Procedural Lapses Short-Circuit Attack on Statute Aimed at Incentivizing Nuclear Plant Construction

The abandonment of the V.C. Summer nuclear project in South Carolina and the questionable status of Plant Vogtle in Georgia have garnered headlines in recent months and raised questions about the validity of state statutes authorizing utility companies to preemptively charge customers for the design and construction of new nuclear facilities using rate hikes. In William B. Newton v. Duke Energy Fla., LLC, 2018 WL 3370809 (11th Cir. July 11, 2018), the Eleventh Circuit considered a constitutional challenge to such a statute – the Florida Renewable Energy Technologies and Energy Efficient Act (the “Act”). Pursuant to the Act, the Florida legislature vested the state’s Public Service Commission with authority to establish a plan to incentivize construction of new nuclear facilities. The PSC, in turn, created a program that allows participating utilities to seek PSC approval to construct new nuclear facilities and thereafter preemptively charge customers for the cost of construction by increasing utilities rates.

In Newton, the putative class representatives filed suit to invalidate two provisions of the Act arguing that (1) the statute violates the Dormant Commerce Clause of the United States Constitution, which precludes a state from “regulat[ing] Commerce . . . among the several States;” and (2) the Act is preempted by two federal statutes – the Atomic Energy Act of 1954 and the Energy Policy Act of 2005. Plaintiffs did not sue the State of Florida or the PSC but instead sued two electric utilities who have been collecting rate increases from class members for the construction of a nuclear plant that has been abandoned.

The district court (S.D. Fla.) granted motions to dismiss by the utilities, holding first that the plaintiffs’ claim under the Dormant Commerce Clause fails for lack of standing. Specifically, the court held that the plaintiffs were not within the “zone of interests” protected by the Clause, which shields out-of-state persons or entities harmed by some other state’s action. Similarly, the court rejected plaintiffs’ preemption challenge, findings the federal statutes at issue do no prohibit states from passing laws promoting investments in new nuclear power plants. In both their opposition memorandum to the utilities’ motions to dismiss and in a subsequent motion for reconsideration, plaintiffs requested the opportunity to amend their complaint to cure these deficiencies. The court denied each request for leave to amend and likewise denied the motion for reconsideration.

On appeal, the Eleventh Circuit agreed that plaintiffs are not in the “zone of interests” protected by the Dormant Commerce Clause and further that the Act is not preempted by federal law.  Plaintiffs cited the district court’s denial of an opportunity to amend the complaint as reversible error.  But the Eleventh Circuit ruled plaintiffs’ request to amend included within their memorandum opposing dismissal was legally insufficient because Rule 7(b)(1) requires all requests for court orders to be made by motion unless made during a hearing or trial. A memorandum, of course, is not a motion. As to plaintiffs’ second request to amend, the court held it was properly included within a Rule 60(b) motion for reconsideration. However, the court found the request deficient because plaintiffs failed to “set forth the substance of the proposed amendment or attach a copy of the proposed amendment” for the court to review. Accordingly, the court affirmed dismissal.

John Sharpe

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