ELR Citation: 52 ELR 20103
No(s). 20-50160 (5th Cir. Aug 30, 2022)

The Fifth Circuit affirmed in part and reversed in part a district court’s dismissal of a lawsuit concerning a 2019 Texas law that allows only owners of existing transmission lines in the state to build, own, or operate new lines that connect to existing lines. A company seeking to enter the state’s market and build new lines challenged the law on dormant Commerce Clause and Contracts Clause grounds. The district court concluded the law regulated only the construction and operation of transmission lines within the state, not the transmission of electricity in interstate commerce, and that the company failed to state a Contracts Clause claim because it did not have reasonable contractual expectations that the law could impair. The appellate court found the fact that certain lines might run entirely within the state was irrelevant because any electricity entering the grid “immediately becomes part of a vast pool of energy that is constantly moving in interstate commerce,” and that the very terms of the law discriminated against interstate commerce because they limited “competition based on the existence or extent of a business’s local foothold.” But it agreed that the company failed to state a Contracts Clause claim because it did not have a concrete, vested right the law could impair. The court affirmed dismissal of the Contracts Clause claim, reversed dismissal of the Commerce Clause claim, and remanded for further proceedings.