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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_2209%3A4

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2001
- **Citation:** 534 U.S. 993

## Text

(3 )
. a Supreme Court, U.S.
rx JTLED

N

In The SEP 28 200!
Supreme Court of the an i States

{

o :
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
; ry ; He} Art ' | } |
; rR Hay
ij
j ' )
’ | |
j } } j } ' | ' ; ; a +}
it} + } ; + th } } ; ' ; +} |
| 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
f

LU WIH ite MINN Hit Why iN th} iil Hit
} WUT HEE NEY HAIN wit i
| Nr aA ih ARTY
MH il Nh Ul vn wa) I
Nth a en | Ai ih Nh Wy
eV Y EHD Ne (4 Nn bh al iy i} Mn
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

|

eo
——
_—_—_...
a
lea
—-
>= —
—
a
— =
SO
Ai» 2

ee ee

4

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 |

Mt th " ani A MATH Atal \\| Hi WHIT
\ HM ae Eni Hi HT i Hi Hit HHI i
Hf We Mt } Ht

i
Me | il) ni Nh Ta MW

Mn Mk Hi Mn A u ) |
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
TT

tf
I

A Ae INTE PUTIN TRE PE RETR id Meh il
ty ce ANTE lh Wh RATE TeMY HH A Hie

th CUE AUTH th (| Ny at Hi
CAG EU MR TE He Mee

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

f

> 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

10

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).

—

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

12

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

a

13

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,

i

[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

activity in clap’ itive ay@as al the © onan

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-
homa Gas & Electric ©€0., 244 F.3d 1220, 1226 (10th Cit.

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,

18

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.

18

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

1?

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,

18

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.

19

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.

= +

20

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
Rocer A. BERLINER
MEGAN M. GRANT

Counsel of Record
BERLINER, CANDON & JIMISON
A Professional Cerporation
1225 19th Street, N.W.
Suite 800
Washington, D.C. 20036
(202) 955-6067

Attorneys for Amici
United States Combined Heat and
Power Association, American Gas
Cooling Center, International
District Energy Association,
Distributed Power Coalition of
America

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_2209%3A4. Public record. Not legal advice.