Court Opinion

ID: 9323637
Source: CourtListenerOpinion
Date Created: 2022-12-07 19:01:24.747817+00
Date Added: 2024-06-11T17:14:49.127336
License: Public Domain

Case: 20-50168   Document: 00516569807      Page: 1     Date Filed: 12/07/2022

          United States Court of Appeals
               for the Fifth Circuit
                                                                  United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
                                                                 December 7, 2022
                             No. 20-50168                           Lyle W. Cayce
                                                                         Clerk

   NextEra Energy Capital Holdings, Incorporated;
   NextEra Energy Transmission, L.L.C.; NextEra Energy
   Transmission Midwest, L.L.C.; Lone Star Transmission,
   L.L.C.; NextEra Energy Transmission Southwest, L.L.C.,

                                                      Plaintiffs—Appellees,

   and

   LSP Transmission Holdings II, L.L.C.; East Texas
   Electric Cooperative, Incorporated,

                                                      Movants—Appellants,

                                versus

   Commissioner Arthur C. D’Andrea, Public Utility Commission of
   Texas, in his official
   capacity; Commissioner Shelly Botkin, Public Utility Commission
   of Texas, in her official capacity;
   Chairman Deann T. Walker, Public Utility Commission of Texas, in
   her official capacity,

                                                  Defendants—Appellees,

   and

   Entergy Texas Incorporated; Oncor Electric Delivery
   Company, L.L.C.;
   Southwestern Public Service Company,

                                                      Movants—Appellants.
Case: 20-50168         Document: 00516569807             Page: 2      Date Filed: 12/07/2022

                                          No. 20-50168

                      Appeal from the United States District Court
                           for the Western District of Texas
                                USDC No. 1:19-CV-626

   Before Dennis and Elrod, Circuit Judges. †
   Per Curiam:*
          In 2019, Texas enacted a law known as Senate Bill (SB) 1938 granting
   the ability to build, own, or operate new electric transmission lines “that
   directly [connect] with an existing utility facility . . . only to the owner of that
   existing facility”—i.e., granting a right of first refusal. Tex. Util. Code
   § 37.056(e). Plaintiff NextEra Energy Capital Holdings, Inc. filed this suit
   against the Commissioners of the Public Utility Commission of Texas
   challenging the constitutionality of SB 1938. This appeal presents the sole
   question of whether five other entities involved in the electric transmission
   market may intervene in this case to variably attack or defend SB 1938.
   Because these entities meet the liberal standard to intervene as of right, we
   REVERSE the district court’s order denying intervention and REMAND
   for further proceedings.
                                               I.
          In 2018, NextEra, a Florida-based corporation with transmission lines
   in multiple states but not in Texas, won a bid with the Midcontinent
   Independent System Operator, Inc. (MISO) to build a new transmission line
   known as the Hartsburg-Sabine Line in East Texas. Before construction
   could begin, however, Texas enacted SB 1938 limiting the right to build and
   operate transmission lines in Texas to those entities already owning
   transmission lines in Texas. SB 1938 ultimately prevented NextEra from

          †
              This appeal is being decided by a quorum. 28 U.S.C. § 46(d).
          *
              This opinion is not designated for publication. See 5th Circuit Rule 47.5.

                                                2
Case: 20-50168      Document: 00516569807           Page: 3    Date Filed: 12/07/2022

                                     No. 20-50168

   being able to construct the Hartsburg-Sabine Line. On June 17, 2019,
   NextEra filed suit against the Commissioners of the of the Public Utility
   Commission of Texas under 42 U.S.C. § 1983, alleging SB 1938 violates the
   dormant Commerce Clause and the Contracts Clause and seeking
   declaratory and injunctive relief.
          Before the Commissioners filed responsive pleadings, several third
   parties sought to intervene as a matter of right or, alternatively, permissively.
   Three entities sought to intervene to defend SB 1938. Entergy Texas, Inc.;
   Oncor Electric Delivery Co. LLC; and Southwestern Public Service Co.
   (SPS) are all entities owning transmission lines in Texas who hold the rights
   of first refusal granted by SB 1938. Entergy moved to intervene on August 6,
   2019; Oncor on August 7, 2019; and SPS on August 8, 2019. Two entities
   sought to intervene to challenge the constitutionality of SB 1938, LSP
   Transmission Holdings II, LLC and East Texas Electric Cooperative, Inc.
   (ETEC). LSP is a transmission utility without a presence in Texas which
   intended to compete for transmission projects in Texas but was prevented
   from doing so by SB 1938. LSP filed its motion to intervene on July 12, 2019.
   ETEC is a non-profit rural electric cooperative that owns power-generating
   plants and power transmission lines in the part of Texas within Entergy’s
   transmission area. ETEC is largely dependent on Entergy’s transmission
   lines, and SB 1938 prevents ETEC and other entities who might compete
   with Entergy from building new lines from lines owned by Entergy. ETEC
   moved to intervene on August 19, 2019.
          The Defendant Commissioners filed a motion to dismiss NextEra’s
   complaint for failure to state a claim under the dormant Commerce Clause
   and Contracts Clause on August 23, 2019. Six months later, on February 26,
   2020, the district in one order both denied the motions to intervene and
   granted the motion to dismiss.

                                          3
Case: 20-50168      Document: 00516569807           Page: 4    Date Filed: 12/07/2022

                                     No. 20-50168

          NextEra appealed the district court’s decision to grant the motion to
   dismiss, and Entergy, Oncor, SPS, LSP, and ETEC appealed the denial of
   their motions to intervene. The merits and intervention appeals proceeded
   separately. This court has already reversed in part and affirmed in part the
   district court’s order granting the motion to dismiss, reversing the dismissal
   of NextEra’s dormant Commerce clause claims because SB 1938 is facially
   discriminatory under the dormant Commerce Clause and because dismissal
   of NextEra’s discriminatory purpose and effects claims was premature, while
   affirming the dismissal of NextEra’s Contracts Clause claim. NextEra Energy
   Cap. Holdings, Inc. v. Lake, 48 F.4th 306 (5th Cir. 2022). The instant appeal
   concerns only the district court’s denial of the motions to intervene.
                                          II.
          Federal Rule of Civil Procedure 24 allows certain parties to intervene
   by right. Fed. R. Civ. P. 24(a). If the right to intervene is not granted by
   some other federal statute, see Fed. R. Civ. P. 24(a)(1), a party can still
   intervene if it satisfies the four elements of Rule 24(a)(2):
          (1) the application for intervention must be timely;
          (2) the applicant must have an interest relating to the property
          or transaction which is the subject of the action;
          (3) the applicant must be so situated that the disposition of the
          action may, as a practical matter, impair or impede his ability
          to protect that interest; [and]
          (4) the applicant’s interest must be inadequately represented
          by the existing parties to the suit.
   La Union del Pueblo Entero v. Abbott, 29 F.4th 299, 305 (5th Cir. 2022)
   (quoting Texas v. United States, 805 F.3d 653, 657 (5th Cir. 2015)). It is the
   movant’s burden to establish the right to intervene, but “Rule 24 is to be
   liberally construed.” Brumfield v. Dodd, 749 F.3d 339, 341 (5th Cir. 2014).
   “Federal courts should allow intervention ‘where no one would be hurt and

                                          4
Case: 20-50168      Document: 00516569807           Page: 5    Date Filed: 12/07/2022

                                     No. 20-50168

   the greater justice could be attained.’” Sierra Club v. Espy, 18 F.3d 1202,
   1205 (5th Cir. 1994) (quoting McDonald v. E.J. Lavino Co., 430 F.2d 1065,
   1074 (5th Cir. 1970)). “A ruling denying intervention of right is reviewed de
   novo.” Wal-Mart Stores, Inc. v. Texas Alcoholic Beverage Comm’n, 834 F.3d
   562, 565 (5th Cir. 2016) (quoting Texas, 805 F.3d at 656).
          The district court concluded that no party seeking to intervene could
   meet the Rule 24 standard largely because “the existing parties adequately
   protect th[eir] interest[s].” However, on appeal, no party contests that
   Entergy, Oncor, SPS, LSP, and ETEC meet the standard to intervene as of
   right. We agree and allow these parties to intervene.
                                          A.
          The first prong is timeliness. Timeliness “is contextual; absolute
   measures of timelines should be ignored.” Id. at 565 (quoting Espy, 18 F.3d
   at 1205). Timeliness “is not limited to chronological considerations but is to
   be determined from all the circumstances.” Id. (internal quotations omitted)
   (quoting Stallworth v. Monsanto Co., 558 F.2d 257, 263 (5th Cir. 1977)). We
   consider four factors in evaluating timeliness: 1) the length of time during
   which the would-be intervenor actually or reasonably should have known of
   his interest in the case before he petitioned for leave to intervene; 2) the
   extent of prejudice that the existing parties to the litigation may suffer as a
   result of the would-be intervenor’s failure to apply for intervention as soon
   as he actually knew or reasonably should have known of his interest in the
   case; 3) the extent of the prejudice that the would-be intervenor may suffer
   if his petition for leave to intervene is denied; and 4) the existence of unusual
   circumstances militating either for or against a determination that the
   application is timely. Ross v. Marshall, 426 F.3d 745, 754 (5th Cir. 2005)
   (quoting Stallworth, 558 F.2d at 264-66).

                                           5
Case: 20-50168      Document: 00516569807            Page: 6    Date Filed: 12/07/2022

                                      No. 20-50168

          In this case, Entergy, Oncor, SPS, LSP, and ETEC each sought to
   intervene within two months of NextEra filing suit and before the Defendant
   Commissioners filed responsive pleadings. Cf. Ass’n of Pro. Flight Attendants
   v. Gibbs, 804 F.2d 318, 321 (5th Cir. 1986) (finding intervention timely when
   filed five months after receiving notice of the party’s interest in the case).
   Intervention this early before discovery and before litigation of major issues
   would not cause extensive prejudice or delay. See Wal-Mart, 843 F.3d at 565-
   66 (“Because the Association sought intervention before discovery
   progressed and because it did not seek to delay or reconsider phases of the
   litigation that had already concluded, the Association's motion was
   timely.”). Entergy, Oncor, SPS, LSP, and ETEC’s interventions were
   timely.
                                          B.
          Second, each of Entergy, Oncor, SPS, LSP, and ETEC has
   demonstrated an interest in the subject of this action. “The precise
   definition of an ‘interest’ has been hard to pin down, but we have
   interpreted Rule 24(a)(2) to require a ‘direct, substantial, legally protectable
   interest in the proceedings.’” La Union, 29 F.4th at 306 (quoting Edwards
   v. City of Houston, 78 F.3d 983, 995 (5th Cir. 1996)). “Property interests are
   the quintessential rights Rule 24(a) protects, but we have made clear that
   Rule 24(a)(2) does not require ‘that a person must possess a pecuniary or
   property interest to satisfy the requirement of Rule 24(a)(2).’” Id. (quoting
   Mothersill D.I.S.C. Corp. v. Petroleos Mexicanos, S.A., 831 F.2d 59, 62 (5th
   Cir. 1987)). Nor does a “legally protectable interest” mean the interest must
   be “legally enforceable”; rather “[a]n interest is sufficient if it is of the type
   that the law deems worthy of protection, even if the intervenor does not have
   an enforceable legal entitlement or would not have standing to pursue her
   own claim.” Id. (quoting Texas, 805 F.3d at 659).

                                           6
Case: 20-50168      Document: 00516569807           Page: 7    Date Filed: 12/07/2022

                                     No. 20-50168

          Generally, we will not grant intervention of right for purely
   “ideological, economic, or precedential” reasons. Id. (quoting Texas, 805
   F.3d at 658). However, “economic interests can justify intervention when
   they are directly related to the litigation.” Wal-Mart, 834 F.3d at 568 (citing
   Espy, 18 F.3d at 1207). For example, a scheme’s “prospective interference
   with [economic] opportunities can justify intervention.” Black Fire Fighters
   Ass’n of Dallas v. City of Dallas, 19 F.3d 992, 994 (5th Cir. 1994) (finding an
   interest where a decree threatened promotion opportunities); see also
   Edwards, 78 F.3d at 1004 (finding an interest where a decree threatened
   “equal access to a promotion system and promotion opportunities”);
   Brumfield, 749 F.3d at 343 (finding an interest where a potential decree
   threatened “equal access to” educational “opportunities”). Moreover, we
   have found the “intended beneficiary of a government regulatory system”
   has a legally protected interest in a case challenging that system. Wal-Mart,
   834 F.3d at 567-69; see also Texas, 805 F.3d at 660.
          In this case, the parties seeking to intervene in SB 1938’s defense—
   Entergy, Oncor, and SPS—are all entities who hold the rights of first refusal
   granted by SB 1938 and are thus the intended beneficiaries of SB 1938.
   Because the constitutionality of SB 1938’s right-of-first-refusal scheme is
   the subject of this case, Entergy, Oncor, and SPS have each demonstrated a
   legally protectable interest related to the subject matter of this case. See Wal-
   Mart, 834 F.3d at 567-69; Texas, 805 F.3d at 660.
          Turning to the parties seeking to challenge SB 1938, LSP is an out-
   of-state transmission company which would be qualified to compete for
   transmission projects in Texas but is prevented from entering the Texas
   market by SB 1938. ETEC owns power-generating plants and power
   transmission lines in the part of Texas within Entergy’s transmission area.
   ETEC would like to build its own new lines from those owned by Entergy or
   contract with other entities who do so, but SB 1938 prevents anyone but

                                           7
Case: 20-50168      Document: 00516569807          Page: 8    Date Filed: 12/07/2022

                                    No. 20-50168

   Entergy from building lines off of those owned by Entergy and thus forces
   ETEC to be dependent on Entergy. Both ETEC and one of LSP’s
   subsidiaries competed for the contract to build the Hartsburg-Sabine Line
   which was ultimately awarded to NextEra. Because SB 1938 prospectively
   interferes with LSP and ETEC’s business opportunities, they have each
   demonstrated a legally protectable interest related to the subject matter of
   this case. See Black Fire Fighters Ass’n, 19 F.3d at 994; Edwards, 78 F.3d at
   1004; Brumfield, 749 F.3d at 343.
                                         C.
          Entergy, Oncor, SPS, LSP, and ETEC have also each satisfied the
   third prong that disposition of this action may, as a practical matter, impair
   or impede their abilities to protect their interests. “The impairment
   requirement does not demand that the movant be bound by a possible future
   judgment, and the current requirement is a great liberalization of the prior
   rule.” Brumfield, 749 F.3d at 344. “Though the impairment must be
   ‘practical’ and not merely ‘theoretical,’ the [parties seeking to intervene]
   need only show that if they cannot intervene, there is a possibility that their
   interest could be impaired or impeded.” La Union, 29 F.4th at 307 (citing
   Brumfield, 749 F.3d at 344-45). We have held that a party’s interest in a
   regulatory scheme “is impaired by the stare decisis effect of the district
   court’s judgment” as to the scheme’s validity. Espy, 18 F.3d at 1207
   (quoting Ceres Gulf v. Cooper, 957 F.2d 1199, 1204 (5th Cir. 1992)). That is
   the case here. A finding that SB 1938 is unconstitutional would impair the
   rights of first refusal of Entergy, Oncor, and SPS, while a finding that SB
   1938 is constitutional would impair LSP and ETEC’s business prospects.
                                         D.
          Finally, Entergy, Oncor, SPS, LSP, and ETEC have each met their
   minimal burden of showing inadequate representation. Parties seeking to

                                          8
Case: 20-50168      Document: 00516569807            Page: 9    Date Filed: 12/07/2022

                                      No. 20-50168

   intervene as of right “‘need not show that the representation by existing
   parties will be, for certain, inadequate,’ but instead that it may be
   inadequate.” La Union, 29 F.4th at 307-08 (quoting Texas, 805 F.3d at 661-
   64). This burden is “minimal.” Id. at 608 (quoting Edwards, 78 F.3d at
   1005); see also Wal-Mart, 834 F.3d at 569. However, we have recognized
   “two presumptions of adequate representation,” Brumfield, 749 F.3d at 345.
   The first presumption arises when the intervenor “has the same ultimate
   objective as a party to the lawsuit.” Texas, 805 F.3d at 661–62. This
   presumption can be overcome by showing “adversity of interest, collusion,
   or nonfeasance on the part of the existing party.” Id. (quoting Edwards, 78
   F.3d at 1005). An intervenor can establish an adversity of interest if “its
   interests diverge from the putative representative’s interests in a manner
   germane to the case.” Id. at 662. The second presumption arises when the
   existing party “is a governmental body or officer charged by law with
   representing the interests” of the intervenor, which can be overcome by
   showing that the intervenor’s “interest is in fact different from that of the”
   governmental party “and that the interest will not be represented by” the
   existing governmental party. Id. at 661–62 (quoting Edwards, 78 F.3d at
   1005). Assuming these presumptions apply, Entergy, Oncor, SPS, LSP, and
   ETEC have rebutted them by showing adversity of interest.
          First, the parties seeking to defend SB 1938—Entergy, Oncor, and
   SPS—have shown their interests may diverge from the Texas
   Commissioners defending the law. The Commissioners have many interests
   in this case, including defending the SB 1938 statewide while also
   maintaining “its relationship with the federal government,” which highly
   regulates the energy sector, and “with the courts.” Brumfield, 749 F.3d at
   346. Entergy, Oncor, and SPS, on the other hand, are more concerned with
   protecting their business interests, particularly the rights of first refusal they
   have enjoyed. “The government must represent the broad public interest,

                                           9
Case: 20-50168     Document: 00516569807           Page: 10    Date Filed: 12/07/2022

                                    No. 20-50168

   not just the economic concerns of” Entergy, Oncor, and SPS. Espy, 18 F.3d
   at 1208; see also Brumfield, 749 F.3d at 346; La Union, 29 F.4th at 309.
   Indeed, the Commissioners have expressed contrary views in the past,
   issuing an advisory opinion in 2017—before SB 1938’s passage—that
   allowed for competitive bidding among transmission projects, and the
   Commissioners’ past views have been used by NextEra to attempt to
   undermine SB 1938 and the motive behind its passage. Entergy, Oncor, and
   SPS, then, may be in a better position to defend their interests, especially as
   litigation progresses and compromises are made. “We cannot say for sure
   that the [Commissioners’] more extensive interests will in fact result in
   inadequate representation, but surely they might, which is all that the rule
   requires.” Brumfield, 749 F.3d at 346; see also La Union, 29 F.4th at 309.
          As for the parties seeking to challenge SB 1938—LSP and ETEC—
   they have shown their interests may diverge from NextEra’s. LSP, ETEC,
   and NextEra are all competitors in the transmission market. NextEra’s
   motivation in challenging SB 1938 has been to vindicate its awarded contract
   to build the Hartsburg-Sabine Line. Thus, NextEra brought a Contracts
   Clause claim, which LSP and ETEC have no interest in. See Brumfield, 749
   F.3d at 346 (emphasis added) (“The lack of unity in all objectives, combined
   with real and legitimate additional or contrary arguments, is sufficient to
   demonstrate that the representation may be inadequate.”). Concerned with
   its own business interests, NextEra continually sought expedited
   consideration of its claims in the district court and in this court, while LSP
   and ETEC have no such interest. See Entergy Gulf States La., L.L.C. v. U.S.
   Env’t Prot. Agency, 817 F.3d 198, 204 (5th Cir. 2016) (noting adverse
   interests between “prompt disclosure of requested documents” and
   “eventual disclosure”). LSP and ETEC have thus “specif[ied] the
   particular ways in which their interests diverge” from NextEra’s and have

                                         10
Case: 20-50168        Document: 00516569807              Page: 11       Date Filed: 12/07/2022

                                          No. 20-50168

   “identif[ied] the particular way in which these divergent interests have
   impacted the litigation.” Texas, 805 F.3d at 663.
                                              III.
           Because Entergy, Oncor, SPS, LSP, and ETEC have protectable
   interests that may be impaired or injured by the outcome of this lawsuit and
   because Entergy, Oncor, SPS, LSP, and ETEC have shown that the present
   parties may not adequately represent their interests, Entergy, Oncor, SPS,
   LSP, and ETEC are entitled to intervene as of right. 1 Thus, we need not
   address the district court’s denial of permissive intervention.
           Accordingly, we REVERSE the district court’s denial of Entergy,
   Oncor, SPS, LSP, and ETEC’s motions to intervene and REMAND for
   further proceedings consistent with this opinion.

           1
            NextEra requests “reasonable conditions” on Entergy, Oncor, SPS, LSP, and
   ETEC’s interventions. See, e.g., Beauregard, Inc. v. Sword Servs., L.L.C., 107 F.3d 351, 352-
   53 (5th Cir. 1997). We leave this issue to the district court and take no position on what
   conditions, if any, are appropriate in this case.

                                                11