Amicus Curiae Brief — Salt River Project Agric. Improvement & Power Dist. v. Tesla Energy Operations, Inc., 138 S. Ct. 1276 (2018) (No. 17-368)

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No. 17-368

In The

Supreme Court of the Anited States

SALT RIVER PROJECT AGRICULTURAL

IMPROVEMENT AND POWER DISTRICT,

Petitioner,

Vv.

TESLA ENERGY OPERATIONS, INC.,

FKA SOLARCITY CORPORATION,

Respondent.

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

BRIEF OF CENTER FOR BIOLOGICAL

DIVERSITY, FOOD & WATER WATCH, FRIENDS

OF THE EARTH, GREENPEACE, INC., INSTITUTE

FOR LOCAL SELF-RELIANCE, AND NC WARN, INC.

AS AMICI CURIAE IN SUPPORT OF RESPONDENT

HOWARD M. CRYSTAL

Counsel of Record

ANCHUN JEAN Su

CENTER FOR BIOLOGICAL DIVERSITY

1411 K Street, N.W., Suite 1300

hcrystal@biologicaldiversity.org

Counsel for Amici Curiae

February 2018

COCKLE LEGAL BRIEFS (800) 226-6964

WWW COCKLELEGALBAIEFS.COM

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...............0..........0000004 iii

INTERESTS OF AMICI CURIAE ....................... 1

SUMMARY OF ARGUMENT ......0000000... eee 2

TT theintinsisciineamdnniemennnseennnnn 3

I. SRP IS NOT ENTITLED TO AN INTER-

LOCUTORY APPEAL BECAUSE ITS

STATE-ACTION DEFENSE REQUIRES

RESOLUTION OF FACTUAL ISSUES

CLOSELY TIED TO THE MERITS........... 3

A. Because SRP Must Demonstrate Ac-

tive Supervision, Its State-Action De-

fense Requires The Resolution Of

Facts Closely Tied To The Merits........ 4

B. In Light Of The Many Arizona Policies

Supporting The Expansion Of Rooftop

Solar Development, SRP’s Claimed

Authorization For Its Discriminatory

Rates Is Also Closely Tied To The Mer-

i a isinncekadseinttiansicunbsatnimeninnaninitideunéen 10

Il. THE FOUNDATIONAL PREMISES OF

SRP’S ASSERTED RIGHT TO AN UN-

BOUNDED MONOPOLY DO NOT HOLD

IN THE AGE OF DISTRIBUTED SOLAR

COMPETITION ............cccccscseesseseseeeeeeeeeeees 16

A. The Premise That Electricity Monopo-

lies Necessarily Serve The Public In-

terest Has Been Undermined By

Public Policy And Technology.............. 17

TABLE OF CONTENTS — Continued

Page

B. Monopoly Power Companies Opposing

Distributed Solar Generation Are Act-

ing Against The Public Interest ..........

1. Discriminatory rates against rooftop

solar are widespread........................

2. Discriminatory rates against rooftop

solar harm consumers and the envi-

. Allowing Public Power Companies To

Obtain Interlocutory Appeal Of State-

Action Immunity Rulings Will Only

Encourage More Discriminatory Rates

Contrary To The Public Interest .........

Eee ccanscscsvevsnnicscossecussespeanorecsevecsocsoensons

DESCRIPTION OF AMICI CURIAE ..............0.0000

iii

TABLE OF AUTHORITIES

Page

CASES

Alabama Power Co. v. Ickes, 302 U.S, 464 (1938)....... 29

Allco Fin., Ltd. v. Klee, 861 F.3d 82 (2d Cir. 2017) ...... 11

Arizona Corp. Comm’n v. Arizona ex rel. Grant

Pes STE Cmte Be Ce cscscccncssccccescvsstectcesscscnnes 13

Ball v. James, 451 U.S. 355 (1981) ............. 2, 5,6, 7,8

City & Cnty. of San Francisco v. Sheehan, 135

Be a ee I dcetiepnsecnnecinisnniiniepicscscssetesessssuneinsens 11

Community Comms. Co. v. Boulder, 455 U.S. 40

PI dcssuiaih\cnsdininnsccsmatnenensvendennscdeabatbenenindstadneisactainvine 10

Cost Management Sucs., Inc. v. Wash. Nat. Gas

Co., 99 F.3d 937 (9th Cir. 1996)...........ccccccccesseeeeeereees )

FERC v. Electric Power Supply Ass’n, 136 S. Ct.

Fe tabictaktriciserntndninncatsiinetnnniisbinimninniwn 19

FTC v. Phoebe Putney Health Sys., Inc., 568 U.S.

i ciiitaninsncnniicnisesananncehicineniichasiisnsieniceninanc 10, 16

FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992) ....... 5,9

Garden Lakes Cmty. Ass’n v. Madigan, 204 Ariz.

238 (Aris. Ct. App. 2008)..........ccrerccrcerrressossccssvesoeees 11

Grason Elec. Co. v. Sacramento Mun. Util. Dist.,

770 F.2d 833 (Oth Cir. 1986).........cccccccccsssrsrssscesscereees 7

Hughes v. Talen Energy Mktg., LLC, 136 S. Ct.

ee CE cones nsiticdnakantntancinanasbibendebdiddedadsbinpeinetncoonces 17

Johnson v. Jones, 515 U.S. 304 (1995)... 4,10

Kay Elec. Coop. v. Newkirk, 647 F.3d 1039 (10th

FT TE ED cchcctccscnsevtnncisttectssenepatnctuinvseapniesunisinnbinnte 13

TABLE OF AUTHORITIES — Continued

Page

Lancaster Cmty. Hosp. v. Antelope Valley Hosp.

Dist., 940 F.2d 397 (9th Cir. 1992) ..........ccccccececeeeeeees 7

Mesa v. Salt River Project Agric. Improvement &

Power Dist., 373 P.2d 722 (Ariz. 1961)... 8

Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100

Ii aihedciseasindemeabbipihansbigunnemnenssinabeddetnnenepnesetianseteseen 28

Morgan Stanley Capital Group Inc. v. Public

Util. Dist. No. 1 of Snohomish Cty., 554 U.S.

ET HII isnt psaccenniniacthidtaidpschsnanantassounineestastniavsbeinecsne 19

N.C. State Bd. of Dental Exam’rs v. FTC, 135

Bs Sek Ce GI erbensenccnresensensecsesecscevscccevecennes passim

New York v. FERC, 535 U.S. 1 (2002) ...............0cceceeee 20

Niedner v. Salt River Project Agric. Improvement

& Power Dist., 121 Ariz. 331 (1979)..........c:ccccccceseeees 6

Ortiz v. Jordan, 562 U.S. 180 (2011) .......ccccccccceeeeeeeseees 4

Otter Tail Power Co. v. United States, 410 U.S.

I TTIIIITE a cedsnastindenenedstgdbvndnntenipetedietaneiuniésedsenncenemnacs 28

Parker v. Brown, 317 U.S. 341 (1943) .........068 passim

Smyth v. Ames, 169 U.S. 466 (1898) ..........cccccccceeeeees 19

Tenn. Electric Power Co. v. Tenn. Valley Auth.,

A CORNED iets candctnasnctnnnnsenacesesevensdénecevesccvede 29

Ticor Title Ins. Co. v. Brown, 511 U.S. 117 (1994)....... 11

Town of Hallie v. Eau Claire, 471 U.S. 34 (1985).....4, 5, 7

Will v. Haddock, 546 U.S. 345 (2006) ............... 9, 10, 16

TABLE OF AUTHORITIES — Continued

Page

STATUTES

Pub. L. No. 95-617, 92 Stat. 3117 ..............ccccccsssseseeees 20

Pub. L. No. 102-486, 106 Stat. 2776 ...........ccccccccceeeees 20

Ariz. Rev. Stat. § 30-800 (2017)........... itebeainiensiaet eastaiios 13

Ariz. Rev. Stat. § 30-805 (2017) ...........cccccccceseeeeeeseeeees 14

Ariz. Rev. Stat. § 40-332 (2017) .........cccccccsceseeessensenees 13

Ariz. Rev. Stat. § 42-6061 (2017) ...........ccccccecseeererenenes 12

Ariz. Rev. Stat. § 42-11054 (2017) ...........ccccccccceeeeeeeees 12

Ariz. Rev. Stat. § 43-1083 (2017) .........c:cccccccceeeseereeeees 12

REGULATIONS

Ariz. Admin. Code § R14-2-703 (2017) .........ccccccccceeeee 11

Ariz. Admin. Code § R14-2-1801 (2017) ............c::008 11

Ariz. Admin. Code § R14-2-2301 (2017)...............06. 12

ADMINISTRATIVE AND EXECUTIVE MATERIAL

Ariz. Exec. Order No. 2006-13 (Sept. 7, 2006),

available at http//azmemory.azlibrary.gov/cdm/

ref/collection/execorders/id/507 ...............cccccceeeeeeeeees 15

Ariz. Exec. Order No. 2010-006 (July 1, 2010),

available at http://azmemory.azlibrary.gov/cdm/

ref/collection/execorders/id/690.................000000000e0ees 14

Bd. of Dir. of Sacramento Mun. Util. Dis., Reso-

lution No. 15-07-06 (Sacramento Mun. Util.

I GE IIIIIIED vavhcsenecnciansatbicucepsningensdevenensiemane 23

TABLE OF AUTHORITIES — Continued

Conn. Light & Power, Docket No. 14-05-06

(Conn. Pub. Util. Regulatory Authority Dec.

SU UEL III ciinteiiniactibecechaentenetindanuatubaahingtaniesiieedesaebindibsnsed 23

Kan. City Power & Light, Docket No. 15-WSEE-

115-RTS (Mo. Corp. Comm'n Sep. 24, 2015) .......... 23

NSTAR Elec. Co., D.P.U. 17-05-B (Mass. Dept. of

I a amamialiagl 23

Wis. Electric Power Co., Docket No. 5-UR-107

(Wis. Public Service Comm'n Dec. 23, 2014).......... 24

OTHER AUTHORITIES

Am. Lung Ass’n, State of the Air (2017), availa-

ble at http://www.lung.org/assets/documents/

healthy-air/state-of-the-air/state-of-the-air-

Ari Peskoe, Unjust, Unreasonable, and Unduly

Discriminatory: Electric Utility Rates and the

Campaign Against Rooftop Solar, 11 Tex. J.

Oil Gas & Energy L. 211 (2016) ...................0 20, 21

Ariz. Climate Change Advisory Group, Climate

Change Action Plan (2006), available at http://

azmemory.azlibrary.gov/cdm/ref/collection/state

SETI talcesbsaladdinticndneiiciaennbeesidiatiianiauiantenpmescees 15

Galen Barbose, Lawrence Berkeley Nat’! Lab.,

Putting the Potential Rate Impacts of Distributed

Solar into Context (2017), available at https://

emp.|lbl.gov/sites/default/files/bn1-1007060.pdf ....... 13

vii

TABLE OF AUTHORITIES — Continued

Gideon Weissman & Brett Fanshaw, Shining Re-

wards: The Value of Rooftop Solar Power for Con-

sumers and Society (2016), available at https://

environmentamerica.org/sites/environment/files/

reports/AME%20ShiningRewards%20Rpt%20

CI i

Jerry Melillo et al., U.S. Global Change Re-

search Program, Climate Change Impacts in

the United States: The Third National Climate

Assessmeni (2014), available at http://s3.amazon

aws.com/nca2014/low/NCA3_ Climate Change _

Impacts_in_the_United%20States_LowRes.pdf?

Page

a 26, 27

John E. Kwoku, Jr., Governance Alternatives &

Pricing in the U.S. Electric Power Industry, 18

J.L. Econ. & Org. 278 (2002) ........ccccccccereeseeereers

John Farrell, Inst. for Local Self-Reliance, /s

Bigger Best in Renewable Energy? (2016),

available at https:/Alsr.org/wp-content/uploads/

2016/1 2/Is-Bigger-Best-in-Renewable-Energy-

Local Clean Energy All. & Center for Social In-

clusion, Democratizing Our Energy Future

(2015), available at http://www. localcleanenergy.

org/files/Climate% 20Justice%20Energy%20

IL EET pusessstcuntnsiesdrassnctbessescommissiniaieestntneeds

viii

TABLE OF AUTHORITIES — Continued

Page

Mark Muro & Devashree Saha, Rooftop Solar:

Net Metering is a Net Benefit, Brookings Insti-

tution (May 23, 2016), available at https://

www. brookings.edu/research/rooftop-solar-net-

metering-is-a-net-bemefit/ ................:cccccceeeeesseeeeeeeees 24

Michael Mann et al., What We Know About the

Climate Change-Hurricane Connection, Sci-

entific American (Sept. 8, 2017), available at

https/blogs.scientificamerican.com/observations/

what-we-know-about-the-climate-change-

I IIIIE vesvenncescecececscssecinicnscssnensccseceses 27

Michael Wara, Competition at the Grid Edge: In-

novation and Antitrust Law in the Electricity

Sector, 25 N.Y.U. Envtl. L.J. 176 (2017)............ 21, 22

N.C, Clean Energy Tech. Ctr., Find Policies &

Incentives by State, available at http://www.

N.C, Clean Energy Tech. Ctr., The 50 States of

Solar Report: Q4 2017 and 2017 Annual Re-

port (2018), available at https://nccleantech.

ncsu.edu/wp-content/uploads/Q4-17_SolarExec

ee iI cescnscctiscsensercenisconissvansccsivocscessece 22

National Ass’n for the Advancement of Colored

People & Clean Air Task Force, Fumes Across

the Fence-Line: The Health Impacts of Air Pol-

lution from Oil and Gas Facilities (2017),

available at http://www.naacp.org/wp-content/

uploads/2017/11/Fumes-Across-the-Fence-Line_

Pe Ee iveacessconcéstiaseshestsésuningnasininnhotsineses 25

TABLE OF AUTHORITIES — Continued

National Conference of State Legislatures, State

Policies for Power Purchase Agreements, avail-

able at http://www.ncsl.org/research/energy/

state-policies-for-purchase-agreements. aspx...

National Conference of State Legislatures, State

Net Metering Policies, available at http://

www.ncsl.org/research/energy/net-metering-

policy-overview-and-state-legislative-updates.

Paul Garfield & Wallace Lovejoy, Public Utility

GED inucniictuintbinieniateenenicsdinniadsauoinis

Peter Gagnon et al., Nat'l Renewable Energy

Lab., Rooftop Solar Photovoltaic Technical Po-

tential in the U.S.: A Detailed Assessment

(2016), available at https://www.nrel.gov/docs/

fy 1608ti/65298. pdf ........cessssscsssvscsssssseersseeesseeessees

Robert Anglen, SRP Spends Millions on Execu-

tive Education Perks, USA Today (Feb. 6,

2015), available at https://www.usatoday.com/

story/money/business/20 15/02/06/srp-spends-

millions-executive-education-perks/2296487 1/ ..

Santee Cooper, Distributed Generation Rider

DG-17 (2015), available at https://www.santee

cooper.com/pdfs/rates/ratesadjustment/dg-17-

SEITE ciccsscocsccinectinenecdatarantteaenseaaaaaiiiphdaniaainn

Stephen Breyer, Regulation and Its Reform

C RIPEN cococsesessocossneceessonasstacosecscosensassoncoosnoueensensiees

sepes 18

TABLE OF AUTHORITIES — Continued

U.S. Energy Info. Admin., Electric Power

Monthly, Table 1.3.b and Table 1.17.b (Novem-

ber 2017), available at https://www.eia.gov/

electricity/monthly/current_month/epm.pdf.....

U.S. Energy Info. Admin., Electricity Explained

(May 10, 2017), available at https://www.eia.gov/

U.S. Envtl. Protection Agency, Inventory of U.S.

Greenhouse Gas Emissions and Sinks: 1990-

2015 (2017), available at https://www.epa.

gov/sites/production/files/20 17-02/documents/

2017_executive_summary.pdf........................006

W.M. Warwick, U.S. Department of Energy, A

Primer on Electric Utilities, Deregulation, and

Restructuring of U.S. Electricity Markets 2.0

(2002), available at https://www.pnnl.gov/

main/publications/external/technical_reports/

— 26

INTERESTS OF AMICI CURIAE

Amici — as further described in the Addendum —

are leading advocacy organizations working toward a

just energy transition, from a fossil fuel-based econ-

omy to a renewable energy system, in order to combat

climate change and protect the health of communities

and the planet. Because the rapid expansion of distrib-

uted solar generation is central to this effort, Amici

are concerned with public power companies like the

Salt River Project Agricultural Improvement and

Power District (“SRP”) exercising monopoly power to

discourage consumer adoption of distributed solar sys-

tems.'

In light of both ever-increasing greenhouse gas

concentrations — currently at more than 400 parts-

per-million — and the negative impacts of fossil fuel ex-

traction and combustion on public health, wildlife, and

the environment, public power companies like SRP

should not be permitted to stifle rooftop solar competi-

tion in violation of the Sherman Act, which is contrary

to the public interest premise on which they were

granted monopoly power. Rather, in Amici’s view, the

Parker v. Brown state-action defense, 317 U.S. 341

(1943), and interlocutory appeal of Parker defense rul-

ings, should not be available as a legal bulwark from

antitrust laws for public power companies like SRP to

' No counsel for a party authored this brief in whole or in

part, and no person or entity other than Amici contributed mone-

tarily to its preparation or submission. The parties have con-

sented to the filing of this brief.

discourage captive ratepayers from accessing renewa-

ble energy choices.

SUMMARY OF ARGUMENT

The Ninth Circuit correctly concluded that SRP

may not invoke the collateral-order doctrine. SRP’s

Parker defense raises factual issues closely tied to the

merits, and SRP should not be shielded from antitrust

liability for imposing electricity rates that improperly

target distributed solar customers and are contrary to

the public interest.

1. Because SRP is an “essentially business enter-

prise! |,” Ball v. James, 451 U.S. 355, 368 (1981), its Par-

ker defense cannot succeed unless SRP can

demonstrate active state supervision. Since that in-

quiry turns on “all the circumstances of a case,” N.C.

State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101,

1117 (2015) (*N.C. Dental”), it is not completely sepa-

rate from the merits, and thus not eligible for interloc-

utory appeal.

2. Arizona has numerous affirmative state poli-

cies designed to expand rooftop solar development as a

vital component of its clean energy transition. Resolv-

ing whether SRP’s discriminatory rates are contrary to

these state objectives is also closely tied to the merits

of SolarCity’s antitrust claims.

3. While regulated electricity monopolies were

originally created to protect the public interest,

changes in public policy and technology undermine the

premise that this model necessarily serves public ob-

jectives today. Instead, SRP and other power compa-

nies have asserted monopoly power to impose

discriminatory rates on distributed solar customers

that ultimately harm consumers and the environment,

contravening the original purpose of the regulated mo-

nopoly. Accordingly, neither the Parker defense nor col-

lateral appeal of adverse Parker defense rulings should

be available for public power entities like SRP to ob-

struct distributed solar development in violation of an-

titrust laws.

ARGUMENT

I. SRP IS NOT ENTITLED TO AN INTERLOC-

UTORY APPEAL BECAUSE ITS STATE-

ACTION DEFENSE REQUIRES RESOLUTION

OF FACTUAL ISSUES CLOSELY TIED TO

THE MERITS

As this Court has emphasized, the federal anti-

trust laws are a “central safeguard” prohibiting “prac-

tices that undermine the free market.” N.C. Dental,

135 S. Ct. at 1109. Thus, while states themselves may

“limit competition to achieve public objectives,” id., a

reviewing court must closely examine whether an en-

tity created by a state should be entitled to the same

freedom. Jd. at 1111-17. As this case demonstrates,

however, that analysis requires resolving both whether

the state has exercised sufficient supervision, and

whether the particular action being challenged aligns

with the state’s policy objectives. These fact-driven de-

terminations are not suitable for collateral appeal.

A. Because SRP Must Demonstrate Active

Supervision, Its State-Action Defense

Requires The Resolution Of Facts

Closely Tied To The Merits

The collateral-order doctrine may not be invoked

where disputed questions of fact must be resolved be-

fore the issue on appeal can be conclusively resolved.

Ortiz v. Jordan, 562 U.S. 180, 190-91 (2011); Johnson v.

Jones, 515 U.S. 304, 314 (1995). This limitation alone

is fatal to SRP’s appeal, because SRP concedes that the

active supervision component of the Parker defense

may turn on disputed facts. Pet. Br. at 22-23 (noting

that the Parker defense may turn “on factual grounds,

such as where state officials did not exercise their

power to supervise the defendant”).

SRP seeks to avoid this conundrum by claiming it

is not subject to this requirement, and that its appeal

therefore falls within a “class of orders” “denying state-

action immunity on legal grounds.” Pet. Br. at 23-24;

see also id. at 2 n.1 (citing Town of Hallie v. Eau Claire,

471 US. 34 (1985)). But SRP does not possess the qual-

ities necessary to be freed from the active state super-

vision requirement.

As SRP recognizes, the Hallie exception to the ac-

tive supervision requirement applies to municipal gov-

ernments because they are subject to the electoral

accountability necessary to ensure they serve the

public interest as authorized by the state. Pet. Br. at 2

n.1; Hallie, 471 U.S. at 46. SRP, however, while labelled

a “public power entity,” is in actuality an unregulated

business monopolist.’

This Court’s decision in Ball v. James, 451 U.S. 355

(1981), makes this absolutely clear. There, the Court

considered a constitutional challenge to the eligibility

rules for SRP elections, whereby only certain landown-

ers have the right to vote at all (thus eliminating the

voting rights of approximately one-third of its electric-

ity customers), and the more property one owns, the

more heavily weighted one’s vote (thus favoring large

landowners). Jd. at 359.

Relying on SRP’s essentially private character, the

Court found SRP exempt from the one-person, one-vote

principle, explaining that water districts like SRP are

“essentially business enterprises, created by and chiefly

benefiting a specific group of landowners,” id. at 368

* The fact that, as SRP stresses, the Arizona Constitution

purports to endow it with the “immunities and exemptions

granted municipalities,” Pet. Br. at 5, is of no moment. This Court

has made clear that a state may not immunize a sub-state entity

from the Sherman Act by simply “authorizing them to violate it,

or by declaring that their action is lawful.” N.C. Dental, 135 S. Ct.

at 1111 (quoting Parker, 317 U.S. at 351). Similarly, the Court has

explained that, contrary to the argument of the Amici National

Governors Association, et al. (collectively, “NGA”), Nat'l Gover-

nors Ass'n et al. Amicus Brief at 7 n.3 (“NGA Br.”), the fact that a

state could correct a public power entity's decision is also not an

adequate substitute for direct supervision. FTC v. Ticor Title Ins.

Co., 504 U.S. 621, 638 (1992) (“The mere potential for state super-

vision is not an adequate substitute for a decision by the State.”).

(emphasis added), and thus do “not exercise the crucial

powers of sovereignty typical of a general purpose unit

of government such as a state, county, or municipality.”

Id. at 372 (Powell, J., concurring); id. at 366 (explaining

SRP does not “administer such normal functions of

government as the maintenance of schools, or sanita-

tion, health or welfare service”). Moreover, as regards

electricity sales in particular, the Court noted that the

“sale of electric power” by SRP is “not for the primary

purpose of providing electricity to the public,” but ra-

ther that SRP uses electricity sales “to defray the ex-

pense in irrigating these private lands for personal

profit.” Jd. at 368-69 and n.17; see also Niedner v. Salt

River Project Agric. Improvement & Power Dist., 121

Ariz. 331 (1979) (rejecting due process claim against

SRP on the grounds that it is “a business corporation

with attributes of sovereignty which are only inci-

dental, conferred for the purposes of better enabling it

to function and accomplish the business and economic

purposes for which it was organized”).

In short, rather than being “democratically gov-

erned” and “directly accountable to the public,” as

foundational to the majority of public power entities,

American Public Power Association et al. Amicus Brief

at 9 (“APPA Br.”), SRP’s structure inherently favors

the private interests of large landowners at the ex-

pense of the broad base of its electricity consumers,

who lack any meaningful accountability mechanism

over SRP’s decisions. Accordingly, to succeed with a

Parker defense, SRP must demonstrate it is subject to

active supervision by the State. See N.C. Dental, 135

S. Ct. at 1111-12.

SolarCity’s antitrust claims here are thus entirely

distinguishable from the challenges to public utility

districts on which Amici American Public Power Asso-

ciation and Large Public Power Council (collectively,

“APPA”) rely. APPA Br. at 5 (citing Grason Elec. Co. v.

Sacramento Mun. Util. Dist., 770 F.2d 833, 838 (9th Cir.

1985) (concerning Sacramento’s utility); Lancaster

Cmty. Hosp. v. Antelope Valley Hosp. Dist. , 940 F.2d 397,

401-02 (9th Cir. 1992) (discussing defense available for

utilities on the grounds that “they are usually inten-

sively regulated”)). As in Hallie, those challenges in-

volved the liability of municipal governments and the

power entities they created, entities whose profits were

“re-directed to their authorizing governmental units,

or to their customers.” APPA Br. at 17. This is a far cry

from an “essentially business” entity like SRP. Ball,

451 U.S. at 368. And it is precisely because of the “risk

of self-dealing,” N.C. Dental, 135 S. Ct. at 1114, that

SRP must be subject to active supervision, even while

these other traditional public utility entities are not.

Compare APPA Br. at 9 (discussing how public power

companies are “democratically governed” for the pur-

pose of “‘expos{ing] decision makers to greater popular

pressure’” and making them “‘more accountable gen-

erally to serve to reduce [electricity] prices’”) (quoting

John E. Kwoka, Jr., Governance Alternatives & Pricing

in the U.S. Electric Power Industry, 18 J.L. Econ. & Org.

278, 293 (2002)) with Robert Anglen, SRP Spends Mil-

lions on Executive Education Perks, USA Today (Feb. 6,

2015), available at https:/Awww.usatoday.com/story/

money/business/20 15/02/06/srp-spends-millions-executive-

education-perks/22964871/ (discussing SRP’s multi-

million dollar tuition reimbursement perk for children

of SRP executives); see also, e.g., Joint Appendix (“J.A.”)

at 15-17 (49 35-38) (discussing $1.6 million SRP paid

for sponsorship of major sports teams and other

“events and entertainment,” and Standard and Poor's

praise for SRP’s “commitment to strong financial mar-

gins”).

As for the similar arguments of NGA, this case

also does not concern an entity charged with “promot-

ing consumer welfare and [| subject to democratic self-

correction by their electorates,” NGA Br. at 17, since

the SRP electorate is limited to landowners, and

weighted to the largest landowners. Ball, 451 U.S. at

359. As such, resolving whether the state-action de-

fense applies to SRP also does not implicate these sov-

ereign concerns or legitimate interests. See also Mesa

v. Salt River Project Agric. Improvement & Power Dist.,

373 P.2d 722, 731 (Ariz. 1961) (“In conducting its ordi-

nary business [SRP] is not exercising governmental or

political prerogatives as it is not operated for the direct

benefit of the general public. . . .”).

In sum, because there is no basis either to consider

SRP’s decisions as “sovereign actions,” see State of Ten-

nessee, et al. Amicus Brief at 16, or to assume that SRP

is “carrying out a state’s economic policies,” Pet. Br. at

34, SRP’s effort to be freed from the active state super-

vision requirement must fail. And since resolving

whether SRP has been adequately supervised turns on

the resolution of factual issues closely tied to the mer-

its of SolarCity’s antitrust claims, SRP’s Parker de-

fense is thus not eligible for collateral appeal. Cf Cost

Management Sves., Inc. v. Wash. Nat. Gas Co., 99 F.3d

937, 943 (9th Cir. 1996) (“the question of whether a

state has ‘actively supervised’ a state regulatory policy

is a factual one which is inappropriately resolved in

the context of a motion to dismiss”).

In addition, because SRP is an active market par-

ticipant in the sale of electricity, a reviewing court will

need to pay particularly close attention to whether the

State — here Arizona — is exercising the requisite active

supervision to entitle SRP to invoke the state-action

defense. See N.C. Dental, 135 S. Ct. at 1111 (“[llimits

on state-action immunity are most essential when the

State seeks to delegate its regulatory power to active

market participants, for established ethical standards

may blend with private anticompetitive motives in a

way difficult even for market participants to discern”);

FTC v. Ticor, 504 U.S. at 634 (“where a private party is

engaging in anticompetitive activity, there is a real

danger that he is acting to further his own interests,

rather than the governmental interests of the State”)

(citations omitted). Viewing SRP in this light, it is also

clear that neither the “efficiency of government and

the initiative of its officials,” nor any other “particular

value of a high order,” Will v. Haddock, 546 U.S. 345,

352-53 (2006), would be implicated by permitting So-

larCity’s antitrust claims to proceed before SRP may

obtain appellate review concerning its state-action

defense — yet another basis on which to conclude that

the collateral-order doctrine is not available.’

B. In Light Of The Many Arizona Policies

Supporting The Expansion Of Rooftop

Solar Development, SRP’s Claimed Au-

thorization For Its Discriminatory Rates

Is Also Closely Tied To The Merits

In order for public power entities to invoke the

Parker defense against liability claims, they must

demonstrate they are acting “pursuant to a clearly ar-

ticulated and affirmatively expressed state policy to

displace competition.” FTC v. Phoebe Putney Health

Sys., Inc., 568 U.S. 216, 217 (2013) (quoting Community

Comms. Co. v. Boulder, 455 U.S. 40, 52 (1982)). SRP

claims that Arizona’s delegation of rate-making power

is the only expression of state policy relevant to this

inquiry. Pet. Br. at 20. However, the State also has nu-

merous affirmative policies promoting self-generated,

renewable electricity — demonstrating that, in fact,

* SRP repeatedly asserts its appeal raises purely legal issues

because a reviewing court assumes the truth of the allegations in

SolarCity’s complaint. £.g., Pet. Br. at 3. If that alone were suffi-

cient, however, public officials would always be entitled to imme-

diately appeal rulings made on motions to dismiss or for summary

judgment — an approach this Court has explicitly rejected. See,

e.g., Will, 546 U.S. at 353 (rejecting the proposition that collateral

appeal is “a matter of right whenever the Government loses} a

motion to dismiss. . . .”); Jones, 515 U.S. 304 (summary judgment

ruling against officials not immediately appealable).

Arizona has no clearly articulated policy supporting

SRP’s anti-competitive practices at issue here.*

“[Tihe Arizona legislature’s enactment of laws

encouraging the use of solar energy dates back to at

least 1974.” Garden Lakes Cmty. Ass’n v. Madigan, 204

Ariz. 238, 241 (Ariz. Ct. App. 2003). Like many other

states, Arizona requires utilities to procure solar gen-

eration as part of a Renewable Energy Standard

(“RES” or otherwise commonly called Renewable Port-

folio Standard (“RPS”)). See Ariz. Admin. Code § R14-

2-703 (2017). Under this program utilities obtain re-

newable energy credits (“RECs”), including credits

from home solar systems, id. § R14-2-1801 (2017), et

seq. See Allco Fin., Ltd. v. Klee, 861 F.3d 82, 92-94 (2d

Cir. 2017) (describing how RPS and REC programs

generally work); see also N.C. Clean Energy Tech. Ctr.,

Find Policies & Incentives by State, available at

http://www.dsireusa.org/ (showing that almost thirty

states have mandatory RPS or other renewable elec-

tricity standards); National Conference of State Legis-

latures, State Policies for Power Purchase Agreements,

* These underlying Arizona state policies - which are highly

relevant to whether SRP has the “authorization” necessary to be

free from antitrust liability — serve to highlight why this case

would be a particularly poor vehicle to find that public entities

are always entitled to immediately appeal adverse state-action

defense rulings. And since the collateral-order doctrine’s applica-

bility does not turn on the facts of a particular case, the Court

might on this basis conclude that certiorari was improvidently

granted. City & Cnty. of San Francisco v. Sheehan, 135 S. Ct. 1765,

1774 (2015); Ticor Title Ins. Co. v. Brown, 511 U.S. 117 (1994).

available at http://www.ncsl.org/research/energy/state-

policies-for-purchase-agreements.aspx (reviewing states

that authorize third party power purchase agreements

to further foster rooftop solar development).

The Arizona legislature has also adopted tax in-

centives to encourage solar installation, including: (i)

the Solar Energy Credit program, which allows a tax

deduction of up to $1,000 invested in a home renewable

energy project, Ariz. Rev. Stat. § 43-1083 (2017); (ii) a

“solar energy devices” exemption from state sales tax,

id. § 42-5061 (2017); and (iii) a prohibition on consid-

ering solar systems as an element of home value for

property tax assessments. Jd. § 42-11054 (2017). The

State was similarly an early adopter of “net metering,”

which many states provide to compensate distributed

solar generators for the excess electricity they return

to the grid, offsetting their reliance on the grid at night

or when their panels are not making enough energy to

serve their needs. See Ariz. Admin. Code § R14-2-2301

(2017), et seq.; see also National Conference of State

Legislatures, State Net Metering Policies, available at

http//www.ncsl.org/research/energy/net-metering-policy-

overview-and-state-legislative-updates.aspx (showing

almost forty states have “net metering” programs).°

® Ironically, in urging that its discriminatory rate-making

advances legitimate objectives, SRP relies on an Arizona Corpo-

ration Commission (“Arizona Commission”) decision concerning

whether full retail net metering “results in a cost shift from solar

customers to non-solar customers.” Pet. Br. at 8 n.2. However,

since that case turned on the very kind of fact-finding SolarCity

seeks to challenge in this case, SRP’s reference merely highlights

that its state-action defense is closely tied to the specific facts of

The Arizona legislature has further sought to in-

sure that electricity “self-generators” — such as those

consumers who install rooftop solar systems — obtain

the same “just and reasonable” rates as all other utility

customers. Ariz. Rev. Stat. § 40-332 (2017). This policy

preference furthers the legislature’s overall intent

for Arizona citizens to obtain “consumer protection

against overreaching by” those selling electricity and

other essential services. Arizona Corp. Comm'n v. Ari-

zona ex rel. Grant Woods, 171 Ariz. 286, 290 (1992).

Finally, the legislature’s framework for electricity

restructuring, which would allow for some level of com-

petition in the State, also runs contrary to SRP’s rates

challenged here, and thus further undermines SRP’s

claim that its challenged discriminatory rates were

state-authorized. Ariz. Rev. Stat. § 30-800 (2017), et

seq.; see also Kay Elec. Coop. v. Newkirk, 647 F.3d 1039,

this case — which, once again, undermines SRP’s claimed right to

an interlocutory appeal of a purely legal issue.

In addition, the Arizona Commission decision that SRP cites

recognized that the claimed “cost-shift issue would benefit from a

detailed analyses of the costs and benefits of distributed genera-

tion systems,” which can vary depending on numerous factors. /n

re Arizona Public Service Commission's Application for Approval

of Net Metering Cost Shift Solution, File No. E-01345A-13-0248,

Decision 74202 (Ariz. Corp. Comm’n 2013), at 28, available at

http://images.edocket.azcc.gov/docketpdf/0000 149849. pdf. Indeed,

as a study by the U.S Department of Energy concluded, contrary

to SRP’s cost-shift premise, “(f)or the vast majority of states and

utilities, the effects of distributed solar on retail electricity prices

will likely remain negligible for the foreseeable future.” Galen

Barbose, Lawrence Berkeley Nat’! Lab., Putting the Potential Rate

Impacts of Distributed Solar into Context at 29 (2017), available

at https://emp.|bl.gov/sites/defau!t/files/Ibnl- 1007060. pdf.

1045 (10th Cir. 2011) (Gorsuch, J.) (relying on electric-

ity competition framework “on the books” to find “a pol-

icy preference for competition”). That framework also

indicates that the legislature expects public power en-

tities to treat “self-generators” (like those with rooftop

solar) like any other “demand reduction” effort (such

as those installing better insulation or other energy ef-

ficiency measures) — an approach also at odds with the

discriminatory rates which SRP imposed on distrib-

uted solar customers alone. See Ariz. Rev. Stat. § 30-

805 (2017) (discussing restrictions on recovering

stranded costs after restructuring); see also J.A. at 46

(¥ 133) (alleging SRP discriminatory treatment be-

tween different electricity demand reduction efforts).

Moreover, as reflected in executive orders from

several Arizona governors, the State has adopted poli-

cies supporting renewable energy, including distrib-

uted solar generation, as a tool to address the climate

change crisis. Thus, in a 2010 executive order, Gover-

nor Janice Brewer declared that Arizona “strive|s| for

pragmatic, pro-active approaches to climate change

mitigation and adaptation by advancing clean and re-

newable energy, including solar power,” as the State

becomes “a leader in the field of solar and renewable

energy.” Ariz. Exec. Order No. 2010-006 (July 1, 2010),

available at http://azmemory.azlibrary.gov/cdm/ref/

collection/execorders/id/690. Indeed, the U.S. Depart-

ment of Energy’s National Renewable Energy Labora-

tory has found Arizona could obtain more than 30% of

its electricity from rooftop solar systems alone —

although to date it accounts for less than 2% of total

electricity generation for the State. See Peter Gagnon

et al., Nat'l Renewable Energy Lab., Rooftop Solar

Photovoltaic Technical Potential in the U.S.: A Detailed

Assessment, at 26, Table 3 (2016), available at https://

www.nrel.gov/docs/fy 16o0sti/65298. pdf; U.S. Energy Info.

Admin., Electric Power Monthly, Table 1.3.b and Table

1.17.b (November 2017), available at https://www.eia.

gov/electricity/monthly/current_month/epm.pdf (com-

paring net generation year-to-date by November 2017

for small-scale photovoltaic (“PV”) to utility-scale facil-

ities for electric power).

Similarly, in a 2006 executive order, Governor Ja-

net Napolitano — recognizing that a “scientific consen-

sus has developed that increasing emissions of carbon

dioxide |], methane and other greenhouse gases | | re-

leased to the atmosphere are affecting the Earth’s cli-

mate” — committed Arizona to reducing greenhouse gas

(“GHG”) emissions pursuant to advice from the State’s

Climate Change Advisory Group. Ariz. Exec. Order No.

2006-13 (Sept. 7, 2006), available at http://azmemory.

azlibrary.gov/cdm/ref/collection/execorders/id/507. The

Advisory Group, in turn, recommended that Arizona

pursue this goal by, inter alia, removing “barriers to re-

newable energy and clean distributed generation | | to

enable more clean generation to enter Arizona’s energy

supply mix.” Ariz. Climate Change Advisory Group,

Climate Change Action Plan 12 (2006), available at

http://azmemory.azlibrary.gov/cdm/ref/collection/state

pubs/id/3 104.

In sum, the authorization prong of the state-action

defense requires a showing that the State has

“foreseen and implicitly endorsed the anticompetitive

effects” of the challenged action “as consistent with its

policy goals.” Phoebe Putney, 568 U.S. at 229. Given the

numerous Arizona policies promoting rooftop solar de-

ployment as a vital component of the renewable energy

transition, and the tension between those goals and

SRP’s rates allegedly designed to unlawfully stifle

rooftop solar expansion in SRP’s service territory, re-

solving the “authorization” prong of SRP’s state-action

defense is not nearly as straightforward as SRP sug-

gests. Rather, as with the direct supervision require-

ment, it is closely tied with the merits of SolarCity’s

antitrust claims, and raises no “particular value of a

high order” warranting interlocutory appeal. Will, 546

US. at 352.

Il. THE FOUNDATIONAL PREMISES OF SRP’S

ASSERTED RIGHT TO AN UNBOUNDED

MONOPOLY DO NOT HOLD IN THE AGE

OF DISTRIBUTED SOLAR COMPETITION

SRP asserts that the state-action defense protects

“the need to ensure that government policymakers ex-

ercise their discretion efficiently and freely, i.e., with

the objective of advancing the public interest rather

than of avoiding litigation.” Pet. Br. at 35 (emphasis

added). Similarly, APPA claims that the state-action

defense “protects public power utilities’ ability to meet

their public goals” and thereby “allows states to favor

public objectives over free-market competition.” APPA

Br. at 2, 4 (emphasis added). However, SRP and other

public power companies are not advancing public

objectives or the public interest when they improperly

target distributed solar generation.

Stifling solar energy competition through discrim-

inatory rates — a widespread action perpetuated by

SRP and numerous other power companies — harms

the public interest by obstructing the tremendous ben-

efits that distributed solar generation brings to both

consumers and the environment. Such discriminatory

behavior therefore contravenes the underlying pur-

pose of the regulated monopoly, which was to protect

consumers and the public interest. The state-action de-

fense, and interlocutory appeal of adverse state-action

defense rulings, should not be available as a legal bul-

wark for power companies like SRP to exercise un-

bounded monopoly power that works against the

public interest in this anti-competitive manner.

A. The Premise That Electricity Monopo-

lies Necessarily Serve The Public Inter-

est Has Been Undermined By Public

Policy And Technology

“Until relatively recently, most state energy mar-

kets were vertically integrated monopolies — i.e., one

entity ... controlled electricity generation, transmis-

sion, and sale to retail consumers.” Hughes v. Talen En-

ergy Mktg., LLC, 136 S. Ct. 1288, 1292 (2016). In the

electricity industry’s infancy of the early 1900s, the

vertically integrated regulated monopoly made sense

in light of the available technology and existent busi-

ness structures of the time. Originally a natural

monopoly, the electricity sector faced extreme barriers

to entry, whereby construction of power plants and grid

infrastructure required massive capital investments,

as well as substantial economies of scale, whereby the

average cost of delivered power became cheaper with

new expansion in demand. Paul Garfield & Wallace

Lovejoy, Public Utility Economics 15-19 (1964).

The foundational premise for granting vertically

integrated utilities monopoly power was to ultimately

serve the public interest. The electricity monopoly

model sought to achieve widespread access to electric-

ity as a public good while, at the same time, subjecting

utilities to electricity rate regulation in order to pre-

vent price gouging for ultimate consumer benefit.

W.M. Warwick, U.S. Department of Energy, A Primer

on Electric Utilities, Deregulation, and Restructuring

of U.S. Electricity Markets 2.0 (2002), available

® Regulation, as an oversight mechanism for natural monop-

olies, and antitrust laws, as an oversight mechanism over compet-

itive markets, have traditionally been viewed as binary legal

approaches serving the same purpose: keeping industry in check

and thereby ensuring fair consumer prices and public interest

protection. Thus, as Justice Breyer has written, while antitrust

laws serve to police competition in traditional competitive mar-

kets, regulation serves as “an alternative to antitrust, necessary

when antitrust cannot successfully maintain a workably compet-

itive marketplace or when such a marketplace is inadequate due

to some other serious defect.” Stephen Breyer, Regulation and Its

Reform 156-57 (1982). As such, in light of increasingly disaggre-

gated electricity services and technological innovation, legal ap-

proaches must also evolve to keep pace with the industry's

ongoing development between monopolistic and competitive free

market structures.

at https://www.pnnl.gov/main/publications/external/

technical_reports/PNNL-13906.pdf; see also Smyth v.

Ames, 169 U.S. 466, 544-45 (1898) (public utility mo-

nopolies were “created for | | public purposes |and] per-

form|| a function of the state,” and the government is

obligated to “protect the people against unreasonable

charges for services rendered by” the public utility).

However, the century-old premise that vertically

integrated monopolies necessarily serve the public in-

terest has been undermined by public policy and tech-

nology. In terms of policy, electricity regulators have

actively encouraged competition in electricity genera-

tion in order to serve the public interest. For example,

as the Court noted in FERC v. Electric Power Supply

Ass’n, 136 S.Ct. 760 (2016), the Federal Energy

Regulatory Commission (“FERC”) “often forgoes the

cost-based rate-setting traditionally used to prevent

monopolistic pricing |. . .| [and] instead undertakes to

ensure ‘just and reasonable’ wholesale rates by en-

hancing competition — attempting ... ‘to break down

regulatory and economic barriers that hinder a free

market in wholesale electricity.’” Jd. at 768 (emphasis

added) (quoting Morgan Stanley Capital Group Inc. v.

Public Util. Dist. No. 1 of Snohomish Cty. , 554 U.S. 527

(2008)).

Indeed, Congress passed a series of modern laws

intended to promote competition in the electricity sec-

tor and unbundle the services of the traditional verti-

cally integrated monopoly, all as a means to advance

the public interest. Thus, due to “|tjechnological ad-

vances |that] made it possible to generate electricity

efficiently in different ways and in smaller plants” and

through grids that were “unlike the local power net-

works of the past,” New York v. FERC, 535 U.S. 1, 7

(2002), Congress passed both (i) the 1978 Public Utility

Regulatory Policies Act, Pub. L. No. 95-617, 92 Stat.

3117, which directed FERC to promulgate rules requir-

ing monopoly utilities to purchase electricity from in-

dependent power production facilities, and (ii) the

Energy Policy Act of 1992, Pub. L. No. 102-486, 106

Stat. 2776, authorizing FERC to order individual mo-

nopoly utilities to provide transmission services to un-

affiliated wholesale generators. See New York, 535 U.S.

at 9. In short, the assumption that the vertically inte-

grated utility monopoly automatically serves the pub-

lic interest has been undermined by public policy

promoting competition in electricity services.

Distributed solar technology further subverts the

economic and public interest assumptions justifying

the traditional vertically integrated electricity monop-

oly. Distributed solar technology, with a relatively low

barrier of entry, is de-centralized and can be owned or

leased by consumers who are otherwise captive to the

local utility monopoly. Ari Peskoe, Unjust, Unreasona-

ble, and Unduly Discriminatory: Electric Utility Rates

and the Campaign Against Rooftop Solar, 11 Tex. J. Oil

Gas & Energy L. 211, 215 (2016). Distributed solar

generation thus dispels the assumption that electricity

service necessarily requires large economies of scale.

John Farrell, Inst. for Local Self-Reliance, Js Bigger

Best in Renewable Energy? 2-4 (2016), available at

https://ilsr.org/w p-content/uploads/2016/12/Is-Bigger-

Best-in-Renewable-Energy-Report-Final.pdf. As such,

distributed solar generation also fundamentally rup-

tures the business model of the vertically integrated

monopoly, obviating the need for power companies like

SRP to continuously construct infrastructure as their

engine of profit generation. Peskoe, 11 Tex. J. Oil Gas

& Energy L. at 228-32.

Taken together, these changes in public policy and

technology, particularly distributed solar generation,

undermine the assumption that electricity companies

require deference to their monopoly power in order to

serve the public interest.

B. Monopoly Power Companies Opposing

Distributed Solar Generation Are Act-

ing Against The Public Interest

1. Discriminatory rates against roof-

top solar are widespread

Across the United States, both public and private

electric utility companies have responded to competi-

tion from distributed solar generation with a range of

discriminatory tactics, chief among them being the im-

position of retail rate structures that serve to reduce

solar power’s cost advantage over grid-supplied energy.

See Michael Wara, Competition at the Grid Edge: Inno-

vation and Antitrust Law in the Electricity Sector, 25

N.Y.U. Envtl. L.J. 176, 189 (2017). In the last few years

alone, these types of rate cases seeking to penalize

rooftop solar customers have amounted to hundreds

and have occurred in the majority of U.S. states. Jd. at

194-99; see also N.C. Clean Energy Tech. Ctr., The 50

States of Solar Report: Q4 2017 and 2017 Annual Re-

port (2018), availcble at https://nccleantech.ncsu.edu/

wp-content/uploads/Q4-17_SolarExecSummary_Final.

pdf (documenting over 100 policy actions negatively

targeting distributed generation customers in over 35

states in 2017 alone).’

Power utilities have imposed discriminatory retail

rate structures on distributed solar customers in sev-

eral forms. First, utilities have implemented either

new or increased fixed monthly bill charges that are

discriminatorily high for customers with distributed

solar generation, known as a “fixed charge.” For exam-

ple, Santee Cooper, a state-owned public power utility

' While the following discussion details successful attempts

to impose discriminatory rates, in many other instances, both

public and private power companies have been rebuffed in these

efforts. Jd. This trend not only demonstrates the widespread prac-

tice by utilities of improperly targeting distributed solar competi-

tion, but also the mixed responses by regulatory boards and

commissions, thus evincing an area in regulatory flux and not

warranting automatic insulation from competition.

In any event, the fact that electricity utilities have had some

success in convincing regulatory boards and commissions to im-

pose rates targeting rooftop solar generation certainly does not

mean those rates are just and reasonable. Rather, given the inev-

itable tension between distributed solar generation and the mo-

nopoly utility model, these outcomes call into question whether

the Court, in an appropriate case, should reconsider the deference

afforded to state authorization for the exercise of monopoly power,

and instead take into account a broader consideration of the pub-

lic interest that reflects the overall consumer and environmental!

interests at stake. See supra at 24-27.

in South Carolina, imposed a fixed charge of $4.40/kW

as well as further stand-by charges on distributed so-

lar customers, regardless of the amount of energy used

by the customer. See Santee Cooper, Distributed Gen-

eration Rider DG-17 (2015), available at https://

www.santeecooper.com/pdfs/rates/ratesadjustment/dg-

17-rider.pdf; see also, e.g., Bd. of Dir. of Sacramento

Mun. Util. Dis., Resolution No. 15-07-06 (Sacramento

Mun. Util. Dist. July 16, 2015) (imposing higher fixed

charges and time-of-use rates on solar customers);

Kan. City Power & Light, Docket No. 15-WSEE-115-

RTS (Mo. Corp. Comm'n Sep. 24, 2015) (Order Approv-

ing Stipulation and Agreement) (approving a 21%

increase of fixed charges on distributed energy custom-

ers); Conn. Light & Power, Docket No. 14-05-06 (Conn.

Pub. Util. Regulatory Authority Dec. 17, 2014) (Order

Amending Rate Schedules) (also imposing a 20% in-

crease of fixed charges on distributed energy custom-

ers).

Second, utility companies have imposed electricity

charges on solar customers that vary as a function of

the consumer’s peak demand for energy, known as a

“demand charge.” See, e.g., NSTAR Elec. Co., D.P.U. 17-

05-B (Mass. Dept. of Pub. Util. Jan. 5, 2018) (Order Es-

tablishing Eversource’s Rate Structure) (approving

mandatory demand charges specifically on residential

distributed solar customers).

SRP’s new rate structure exemplifies both of these

discriminatory rate practices, as SRP imposed both a

fixed distribution charge of up to $37.88 per month and

increased demand charges ranging from $30 to $125

per month for all residential distributed solar custom-

ers. J.A. 33 ({ 108). These rate changes resulted in an

increase of approximately 65% in energy fees (or $600

per year) for a typical solar customer, as opposed to a

3.9% increase in energy fees for a non-solar customer.

See J.A. 8-9 (4 5); see also, e.g., Wis. Electric Power Co.,

Docket No. 5-UR-107 (Wis. Public Service Comm’n Dec.

23, 2014) (Final Decision) (approving application to im-

pose high demand charges, fixed charges, and time-of-

use rates on distributed solar customers).

2. Discriminatory rates against rooftop

solar harm consumers and the envi-

ronment

Wide-scale discriminatory rates targeting solar

power deployment undermine the very public objec-

tives that power utility monopolies were created to

serve because they harm both consumers and the en-

vironment.

First, rates that stifle the deployment of rooftop

solar harm consumers by diminishing the economic

and social value they receive through generating their

own power. Due to technological advances, the cost of

residential solar has dropped precipitously and is cost-

comparable, if not lower, than the average price of

power purchased from the utility grid. See, e.g., Gideon

Weissman & Brett Fanshaw, Shining Rewards: The

Value of Rooftop Solar Power for Consumers and Soci-

ety (2016), available at https://environmentamerica.org/

sites/environment/files/reports/AME%20ShiningRewards

%2ORpt%200ct16%201.1.pdf; Mark Muro & Devashree

Saha, Rooftop Solar: Net Metering is a Net Benefit,

Brookings Institution (May 23, 2016), available at

https://www. brookings.edu/research/rooftop-solar-net-

metering-is-a-net-benefit/. Further, distributed solar

generation can serve to democratize power ownership

by increasing local control over power decisions, re-

turning economic benefits directly to the served com-

munity and promoting a more equitable distribution of

economic and social benefits across racial and eco-

nomic lines. See generally Local Clean Energy All. &

Center for Social Inclusion, Democratizing Our Energy

Future (2015), available at http://www. localcleanenergy.

org/files/Climate%20Justice%20Energy%20Platform.

pdf.

Second, discriminatory rates inhibiting distrib-

uted solar generation stave off the public health bene-

fits associated with phasing out fossil fuel combustion

from power plants. Nearly 40% of Americans are ex-

posed to toxic air pollution from fossil fuel power

plants that often reaches dangerous levels, resulting in

the increased incidence of asthma and chronic bronchi-

tis and leading to hundreds of thousands of premature

deaths per year. See Am. Lung Ass’n, State of the Air 9

(2017), available at http?//www.lung.org/assets/documents/

healthy-air/state-of-the-air/state-of-the-air-2017.pdf.

Critically, these public health impacts are dispropor-

tionately borne by communities of color and low-

income, who more often live in closer proximity to fossil

fuel power plants. Jd. at 41; see also National Ass’n for

the Advancement of Colored People & Clean Air Task

Force, Fumes Across the Fence-Line: The Health Im-

pacts of Air Pollution from Oil and Gas Facilities

(2017), available at http://www.naacp.org/wp-content/

uploads/2017/11/Fumes-Across-the-Fence-Line_ NAACP _

CATF.pdf. Accordingly, obstructing distributed solar

generation directly exacerbates the country’s systemic

public health disparities by perpetuating reliance on

fossil fuel power.

Finally, these discriminatory rates hinder the

country’s urgently needed transition to clean energy in

order to combat climate change. More than 60% of

America’s electricity still derives from fossil fuels. U.S.

Energy Info. Admin., Electricity Explained (May 10,

2017), available at https://www.eia.gov/energyexplained/

index.cfm?page=electricity_in_the_united_states. As a

result, the electricity sector is the single largest source

of GHG emissions in the country, accounting for nearly

one-third of total U.S. GHG emissions in 2015. U.S. En-

vtl. Protection Agency, Inventory of U.S. Greenhouse

Gas Emissions and Sinks: 1990-2015 ES-24 (2017),

available at https://www.epa.gov/sites/production/files/

2017-02/documents/2017_executive_summary.pdf.

Accordingly, discriminatory ratemaking against

the deployment of distributed solar energy, like that

implemented by SRP, undermines the inherent public

interest in “aggressive and sustained greenhouse gas

emission reductions” in order to avoid some of the

worst impacts of climate change. Jerry Melillo et al.,

U.S. Global Change Research Program, Climate

Change Impacts in the United States: The Third Na-

tional Climate Assessment 13 (2014), available at

http://s3.amazonaws.com/nca2014/low/NCA3_Climate _

Change _Impacts_in_ the United%20States_LowRes.

pdf ?download=1 (“2014 Climate Assessment”). Indeed,

the public harms caused by climate change are im-

mense: the increased extinction of species and ocean

acidification; the rapid loss of Arctic sea ice and the col-

lapse of Antarctic ice shelves; declining global food and

water security; and the heightened frequency of heat

waves and other extreme weather events, including

contribution to the three unprecedented hurricanes

that ravaged the Gulf Coast, Florida, and Puerto Rico

in 2017. See generally 2014 Climate Assessment; see

also Michael Mann et al., What We Know About the

Climate Change-Hurricane Connection, Scientific

American (Sept. 8, 2017), available at https://blogs.

scientificamerican.com/observations/what-we-know-

about-the-climate-change-hurricane-connection/.

For all these reasons, it could not be clearer that

by obstructing the realization of these consumer and

environmental benefits, utility rates which improperly

discourage the transition to renewable energy sources

like rooftop solar are contrary to the public interest.

C. Allowing Public Power Companies To

Obtain Interlocutory Appeal Of State-

Action Immunity Rulings Will Only En-

courage More Discriminatory Rates

Contrary To The Public Interest

The central premise of SRP’s asserted right to in-

terlocutory appeal is that it is necessary to allow public

power entities to focus their attention on “advancing

the public interest” without potential exposure to

antitrust liability. Pet. Br. at 35. However, because SRP

and other utilities’ decisions targeting distributed so-

lar generation are arguably contrary to the public in-

terest, SRP raises no “particular value of a high order”

warranting immediate appeal under the collateral-

order doctrine. Mohawk Indus., Inc. v. Carpenter, 558

U.S. 100, 605 (2009).

Instead, allowing interlocutory appeal in these

circumstances will serve to further encourage power

companies to unfairly obstruct distributed solar devel-

opment in a manner contrary to antitrust laws, with

the expectation that they can avoid liability by invok-

ing the state-action defense and, at minimum, signifi-

cantly delay antitrust litigation by immediately

appealing adverse rulings. By requiring SRP to defend

its rates — including its purported entitlement to the

state-action defense — like any other litigant, the Court

will level the playing field in an area where it has be-

come increasingly apparent that competition, rather

than the perpetuation of insulated monopoly power,

will best serve the public interest.

Such a result would also be consistent with this

Court’s precedents recognizing that power companies

are not immune from competition and antitrust laws.

In Otter Tail Power Co. v. United States, 410 U.S. 366

(1973), the Court decisively held that the Federal

Power Act does not “immunize” power companies from

“antitrust regulation.” Jd. at 374-75 (permitting the

federal government to seek antitrust remedies against

a power utility which, among other things, refused to

sell power to municipalities and transfer competitors’

power over its lines). As the Court has explained, a

power company’s “franchise to exist as a corporation

and to function as a public utility . . . creates no right

to be free of competition.” Tenn. Electric Power Co. v.

Tenn. Valley Auth. , 306 U.S. 118, 139 (1939) (overruled

in part on other grounds); see also Alabama Power Co.

uv. Ickes, 302 U.S. 464, 480 (1938) (holding that power

utilities do not “possess” any inherent legal “right to be

immune from lawful . . . competition”). These findings

are grounded in the recognition that “|t)he public in-

terest is far broader than the economic interest of a

particular power supplier.” Otter Tail Power Co., 410

U.S. at 380 n.10. Accordingly, Amici urge the Court to

recognize that, at least with respect to monopoly prac-

tices serving to obstruct distributed solar generation,

the state-action defense and interlocutory appeal of ad-

verse immunity rulings should be disfavored.

CONCLUSION

The judgment of the Ninth Circuit should be af-

firmed.

Respectfully submitted,

HOWARD M. CRYSTAL

Counsel of Record

ANCHUN JEAN Su

CENTER FOR BIOLOGICAL DIVERSITY

1411 K Street, N.W., Suite 1300

Washington, DC 20005

(202) 849-8397

hcrystal@biologicaldiversity.org

Counsel for Amici Curiae

February 2018

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.