NextEra Energy Capital Holdings, Inc. v. D'Andrea

1

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, v. 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.

No. 20-50168

United States Court of Appeals, Fifth Circuit

December 7, 2022

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 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.

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 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).

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 56566 ("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...