The US Court of Appeals for the Eleventh Circuit on July 11 affirmed the dismissal of a putative class action complaint seeking disgorgement and other relief from two Florida utilities (Utilities). The complaint also sought to invalidate provisions of a Florida statute relating to rate recovery for nuclear power projects on constitutional dormant Commerce Clause and preemption grounds.
The statute at issue in the proceeding—the Florida Renewable Energy Technologies and Energy Efficiency Act (Florida Act)—authorized the state regulatory body to incentivize investment in nuclear power plant construction. Acting on that authority in 2007, the Florida Public Service Commission promulgated the Nuclear Cost Recovery System (NCRS), a program that allows utilities to preemptively recover costs related to the construction of new nuclear power plant projects. The plaintiffs had sued the Utilities, arguing that the provisions authorizing the NCRS are invalid under the dormant Commerce Clause, which limits states from regulating interstate commerce, and preempted by federal statute. Plaintiffs argued that the Atomic Energy Act expressly reserves the authority to regulate nuclear power plant construction with the federal government, and that the provisions of the Florida Act that led to the creation of the NCRS were therefore preempted by federal law. The lower court dismissed these claims, and also denied plaintiffs’ motion to amend the complaint to join the State of Florida as a defendant.
On appeal, the Eleventh Circuit affirmed the lower court’s dismissal of the constitutional claims and the denial of leave to amend the complaint.
The court held that the alleged interests of the plaintiffs were "well beyond the zone the [dormant Commerce Clause] was meant to protect," noting that utilities are not “states” such that their actions could give rise to dormant Commerce Clause claims. In rejecting the preemption claim, the court held that the federal government has plenary authority over nuclear safety concerns, but that state initiatives based on an economic rationale, such as the NCRS, are well within the state’s authority to promote investment in new plants.
The court also found that the district court did not abuse its discretion in denying plaintiffs’ leave to amend the complaint. The plaintiffs sought to join the state as a defendant in order to bolster their dormant Commerce Clause claim and argue that the Utilities were acting under color of state law by recovering NCRS costs, and thereby raising rates. The court affirmed the district court’s decision to bar the amended complaint, finding primarily that the plaintiffs’ motion failed to sufficiently articulate the substance of the amendment.
The case is Newton v. Duke Energy Florida, LLC, Case No.: 17-10080 (11th Cir.); Docket No. 16-CV-60341 (S.D. Fla).