Judge partially blocks Texas transmission law

A federal judge on Monday struck down a section of a Texas law that gives state utilities the “right of first refusal” for building new electrical transmission lines.

The law, SB 1938, made it harder for utilities with no in-state transmission facilities to build new lines, reversing the state Public Utility Commission’s policy that allowed utilities with no Texas facilities to build in certain territories.

In a 33-page ruling, Judge Robert Pitman of the Western District of Texas ruled that the 2019 Texas law violates the U.S. Constitution’s Commerce Clause because it “facially discriminates based on interstate commerce and does not survive strict scrutiny.”

“SB 1938 does not advance a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives,” wrote Pitman, an Obama appointee. He noted that there are five other states with similar preferential treatment regimes for in-state utilities, none have laws as restrictive as Texas’s, and only one of the five, North Dakota, has no time limit for in-state utilities to exercise the right of first refusal.

“No other state completely bars out-of-state entrants or allows an incumbent to designate its replacement if it declines a project,” he added.

Florida-based NextEra Energy, the operator of thousands of miles of lines in several states, challenged the law after it was cited to prevent the company from building in the state. The Western District had earlier dismissed the complaint, but in 2022, the 5th Circuit Court of Appeals in New Orleans ordered the lower court to reconsider whether the law violated the Commerce Clause.

Last October, the U.S. solicitor general asked the Supreme Court not to review the law after the 5th Circuit decision, and the court declined to hear the case that December.

The Hill has reached out to the Public Utility Commission of Texas for comment.