The US Court of Appeals for the Eleventh Circuit on July 11 affirmed the decision of the US District Court for the Southern District of Florida that dismissed a putative class action complaint seeking class certification for more than 1 million customers, injunctive relief, and disgorgement of rates collected under Florida’s Nuclear Cost Recovery System (NCRS).

The NCRS is a regulation promulgated by Florida’s Public Service Commission (PSC) after the passage of Florida’s 2006 Renewable Energy Technologies and Energy Efficiency Act (the Act). The NCRS allows a utility, subject to PSC approval, to preemptively charge its customers through an electricity rate increase for “costs incurred in the siting, design, licensing, and construction” of a nuclear project through its completion. The utility retains the funds collected under the NCRS even if the project is never completed. Here, plaintiffs sought to recover monies collected by two utilities under the NCRS for nuclear projects.

Plaintiffs sought to invalidate the two provisions of the Act authorizing the NCRS arguing that the provisions violated the dormant Commerce Clause (which prevents a state from unduly burdening competition in another state) and were preempted by the Atomic Energy Act of 1954. In affirming the district court, the Eleventh Circuit noted that the dormant Commerce Clause protects against economic protectionism by states. Since utilities are not states, the court held that “Plaintiffs’ interests are well beyond the zone the dormant Commerce Clause is meant to protect.” Turning to plaintiffs’ preemption argument, the court held that through the Atomic Energy Act of 1954, “the federal government has occupied the entire field of nuclear safety concerns,” but that state laws promoting investment in new nuclear power plants or shifting the costs of nuclear plant construction are not preempted.

The court also held that the district court did not abuse its discretion in denying plaintiffs leave to amend their complaint. Plaintiffs sought to add the State of Florida as a defendant to bolster their dormant Commerce Clause claim. The court affirmed the district court and held that plaintiffs’ request was procedurally defective but also failed to sufficiently articulate the substance of the amendment.

The case is Newton v. Duke Energy Florida, LLC, Case No.: 17-10080 (11th Cir.); Docket No. 16-CV-60341 (S.D. Fla).