do you have any authority that would say you can do i come to wealthy and something that would give us some confidence in right well i would i would point st to the th circuit swilling in l s p transmission that was also on a twelve dissects motion and they did resolve the pi question but i think sort of the the st level at which you could decide pike on a legal basis is based on the state wide latitude to regulate electric utilities and that latitude is so wide that it's to the point it's not in your pipe balance and should even be applied and i would i would point the court to department of versus davis from the supreme court and all rd to electric power supply association vs star both a further cited in our brief that one is a th circuit case and there they are they directly say pike does not apply to a state regulation of electric path but the department of revenue versus davis also makes a pretty direct statement that they were a quintessential government function is involved the law is likely motivated by legitimate stated objectives other than simple economic it hid it in one but incumbent will drillers from drilling wells and the answer is no that's because that's a free private enterprise and this case isn't about free competition at all turns instead of the purposes of the form of commerce skins where the court said the only difference between that and carbone so the government had stepped in providing a service with a fundamentally different activity that is on the congress on then it prohibit and i would submit that that is exactly the same here council for next year for the carbon their best case but i would say the same principles produce a different result not a hollow supply because here texans who decided to use public utilities to provide essential delivery electric delivery service those are literally a matter of life and death for texas citizens now according to the supreme court it's so interesting or said that well this isn't a government produced providing a service it's private entities but that's just using a label the code doesn't use formulas and area what the courts of the united hall are and what the difference is that governments protect the health safety and welfare of its citizens in the department of revenue case versus davis that mr singer also reference and here i'd like to quote from the court so that in the paradigm of unconstitutional discrimination the wall chills intrastate activity creating a commercial advantage for goods or services and marketed by local private actors not by government and those who say employee to fulfill their so that objective that here texas has chosen to use public utilities to fulfill its traditional police role to look out for the health and safety and welfare of its citizens now while electric utilities may be privately owned the state's enacted to protect the public interest inherent in the raids and services the public utility of the control is property is dedicated to the public interest that actually used the state's imminent domain power to take private land in order to put it t stay with an issue where the state was using the public utilities to the store at different private market that was in the choir or the utilities to buy oklahoma coal instead of coal that was a private market came with one where we point out that with the citing the case of the mill that you still can as acquitted there facially strike down a lot even though the law also applies to wholly in state actors in that case the dairy farms that were in state about fifty five miles so you can have a facial challenge here without having to resolve issues with burqas that facially strikes down this law with respect to the area outside of her areas whether one calls that a facial challenge to those areas or as applied to those areas that would be unconstitutional the rd point i wanted to make with respect to tracy there's no dispute here that we're dealing with a single market of constructing owning an operating these interstate transmission lines what they're saying is well the state should be allowed to protect a local electric utility in that market because it only system in their captive market but that is not what trac act that was it the tracy wouldn't have to evaluate anything about the effects on two different markets and here that would suggest that if texas wanted to it could take other inputs into electricity let's say the transportation of coal or natural gas that's also used to private hall and we were going to struck down the hall just as we define carbone and that's what we're doing we're faced with here texas has created a monopoly in favor entergy a private company well they say well it's regulated like a public utility but it owned it is not the state of texas is becoming a market system and that is the essential distinction that applies there and in fact if one looks at the cargo in case one sees that there was regulation of waste in that case that's not simply a private enterprise it has no regulation and it was a municipal compact which was entered into for the financing building and operation of that facility so we returned to the position that this is controlled allowing a transmission only entities to reach the receive the certificates would not endanger the race jurisdiction of up and i think the reason for that is spelled out there by posting the public utility commission  justification for this law that it's needed to preserve the great jurisdiction of texas in any way that's constitutionally significant i would also fully nd in support that the proposition that these justifications come into the  phase of the analysis if it's discriminatory then the state has that very heavy burden to show that since criminal is justified and that there are no nondiscriminatory ways to be ease of justice and here there's an obvious way to meet that objective which is the case by case determination by the public utility commission of whether an applicant including xterra is entitled to a certificate not an across the board statement that says you can't even get to the square one you can't apply t