# Opposition Brief — North Star Steel Co. v. MidAmerican Energy Holdings Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_0157%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1999 - **Citation:** 528 U.S. 1046 ## Text No. 99-581 a IN THE Supreme Court of the United States NorTH STAR STEEL COMPANY, Petitioner, v. MIDAMERICAN ENERGY HOLDINGS COMPANY and MIDAMERICAN ENERGY COMPANY, Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eighth Circuit RESPONDENTS’ BRIEF IN OPPOSITION J. A. BOUKNIGHT, JR. Counsel of Record SAMUEL T. PERKINS STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, N.W. Washington, D.C. 20036 (202) 429-3000 Counsel for Respondents MidAmerican Energy Holdings Co. and November 4, 1999 MidAmerican Energy Co. WILSON-EPES PRINTING Co., INC. - (202) 789-0096 - WASHINGTON, D.C. 20001 QUESTIONS PRESENTED Did the court of appeals correctly apply the “state ac- tion” doctrine in holding MidAmerican’s alleged anti- competitive conduct immunized from federal antitrust claims by reason of (1) Iowa’s clearly articulated and affirmatively expressed state policy displacing retail com- petition with regulation in the provision of retail electric service and (2) Iowa’s active supervision of that policy? (i) li LIST OF PARTIES All parties to the proceeding below are listed in the caption. The lowa Utilities Board participated in the pro- ceedings below as amicus curiae. RULE 29.6 CORPORATE DISCLOSURE STATEMENT Respondent MidAmerican Energy Company is a wholly owned subsidiary of MHC, Inc. MHC, Inc. is a wholly owned subsidiary of MidAmerican Funding, LLC, which is in turn wholly owned by respondent MidAmerican En- ergy Holdings Company, a publicly held company. Respondent MidAmerican Energy Holdings Company has no parent company. No publicly held company owns 10 percent or more of the stock of MidAmerican Energy Holdings Company. However, on October 25, 1999, an investor group including Berkshire Hathaway, Inc. and other private investors announced that it had reached a definitive agreement to acquire MidAmerican Energy Holdings Company. The transaction is expected to be completed by April of 2000. After the transaction, Berk- shire Hathaway, Inc. will own approximately 75 percent of MidAmerican Energy Holdings Company on a fully diluted basis. See MidAmerican Energy Holdings Com- pany, Current Press Releases, Berkshire Hathaway, Walter Scott and David Sokol to Acquire MidAmerican Energy Holdines (Oct. 25. 1999), accessed at . 3 ' TABLE OF CONTENTS Page QUESTIONS PRESENTED .0woooooooccecceccceeeeceeeee- i I sc sseisssdndcaddcaniessininenisnicssinsachbcotéedmas ii RULE 29.6 CORPORATE DISCLOSURE STATE- a in cchindnvslaehtblepsdebh ii dtselchdacubesiontuigslocann ii TABLE OF AUTHORITIES ..0..0...........ccccceccceccsecceceees- iv RPE REOROPEEED MOMMA on. onccseceesccencscneccccsascnacaseencaceeseceaseree 1 i sa cece ivacsnaindtwe donner 2 STATUTORY PROVISIONS INVOLVED .......00000000..... 2 SLATEMENT OF THE CASE ooonn.on.n...n..cccccccccccccesees 4 REASONS FOR DENYING THE WRIT ............0........ 7 I. THE STATE OF IOWA’S REGULATION OF RETAIL ELECTRIC SERVICE SATISFIES BOTH PRONGS OF THE TEST FOR APPLI- CATION OF THE “STATE ACTION” DOC- Sau SEES COPIA BAO Aaa eae i en 7 Il. THERE IS NO REASON FOR THIS COURT TO REVIEW THE DECISION OF THE COURT OF APPEALS W000... 12 A. The Possibility of Future Retail Deregula- tion Does Not Negate the Force and Effect of Current Regulation ea 12 B. This Case Reflects No “Split” Among the Circuits Meriting Review By This Court... 15 I ies essa asics eubincssenaididiasshvenseedelanicscs 18 APPENDIX ..................... eines ah adenine sis Geclatnene Medien oi cdates la (iii) iv TABLE OF AUTHORITIES CASES Page California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980) 0.000000... 7 Columbia Steel Casting Co. v. Portland General Elec. Co., 111 F.3d 1427 (9th Cir. 1997), cert. denied, 118 8. Ct. 1688 (1998).............................. 16 FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992)... 10 Fuchs v. Rural Elec. Convenience Co-op., Inc., 672 F. Supp. 1111 (C.D. Ill. 1987), aff’d, 858 F.2d 1210 (7th Cir. 1988), cert. denied, 490 U.S. I A a ns rates g pea raeee Ua aa 9 Fuchs v. Rural Elec. Convenience Co-op., Inc., 85 58 F.2d 1210 (7th Cir. 1988), cert. denied, 490 U.S. TE III Gosh decdtenk: cs bacrestateteekesuatantine nannies 10 Iowa-Illinois Gas & Elec. Co. v. Iowa State Com- merce Comm’n, 412 N.W.2d 600 (Iowa 1987).... 9 Iowa-Illinois Gas & Elec. Co. v. Iowa State Com- merce Comm’n, 347 N.W.2d 423 (Iowa 1984).... 9 Municipal Utils. Bd. v. Alabama Power Co., 934 F.2d 1493 (11th Cir. 1991), cert. denied, 513 U.S. 1148 (1995) ......... Siar ieee ee ae ee ares. 9, 10 Nantahala Power & Light Co. v. Thornburg, 476 Sain WO MINED Gasset ce aoe, cxsasee chee asecae eat ceases 13 North Star Steel Co. v. Iowa Utils. Ba., No. AA3127 (Iowa Dist. Ct. Jan. 29, 1999) ....... 65 North Star Steel Co. v. MidAmerican Energy Hold- ings Co., No. 4-97-CV-80782, 1998 U.S. Dist. LEXIS po489 (S.D. Iowa June 23, 1998) bape 1 | North Star Steel Co. v. MidAmerican Energy Hold- | ings Co.. 184 F.3d 732 (8th Cir. 1999) ......... passim Office of Consumer Advocate v. Iowa State Com- merce Comm’n, 419 N.W.2d 373 (Iowa 1988)... 9 Parker v. Brown, 317 U.S. 341 (1943) 5 as Patrick v. Burget, 486 U.S. 94 (1988) 0000. Prarair, Inc. v. Florida Power & Light Co., 64 F.2d 699 (11th Cir. 1995), cert. denied, 517 Ee ee Ae RII pelisiccnsecssnces tunel ecb ote eta ts 10, 16 Southern Motor Carriers Rate Conference, Ine. v. United States, 471 U.S. 48 (1985) ............ ee 17 v TABLE OF AUTHORITIES—Continued Page Town of Massena v. Niagara Mohawk Power Corp., 1980-2 Trade Case. (CCH) 63,526 (N.D.N.Y. Sept. 8, 1980) —.........-...------::seccceeeeeeeeees 13 AGENCY PROCEEDINGS In re MidAmerican Energy Co., Docket No. DRU- 98-1 (I.U.B. May 29, 1998), aff'd, North Star Steel Co. v. Iowa Utils. Bd., No AA3127 (lowa Tilak, Cb. Fete. BD, BOR) nncenccnsccsanesacscses sdcaivicdedaatonl passim STATUTES Federal {Bik 7 cae & Beenemeeminurunprapenenns mver sn pennrnnnn 4 BB OT OD iain cnesassscaicicaseennstnsecnncernnensmnanneadenatanans 4 TBs Cee & © RP penpemnmnmeierecorsn nm s van syn enna! DEA 4 Rie Tote |. peormmeevennmnenuuereesmuseray serve a minns=s 13 16 UTE: BRIS on ovcsseccctccceee ene 14 DO CBRE. OE aia ssa siiseissiicnnsinstarsssipsecssasentecnemaeaneanon 14 DB UBC. 6 TRIG) ona oes cctneerdires see 2 State Bees Ce BT morssehscsciseassseemtaseasees ANGer ee 2,8 Tore Catlin © SFG BGG) in inciccssiincsiscscccccnsacitsnegrsenpictapeceess 2,8 Towa: Cote © GIG ASCE D ...-.----2-0csencscesercncees sea ktoan ee 2,8 Tw, Cle 6 ATG BI neces i niece cn nsascassnsnsnssssasastanctaneronsness passim Town Cee 8 ATGAL oan nace sncsscsscenssenisncccnssnoroseseveses aan 14 Sores Cae 6 GIGI inc sivsccdicensnsatecicssimeen 4,9 Bown Codie 8 GIGI 2S) ocncivvscnccncccsinestissssaersticeneees 4,9 REGULATIONS Iowa Admin. Code rr. 199-24.4 ..............--sssscssccccsseseeee 4,9 MISCELLANEOUS The White House, Office of the Press Secretary, The Clinton Administration’s Comprehensive Electricity Competition Plan (Mar. 25, 1998), accessed at ........ 14 vi TABLE OF AUTHORITIES—Continued Page MidAmerican Energy Holdings Company, Current Press Releases, Berkshire Hathaway, Walter Scott and David Sokol to Acquire MidAmerican Energy Holdings (Oct. 25, 1999), accessed at . 15 legislation on its own terms. North Star’s assertions about the importance of the antitrust laws in a deregulated in- dustry puts the cart before the horse. Should Iowa enact retail choice, the antitrust laws will certainly become an important tool for protecting competition. Until that time, however, pervasive state regulation in the provision of retail electric service remains the operative system. B. This Case Reflects No “Split” Among the Circuits Meriting Review By This Court North Star also asserts that there is a “split among the federal circuit courts” with respect to the first prong of the state action doctrine, which requires that a state policy displacing competition with regulation be “clearly articu- lated” and “affirmatively expressed.” North Star character- izes this split as one between those courts that have adopted a “foreseeability” standard in which “inference” of a policy is accepted, and those which still require “clear articulation” of a policy pursuant to the Midcal standard. (Pet. 8-12.) These claims both mischaracterize the decision below and overstate the extent of any sup- posed split among circuits. The “split in the circuits” hypothesized by North Star is not presented by this case, and is in any event overstated by North Star. As an initial matter, the court of appeals did not rely on an inference from ambiguous or unclear statutory lan- guage, as North Star asserts. (Pet. 12.) Rather, the court of appeals based its decision on the express language of the Iowa statute, which directly displaces competition with regulation by the establishment of exclusive retail electric service territories, and the preclusive affect of the state court decision affirming the IUB’s Declaratory Rul- ing. As the court of appeals found: The state statute expressly provides that its purpose is to create exclusive service areas which have only 16 one supplier of electricity. See IowA CopE § 476.25 (1997). [Footnote omitted.] The policy to displace competition in the provision of retail electric service, including the generation of electricity, is unambigu- ous because the statute has been interpreted to in- clude the generation of electricity. See In re Mid- American Energy Co., Docket No. DRU-98-1, slip op. at 5. Thus, the exclusive service territory statute is explicit state authorization for displacing competi- tion in both distribution and generation of retail elec- tric service. (Pet. App. A at 10a-lla.) Thus, the court of appeals applied the “clear articulation” test enunciated by this Court, and did not rely not on an impermissible “infer- ence,” as North Star contends (Pet. 13). North Star’s quarrel is, as it properly should be, with the IUB and the Iowa General Assembly, not with the federal court of appeals. North Star also asserts that the split is presented by the contrast between Columbia Steel Casting Co. v. Portland General Elec. Co., 111 F.3d 1427 (9th Cir. 1997), cer*. denied, 118 S. Ct. 1688 (1998) and cases such as Praxair, 64 F.3d 609. The Petitioner in Cclumbia Steel Casting Co. raised a similar contention last Term, also contrasting Praxair and Columbia Steel Casting Co. This Court requested briefing by the Solicitor General, who in turn recommended denial of the petition for certiorari, stating that his office “perceive[d] no conflict that calls for resolution by this Court.” '* Specifically, the Solicitor General observed: [Unlike petitioner (Pet. 25), we see no firm basis for concluding that the Praxair court would have recognized immunity on the facts of this case, or that 12 Brief for the United States as Amicus Curiae at 14, Co’umbia Steel Casting Co. v. Portland General Elec. Co., No. 97-49, cert. denied, 118 S. Ct. 1688 (1998). 17 the court below would have rejected a claim of im- munity on the facts of Praxair. Id. at 16 (footnote omitted). The Solicitor General’s reference to “the facts of [the] case” is a reminder that cases involving the state action doctrine are heavily dependent on the facts and circum- stances of each case. (See Pet. 10.) The issues to be decided include whether the state has clearly articulated and affirmatively expressed a policy to displace competi- tion with regulation, whether that policy has been actively supervised by the state, and whether it extends to im- munize the particular conduct in question. Because such cases are “fact-bound,” Brief for the United States as Amicus Curiae in No. 97-49 at 8, in the absence of significant doctrinal issues, they are not ordinarily appro- priate for review by this Court on certiorari. See also id. at 11 n.5. North Star has offered no rationale that justifies a grant of certiorari in this case. North Star’s final argument is that the IUB’s approval of an experimental program of customer choice somehow demonstrates that Iowa’s policy is not “clearly articulated,” “affirmatively expressed,” or “actively supervised.” (Pet. 13-14.) However, the fact that the Board, which has au- thority to establish exclusive service territories, may also have authority to approve a limited experimental program for the purpose of testing how retail competition might work hardly suggests the absence of a clearly articulated state policy. As this Court has made clear, the state ac- tion doctrine should not be construed in a way that un- necessarily reduces the “range of regulatory alternatives available to the State.” 15 Likewise the fact that the pro- 13 Southern Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48, 61 (1985) (rejecting argument that state policy must “require, rather than merely permit, anticompetitive conduct” in order for the state action doctrine to apply). 18 gram—limited in duration and extent—was subject to the IUB’s detailed review and approval?* confirms that the State’s policy is, in fact, closely supervised. CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted, J. A. BOUKNIGHT, JR. Counsel of Record SAMUEL T. PERKINS STEPTOE & JOHNSON LLP 1330 Connecticut Avenue, N.W. Washington, D.C. 20036 (202) 429-3000 Counsel for Respondents MidAmerican Energy Holdings Co. and November 4, 1999 MidAmerican Energy Co. 14 Sec Pet. App. E. £ PR LF OIE OF 12 APPENDIX PRA” - BL AI FOTW 7 * la APPENDIX IOWA ADMINISTRATIVE CODE rr. 199.24,4(3), (4) 199—24.4(476A) Application for a certificate—con- tents. Each person or group of persons proposing to con- Struct a facility after January 1, 1977, or a significant alteration to a facility shall file an application for certifi- cate of public convenience. use, and necessity with the board, unless otherwise provided by these rules. 24.4(3) In section 3, entitled “Current system informa- tion,” the applicant shal] include the following: a. A specific and complete description of all Partici- pants’ operating generating units in all Participants’ op- erating electric power generating stations. Such descrip- tion shall include, but shall not be limited to, installed Senerating capacity including nameplate, net to the busbar ratings and net to the distribution system of each unit in megawatts, primary fuel types and sources for each unit. the heat rate of each unit in BTU‘/kWh over the range of operating capacity, date placed in service and pro- jected retirement date. Applicant shall also describe all Other sources of electricity available to serve Participants’ Service area, Description of other sources of electricity shall include, but shall not be limited to, total kilowatts and kilowatt hours available in each quarter of the year. Fer this purpose, a group of several similar generating units operated together at the same location such that Segregated records of energy output are not available shall be considered as a single unit. b. For each quarter of the ten (10) years preceding the date of application. system load level information in the form of duration curves, load curves and integrated energy curves. Supporting data for each curve shall be supplied in tabular form. POPS UN e RT ire SON te cree nen 5, ye 2a c. For each quarter of the ten (10) years preceding the date of application, in each participant’s service area, the number of customers in each customer class, the aver- age customer consumption in each customer class and the average price per kilowatt hour for each customer class. Data for the largest industrial users shall be further classi- fied according to two digit Standard Industrial Classifica- tion (SIC) Codes. Applicant must indicate whether any information provided under this subsection constitutes a clearly unwarranted invasion of personal privacy or trade secrets required to be kept confidential by the board under the Iowa Administrative Procedure Act. Applicant shall provide capital costs and operating and maintenance ex- penses per kilowatt hour by generating station for each quarter of the ten (10) years preceding the date of appli- cation. d. For purposes of this subsection, the period chosen for presentation of quarterly data shall be any appropriate three (3)-month interval, selected on the basis of the shape of the load curve or any other load characteristics of the installed generating capacity. 24.4(4) *In section 4, entitled “Future system projec- tions,” the applicant shall include the following: a.(1) A description of each participant’s projected in- stalled generating capacity for each year from the date of application through the proposed facility’s life. Such description shall include but not be limited to the pri- mary type of fuel projected to be used by each generating unit in the system and the proportion each generating unit is projected to contribute to total installed generating capacity. * Objection, see filed rules published IAC Supp. 1/9/77, 5/4/77, 7/13/77. RE RAISES MOO ie tates POR RS Sead aby 3a (2) A description of other sources of electricity avail- able or likely to be available to supply participants’ serv- ice areas. Such description shall include, but shall not be limited to, total kilowatts and kilowatt hours available for each year from the date of application through the pro- posed facility’s life. : b. (1) Identification and description of participants’ ex- isting and planned programs designed to conserve energy. Such description shall include, but shall not be limited to, estimated kilowatt hours saved for each year from the date of application through the proposed facility’s life. (2) An analysis of the effect construction of the facil- ity would have on the demand for electricity. This analy- sis shall include, but shall not be limited to, all antici- pated changes in demand due to community developments induced by construction of the facility. (3) An identification of the forecast methodology used by applicant including a discussion of the analytical tech- niques used, the manner in which the techniques are related to the forecast, and the confidence levels and ex- pected range of accuracy for the components of the fore- cast. (4) A projection of system load levels in the form of duration curves, load curves and integrated energy curves, for each year from the date of application through the proposed facility’s life. Supporting data for each curve shall be supplied in tabular form. c. For each participants’ service area, a projection of the number of customers in each customer class, average customer consumption by customer class and average price per kilowatt hour for each year from the date of application through the proposed facility’s life. Applicant shal! provide projections of capital costs and operating 4a and maintenance costs per kilowatt hour for each station in the participants’ system and for the proposed facility for each year from the date of application through the proposed facility’s life. Average price per kilowatt hour may be stated as an aggregate index of all rate classifica- tions. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_0157%3A2. Public record. Not legal advice.