LSP Transmission Holdings, LLC v. Sieben

• Decision Date: 25 March 2020
• Docket Number: No. 18-2559,18-2559
• Citation: 954 F.3d 1018
• Parties: LSP TRANSMISSION HOLDINGS, LLC, Plaintiff - Appellant v. Katie SIEBEN, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Dan M. Lipschultz, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Matthew Schuerger, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; John Tuma, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Valerie Means, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Steve Kelley, Commissioner, Minnesota Department of Commerce, each in his or her official capacity, Defendants - Appellees ITC Midwest LLC; Northern States Power Company, doing business as Xcel Energy, Intervenors below - Appellees United States Department of Justice, Amicus Curiae Iowa Department of Justice, Amicus on Behalf of Appellant(s) Great River Energy; Minnesota Power; Otter Tail Power Company; Southern Minnesota Municipal Power Agency ; Edison Electric Institute, Amici on Behalf of Appellee(s)
• Court: U.S. Court of Appeals — Eighth Circuit

954 F.3d 1018

LSP TRANSMISSION HOLDINGS, LLC, Plaintiff - Appellant

v. Katie SIEBEN, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Dan M. Lipschultz, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Matthew Schuerger, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; John Tuma, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Valerie Means, Commissioner, Minnesota Public Utilities Commission, each in his or her official capacity; Steve Kelley, Commissioner, Minnesota Department of Commerce, each in his or her official capacity, Defendants - AppelleesITC Midwest LLC; Northern States Power Company, doing business as Xcel Energy, Intervenors below - AppelleesUnited States Department of Justice, Amicus CuriaeIowa Department of Justice, Amicus on Behalf of Appellant(s)Great River Energy; Minnesota Power; Otter Tail Power Company; Southern Minnesota Municipal Power Agency ; Edison Electric Institute, Amici on Behalf of Appellee(s)

No. 18-2559

United States Court of Appeals, Eighth Circuit.

Submitted: October 16, 2019

Filed: March 25, 2020

Rehearing and Rehearing En Banc Denied June 8, 2020^*

Counsel who presented argument on behalf of the appellant was Erin Murphy, of Washington, DC. The following attorney(s) appeared on the appellant brief; Charles Nathan Nauen, of Minneapolis, MN, Paul D. Clement, of Washington, DC, David Joseph Zoll, of Minneapolis, MN, Rachel Kitze Collins, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellees Lipschultz, Tuma, Schuerger, Sieben, Means and Kelley was Jason Marisam, AAG, of Saint Paul, MN.

An amicus brief in support of appellant was filed by the Iowa Department of Justice. Counsel appearing on this brief were Mark R. Schuling, Jennifer C. Easler, John S. Long, and Jeffrey J. Cook all of Des Moines, IA.

An amicus brief in support of neither party was filed by the United States of America and counsel on that brief were Kristen C. Limarzi, Robert B. Nicholson and Adam D. Chandler, Robert Potter, Daniel E. Haar and Matthew C. Mandelberg all with USDOJ, Antitrust Division, Washington, DC.

Aaron Daniel Van Oort, of Minneapolis, MN, presented argument for appellee Northern States Power Company. The following attorneys appeared on the brief of Northern States Power; Nathaniel J. Zylstra, Lauren W. Linderman, David Archer, Richard D. Snyder, Lisa M. Agrimonti and Leah C. Janus, all of Minneapolis, MN; Max J. Minzner and Matthew E. Price of Washington, DC.

The following attorney(s) appeared on the amicus brief in support of appellees of Great River Energy, Minnesota Power. Otter Tail Power Company and Southern Minnesota Municipal Power Agency; Harvey L. Reiter, of Washington, DC, David R. Moeller of Duluth, MN, Brian M. Meloy and Thomas C. Burman of Minneapolis, MN, Mark Bring of Fergus Falls, MN.

The following attorneys appeared on the amicus brief in support of appellees of The Edison Electric Institute; Samara Kline of Dallas, TX, Scott A. Keller, Marcia Hook and Emily Fisher of Washington, DC.

Before SMITH, Chief Judge, GRUENDER and BENTON, Circuit Judges.

SMITH, Chief Judge.

LSP Transmission Holdings, LLC (LSP) filed this appeal against Minnesota's Public Utilities Commission and Department of Commerce; ITC Midwest, LLC (ITC); and Northern States Power Company doing business as Xcel Energy ("Xcel") (collectively, "Appellees"). LSP asserts that the district court¹ erred in deciding that Minnesota's right of first refusal (ROFR) provision does not violate the dormant Commerce Clause. The provision grants incumbent electric transmission owners a ROFR to construct, own, and maintain electric transmission lines that connect to their existing facilities. Minn. Stat. § 216B.246, subdiv. 2. Upon de novo review, we affirm.

I. Background

A. Federal ROFR

Pursuant to the Federal Power Act (FPA), the Federal Energy Regulatory Commission (FERC) regulates interstate transmission of electricity and the sale of electricity at wholesale in interstate commerce. LSP Transmission Holdings, LLC v. Lange , 329 F. Supp. 3d 695, 700 (D. Minn. 2018) (citing 16 U.S.C. § 824(b)(1) ). States, however, retain jurisdiction over the retail sale of electricity and the generation, transmission, and distribution of electricity in intrastate commerce. Id. (citing 16 U.S.C. § 824(b)(1) ).

FERC is also authorized to "divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission, and sale of electric energy" and to "promote and encourage such interconnection and coordination within each such district and between such districts." Id. (quoting 16 U.S.C. § 824a(a) ). "Regionally, FERC-approved nongovernmental agencies, independent system operators (‘ISO’s), oversee the operation and expansion of electric transmission grids. Each ISO issues a tariff, which establishes the terms by which its members build and operate grids. These tariffs are subject to the approval of FERC." Id. at 700–01 (internal citations omitted).

Before issuing Order 1000, FERC allowed incumbent public utility transmission providers to exercise their federal ROFR. Under that regulatory regime, incumbents held priority status in choosing to construct new electric transmission lines in their respective service territories. See id. at 701 (citing MISO Transmission Owners v. FERC , 819 F.3d 329, 332 (7th Cir. 2016) ). In 2011, "FERC issued Order 1000," which in part, "eliminated the federal ROFR." Id. (citing Transmission Planning & Cost Allocation by Transmission Owning & Operating Pub. Utils. , 136 FERC 61051, 3 ¶ 7 (2011) (hereinafter " Order 1000")). Order 1000 specifically "direct[s] public utility transmission providers to remove from their [Open Access Transmission Tariffs] or other Commission-jurisdictional tariffs and agreements any provisions that grant a federal right of first refusal to transmission facilities that are selected in a regional transmission plan for purposes of cost allocation." Order 1000 at 3 ¶ 7.²

In substance, FERC's Order 1000 reformed "its electric transmission planning and cost allocation requirements for public utility transmission providers." Order 1000 at 1 ¶ 1 (citing 16 U.S.C. § 824e ). "Order 1000 [is also] consistent with [FERC's] effort to manage electric grids on a regional level" but "recognize[s] that states c[an] continue to regulate electric transmission lines." LSP Transmission , 329 F. Supp. 3d at 701 ("We acknowledge that there is longstanding state authority [over] certain matters that are relevant to transmission planning and expansion, such as matters relevant to siting, permitting, and construction. However, nothing in ... [Order 1000] involves an exercise of siting, permitting, and construction authority." (quoting Order 1000 at 33 ¶ 107 )).

B. State ROFR

Regionally, Minnesota is governed by the FERC-approved regional transmission entity known as Midcontinent Independent System Operator (MISO). Id. "In accordance with Order 1000, MISO removed the federal ROFR provisions from its tariff." Id. Thereafter, in response to Order 1000, Minnesota, along with other states,³ enacted a state statutory ROFR. Id. (citing Minn. Stat. § 216B.246, subdiv. 2 ). Minnesota's ROFR law provides the following:

An incumbent electric transmission owner has the right to construct, own, and maintain an electric transmission line that has been approved for construction in a federally registered planning authority transmission plan and connects to facilities owned by that incumbent electric transmission owner. The right to construct, own, and maintain an electric transmission line that connects to facilities owned by two or more incumbent electric transmission owners belongs individually and proportionally to each incumbent electric transmission owner, unless otherwise agreed upon in writing. This section does not limit the right of any incumbent electric transmission owner to construct, own, and maintain any transmission equipment or facilities that have a capacity of less than 100 kilovolts.

Minn. Stat. § 216B.246, subdiv. 2.

After MISO removed the federal ROFR and incorporated Minnesota's ROFR into its tariff, FERC approved the tariff. LSP Transmission , 329 F. Supp. 3d at 702 (citing Midwest Indep. Transmission Sys. Operator, Inc. , 150 FERC 61037, 61176 ¶ 25 (2015) (hereinafter " MITSO")). LSP, a transmission company based outside of Minnesota, challenged MISO's tariff. FERC, however, ruled that MISO is authorized to consider state laws in the regional transmission planning process. Based on FERC's ruling, LSP requested a rehearing. LSP argued, in part, "that FERC should preclude states from enacting ROFR laws." Id. (citing MITSO at 61176 ¶ 24 ). FERC subsequently denied LSP's request for rehearing. Id. (citing MITSO at 61176 ¶ 25 ).

C. Procedural History

After FERC denied LSP's request for rehearing, LSP first filed a petition for review against FERC, which was denied by the Seventh Circuit. See MISO Transmission Owners , 819 F.3d at 337. LSP contended that FERC erred in allowing MISO to recognize state ROFR laws. Id. at 336. The Seventh Circuit ultimately held that FERC's goal—"to avoid intrusion on the traditional role of the States in regulating the siting and construction of transmission facilities"—was proper and that Order 1000 terminated the federal ROFR, not ROFR laws enacted by states. Id. (internal quotation omitted).

Prior to LSP filing the present lawsuit, Xcel—a Minnesota-based public utility—and ITC—a Minnesota-based transmission company—"jointly exercised their rights of first refusal under § 216B.246" to construct the Huntley-Wilmarth line. LSP Transmission , 329 F. Supp. 3d at 703. The line is a proposed 345 kilovolt electric transmission line that was approved by FERC and is projected to traverse Minnesota for approximately 40 miles. Id. It "will connect two...