Amicus Curiae Brief — Trigen-Oklahoma City Energy Corp. v. Oklahoma Gas & Electric Co.

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TRIGEN-OKLAHOMA CITY ENERGY LOREORATION,

Petitioner,

Vv.

OKLAHOMA GAS & ELECTRIC COMPANY,

Respondent.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Tenth Circuit

BRIEF OF AMICI CURIAE UNITED STATES

COMBINED HEAT AND POWER ASSOCIATION,

AMERICAN GAS COOLING CENTER,

INTERNATIONAL DISTRICT ENERGY

ASSOCIATION, AND DISTRIBUTED POWER

COALITION OF AMERICA IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI

JOHN W. JimMIsON

Rocer A. BERLINER

MEGAN M. GRANT

Counsel of Record

BERLINER, CANDON & JIMISON

A Professional Corporation

1225 19th Street, N.W.

Suite 800

Washington, D.C. 20036

(202) 955-6067

Attorneys for Amici

Uniied States Combined Heat and

Power Association, American Gas

Cooling Center, International

District Energy Association,

Distributed Power Coalition of America

September 28, 2001

COCKLE LAW BRIEF PRINTING CO,, (800) 225-6964

OR CALL COLLECT (402) 342-2831

| a

TABLE OF CONTENTS

Page

INIGRGo. OF AMIC! CURIAE. «ows cccestcaccavss 1

SSASEMGINe OF THE CAGE. ooo ccc ciiicetdaccss 2

REASONS FOR GRANTING THE WRIT ........... 2

I. THIS CASE PRESENTS AN ISSUE CRITICAL

TO THE NATIONAL POLICY INTEREST IN

COMPETITIVE ENERGY MARKETS.......... 3

Il. THE SCOPE OF THE STATE ACTION DOC-

TRINE MUST BE CLARIFIED................ 12

Ae RI 0 <4 cae 04k Dane ates aG re Rd eR een 20

TABLE OF AUTHORITIES

Page

CASEs:

A.D. Bedell Wholesale Company, Ine. et al. '

Philip Morris Inc., et al., 2001 WL 708447 (3d

Cir. June 19, 2001). 14

California Retail Liquor Dealets Ass'n v. Mideal

Aluminum, Inc., 445 1) S 97. 190 SC# 937. 4&7

L.Ed.2d 233 (1980). Weed Hi

Cantor v. Detroit Edisiii,C4,, 498 11.5 579 GF SFI

3110, 49 L.Ed.2d 1/41 (197; ‘4 4]

FTC v. Ticor Title Ins , |, iat

2169, 119 L.Ed.2d -'! |

Patrick v. Burget, 486

L.Ed.2d 83 (1988).

Snake River Valley Ey (ii) (jp Jy) jp. |

corp, 238 F.3d 118¢

PHet) ; hh Léniadlobia

Trigen-Oklahoma Cityj44 F.9d $22) ()0th Cir 200)) \4

Gas & Electric Co., :

OTHER AUTHORITIES

ial nergy Poh Develop

Report of the Natioma/ Energy Policy, May 2001

ment Group, Natiomg Office, Washington, D. Lt)

Government Printir

INTEREST OF AMICT CURTAI

lyric) curiae United States Combined Heat and Power

Association (WSCHPA), American Gas Cooling Center

‘ACCC ), tnternational District Enetey Aseociation (IDEA)

and Distributed Power Coalition of Ameticn (DPCA) leolle

tively, the Associations) ate horprotit trad sonciations chat

ing ? WHA AW iWsbebet iW PHS Wi PHINP 4, ypmert WE +H

Hipetiti ; +LAt ger Hit ; ; +} Beeer

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| Puiyt ' al \ Mia} i} iibi hi) Ald '

Mahy wre acnve Parhell inis in 4} . Chery Nnarvnct ian

merely irigen-WVsahoma Lily bnery -orporahen (irigen)

and (iklahoma (sas & tlectric ¢ ompany (a ik), the sok

petitioner and sole ré pondent im thi proceediny

]

STATEMENT OF THE CASE

Amici adopt the statement of the case in Petitioner's

brief.

‘ an

REASONS FOR GRANTING THE WHIT

SuHMAHY HE Ne APU HHEH

HH HMA WHEY my Hu bd {i Wi 1H HAH THe WH AW

LU WIH ite MINN Hit Why iN th} iil Hit

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NePHy ree: Wp Hy DAT HP AATR ARH AN NT Th HENNE

ay i) yan APIBING i applied have hepyn ta PIMP This sane

presents a ripe example af the resulting inadequaey al

existing law when a regulated energy utility seeks to

shield itself fram antitrust liability for anticompetitive

actions in a market where its product competes with

other energy products to provide energy services, and the

state regulates neither the market nor the utility's partic:

ular actions.

Amiel CHTIME Apseciations uw that this evelution ef

markets and the RHRHE Realiey Phat fevers tH WHT Re frie:

a If ntale Acre HRRHRIEY te eetended: ae TE RHIA Re

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ee ee

by the TeHth Cikeuit ih EKe deeisioH Below FRoHI the

regulated iarket for an eHergy product, in this case

electricity, into unregulated markets where that product

is but one competing form of energy to provide energy

services, if this case cooling services for buildings.

Amici futthet argue that, evel assuthiny that OG&E

Wet) Hot UpetaHN Outside He Beds BE A HAtket iH

WHIEH OGRE WAs inh SUH LY HAIHUATH 4 atin Hb

i Ati WHANTY HAH {4 ih ae Racit |

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HH ie Tent EWA f SHEP ABEIAT Wa an iM Phi

|, THIS CASE PRESENTS AN ISSUE CRITICAL TO

THE NATIONAL POLICY INTEREST IN COMPETI.

TIVE ENERGY MARKETS

As the general economic trend toward reducing regu>

lation and bringing competitive market forces to bear in

the U.S, economy sweeps across the energy industries (as

it has Previgusly swept acrass the telecommunications

and FFARERAFFRFAR IRAHBEFIERI, Rew inet market

PRIFAnER, RNa many Al the fii AF Ne ARRREIAY

Wy UN

A Ae INTE PUTIN TRE PE RETR id Meh il

ty ce ANTE lh Wh RATE TeMY HH A Hie

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competitive, and may still have legal monopolies in other

portions of those markets.

Amici curiae believe that it is critical that the bounds

of antitrust immunity for regulated monopolies coincide

precisely with the bounds of the remaining regulated

monopoly portions of those markets. It is equally critical

that potentially anticompetitive behavior be disciplined

within those bounds by conscious and effective state

supervision. This Court has long recognized the impor-

tance of these two factors in prior cases by making them

the two prongs of the “state action immunity doctrine,”

exempting regulated utilities from antitrust liability for

anticompetitive actions only if they were taken within the

defined regulated sphere and under meaningful state

supervision. California Retail Liquor Dealers Ass'n v. Midcal

Aluminum, Inc., 445 U.S. 97, 106, 100 S.Ct. 937, 63 L.Ed.2d

233 (1980). It is time to reinforce and clarify the limita-

tions on the scope of antitrust immunity conferred upon a

regulated energy utility where its energy product is sold

in unregulated competition with other energy products

that can meet the same energy need, and when the state

neither regulates the market for those energy services nor

supervises the utility’s actions in that market.

USCHPA, AGCC, IDEA, and DPCA, as amici curiae,

bring a broad, industry-wide perspective to this issue:

e Amicus United States Combined Heat and Power

Association represents for-profit and non-profit enti-

ties who support and promote the proliferation of

highly-efficient, environmentally-beneficial combined

heat and power technologies. By capturing and utiliz-

ing (for steam, heating, cooling, air treatment, or other

purposes) the thermal energy of a combustion process

also used in the generation of electricity, CHP projects

achieve energy efficiencies of two to three times the

efficiencies of conventional power generation. At the

same time and by the same means, they reduce emis-

sions to half or less of the emissions produced when

fuel is consumed separately for these purposes. The

success of CHP projects requires markets for energy

services in which customers can recognize and elect

the high energy and environmental efficiency of CHP

in fair competition with separate electricity and ther-

mal energy services, including products that may be

marketed by regulated utilities.

e Amicus American Gas Cooling Center promotes the

development, demonstration, and implementation of

high-efficiency distributed technologies for cooling,

including combinations of cooling with heating and

other energy services. Members of AGCC include nat-

ural gas distribution companies, municipal utility con-

sortia, pipelines, producers, associated equipment

manufacturers, government agencies, nonprofit orga-

nizations, and universities. The AGCC and its mem-

bers act as a catalyst to promote natural gas cooling

equipment, heating/cooling systems, and dehu-

midification technologies. The success of such systems

depends on the existence of markets in which they can

readily be installed, interconnected, and utilized,

potentially in competition with cooling technologies

that would consume electricity provided by regulated

utilities.

e Amicus International District Energy Association fos-

ters the success of its members as leaders in providing

reliable, economical, efficient and environmentally

sound district energy services. Its vision is to advance

global environmental quality through efficient district

energy. The Association’s membership of about 900

members worldwide, including 850 in the United

States, consists of representatives from utilities,

municipals, universities, hospitals, military bases, air-

ports, industrial parks, and other physical plant sys-

tems engaged in the supplying of thermal energy in

the form of steam, and hot and chilled water for

heating, cooling and process uses. The success of dis-

trict energy systems requires a market in which the

efficiency and cleanliness of district energy can com-

pete fairly with the provision of steam, heating or

cooling through separate appliances using electricity

or fuels, including those provided by regulated util-

ities.

e Amicus Distributed Power Coalition of America was

created to facilitate and advocate the optimal use of

distributed power for the placement of electric power

generation at the point of need. Members of DPCA

include utilities, end users, power equipment manu-

facturers, pipelines, electric and gas marketers, and

research organizations. The success of distributed

power applications requires markets for energy ser-

vices in which such applications can compete fairly

with centralized electricity generation delivered

through transmission and distribution wires, which

generally remain regulated as monopoly utility sys-

tems.

Each of the Associations joined in this brief therefore

seeks markets for energy services that are open to the

competitive efforts of their members, and are potentially

competing among themselves as well as with others. This

potential competition includes both members and non-

members of the Associations who retain regulated

monopoly status in one or more specific energy products

such as electricity or natural gas service.

The Associations submit that the Court should grant

the writ sought by petitioner because of the profoundly

negative effect on national policies promoting competi-

tive energy markets if the lower court decision is allowed

to stand unreviewed. If anticompetitive acts can be com-

mitted with impunity outside the defined monopoly mar-

ket by the protected utility, or can be committed without

the assurance that they are closely reviewed for consis-

tency with the public interest, competitive entrants will

be deterred and the benefits of competition will not be

fully realized. As a result, this case presents an issue of

critical importance to the competitive strength of the

national market for energy services.

Amici curiae believe that it is critical to recognize that

the relevant market in this case, and the relevant energy

markets for national policy purposes, are markets for

energy services, rather than markets for energy itself.

Consumers do not purchase energy for its own sake, but

instead to have the services that require energy: heat,

light, cooling, dehumidification, transportation, products

from industrial processes, etc. In many instances, differ-

ent forms of energy can compete to provide the same

energy service. Heating can be provided to buildings, for

example, in many ways: electric resistance heating, elec-

tric heat pump, oil furnaces, natural gas furnaces, hot

water delivered through a district energy system, hot

water from a solar system, firewood in fireplaces or wood

stoves, or coal furnaces, among others. The market for

providing heat to buildings is therefore potentially a

highly competitive market. It is critical that no one

entrant or group of entrants has the power to commit

anticompetitive actions in seeking to win that market

shielded by immunity from antitrust liability drawn from

the regulated monopoly granted over its production or

delivery of one of the competing forms of energy capable

of serving that market.?

In this case, it is clear that Trigen was not competing

in the electricity market (although the record below sug-

gests that OG&E was motivated to oppose Trigen in pa t

out of fear that Trigen would, when the law allowed,

compete directly in the electricity market).3 It is also clear

that OG&E recognized that it was competing with Trigen,

but OG&E was not competing in the market for chilled

water. Instead, both were competing in the market for

building cooling services, a market in which other forms

of energy (natural gas cooling, for example) could also

potentially compete. Indeed, this is what the jury found

in this case to be the relevant market: the market for

cooling services. It is unquestionable that the State of

Oklahoma did not seek to regulate the market for cooling

services in buildings, and that Trigen did not become a

regulated utility in seeking to serve this market by deliv-

ering chilled water through its pipes. Neither did the

State provide nor intend- that its electric utilities take

actions to make electricity the exclusive form of provid-

ing cooling services or otherwise monopolize the cooling

> The Associations do not argue that regulated utilities

should be excluded from such competition, nor that they be

barred from competing through price offers reflecting regulated

_rates. Rather, they should simply not be protected from antitrust

liability for non-price anticompetitive actions taken to extend

their monopolies from the regulated markets into unregulated

markets.

3 10th Cir. App. vol. VI at 1182-89.

services market. Therefore, OG&E was clearly participat-

ing in an unregulated and competitive market in its

efforts to win market share in promoting cooling services

that required electricity and endeavoring to defeat com-

petitors-offering cooling services in other manners. The

critical question is whether OG&E’s antitrust immunity

derived from its status as a regulated monopoly for the

delivery and retail sale of electricity should extend to

immunize the blatantly anticompetitive actions the jury

found it had committed in the competitive market for

cooling services. The answer will determine the competi-

tive rules and therefore the potential to obtain competi-

tive benefits in every market for energy services across

the United States, including the markets in which the

members of the Associations amici curiae operate.

The importance of carefully defining the limitations

of antitrust immunity afforded to a regulated energy

utility operating outside its monopoly market is increas-

ing. This is because national and state policies are

increasing the role of competitive market forces, and

diminishing the role of command-and-control regulation,

in markets for energy services. To date the federal gov-

ernment and numerous states have enacted laws to

restructure the energy industries to “unbundle” their

markets into competitive and monopoly sub-markets. The

report of the President’s National Energy Policy Develop-

ment Group, “National Energy Policy,” stated in May

2001, when announcing the Administration’s energy pol-

icy priorities:

The electricity industry is going through a

period of dramatic change. To provide ample

electricity supplies at reasonable prices, states

are opening their retail markets to competition.

This is the most recent step in a long transition

from reliance on regulation to reliance on com-

petitive forces. This transition from regulation

to competition began in 1978 with enactment of

the Public Utility Regulatory Policies Act [cite

omitted], which promoted independent electric-

ity generation. Open-access transmission poli-

cies adopted by the Federal Energy Regulatory

Commission (FERC) in the late 1980s further

promoted competition in wholesale power mar-

kets. Congress largely ratified these policies

with enactment of the Energy Policy Act of 1992

[cite omitted], which further promoted non-util-

ity generation. FERC took another large step to

promote competition with its open-access rule

in 1996, which provided greater access to the

transmission grid, the highway for interstate

commerce in electricity. Increased competition

in wholesale power markets encourages states

to open retail electricity markets. . . . Beginning

in 1996, states began opening their retail mar-

kets to competition in order to lower electricity

prices. Twenty-five states have opted to open

their retail electricity markets to competition.‘

As markets formerly served by fully-integrated util-

ity monopolies are partially or completely restructured to

allow competitive market forces to create choices and

lower costs for consumers, it is critical to amici curiae and

their members that competition itself be protected by

even-handed application of the antitrust laws. Granting a

* Report of the National Energy Policy Development

Group, National Energy Policy, May 2001. Government Printing

Office, Washington, D.C. page 5-11 (Chapter 5, page 11).

—

utility antitrust immunity for its anticompetitive actions

in any market in which its regulated product is sold

competitively with another form of energy is incompat-

ible with a policy of allowing, indeed encouraging, com-

petition in energy services markets.

If these markets are to function properly, competitors

to provide energy services must be assured the law will

constrain regulated entities to the use of their monopoly

privileges solely within their remaining and explicitly

regulated monopoly markets. Close supervision within

those markets of monopolistic actions is also necessary to

assure they are not contrary to the public interest. To the

extent regulated utilities elect to participate in competi-

tive energy services markets, like the market for cooling

services in which the Petitioner and Respondent were

competing in this case, they must be obliged to compete

fairly. They should not be exempted from antitrust lia-

bility for anticompetitive actions they commit in the com-

petitive segments of the market on the basis of their

continuing status as regulated monopolies with regard to

one or more non-competitive functions.

The decision below wrongly extends the state action

immunity doctrine beyond any exception this court has

carved out. Immunity from antitrust liability granted

because the defendant is a regulated monopoly has

repeatedly been held by this Court to be limited to extend

no further than the monopoly itself extends, and even

within that extent requires that the anticompetitive

actions be closely supervised by the state in an ongoing,

conscious, and effective manner. If allowed to stand, the

decision below will affect not just Trigen and OG&E, but

all participants in the energy services industries, includ-

ing developers of industrial combined heat and power

systems, building cooling, heating and power systems,

district energy systems for heating, cooling, and power,

and other distributed energy resources. As major trade

associations representing many such entities, amici curiae

call on the Court to review the decision of the Tenth

Circuit in this case as a matter of critical priority to

national policy favoring competition where feasible in

energy markets.

Il. THE SCOPE OF THE STATE ACTION DOCTRINE

MUST BE CLARIFIED

_ It has been almost ten vears since this Court last

addressed the scope of the state action doctrine. FTC v.

Ticor Title Ins. Co., 504 U.S. 621, 112 S.Ct. 2169, 119

L.Ed.2d 410 (1992). Since then, there has been a sweeping

transformation in the fundamental relationship between

state regulated entities and private entrepreneurs in the

competition for the provision of energy services. Today, it

is increasingly the rule, rather than the exception, that

private entrepreneurs are in a position to provide what

were once regulated utility services to energy service

consumers across the nation.

As set forth more fully in the policy discussion

above, this tectonic shift in the competitive landscape

makes it imperative that the rules of the game, and the

rule of law, be understood by all those who influence the

balance of competition, including reviewing courts. As

the Tenth Circuit decision at issue underscores, that is

clearly not the case today with respect to the core ques-

tion of the extent to which a regulated utility’s conduct is

insulated from federal antitrust scrutiny.

The Tenth Circuit found that state action immunity

applies to OG&E because it met the Midcal two-pronged

test: clearly articulated policy and active supervision.

California Retail Ligue: Dealers Ass'n v. Mtdcal Aluminum,

Inc., 445 U.S. 97, 106, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980).

As Trigen has forcefully argued, and as amici curiae have

noted above, the Tenth Circuit has mistakenly identified

the relevant market,-the market for cooling services,

instead accepting that OG&E’s anticompetitive actions

were wholly within the electricity market in which it has

a legal monopoly by effect of law. Oklahoma does not

have a clearly articulated policy governing the cooling

services market, and the Oklahoma Corporations Com-

mission (OCC) does not regulate the cooling. services

market. Amici curiae submit that the lack of any State

action creating a regulatory regime to apply to the cool-

ing services market is sufficient to deny OG&E state

action immunity for its anticompetitive actions in that

market.

As Trigen notes, this Court previously visited this

issue in Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct.

3110, 49 L.Ed.2d 1141 (1976). In Cantor, this Court consid-

ered whether a regulated utility’s lightbulb distribution

program was entitled to immunity from antitrust claims

under the state action doctrine. This Court held that the

program distributing free light bulbs was not immune

from the Sherman Act, and recognized that,

[t}here is no logltal INEGRALN ENG Walwenn

requiring such a AVN Ni pel WK AVANY EUNREIA

insofar as it is ext eli, (WH NATWNAl WiAMApal

PAARL WHE A han

1 Wat i engaged Ny WWaiieas

Id. 428 US. at 596, 96. Eh At A180, bike Cantar, OGRE

petitive area of the ecanomy of

has moved into a co! , '

; -annot rely on the immunity status

cooling services, and ¢

ng its natural monopoly powers in

it enjoys while exercis} B ONOpoly P

ty market,

the regulated electrici

Sven i el Coult were to conclude that OG&E's

actions waka the market realm deliberately set

aside tee Ce maepely ta be exercised, hawever,

there is no suggestion by We Cant Mat ine alate engaged

in meaningful super\ WON M CRMR'A anteampeltve

actions. It is on the Neabieis Of the Tenth Eienit's

assessment of the secl\ AYA At Whe Atteat Weal What

amici curiae focus, to é\\WNANS® WO WAVE CONTE He (eee Ka

clarify the state supe! \ \S\\\\ VAAL SAVERS

The Tenth Circuit: TWA Hat KAO ReeOH BRAK GE Ee

Midcal test, the requilt®iveltt for active Supervision, Was

satisfied solely by vittwé Of the fact that OGRE is 4

regulated utility. There Wes No ahalysis conducted

regarding the extent Of that supervision, or whether the

challenged conduct itself was supervised. The mere fact

that OG&E was reguilated by the OCC sufficed for the

Tenth Circuit. Trigen--Oklahoma City Energy Corp. v. Okla-

2001).

While invoking thé Hatta of Midenl, the Tenth Cit

cuit’s approach to the’ ##eHH PrOH# 18 8 FAF 1H BHE BHO BF

powers and also

dards to the extel,

HG WETIE WAAR PATAAEY: QAROHEAL Ak He PeNee VE UPR

NUIT LULL LLL ELC LCOPMLMLI LL ALL LD

VUE PRARATVOR ATALWANE PITA Fy ie NAY ate Tite

Fiveita Waly ab whieh Wave eanelvded Mat We apaeitie

eaneduel al iaave mMal be actively aMpervined by he alate

in arder ta be immunized by the state actian dactine,

In Snake River Valley Electric Association v, Pacificarp,

238 Fad 1189 (9th Cir, 2001), the Ninth Circuit discussed

and applied Midcal, Patrick v, Burget, 486 U.S, 94, 101, 108

S.Ct, 1658, 100 L.Ed.2d 83 (1988), and FTC v, Ticor Title

Ins, Co,, 504 U.S, 621, 634, 112 S.Ct, 2169, 119 L,Bd.2d 410

(1992), The court stated that,

[t]he seeand prong af the Mideal test requires

that the state “exercise ultimate antral aver the

a (private) anticompetitive canduet”

PFE Teae Title dma, Cy AOA US, G44, GAA, 142

BE BVOM VAR FRete ANG (AMMA Tle pian

RAVAN VAAL HAG ALAKE ACHR CARHEVG WAT ahel

Wee QALY We BAe ANWEQMIPRUHUE Eb Qf

NAN WAPMS HAE (1 HAG AARANRAE Cal iy whats

UAL) AVEENOE REALE FRRUTAIQEY BOHEER:

Pattie 0. ae ty ARG LS. BA LOL, LU SICK LER,

10 L.Bd. dd 83 (1888).

Swake River Valley, 238 F.3d at 1193.

In considering Pacificorp’s arguments that the statute

in question was “self-policing” and therefore satisfied the

active supervision prong, the Ninth Circuit determined

that the “opt out” provision that was solely within the

utility’s control in effect gave the utility partial control

Ovet the Ho-coMipetition policy. The Court fotind that this

type of private tepilatoty power was what the active

UPBPVIBIOH PROHB OF Midcdl Was supposed te preveHE T7.

AL L1Ma, Re Ate Pe A TRAP TH His ey A Ly at

WAMOAM, LAA eH ALAM, Te EEE Fatiived hat Ue atate diet

WAL APIIATY PORTOINE AHITIAIRAE PARTIAL AYER THR apaeiiy

PATOL AL TRAE FO RATIALY FVG APTI AUPREVIRI ORL FRIAR

ment Snake River Valley, 248 Rad al 14M, ;

The Third Cirewit has emplayed a similar analysis af

the specific conduct at issue for purposes of applying the

“problematic” second prong, In A.D. Bedell Wholesale

Company, Inc, et al, v, Philip Morris Inc,, et al,, 2001 WL

708447 (3d Cir, June 19, 2001) the court stated, |

[t]he second prong of the Mideal test is whether

the resulting antitrust violation was “actively

supervised” by the state, This standard is more

problematic, The essential inquiry of the

‘actively supervised” prong is ta determine if

ihe “anticampelitive scheme ia He State's awa,”

FRE & Freon Pile twa CO. AAA LB GAL, GAR, M48

Beh, AUOM, VAG HR ANG (UMMA. Ribbed

WAN A A AY AMWAE ARHAN i Nah AW

WNYAAYE RYALR ARMOR, A AUALE AAWAE KACO RA EY

WOVEN AA AIAG HYG AIERABOHHUG Behan:

WOE WS RANEY FAVS ROAR GE He Baber Gaeta,

Pathe’, WB LS. ab LOL “TAG GeHVe EAPORHIMIOR

PeGIIHEMNENE HaKidates Haat the State exercise

ultimate control over the challenged alticoit:

petitive conduct.” Ticor, 998 F2d at 1139.

A.D. Bedell Wholesale Company, Inc., 2001 WL 708447 at

“15.

A a er

The Third Circuit went on to hold that the “active

supervision” prog was fot satisfied, and stated “i]t is

the cotidtiet that violates the antittist laws that states

Hust ‘Actively supervise’ iH Btdet fot Parker itHHiuHity to

AttAeH.” Td ab M47,

a ee ee ee

AWWies AE HAAE EV ARALate BAB layed BY Bath Hie

NWI AN TA CUPRA: AVAIL TRAE Fela an

WHAO) HiRTR WAR APHIVE AMRRLIAN Aver Hie apaeilie

PANEL AL (MAE: (A preeiiely Wal Hila CAMEL Atended fay

piypaaea Af apPIVINg (he seeand prang al We Midea! teal,

in Patrick, this Court stated thal,

[t}he active supervision requirement stems from

the recognition that “[w]here a private party is

engaging in the anticompetitive activity, there is

a real danger that he is acting to further his own

interests, rather than the governmental interests

of the State.” (Citation omitted), The require-

ment is designed to ensure that the state action

doctrine will shelter only the particular anticom-

petitive acts af private parties that, in the judg-

ment af the State, aetwally further state

veg lalary pati¢ies, .. TR age@npliah (Ala put

MiG WWE ACTIVE AAPOTIEAN FRQUIRRIENL Alan

AVA Wal We Blale @XerelRe Uae Gani

VEL HAG CRANEAREE ANHOAAIRELIIIE Canewel

WG WARHR BPRREAER GE RUMKE ANALG (AWahiee

WARANE Qh AVAL ABR LAE AL ERIRR, (OMAN

WMAitherd) (eA aati acter),

My, BRB UWS. at WOOTOL, THB BICK at 1663.

This Court went of to say,

[t}he active supervision prong of the Midcal test

requires that state officials have and exercise

power to review particular anticompetitive acts

of private parties and disapprove those that

fail to accord with state policy. Absent stich a

progtatn of siipervision, there is no tealistic

assuitatice that a private patty’s atiticotnpetitive

coHdiet prothotes state policy, rather that

Merely He Party's MAIVidAl iHiereate,

Id. (Emphasis added).

In Ticor, this Court noted generally that “state-action

immunity is disfavored, much as are repeals by implica-

tion.” Id. 504 U.S. at 636, 112 S.Ct. at 2178 (citation omit-

ted). This Court further stated that,

[oJur decisions make clear that the purpose of

the active supervision inquiry is not to deter-

mine whether the State has met some normative

standard, such as efficiency, in its regulatory

practices. Its purpose is to determine whether

the State has exercised sufficient independent

judgment and control so that the details of the

rates or prices have been established as a prod-

uct of deliberate state intervention, not simply

by agreement among the parties. Much as in

causation inquiries, the analysis asks whether

the State has played a substantial role in deter-

mining the specifics of the economic policy. The

question is not how well state regulation works

but whether the anticompetitive scheme is the

State’s own. . . . The mere potential for state

supervision is not an adequate substitute for a

decision by the State. Id. 504 U.S. at 634-35, 638,

112 S.Ct. at 2177, 2179.

Amici respectfully submit that Midcal, Patrick, and

Ticor, taken together, stand for the proposition that

merely having power to supervise is not sufficient for the

purpose of granting immunity under the state action

doctrine. That power must be exercised, and it must be

exercised with respect to the “particular anticompetitive

acts of private parties.” Patrick, 486 U.S. at 100-101, 108

S.Ct. at 1663.

As noted, the Tenth Circuit only found that the OCC

has “general supervision” and power and authority over

OG&E. There was no analysis or specific finding of active

supervision over the anticompetitive acts OG&E engaged

in that affected Trigen. This analysis, or lack thereof, is

contrary to amici’s interpretation of this Court’s prior

rulings and to the approach taken by the Ninth and Third

Circuits. Indeed, if the approach of the Ninth and Third is

correct, the Tenth must be in error. There is simply not

room for both interpretations within the spectrum of

“active supervision.”

Thus, at the very least, the Tenth Circuit decision

highlights the “problematic” nature of.the second prong

of the Midcal test. Given the overarching public policy

considerations that are at stake, this Court should take

the opportunity to clarify the extent to which the specific

conduct at issue must be found to have been actively

supervised by the state in order to satisfy Midcal and

invoke the state action doctrine.

= +

CONCLUSION

For the reasons set forth above, amici respectfully

urge this Court to grant the Petition for Writ of Certiorari.

September 28, 2001

Respectfully submitted,

JOHN W. Jimison