Let me first begin by saying that energy law and policy is, in general, a very new subject for me. Additionally, the text's early introduction of economic principles (another relatively new subject for me) makes the consumption and digestion of the content that much more challenging. Nevertheless, it is hard not to acknowledge just how important U.S. laws and policies governing the energy industry are (especially after being reminded of the Enron scandal).
While reading the opinion from the 11th Circuit in TEC Cogeneration, Inc. v. Florida Power & Light Co., I realized just how little I know about antitrust laws. Following my unsuccessful attempt to access Wikipedia (SOPA blackout: love it, but hate it), I ventured to Cornell's legal information site to read up on the basics of antitrust. Here's the gist: Competition is good, monopolies are bad...at least most of the time. Enabling companies and corporations to hold monopolies in certain industries is bad for the economy since it decreases individualistic market competition by placing all the control in the hands of only one player: the monopoly holder. As a result, economic growth is greatly hindered. When Congress recognized in the late 1800's that larger corporations were exerting significant monopolistic control over the market, they enacted the Sherman Antitrust Act to combat against risks of monopolistic practices. In response to such an enactment, the majority of states enacted similar legislation to protect against anticompetitive behavior within their borders. Later, following Congress' recognition that certain practices fell outside of the Sherman Act, the Clayton Antitrust Act of 1914 (later amended to the Robinson-Patman Act of 1936) was enacted to broaden the scope of federal antitrust laws. However, as we see in the Cogeneration case, state-regulated public utilities may be granted immunity from the federal antitrust laws.
The 11th Circuit looked to the Supreme Court decision of Parker v. Brown, 317 U.S. 341, which held that the federal antitrust laws, like the Sherman Act, were not intended to apply to state-regulated policies which promote monopolistic practices. Id. at 350-351. In the case ofCogeneration, Florida Power & Light, by design, had a natural monopoly over a significant portion of Florida. Cogeneration argued that FPL should not be entitled to such an immunity (Cogeneration was having some energy issues of their own). The 11th Circuit disagreed. Using a two-pronged test, they held that as long as there is (1) an intended and clearly articulated state policy which grants anticompetitive behavior within a particular industry; and (2) the state can closely supervise the conduct of the industry player, then immunity should be upheld. The 11th Circuit found that FPL had satisfied both prongs of the test and was therefore entitled to immunity from federal antitrust laws.
What I found to be interesting about this test was the court's response to the second prong. They essentially said that they should only supervise the conduct of FPL when they are called upon to do so. And what better analogy to use than themselves? They compared the second prong to the practice of a circuit court -- a court should only act when they are called upon to do so. This struck a cord with me. While I understand the analogy, I found it to be somewhat of a stretch. Under the second prong of the test, at least in my interpretation, immunity can only be upheld if the state can closely and actively supervise the conduct of the public utility. But apparently, under this court's reasoning, the ability to closely and actively monitor is all that is needed. This stance, almost apathetic in nature, appears to serve as a nod and a wink to corporations such as FPL. Or maybe I just don't understand energy law and policy yet?
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