2001 Court Opinion Case Summaries
TO: Members of the Energy Bar Association
FROM: John E. McCaffrey, Assistant Secretary
SUBJECT: Energy-Related Court Opinions
DATE: January 17, 2002
Attached is a list of energy-related opinions issued by federal courts during 2001, along with a brief summary of each opinion. In recognition of the prevalent use of electronic mail by its members, the Association is now distributing the opinion summaries via e-mail, with hard copies available upon request. For the convenience of the Association’s members, we have included, where available, an internet hyperlink in each opinion summary that will allow for instant retrieval of the opinion from the Internet. Due to the availability of almost all court decisions in electronic format, the Association will no longer provide hard copies of the court decisions. The Association encourages the members to use the Internet links provided to access the full text of the court decisions.
Finally, due care has been taken to ensure that all relevant energy-related court opinions have been included in this report. If members are aware of energy-related court opinions issued during 2001 that are not included and that likely would be of interest to the Association’s membership, please contact John McCaffrey at (202) 785-9100, or by e-mail at email@example.com.
United States Court of Appeals for the District of Columbia Circuit
Public Utility District No. 1 of Snohomish County v. FERC, 272 F.3d 607 (D.C. Cir. December 11, 2001)
The Court considered challenges to FERC’s Order No. 2000 brought by: (i) certain jurisdictional utilities (“Jurisdictional Utilities”); (ii) Public Utility District No. 1 of Snohomish County, Washington; and (iii) South Carolina Public Service Authority (“the Authority”). The Court dismissed each petition for want of jurisdiction on the grounds that Petitioners were not aggrieved within the meaning of Section 313(b) of the Federal Power Act.
In considering Jurisdictional Utilities’ petition, the Court noted that they did not challenge FERC’s overarching objective to encourage participation in the formation of RTOs, and observed that any such challenge “hardly could” be raised because Section 202(a) of the FPA directed FERC to divide the country into regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission and sale of electric energy and to promote and encourage such interconnection and coordination within each such district and between such districts. The Jurisdictional Utilities challenged several aspects of Order 2000 including: (i) lack of statutory authority to define rate filing responsibilities in which transmission owners were forced to cede their alleged statutory right to file rates; (ii) the division of rate filing responsibilities was arbitrary and capricious; (iii) improper limitation on transmission owners’ right to contract to make unilateral rate modifications; (iv) the open architecture requirement was arbitrary and capricious; and (v) the transmission expansion requirement impermissibly abdicated the Commission’s authority to approve interconnections and expansions.
In performing its analysis of Jurisdictional Utilities’ aggrievement, the Court stated that the central issue was whether Order No. 2000 was voluntary, and observed that the Utilities’ challenges to Order No. 2000 were premised on the notion that it was not voluntary. The Court rejected Jurisdictional Utilities’ arguments that Order No. 2000 was not voluntary, finding that the text and preambles of the Order did not support their contention, as the Commission had repeatedly affirmed that Order No. 2000 was voluntary, and that, by its terms, Order No. 2000 did not require RTO participation. The Court also noted that “the voluntariness of Order No. 2000 thus lies in the existence of the alternative filing, which enables any public utility to opt not to participate in the RTO.” According to the Court, Jurisdictional Utilities were asking it to read “between the lines” of Order No. 2000 and find that the Order was actually involuntary because of the remedial actions, i.e., conditioning of mergers or market-based rate authority, that the Commission might take against those utilities that failed to participate in an RTO. The Court concluded, however, that the Commission had not made any generic findings as to these potential Commission actions and, thus utilities should be no more fearful of these future actions after the issuance of Order 2000 than they were before its issuance. The Court opined that it was conceivable that Order No. 2000’s provisions on RTOs are in effect mandatory if Order No. 2000 will result in participation in RTOs because of the benefits of joining or forming an RTO and the potential cost of not doing so, but the Court observed that Jurisdictional Utilities had not come forward with evidence to support such a conclusion. The Court also explained that Jurisdictional Utilities had failed to adequately address the fact that Order No. 2000 allowed for “an alternative filing,” and was not persuaded by the Utilities’ response that they did not want to file an alternative filing because they wanted to participate in an RTO. The Court concluded that “because none of the utilities’ injuries will come to fruition if they opt to make an alternative filing, their stated injuries are nonexistent or at least highly speculative; thus, they are inadequate to give rise to an injury in fact.”
Next the Court took up Snohomish’s challenge to FERC’s assessment that RTOs will be cost effective. The Court found that Snohomish had not suffered an injury as a result of Order No. 2000, and noted FERC’s acknowledgment that it must consider cost benefits when evaluating individual RTO proposals. The Court rejected Snohomish’s argument that FERC statements in a currently pending RTO application in Snohomish’s Pacific Northwest region indicated that it was barred from submitting cost benefit analysis in the individual RTO proceeding, noting FERC’s acknowledgment at oral argument that the Commission must, in order to comply with the Federal Power Act and APA, adequately address specific cost benefit evidence (if presented) prior to FERC’s final decision on the RTO proposal.
Finally, the Court dismissed the Authority’s argument that Order No. 2000’s allowance for up to 100% passive ownership of an RTO by market participants contravenes Order No. 2000’s independence principle. The Authority would only be aggrieved if passive ownership occurs in an RTO operating in its region. The Authority also cited language from a subsequent FERC RTO order suggesting that FERC would consider parties raising the passive ownership issue in individual proceedings to be making an impermissible collateral attack on Order No. 2000. The Court disagreed, finding that FERC had simply rejected the “generic” argument that permitting passive ownership was unacceptable, but had not foreclosed adjudication of the issue on a case-by-case basis.
Amoco Production Co. v. FERC, 271 F.3d 1119 (D.C. Cir. November 30, 2001)
Amoco, a natural gas producer, challenged FERC Orders relating to approval of a settlement for rates on an interstate pipeline. The pipeline and all parties except Amoco had entered into a settlement to resolve the pipeline’s rate case, with Amoco retaining the right to litigate its interests independently. Based on a subsequent rate case filing by the pipeline, FERC denied Amoco’s petition for rehearing of the settlement approval and, in fact, extended the settlement to cover Amoco itself, reasoning that, under the facts of the case and the applicable refund floor, there was no way that Amoco could benefit from pursuit of its claims in the earlier rate case. The Court affirmed FERC’s approval of the settlement as to the other parties because all the non-Amoco shippers agreed to the settlement and, thus, FERC was only required to find that the settlement was fair and reasonable, which finding Amoco did not dispute. The Court also affirmed FERC’s analysis of the refund floor issue and its finding that Amoco could not benefit from litigating its issues.
Murphy Exploration and Production Co. v. United States, 270 F.3d 957 (D.C. Cir. November 9, 2001)
This opinion supplements the Court’s opinion in Murphy Exploration, 252 F.3d 473, described below. Following issuance of the initial opinion, Department of Interior (“DOI”) sought to have the Court take notice of evidence demonstrating that lessee participated in the rulemaking proceeding regarding when the DOI would consider the 33-month period under the Federal Oil and Gas Royalties Simplification and Fairness Act, 30 U.S.C. § 1724(h)(l) to begin to run, and thus, lessee should have been barred from relitigating the issue. The Court accepted the material offered by DOI and struck the portion of its previous opinion addressing lessee’s actions in the DOI rulemaking proceeding. The Court concluded, however, that the result of the case did not change. The Court explained that because administrative rules and regulations are capable of continuing application, the Court would not limit review to the adoption of the rule without further judicial relief at the time of its application.
Wabash Valley Power Ass’n, Inc. v. FERC, 268 F.3d 1105 (D.C. Cir. November 2, 2001)
Wabash, a competitor and customer of AEP, challenged FERC’s approval of AEP’s merger with Central and Southwest Corp. The Court found that as a competitor, Wabash had standing, and that there was cognizable injury because such injury exists when an agency lifts regulatory restrictions on competitors or otherwise allows increased competition. The Court dismissed certain of Wabash’s arguments on the grounds that they had not been properly raised in a timely request for rehearing and found that Wabash’s remaining claims did not warrant granting its petition. The Court rejected the argument that FERC’s approval of the merger was arbitrary and capricious because it conditioned the merger on future participation of the merged company in an RTO, finding sufficient the interim measures ordered by FERC to limit the new company’s ability to exercise market power. Even though the conditions did not have enforcement mechanisms attached, FERC’s statutory authority and the antitrust laws were effective to limit the new company’s exercise of strategic behavior to circumvent FERC’s merger conditions. The Court also found that FERC had not ignored “crucial evidence,” as alleged by Wabash, nor had FERC acted arbitrarily and capriciously in approving the merger notwithstanding the fact that it did not eliminate rate pancaking. Finally, the Court declined to review FERC’s decision in light of a purportedly inconsistent staff report issued after the merger was approved. The Court noted that “a staff report following the issuance of a Commission Order is not a superseding order, therefore the issuance of such report plays no role in our determination of the order’s legality.”
Canadian Ass’n of Petroleum Producers v. FERC, 254 F.3d 289 (D.C. Cir. July 13, 2001)
Appeal from FERC orders in rate case under Section 4 of the Natural Gas Act addressing several issues: (1) The Court rejected pipeline customer’s argument that pipeline could not include project overrun costs in rates. Parties had ample notice of such cost claims, and costs were known and measurable. FERC has discretion to consider costs outside of the test period where facilities were in service, but some bills not paid until after the close of the test period; (2) the Court did not have jurisdiction to hear argument regarding FERC’s analysis of business risk where Petitioner had filed for rehearing of a previous Commission Order on the issue but had not pursued the issue in several subsequent orders; (3) FERC adequately explained its shift from previous policy of equally weighting long and short-term growth projections in return on equity DCF analysis; (4) the Court remanded to FERC to provide a reasoned answer to objection that an average rate of all or of three of the proxy group companies should be used in lieu of the median in choosing the appropriate equity return from proxy group range of returns; (5) surcharges to collect costs that FERC found it had improperly reduced were not barred by the filed rate doctrine where parties had adequate notice.
Public Util. Comm’n of California v. FERC, 254 F.3d 250 (D.C. Cir. July 6, 2001)
California PUC challenged FERC order allowing the California ISO to enter into “Reliability Must Run” (“RMR”) contracts with non-jurisdictional entities and to pass through the costs of such contracts without filing under Section 205 of the Federal Power Act. The Court denied the PUC’s petition, upholding FERC’s finding that ISO rate was a formula rate and that a change in formula input (i.e., RMR contracts) did not require a Section 205 filing. The Court found that the Commission had not abused its discretion in declining to review the RMR contracts for market power problems and that Section 206 of the FPA provided an adequate statutory remedy for parties challenging the formula rate.
Fourth Branch Associates (Mechanicville) v. FERC, 253 F.3d 741 (D.C. Cir. June 19, 2001)
Petitioner, co-licensee of hydroelectric plant, appealed FERC order that: (i) dismissed Petitioner’s complaint alleging anti-competitive behavior by other co-licensee under Section 10(h)(1) of the Federal Power Act; and (ii) gave notice that FERC intended to accept surrender of the project license under the doctrine of implied surrender, following further analysis. The D.C. Circuit held that FERC had specifically stated that its finding of implied license surrender was not final agency action, and, thus, the Court had no jurisdiction to consider the issue. The Court held further that FERC’s dismissal of Petitioner’s complaint was not arbitrary and capricious where Petitioner failed to demonstrate anti-competitive conduct.
Alliant Energy Corp. v. FERC, 253 F.3d 748 (D.C. Cir. June 19, 2001)
Petitioners, certain members of Mid-Continent Area Power Pool (“MAPP”), petitioned for review of FERC order directing MAPP to refund “third party” charges assessed on transmission in or out of MAPP that were in addition to the MAPP border utility’s tariff transmission rate. Intra-MAPP transmission incurred only a discounted distance-based rate. The Court rejected MAPP’s argument that the refund order violated the rule against retroactive ratemaking, finding that the Commission’s refund order was a permissible application of existing law (Order No. 888), and that MAPP could not have reasonably relied on pre-Order No. 888 acceptance of a similar tariff provision when it refiled the provision as part of its Order No. 888 compliance filing. Enron, a MAPP member and refund beneficiary, petitioned for review on the ground that the Commission should have refunded not only the discriminatory third-party charges, but also the difference between the border utility’s transmission rate and the discounted intra-MAPP rate. The Court held that FERC properly concluded that Enron’s complaint did not challenge the justness and reasonableness of the individual border utility transmission rates.
Murphy Exploration and Prod. Co. v. United States, 252 F.3d 473 (D.C. Cir. June 19, 2001)
Appellant, lessee of rights to oil and gas on federal land, appealed District Court’s finding that it did not have jurisdiction over Appellant’s suit against Department of Interior (“DOI”) for a royalty refund. Appellant had sued under the Federal Oil and Gas Royalty Simplification and Fairness Act (“the Act”), which confers jurisdiction on courts to consider challenges to “administrative proceedings” that DOI fails to resolve within 33 months. DOI promulgated regulations under the Act specifying that the 33-month period was to be counted starting from the time a party files a notice of appeal with the agency, and not when it files its initial refund request. The Court of Appeals reversed. Declining to apply Chevron deference to DOI’s interpretation on the grounds that interpreting statutes granting jurisdiction to Article III courts is the exclusive province of the courts, the Court concluded that DOI’s interpretation of the Act was not reasonable, and that the Act’s 33-month period begins to run when a party files a request for a refund. Judge Roberts dissented, disagreeing with the textual analysis used by the majority to arrive at its conclusion.
Baltimore Gas & Elec. Co. v. FERC, 252 F.3d 456 (D.C. Cir. June 15, 2001)
Baltimore Gas & Electric appealed FERC settlement of enforcement action against natural gas pipelines, asserting that public should have the right to comment upon settlement. BG&E asserted the settlement was inadequate to remedy the harm it had allegedly incurred as a result of pipelines’ alleged unauthorized abandonments. The Court dismissed for lack of jurisdiction, holding that decision to settle enforcement action was committed to FERC’s nonreviewable discretion under the APA, 5 U.S.C. § 702(a)(2), as interpreted in Heckler v. Chaney, 470 U.S. 821 (1985). Under Heckler, there is a presumption that an agency’s decision not to exercise its enforcement authority is committed to its absolute discretion. This presumption extends to a decision to settle. The recognition that the courts must not require agencies to initiate enforcement actions may well be a requirement of separation of powers under the Constitution. While the Chaney presumption can be overcome, BG&E did not rebut the presumption by showing that “the substantive statute has provided guidelines for the agency to follow in exercising its enforcement powers.” The Court specifically held that the Natural Gas Act “lacks guidelines against which to measure FERC’s exercise of its enforcement discretion.”
Pan-Alberta Gas, Ltd. v. FERC, 251 F.3d 173 (D.C. Cir. June 1, 2001)
Petitioner challenged FERC orders authorizing pipeline to add capacity and sell such capacity to marketing company. FERC also approved the amendment of certain marketing company contracts to release capacity on one segment of the pipeline system and utilize capacity on the new facilities. The Court rejected Petitioner’s argument that marketing company was allowed to control too much pipeline capacity, finding that releasing previously-held capacity ceded any right to actually ship gas, and, thus, marketing company only controlled capacity on the new facilities.
El Segundo Power, LLC v. FERC, 2001 U.S. App. LEXIS 13909 (D.C. Cir. May 22, 2001)
Petitioners, electricity suppliers, sought review of FERC orders affirming the authority of California ISO to accept Petitioners’ bids to provide ancillary services and adjust bid amounts exceeding the ISO’s announced price caps to the capped level. In an unpublished decision, the Court denied the petition for review, finding that the Commission reasonably concluded that the Petitioners agreed to sell ancillary services at the price cap when they voluntarily submitted the above-cap bids and furnished the services with knowledge of the ISO’s declared policy to accept above-cap bids at the cap amount. Further, the order was not a violation of Section 206 of the Federal Power Act because Petitioners’ filed rates were set at whatever price they should agree to accept from purchaser, and Commission reasonably found Petitioners agreed to accept the cap price from ISO.
Appalachian Power Co. v. EPA, 249 F.3d 1032 (D.C. Cir. May 15, 2001)
The Court of Appeals considered various challenges by Midwestern and Southern utilities to an EPA final rule to control NOx emissions pursuant to Section 126 of the Clean Air Act (“CAA”). First, the Court agreed with EPA that 1990 Amendments to the CAA contained a scrivener’s error in 42 U.S.C. 7410(a)(2)(D) that, if read literally, would restrict EPA authority to take action under the Rule. Second, the Court rejected arguments that the EPA’s direct regulation of sources under Section 126 was inconsistent with EPA’s requirement in a related case that states file revised CAA State Implementation Plans (“SIPs”), agreeing that Section 126 and the right to request revised SIPs were independent statutory tools. Third, the Court rejected arguments that EPA erred by not making findings as to how individual sources “significantly contributed” to non-attainment of NOx limits in down-wind states, concluding that EPA could treat any state’s entire man-made emissions as the controlling aggregate for both whether an individual state significantly contributes to non-attainment in other states as well as whether individual sources significantly contribute. Fourth, the Court remanded to EPA for further explanation of certain of its emission limitations which had been based on unreasonable projections. The Court further agreed that Section 126(b) was broad enough to include restrictions on “future” sources of NOx. The Court also remanded the portion of the Rule applicable to co-generators, finding that EPA had not adequately explained its classification of co-generators as electric generating units. Finally, the Court considered and rejected several source-specific and facilities-specific objections to the rule.
New York State Elec. & Gas Corp. v. FERC, 2001 U.S. App. LEXIS 13900 (D.C. Cir. May 15, 2001)
The Court rejected challenges to limitations on liability of New York ISO. The Court found that, even accepting the argument that FERC’s decision was inconsistent with a previous opinion, FERC was entitled to revisit a decision it considered erroneous rather than apply it to Petitioners. The Court observed that, in any event, the cases were not inconsistent.
Baltimore Gas & Elec. Co. v. FERC, 2001 U.S. App. LEXIS 13876 (D.C. Cir. May 14, 2001)
Petitioners, pipeline customers, sought review of FERC order authorizing replacement of certain pipeline compressor units and an increase to certificated capacity. The Court dismissed the petition for lack of standing, finding that the certificate orders by no means caused or threatened to cause Petitioners actual or imminent injury in fact.
DEK Energy Co. v. FERC, 248 F.3d 1192 (D.C. Cir. May 4, 2001)
Petitioner, DEK Energy Co., challenged FERC order approving restructuring of contractual relationship for the transportation and sale of gas from Canada to Southern California Gas Company that left Pan-Alberta with 100,000 MMbtu in excess capacity at favorable rates. DEK claimed that Pan Alberta’s use of lower tariff rate could injure DEK by enabling Pan Alberta to sell the 100,000 MMbtu per day in DEK’s market and undercut DEK sales or force it to reduce its prices. The Court dismissed the petition on standing grounds, finding that DEK had failed to show injury. Applying the “competitive standing” doctrine, which requires the competitor to show that the allegedly illegal transactions “will almost surely cause petitioner to lose business,” the Court found that DEK had not shown, beyond mere speculation, that it would be harmed.
The Power Company of America, L.P. v. FERC, 245 F.3d 839 (D.C. Cir. April 17, 2001)
Power Company of America (“PMA”), a bankrupt power marketer, challenged FERC ruling that 60-day notice of termination requirement in FERC regulations did not apply to power sales contracts terminated by 21 counter-parties of PCA. FERC had found the 60-day notice requirement inapplicable because the agreements were not “required to be on file” under 18 C.F.R. § 35.15(a). First, the Court found that PCA had incurred a cognizable injury for standing purposes because, while PCA was not seeking redress from FERC itself, a finding that the regulation was applicable was the first step in redressing the purportedly improper contract terminations. The Court found that Section 205(c) of the FPA does not require sales agreements to be filed, as the Act gives the Commission discretion to establish filing requirements. PCA argued that FERC had retroactively applied a change in its policy. FERC acknowledged changing its policy but found that retroactive application was warranted. The Court noted that FERC’s standard for retroactive application was different than the Court’s test, which, the Court observed, was itself different from certain Supreme Court precedent. The Court did not address the issue of which test to apply, finding that on the key issue of equity, FERC’s conclusion that the equities favored retroactive application could not be faulted.
Western Power Trading Forum v. FERC, 245 F.3d 798 (D.C. Cir. April 10, 2001)
Petitioners sought review of FERC declaratory order approving the proposed composition of the California ISO and Cal. PX boards, as specified in California Senate Bill SB 96. The Court concluded that Petitioners’ claims had been largely mooted by subsequent Commission order making changes to the composition and powers of the ISO Board and effectively dissolving the PX. While challenge to the breadth of the Oversight Board’s power to review substantive decisions of the ISO was not moot, the Court found that Petitioners did not have standing to challenge the breadth of the Oversight Board’s authority because there had been no actual or imminent injury resulting from the power of the Oversight Board.
LBU Joint Venture v. FERC, 2001 U.S. App. LEXIS 7236 (D.C. Cir. February 23, 2001)
Petitioner asserted that FERC acted arbitrarily and capriciously in concluding that issuance of a blanket certificate to provide natural gas storage services under 18 C.F.R. § 284.224 does not convey eminent domain rights under Section 7(h) of the Natural Gas Act. The Court dismissed the petition as unripe because Petitioner’s purpose in seeking eminent domain rights was to prevent attempted state law condemnation of its natural gas storage field and to condemn capacity on a pipeline transporting gas to and from its field. There was, however, no state law condemnation action imminent or pending against Petitioners’ facility and Petitioner had not attempted to acquire capacity on the relevant pipeline.
Wisconsin Valley Improv. Co. v. FERC, 236 F.3d 738 (D.C. Cir. January 26, 2001)
Petitioner, hydro-power project licensee, petitioned for review of FERC Order imposing conditions on license renewal, including annual fee for Petitioners’ use of submerged federal lands, implementation of a wild rice enhancement plan, and limitation on the water level of the project. The Court first determined that lands flooded by Petitioner’s reservoir were part of a “reservation” of the United States within the meaning of Section 4(e) of the FPA. While acknowledging Petitioner’s argument that it had easements to flow water over federal land, the Court found that any takings claim associated with such right would have to proceed under the Tucker Act and be brought in the Court of Federal Claims. The Court upheld FERC’s application of the water level condition to the whole project and not just federal reservation because condition could not, as a practical matter, be applied to one portion of the lands and not to others. The Court also considered the implementation of a wild rice enhancement plan condition requested by the Department of Interior and the Department of Agriculture. The Court found that it need not review FERC’s decision to include the conditions from the other agencies because, under Section 4(e) of the Federal Power Act, FERC had no discretion to reject a condition in a project license proposed by these agencies. Further, the agencies’ decision to implement the wild rice enhancement plan was based on substantial evidence. The Court, however, found that FERC’s imposition of a usage fee for federal lands under Section 10(e) of the FPA was arbitrary and capricious, as no usage fee had been applied to the Petitioner’s previous license and FERC had diverged without reasonable explanation from its prior policy of placing the burden of proof for a fee on the government.
Public Util. Comm’n of California v. FERC, 236 F.3d 708 (D.C. Cir. January 12, 2001)
Petitioners challenged FERC’s approval of pipeline capacity sales contract between gas pipeline and customer, alleging that the contracts violated antitrust principles and were inconsistent with a previous settlement agreement. The Court dismissed the petition as moot because the challenged contracts had expired. The Court found that the case did not satisfy the standards for the “capable of repetition, yet evading review” exception to the mootness doctrine. The Court acknowledged that orders of less than two years duration (such as the one at issue) ordinarily evaded review, but found that Petitioners had not shown that the harm alleged was capable of repetition because FERC had made clear that its conclusions concerning the challenged contracts did not represent continuing FERC policy.
Independent Petroleum Ass’n of America v. Babbitt, 235 F.3d 588 (D.C. Cir. January 5, 2001)
This appeal addressed Department of Interior (“DOI”) royalty policy applied to producers’ take-or-pay settlement agreements with gas pipelines. IPAA appealed from a District Court’s ruling that jurisdiction was lacking for IPAA’s broad challenge to DOI’s royalty policy because IPAA did not challenge a final agency action. The D.C. Circuit affirmed, finding that IPAA did not challenge a particular agency action under the APA, and that no jurisdiction existed. The Court rejected IPAA’s arguments that its suit was jurisdictional because it had been consolidated with a case challenging a particular application of the DOI’s policy and/or that IPAA and DOI had impliedly consented to litigate the particular application of DOI’s policy.
United States Court of Appeals for the First Circuit
Londonderry Neighborhood Coalition v. FERC, 2001 U.S. App. Lexis 26300 (1st Cir. December 10, 2001)
Petitioner, nonprofit citizens group, challenged FERC’s issuance of a certificate for pipeline expansion project. The Court concluded it was without jurisdiction to hear the case because Petitioner had not filed a timely request for rehearing of the order by which it had been “aggrieved” pursuant to Section 19(a) of the Natural Gas Act. Although FERC issued a later order for which Petitioner sought rehearing, the Court concluded that Petitioner was plainly “aggrieved” by the earlier order and that the NGA makes a clear distinction between the aggrieving order and the rehearing order that triggers the 60 day period for filing an appeal under Section 19(b) of the Act. While acknowledging cases in which a subsequent order would sufficiently modify an earlier order so as to issue, in effect, a new aggrieving order that triggers a new rehearing requirement, such was not the case here. Finally, the Court rejected Petitioner’s argument that it should be excused from strict adherence to the review provisions of the NGA based on equitable considerations, in particular, its claim that its rehearing request of the initial order would have been timely filed but for an error by the postal service. While declining to hold that there are no circumstances, no matter how extraordinary, that would toll the rehearing deadline under Section 19(a), the Court found that the facts of this case clearly did not warrant any such waiver of the timely filing requirement.
Central Maine Power Co. v. FERC, 252 F.3d 34 (1st Cir. June 13, 2001)
Petitioners petitioned for review of FERC order rejecting proposal by ISO New England to institute $0.17/kw-month installed capability (“ICAP”) deficiency charge and instituting $8.75/kw-month charge. Court of Appeals remanded to FERC for further explanation of why a substantial ICAP charge was still required to enforce reserve obligations, why $8.75 was selected as the proper figure given evidence of lower costs of present peaking capacity (the identified measure for the charge), and why alternatives proffered by opponents were inadequate. The Court upheld FERC’s summary rejection of $0.17 charge on grounds that FERC has authority to summarily reject non-compliant filings and FERC reasonably explained its decision. The Court also rejected objections that FERC should have held a hearing, finding that paper hearing procedures, including submission of affidavits, was adequate.
Smith v. FERC, No. 00-1785 (1st Cir. April 4, 2001) (unpublished)
Landowners challenged FERC orders relating to the construction of a gas pipeline. The Court rejected certain of Petitioners’ claims as moot. The failure of the pipeline to include certain information in the environmental impact statement was moot because the pipeline had been completed and there was no effectual relief that the Court could order in relation to the final EIS. The Court also found that FERC’s safety conclusions were supported by substantial evidence. Claims of alleged safety violations during construction of the pipeline were rendered moot by the completion of the pipeline. Further, the Court rejected Petitioners’ claims concerning alleged violations of the easement between Petitioners and the pipeline. In so doing, the Court affirmed FERC’s finding that it lacked the power to award damages to Petitioners as a result of easement violations and that claims relating to the property rights between the parties would have to be pursued in state court.
United States Court of Appeals for the Second Circuit
New York State Elec. & Gas Corp. v. Saranac Power Partners, LP, 267 F.3d 128 (2nd Cir. October 5, 2001)
The Court of Appeals affirmed decision of the District Court dismissing Complaint of NYSEG against FERC and New York PSC. The Court of Appeals affirmed the lower court for substantially the same reasons as those set forth in the District Court’s decision, 117 F. Supp. 2d 211 (N.D.N.Y. 2000). The Court clarified, however, that it did not agree with the District Court’s suggestion that it was without subject matter jurisdiction to entertain any of NYSEG’s claims against FERC, finding two claims that could be addressed by the Court. First, the Court rejected on the merits NYSEG’s argument that FERC’s application of a “continuous challenge” rule to challenges to PURPA contracts was improper rulemaking without notice and comment. The Court concluded that the continuous challenge rule was interpretive and not substantive or legislative. Second, FERC’s decision not to initiate rulemaking to address the divergence between purchase power agreement rates and actual avoided costs under PURPA was not arbitrary and capricious, as PURPA only requires FERC to adjust rates “from time to time” and does not require FERC to do so at any particular interval or every time it is requested to do so.
United States Court of Appeals for the Third Circuit
N.E. Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333 (3rd Cir. January 29, 2001)
This case related to certification of N.E. Hub Partners, L.P. natural gas storage facility in Pennsylvania. FERC certificated the facility and N.E. Hub brought a District Court action seeking an injunction against Pennsylvania Environmental Hearing Board (“EHB”) proceedings to bar litigation of certain aspects of N.E. Hub’s proposed facilities that had been addressed by FERC, citing federal preemption. The Court of Appeals, reversing a District Court ruling, found N.E. Hub’s challenge to the EHB appeal was ripe because preemption may operate to spare a party from the state process itself, not just specific rulings. The Court rejected EHB’s contention that cases holding a state regulatory process to be preempted have involved only “field occupation preemption” and were not applicable in this case because NGA and FERC have not occupied the field. The Court of Appeals observed, without deciding, that it strongly doubted the District Court’s conclusion that the case did not involve field occupation. In any case, the Court explained that “the process preemption cases do not confine themselves to the field occupation context.” The Court then went on to discuss the interplay between field preemption and conflict preemption, noting that the different categories of preemption are not rigidly distinct, and that indeed, field preemption may be understood as a species of conflict preemption. The Court therefore held that state regulatory process may be preempted by conflict with federal law, as well as by field occupation. The Court also rejected the District Court’s finding that N.E. Hub’s action was a collateral attack on the FERC order requiring certain state approvals for the project. The Court noted that N.E. Hub was not challenging FERC’s requirement that it obtain state permits and cooperate with state and local agencies, but simply contending that the EHB state proceedings are preempted to the extent the proceedings involve certain specific issues already decided by FERC. Judge Nygaard dissented from the majority opinion, objecting to the majority’s expansion of process preemption to areas where Congress had not occupied the field.
United States Court of Appeals for the Fourth Circuit
Interstate Petroleum Corp. v. Morgan, 249 F.3d 215 (4th Cir. May 1, 2001)
Franchisees of gasoline and petroleum products appealed District Court judgment in favor of Appellee Franchisor, on the grounds that the District Court had lacked subject matter jurisdiction over the case. Federal question jurisdiction was ostensibly premised on the Petroleum Marketing Practices Act (“PMPA”). The Court of Appeals reversed the District Court, finding that, while the PMPA specifically authorizes suits by franchisees against franchisors, the PMPA does not authorize actions brought by a franchisor against a franchisee. Further, federal question jurisdiction did not exist under the theory that the right to relief necessarily depended on resolution of a substantial question of federal law. One judge dissented, concluding that discussions of the PMPA at trial sufficiently raised the issue of whether or not Appellee had violated the PMPA, and thus federal question jurisdiction existed.
Columbia Gas Transmission Corp. v. Drain, 237 F.3d 366 (4th Cir. January 8, 2001)
Plaintiff, an interstate natural gas transmission company, appealed the District Court’s grant of Defendant landowner’s motion to dismiss pipeline’s request for declaratory judgment that landowner was not deprived of property without just compensation and due process under the U.S. Constitution as a result of pipeline’s fifty-foot wide easement over landowner’s property. The District Court dismissed for want of subject matter jurisdiction, and the Court of Appeals reversed. Although the Natural Gas Act and the Natural Gas Pipeline Safety Act did not provide an affirmative cause of action arising under federal law that would establish subject matter jurisdiction, federal subject matter jurisdiction existed because pipeline’s action sought declaratory relief on a matter for which defendant could bring a coercive action against pipeline arising under federal law.
United States Court of Appeals for the Fifth Circuit
Texaco, Inc. v. Duhe, 2001 U.S. App. Lexis, 25394 (5th Cir. November 29, 2001)
Texaco sued royalty interest owners seeking declaratory relief from royalty owners’ claims that Texaco had underpaid royalties. Royalty owners claimed that, pursuant to their contract, they were entitled to royalties based on the reasonable value of the natural gas sold. The District Court found that the price ceilings imposed by Section 105 of the Natural Gas Policy Act of 1978 (“NGPA”) defined the royalty price basis to which the royalty owners were entitled. The Court found that under the plain meaning of the statute, Section 105 of the NGPA applied to the sales made by Texaco. In this regard, the Court considered and rejected arguments that the gas involved was “Rollover” gas under Section 106 of the NGPA or “Other” gas under Section 109.
Comstock Oil & Gas, Inc. v. Alabama & Coushatta Indian Tribes, 261 F.3d 567 (5th Cir. August 27, 2001)
Native-American tribe and oil & gas company filed cross appeals arising out of a dispute over oil and gas leases between the Tribe and the Company. At issue was legitimacy and jurisdiction of a Tribal court as well as Tribe’s immunity from the suit. The Court found that, under Fifth Circuit precedent, the individual tribal counsel members were not entitled to tribal sovereign immunity and that, because the oil companies were seeking injunctive or declaratory relief, the Tribe itself was not entitled to sovereign immunity. The Court also concluded that the Tribal Court in which the Tribe contended the case should be heard had not been properly constituted, and, thus, the oil and gas company could not be faulted for failure to exhaust the purported remedies before the Tribal Court. Finally, the Court concluded that the case presented an appropriate federal question because the federal regulations and statutes governing tribal oil and gas leases were adequate to invoke federal question jurisdiction.
Panda Brandywine Corp. v. The Potomac Elec. Power Co., 253 F.3d 865 (5th Cir. June 22, 2001)
Appellants, operators of an electric power plant, appealed District Court judgment dismissing their action for lack of personal jurisdiction over Appellee, PEPCO. Appellants sold electricity to PEPCO under a long term purchase power agreement (“PPA”). Appellants’ operations were funded by certain instruments that encumbered the revenue paid by PEPCO under the PPA. PEPCO was not a party to any of the instruments. PEPCO informed Appellants that it intended to divest the PPA along with certain other electricity generating assets and purchase contracts. Suit was brought in U.S. District Court in the Northern District of Texas (following removal from state court) for tortious interference with the financing arrangements. On appeal, the Court affirmed District Court’s dismissal for lack of personal jurisdiction over PEPCO. PEPCO lacked minimum contacts with Texas to subject the company to jurisdiction in that forum.
Verdine v. Ensco Offshore Co., 255 F.3d 246 (5th Cir. June 22, 2001)
The Court considered application of the Louisiana Oil Field Anti-Indemnity Act (“the Act”) to an agreement between Ensco Offshore Company and Centin, LLC for repairs on a dismantled fixed platform rig. In reviewing the District Court’s judgment, the Court of Appeals concluded that the issue of indemnification depended on whether the agreement between Centin and Ensco met the definition of “Agreement” under the Act. Construing previous decisions, the Court explained that to meet the definition of an Agreement under the Act, the agreement must “pertain to an oil, gas, or water well, and must be involved with operations related to the exploration, development, production, or transportation of oil, gas, or water.” The Court of Appeals found that the agreement at issue met the definition and, accordingly, application of the Act to the relationship between Ensco and Centin was appropriate.
Shell Offshore, Inc. v. Babbitt, 238 F.3d 622 (5th Cir. January 12, 2001)
Shell sued the Department of Interior (“DOI”) under the Outer Continental Shelf Lands Act (“OCSLA”), the APA and the Declaratory Judgment Act challenging DOI’s denial of Shell’s request to use its affiliate’s FERC pipeline tariff rate as its actual cost for purposes of deducting transportation costs from calculation of royalty payments due to DOI. DOI regulations allowed lessees to use FERC tariff rates as actual costs if, like Shell’s affiliate, the pipeline had a tariff for the transportation system “approved by the FERC.” In 1994 DOI informed lessees that they would be required to petition FERC and receive a determination affirmatively stating that FERC possessed jurisdiction over the pipelines whose costs the lessees sought to deduct from royalty payments. On appeal, the Court found DOI’s policy change requiring OCSLA lessees to petition FERC for an affirmation of jurisdiction to be a new rule that triggered the notice and comment provision of the APA. Even if the new rule was interpretive, altering a well-established regulatory interpretation required notice and comment. Because of lack of notice and comment, Shell could not lawfully be affected by the new rule.
United States Court of Appeals for the Sixth Circuit
Hayes v. Equitable Energy Res. Co., 266 F.3d 560 (6th Cir. September 26, 2001)
Plaintiffs, oil and gas lessors, appealed from District Court’s grant of summary judgment in favor of defendant lessee regarding plaintiffs’ claim of breach of lease for failure to pay royalties. The District Court, while granting summary judgment, had required lessee to pay all back royalties into a court-supervised escrow fund. The Court of Appeals rejected the argument that non-payment of royalties permitted termination of the lease, finding that, under Kentucky law, a lessor that has not received royalty payments cannot forfeit the lease but can instead bring an action for payment. There was no breach of implied covenants of reasonable development and further exploration because the lease at issue provided for a flat royalty rate and was not tied to the amount of production. Even accepting that a portion of the lease could be considered a production clause raising an implied covenant of development, plaintiffs hadn’t made any demand upon lessee providing notice that compliance with the implied covenant was required. Finally, the lease was not terminable due to being of indefinite duration because applicable Kentucky precedent did not necessarily apply to leases of real property and, further, the lease language itself was not perpetual.
Choate’s Air Conditioning and Heating, Inc. v. Light, Gas and Water Div. of Memphis, 2001 U.S. App. LEXIS 14777 (6th Cir. June 22, 2001)
The Court upheld the District Court’s dismissal for lack of jurisdiction where the Court found that Plaintiff, Choate’s, had failed to state a federal civil rights claim related to an alleged taking by Defendant, a municipal utility. Plaintiff’s claim was based on the utility’s leasing of a portion of an easement from Choate’s to various private telecommunications companies for the purpose of building cellular telephone antennae. Plaintiff did not make out a claim under Section 1983 for violation of substantive due process rights because Choate’s had not alleged an action that so “shocks the conscience” as to amount to a violation of one’s federal civil rights or shown that state action had deprived Choate’s of a particular constitutional guarantee. In particular, there was no uncompensated taking that would violate the Fifth Amendment because Choate’s could pursue state post-deprivation remedies. The Court also rejected Choate’s argument that the use of the easement for telecommunications’ antennae necessarily constituted a private taking for which Choate’s would not need to seek compensation in state proceedings before filing federal takings claim.
United States v. Kentucky, 252 F.3d 816 (6th Cir. June 5, 2001)
Appellant, Kentucky environmental agency, appealed from U.S. District Court ruling that the agency’s conditions on nuclear waste disposal in a landfill in Kentucky operated by the U.S. Department of Energy (“DOE”) were preempted by federal regulation of radioactive materials. The Court of Appeals affirmed. The Court rejected Kentucky’s argument that the regulations were proper under the Commonwealth’s authority to regulate solid waste disposal, concluding that the Atomic Energy Act (“AEA”) preempts any state attempt to regulate materials covered by the Act for safety purposes and that the challenged permit conditions in this case specifically sought to limit “radioactivity” and “radionuclides,” the source of which were materials covered by the AEA. The Court further found that the federal government had occupied the entire field of nuclear safety concerns, except the limited powers expressly ceded to the states, and thus, DOE was not required to identify specific conflicts between Kentucky’s permit conditions and federal law. The District Court was also affirmed on the alternate ground that neither the AEA nor any other federal law waives federal sovereign immunity from regulation of DOE facilities by states with respect to materials covered by the AEA. Finally, Kentucky’s argument that the District Court should have abstained from hearing the case pending completion of a state case addressing the same matter was rejected.
North American Natural Resources, Inc. v. Strand, 252 F.3d 808 (6th Cir. June 5, 2001)
Appellants, Commissioners of the Michigan Public Service Commission (“MPSC”), appealed from District Court order that certain aspects of Michigan’s electric restructuring plan violated the Public Utilities Regulatory Policies Act of 1978 (“PURPA”). At issue was the effect that MPSC’s treatment of stranded costs would have on Plaintiffs, a group of electric power generators that were qualifying facilities under PURPA. The Court of Appeals agreed with MPSC that jurisdiction was lacking for want of a case or controversy, finding that the parties’ dispute was purely hypothetical given that the Michigan restructuring plan did not affect the QF’s contracts with utilities and provided for full avoided cost recovery by the utilities as stranded costs through 2007. The Court remanded to the District Court with instructions that the case be dismissed.
Nelson v. Tennessee Gas Pipeline Co., 243 F.3d 244 (6th Cir. March 9, 2001)
Plaintiffs in a class action suit alleging injuries from exposure to PCBs appealed District Court exclusion of expert testimony under Daubert and F.R.E. 702, and subsequent grant of summary judgment in favor of Defendant, an interstate natural gas pipeline company. The Court of Appeals affirmed. First, the Court found no abuse of discretion in District Court’s decision not to hold an evidentiary hearing on the motion to exclude the expert testimony and its refusal to permit Plaintiffs to obtain additional expert testimony to cure the deficiencies in the proffered testimony. The Court upheld District Court’s findings that Plaintiffs’ experts did not pass muster under Daubert because, inter alia, they failed to account for “confounding factors” that could have caused Plaintiffs’ symptoms, failed to establish a temporal relationship between exposure to PCBs and the reported illnesses, failed to demonstrate that the Plaintiffs received doses of PCBs sufficient to make them ill, and failed to show that theories enjoyed general acceptance.
United States Court of Appeals for the Seventh Circuit
Midwestern Gas Transmission Co. v. McCarty, 270 F.3d 536 (7th Cir. November 2, 2001)
Midwestern, an interstate natural gas pipeline, sought an injunction against Southern Indiana Gas & Electric Company from prosecuting an action before the Indiana Utility Regulatory Commission and against the Indiana Commission from entertaining the action. Midwestern wished to interconnect directly to certain Southern Indiana customers, and Southern Indiana filed an action with the Indiana Commission claiming that Midwestern was required to seek leave of the Indiana Commission before doing so. Midwestern claimed that the issuance of a certificate by FERC allowing the interconnection preempted the state action. The District Court dismissed the suit, ruling that Midwestern was required to argue preemption as a defense in the state proceeding, citing Younger v. Harris, 401 U.S. 37 (1971). The Court of Appeals reversed, finding that Younger was not applicable because the federal proceeding, in which the parties had an opportunity to litigate all relevant issues, had already been completed. In addition, the Court noted that Younger presupposes that the state has a valid interest that it is seeking to enforce, and concluded that, while federal preemption does not automatically defeat a Younger challenge, the state was not seeking to advance a legitimate interest by requiring Midwestern to file with the Indiana Commission and, in fact, was seeking to reduce competition in the sale of natural gas in contravention of federal law and policy.
WICOR, Inc. v. United States, 2001 U.S. App. LEXIS 18323 (7th Cir. August 14, 2001)
WICOR, on behalf of its affiliate, Wisconsin Gas Company (“WGC”), brought an action for refund of federal income taxes, arguing that WGC was improperly denied a “qualified research” credit under Section 41 of the Internal Revenue Code and an unrelated deduction under Section 1341 of the Code. WGC had sought a qualified research credit for the development of an integrated computer system. The Court found that the project did not reflect the genuine innovation or discovery required under Section 41 of the Code because the project had involved merely adapting existing computer technology to the special needs of WGC rather than inventing a new technology that would have a broader applicability. The Court also rejected WGC’s petition with respect to denial of a Section 1341 deduction. Under Section 1341, if a taxpayer includes an item in taxable income in year one because it appears that the taxpayer had an unrestricted right to such item, and later a deduction is allowable for the item because the taxpayer did not have an unrestricted right to it after all, the taxpayer can assign the deduction to year one and obtain a larger tax savings if the tax rate was higher in year one than in the year that the deduction was allowable. WGC had included in its cost-of-service rates certain anticipated but not yet paid tax liabilities. When a change in tax law resulted in a drop in those rates, the Wisconsin Commission required the company to reduce its rates. WGC wished to take the deduction in the years that it had charged rates reflecting the tax liabilities that had not ultimately been incurred. The Court rejected WGC’s position, concluding that WGC’s PUC-ordered rate reduction was not a refund, and that the IRC does not allow a seller to take a deduction for a discount. Because Section 1341 is applicable only if a deduction is allowable, WGC’s refund request was properly denied.
Youngs v. Old Ben Coal Co., 243 F.3d 387 (7th Cir. March 15, 2001)
Through a complicated series of transactions, Plaintiff owned the oil and gas estate for a tract of land with Defendant, a coal mining company, owning the fee simple estate. The tract of land included four oil wells, which were leased by another party from Plaintiff. Defendant’s deed included a requirement that, to the extent that it took any oil wells “out of production,” it was required to restore the wells to production in substantially the condition that they were in prior to taking them out of production. The purpose of this clause was to obligate the owner of other rights in the land, including the right to strip mine coal, to restore oil wells for the benefit of the oil and gas estate when the interfering uses ceased. Once Defendant had completed the coal mining on the property, Plaintiff sought to enforce the oil production restoration clause in the deed. The District Court denied plaintiff’s claims following a bench trial. The Court of Appeals affirmed, finding that the third party lessee of the oil and gas estate had the right to remove all of its machinery and fixtures on the property, and that such an interpretation was consistent with general oil and gas law in which the fixtures belonged to the lessee, and was consistent with an interpretation of the parties’ rights under the various deed transactions. The Court rejected Plaintiff’s claim that the third party lessee’s lease had expired for non-production, finding that Plaintiff had not filed a statement with the county recorder to such effect. Finally, because the wells were dry, the Plaintiff had suffered no damages as a result of any purported failure to restore the wells to production, and, thus, the Court characterized the suit as essentially an extortionist transaction.
United States Court of Appeals for the Eighth Circuit
Mid-American Energy Co. v. Commissioner of Internal Revenue, 271 F.3d 740 (8th Cir. November 15, 2001)
Mid-American, a public utility and retail distributor of electricity and natural gas, appealed from an adverse ruling of the United States Tax Court on two issues. The Court of Appeals affirmed. First, Mid-American asserted that it was not required to include in its December income the portion of income attributable to December fuel use billed in January because December fuel billings were actually premised on billings for November/December. The Court rejected Mid-American’s position as based on intent and not reality and concluded that, under Section 451(f)(1) of the Code, revenues from the bill for fuel use in December constituted “income attributable to the furnishing of utility services” in December that had to be included in income for the prior year. In so holding, the Court rejected Mid-American’s argument that its accounting was required by the State Commission, finding that such accounting was not binding on the IRS. The Court also affirmed the tax court regarding Mid-American’s proposed tax deduction for a reduction in rates it was required to make by the State Commission to reflect lower costs. Relying on WICOR, supra, the Court found that Mid-American was not entitled to a Section 1341 deduction because a discount of future profits was not “a refund and was not deductible under the Code.”
United States v. Basin Elec. Power Coop., 248 F.3d 781 (8th Cir. April 30, 2001)
The Court of Appeals reviewed District Court rulings in a qui tam action under the False Claims Act (“FCA”) brought against a utility relating to the utility’s sale of power to Western Area Power Administration (“WAPA”). The government had intervened in the case but had supported only breach of contract claims and not the FCA claims brought by the relator. The Court of Appeals: (i) reversed the District Court’s finding that the utility had violated the FCA with regard to the manner in which it accounted for and billed WAPA in association with the sale-leaseback of the generating facility that was the subject of the unit contract between the two parties; (ii) reversed the District Court’s finding that the utility had violated the covenant of good faith and fair dealing in using a 10-year amortization period for certain facilities; (iii) found that, under the facts of the case and the contract between the utility and WAPA, the District Court had properly concluded that the utility’s inclusion of imputed interest for the purpose of billing unit costs to WAPA was justified; and (iv) affirmed in part and reversed and remanded in part the District Court’s finding that the utility’s charges to WAPA for coal costs constituted a breach of contract.
Entergy, Arkansas, Inc. v. Nebraska, 241 F.3d 979 (8th Cir. March 8, 2001)
The case arose out of the five-state Central Interstate Low Level Radioactive Waste Compact (entered into by Nebraska, Arkansas, Kansas, Louisiana, and Oklahoma and enacted by the U.S. Congress as original legislation). The Compact created a framework for the development of low level radioactive waste facilities and established the Central Interstate Low Level Radioactive Waste Commission (“Commission”) as the governing body. The Commission and certain generators and nuclear waste disposal facility applicant (“Non-Commission Plaintiffs”) sued Nebraska and individual state officials for excessively delaying the licensing of a nuclear waste disposal facility in Nebraska. The Court of Appeals affirmed the District Court finding that the suit was not barred by the Eleventh Amendment, finding that Compact delegated to the Commission state authority to sue for breach and required the Commission to enforce contractual obligations, thus Nebraska waived its Eleventh Amendment immunity from suit by the Commission in federal court. The Court reversed District Court finding that the Non-Commission Plaintiffs were entitled to pursue an action against Nebraska officials under a theory of breach of the good faith provision in the Compact on grounds that the Compact did not identify entities other than the Commission possessing a right to sue. The Court of Appeals remanded on the issue of whether individual Nebraska officials were entitled to qualified immunity on the procedural and substantive due process claims brought by the Non-Commission Plaintiffs.
United States Court of Appeals for the Ninth Circuit
Baker v. Exxon Corp (In re the Exxon Valdez), 239 F.3d 985 (9th Cir. November 7, 2001)
The Ninth Circuit considered challenges to the $5 billion punitive damage award levied against Exxon arising from the Exxon Valdez oil spill. The Court rejected various challenges to the award, including arguments that: (i) punitive damages should be precluded on policy grounds; (ii) punitive damages are not allowed under admiralty law; (iii) the judgment was barred by res judicata; (iv) the damages were preempted by the Clean Water Act; (v) the jury instructions were erroneous on the issues of standard of proof and vicarious liability; and (vi) there was insufficient evidence to award punitive damages. On the issue of amount of the punitive damages award, however, the Court remanded to the District Court in light of the standards announced by the Supreme Court in Honda Motor Co. v. Oberg, 512 U.S. 415 (1994) and BMW v. Gore, 517 U.S. 559 (1996). The Court remanded to the District Court to consider the constitutionality of the amount of the award in light of the “guideposts” established by the Supreme Court. The Court then proceeded to analyze the various Supreme Court factors to aid the District Court in its consideration.
Duke Energy Trading & Marketing, L.L.C. v. Davis, 267 F.3d 1042 (9th Cir. September 20, 2001)
Duke, wholesale energy supplier, sought injunctive relief in U.S. District Court from orders issued by Governor Davis of California commandeering contractual rights to delivery of electricity to public utilities in California at well-below prevailing rates on the grounds that the commandeering Orders were preempted by federal law. Governor Davis moved to dismiss on sovereign immunity grounds and, in the alternative, moved for summary judgment on the merits. Duke filed a cross-motion for summary judgment on the merits. The District Court dismissed the suit against the Governor on sovereign immunity grounds, and Duke appealed. After finding that the Court had jurisdiction to hear the appeal because defendant CalPX had been dismissed, the Court considered Duke’s standing. The Court rejected the Governor’s contention that because the right to liquidate forward contracts rested within the discretion of the CalPX, there was no case or controversy between Duke and Governor Davis. CalPX had no more than a de minimis beneficial interest in the proceeds derived from such liquidation and Duke, as a beneficial holder in the liquidation value of the forward contracts, suffered injury in fact from the commandeering Orders and provided Duke with standing. The Court also found that, although CalPX had discretion regarding liquidation of the forward contracts, there was nothing speculative about tracing Duke’s injury to Governor Davis’ commandeering Orders rather than to some independent decision against the liquidation made by the PX.
The Court then reversed the District Court’s finding that Duke’s suit was precluded on sovereign immunity grounds. The Court found that Duke’s suit fell within the sovereign immunity exception explained by the Supreme Court in Ex parte Young, 209 U.S. 123 (1908), rejecting the argument that the case should be controlled by Idaho v. Coeur d’Alene Tribe, 521 U.S. 261 (1997). The Court explained that granting Duke relief from the specific application of emergency powers in this situation would not be so much of a divestiture of the State’s sovereign immunity as to render the suit as one against the State itself, as required by Coeur d’Alene. The Court also rejected Governor Davis’ argument that Congress intended to preclude Ex parte Young actions against state officials under the Federal Power Act. Addressing the merits, the Court found that Governor Davis’ commandeering orders directly nullified the security and default mitigation provisions of the FERC-approved contract rates and hence crossed the bright line between state and federal jurisdiction under the Federal Power Act. The Court reversed and remanded to the District Court. Judge Kozinski filed a dissenting opinion, reasoning that Duke’s suit was barred on sovereign immunity grounds because the case fell within the exception to Ex parte Young established by Coeur d’Alene.
Kaiser Aluminum & Chem. Corp. v. Bonneville Power Admin., 261 F.3d 843 (9th Cir. August 16, 2001)
Petitioners, aluminum smelters, sought review of final Bonneville Power Administration decisions denying their requests to purchase power from BPA at a lower fixed rate rather than a higher market-based rate. After detailed review of the contractual agreements between the parties, as well as a previous settlement establishing the disputed rates, the Court concluded that BPA’s conclusion as to the rate to which Petitioners were entitled could be deemed reasonable, especially given the additional deference accorded to BPA’s interpretations regarding matters within its longstanding areas of expertise. The Court also rejected Petitioners’ argument that their contracts with BPA were subject to arbitration under the arbitration clauses in the contracts, concluding that, regardless of whether Petitioners characterized their claims as contract actions, Congress had given the Court exclusive jurisdiction over what was, in reality, a challenge to a final action of BPA taken pursuant to its statutory authority.
High Country Resources v. FERC, 255 F.3d 741 (9th Cir. June 21, 2001)
Petitioners appealed FERC denial of licenses for hydroelectric projects that FERC concluded would be inconsistent with Section 7(a) of the Wild and Scenic Rivers Act (“Act”), 16 U.S.C. § 1278, precluding licensing of projects on designated wild and scenic rivers. Petitioners argued that FERC erred: (1) by misconstruing Section 7(a) of the Act to find that proposed projects were precluded by Section 7(a); and (2) by relying on U.S. Forest Service findings regarding the effect of projects on the river, which findings were purportedly inconsistent with previous findings and, therefore barred by res judicata. In a decision that produced three separate opinions from a three-judge panel, two judges held that Petitioners’ statutory construction argument had not been raised on rehearing and, thus, the Court did not have jurisdiction to hear the objection. One Judge dissented, finding that the argument was sufficiently raised before FERC. The dissent agreed that FERC’s statutory interpretation was flawed. As to the second argument, the two judges in the majority found that FERC was not in a position to judge the validity of another agency’s findings and that the res judicata argument should have been raised with the Forest Service. The third judge found that his conclusion as to the statutory construction argument rendered the Forest Service finding inapplicable.
Friends of the Cowlitz and Cpr-Fish v. FERC, 253 F.3d 1161 (9th Cir. June 14, 2001)
Petitioners, citizens groups, petitioned for review of FERC order granting summary disposition of complaint alleging non-compliance by hydro-electric project licensee with project license requirements concerning preservation of fish stocks. Complaint was based, in part, on Agreement between licensee and Washington Department of Fisheries and Wildlife. Court of Appeals held that FERC had erred as a matter of law in dismissing complaint on grounds that Agreement was not part of license. Further, FERC erred in granting summary disposition where Petitioners’ allegations, if true, would amount to a license violation. The Court also held that it was legal error to grant summary disposition based, in part, on FERC’s preference to address potential license violations through the relicensing process. Notwithstanding these findings, the Court dismissed the petition on grounds that FERC’s choice not to enforce the license would be committed to its discretion and non-reviewable under Heckler v. Chaney, 470 U.S. 821 (1985), and that neither the license enforcement provisions of the Federal Power Act nor FERC’s regulations removed the issue from FERC’s discretion.
In re California Power Exchange Corp. v. FERC, 245 F.3d 1110 (9th Cir. April 11, 2001)
California Power Exchange Corporation and City of San Diego, California filed petitions for writs of mandamus to FERC under the All Writs Act related to FERC’s actions with respect to California electricity crisis. The Court employed a three-part test to determine whether to grant Cal PX’s request for mandamus relief: (i) the plaintiffs’ claim must be clear and certain; (ii) the duty must be ministerial and so plainly prescribed as to be free from doubt; and (iii) no other adequate remedy is available. The Court found that Cal PX could not satisfy the first requirement that its claim be clear and certain because the FERC’s actions under Section 206 of the Federal Power Act appeared to be consistent with Section 206. It was at least arguable that Section 206(a) was sufficiently broad to permit FERC to eliminate PX’s tariff or rate schedule entirely, particularly in the context of a market-based regime, if it also establishes rules, regulations, or practices that would result in just and reasonable rates. Elimination of the voluntary sales into Cal PX markets was not unduly discriminatory or arbitrary. FERC’s formulation of the $150 MWh breakpoint was neither arbitrary nor discriminatory.
San Diego’s petition sought to compel FERC to issue an order as to wholesale sellers’ refund liability. The Court denied the City’s request after evaluating it under a five-part test to determine whether an agency delay in issuing a final order was so egregious as to warrant mandamus. The Court noted that cases in which courts have afforded relief have involved delays of years, not months, and that FERC’s 4-month delay did not run afoul of any rule of reason.
Natural Resources Defense Council, Inc. v. Abraham, 244 F.3d 742 (9th Cir. March 28, 2001)
The Court of Appeals found that it did not have original or exclusive jurisdiction to hear the NRDC’s appeal of a DOE Order that would affect how nuclear waste from certain DOE installations was treated. The Court of Appeals analyzed the judicial review provisions of the Nuclear Waste Policy Act of 1982, and concluded that the DOE Order was not subject to direct Court of Appeals review based on the facts of the case. Rather than dismissing the action entirely, the Court of Appeals accepted the NRDC’s invitation to transfer the action to a District Court.
Snake River Valley Elec. Ass’n v. PacifiCorp, 238 F.3d 1189 (9th Cir. January 29, 2001)
Plaintiff-Appellant, Snake River Valley Electric Association (“Snake River”), a non-profit cooperative, appealed from the District Court’s grant of summary judgment in favor of Defendant-Appellee PacifiCorp in Salt River’s suit alleging PacifiCorp violated federal antitrust laws by refusing Snake River’s request to wheel and supply power to PacifiCorp’s customers through PacifiCorp’s electric transmission facilities. The District Court granted PacifiCorp’s motion for summary judgment on state action immunity doctrine grounds, and the Court of Appeals reversed. The Court of Appeals considered applicability of the doctrine, noting that the challenged restraint must meet a two-part test: it must be (1) clearly articulated; and (2) actively supervised by the state. Interpreting the Idaho Electric Supplier Stabilization Act (“ESSA”), the Court concluded that there was no question that the ESSA contemplated the suppression of the competition at issue. The ESSA granted utilities discretion whether to allow other electric suppliers to serve its existing customers, and, given such discretion, PacifiCorp’s refusal to allow Salt River to serve PacifiCorp customers was a foreseeable result of the ESSA, and, therefore, the “clearly articulated standard” prong was met. The Court held, however, that the second prong of the state action immunity test, active supervision by the state, was not met because ESSA gave utilities discretion to refuse to wheel power and this discretion was not subject to state oversight. Because the second requirement was not satisfied, PacifiCorp’s refusal to allow Salt River to serve its customers was not shielded by state action immunity.
United States Court of Appeals for the Tenth Circuit
Oxy USA v. Babbitt, 268 F.3d 1001 (10th Cir. October 10, 2001)
The Tenth Circuit considered en banc whether the six-year statute of limitations provided by 28 U.S.C. § 2415(a) governs Mineral Management Service (MMS) orders directing oil and gas lessees to pay additional royalties on production procured prior to September 1, 1996. That section provides that “except as otherwise provided by Congress, every action for money damages brought by the United States or an officer or agency thereof which is founded upon any contract” is barred if not brought within six years. The MMS in 1996 ordered Oxy USA to pay royalties, with interest, for oil production under leases during the period 1980 to 1983. Oxy brought a suit seeking a declaration that the government’s claims were time barred under 28 U.S.C. § 2415(a). The en banc Court reversed the panel and held that an MMS order for refunds constituted an action for money damages brought by the United States and founded upon a contract. Because the Court also concluded that Congress had not “otherwise provided” relief from the limitation, a § 2415(a) six year statute of limitations applied. Two judges dissented, disputing the holding that the MMS order constituted an action for money damages brought by the United States.
Bowen v. Amoco Pipeline Co., 254 F.3d 925 (10th Cir. June 29, 2001)
Defendant Amoco appealed arbitration award arising out of an oil leak that damaged Plaintiffs’ property. The Court reviewed the arbitration award under the standard set forth in the Federal Arbitration Act (“FAA”). The Court declined to reverse the District Court’s refusal to apply a standard of review included in the arbitration agreement that was more expansive than the standard of review under the FAA. Explicitly disagreeing with the holdings of the Fifth and Ninth Circuits on the same issue, the Court held that parties may not contract for expanded judicial review of arbitration awards. Amoco also argued that the abatement requirement of the arbitration ruling was within the exclusive jurisdiction of the Oklahoma Corporation Commission. While acknowledging it as a close question, the Court noted that the “exclusive jurisdiction” of the OCC under Oklahoma statutes may refer only to the OCC jurisdiction relative to other agencies, not courts. The Court also noted that the public rights doctrine supported upholding the arbitration award, explaining that the liability of one individual to another under the law is a private right and not an attack upon the public rights function of the OCC to regulate and administer the conservation laws and policies of the state. Further, allotting funds for cleanup did not amount to a legal award of damages, which may have raised double recovery concerns. Finally, punitive damages award did not exceed the arbitrator’s authority under the agreement, nor was it inconsistent with Oklahoma law.
Trigen-Oklahoma City Energy Corp. v. Oklahoma Gas & Elec. Co., 244 F.3d 1220 (10th Cir. April 3, 2001)
Defendant, Oklahoma Gas & Electric Company (“OGE”), a regulated utility in Oklahoma and Arkansas, appealed a jury verdict in the District Court in favor of Trigen-Oklahoma Energy Corp., owner and operator of district heating and cooling plants, where OGE was found to have violated federal antitrust law, Oklahoma antitrust laws, and Oklahoma tort law. The Court of Appeals reversed the judgment, finding, in large measure, that Trigen’s claims were barred by state action immunity. The Court agreed that all of Trigen claims were based on OG&E’s efforts to sell electricity and that OG&E’s electricity sales are immune from antitrust actions under the state action immunity doctrine because Oklahoma has clearly articulated a policy to displace competition with the regulation of electric utilities and because Oklahoma actively supervises any allegedly anti-competitive conduct. The Court also rejected Trigen’s argument that OGE was competing in the building cooling market, noting that this logic would mean that OG&E would be deemed a competitor and a potential monopolist in every single product market that uses electricity. Finally, all of Trigen’s state law claims were collateral attacks on OG&E’s filed rates and were within the exclusive jurisdiction of the Oklahoma Corporation Commission.
United States Court of Appeals for the Eleventh Circuit
Hendrickson v. Georgia Power Co., 240 F.3d 966 (11th Cir. January 31, 2001)
Plaintiff appealed District Court’s grant of summary judgment in favor of Defendant Georgia Power in Plaintiff’s wrongful death suit arising out of a murder on recreational property owned by Georgia Power. District Court granted summary judgment on the grounds that the Georgia Recreational Property Act (“RPA”) limited the liability of landowners who make property available without charge to the public for recreational purposes. Construing Georgia law, the Court found that Georgia Power’s liability was limited under the RPA and thus summary judgment was appropriate. Notably, the Court rejected the argument that Georgia Power should be held to have operated the facility for business or commercial purpose because it included the costs of both the operation and improvement of the facility in regulated rates which are passed on to consumers.
United States District Court for the District of Arizona
Center for Biological Diversity v. FERC, CIV-00-848-PCT-SMM (D. Ariz. 2001) (unpublished)
District Court granted FERC’s motion to dismiss Plaintiff’s complaint seeking a Court order requiring FERC to act on Plaintiff’s petition requesting that FERC initiate a consultation with the United States Fish and Wildlife Service pursuant to the Endangered Species Act in relation to a license application. The Court held that the U.S. Courts of Appeals had exclusive jurisdiction over the action and dismissed the complaint.
United States District Court for the Central District of California
Pacific Gas & Elec. Co. v. Lynch, 2001 U.S. Dist. LEXIS 5500 (C.D. Cal. May 2, 2001)
PG&E brought suit against Commissioners of the California PUC in their official capacity alleging violations of federal statutory and Constitutional law in the Commissioners’ implementation of California’s electric restructuring law. The Court granted Commissioners’ motion to dismiss PG&E’s complaint without prejudice on the grounds that many of PG&E’s claims were unripe, as they were based on CPUC orders that were not yet final. Before granting the motion to dismiss on ripeness grounds, the Court considered and rejected numerous other arguments proffered by the Commissioners in support of dismissal including: (i) res judicata; (ii) preemption – the Court found that a plaintiff who seeks injunctive relief from state regulation on the ground that such regulation is preempted by federal statute presents a federal question even though the Federal Power Act did not provide PG&E with a private right of action either directly under the FPA or indirectly under Section 1983; (iii) abstention; (iv) the Johnson Act – which the Court found inapplicable because jurisdiction was not premised solely on diversity of citizenship or repugnance of the CPUC’s order to the Constitution; and (v) Eleventh Amendment immunity.
United States District Court for the Eastern District of California
California Ind. System Operator Corp. v. Reliant Energy Serv., Inc., CIV S-01-238 FCD/JFM (E.D. Cal., March 21, 2001) (unpublished)
Order on preliminary injunction sought by California ISO against Defendant, power suppliers, to enforce compliance with the provisions of the ISO Tariff relating to the obligation to respond to emergency dispatch orders. The Court denied Defendants’ motion to dismiss, or in the alternative, to stay the injunction proceeding. The Court concluded that the disputed issues had not been decided by FERC, and thus were not moot. Further, the Court declined to stay the proceeding pending FERC action in light of the potential imminent and irreparable harm. The Court also dismissed Defendant’s third-party complaint against California DWR on Eleventh Amendment grounds, concluding that DWR had not waived Eleventh Amendment immunity. Finally, the Court issued the preliminary injunction against Defendant pending FERC action because it found that Defendant was subject to the terms of the ISO Tariff, and the obligation to comply with the Tariff was not discharged by the ISO’s alleged failure to comply with other provisions of the Tariff relating to creditworthiness of scheduling coordinators. The Court cited the particulars of the California electricity crisis in support of a finding of the irreparable harm that would occur absent the injunction.
California Independent System Operator Corp. v. Reliant Energy Serv., Inc., 2001 U.S. Dist. LEXIS 1593 (E.D. Cal., Feb. 8, 2001)
California ISO sought a temporary restraining order pending an injunction hearing against Defendants, power suppliers, to enforce compliance with the provisions of the ISO Tariff relating to the obligation to respond to emergency dispatch orders. The Court found that the ISO was entitled to issuance of a TRO because it had demonstrated both a likelihood of success on the merits and possibility of irreparable injury should the restraining order not issue. The Court found that ISO was likely to succeed on the merits because the suppliers were subject to the terms of the ISO Tariff, and the obligation to comply with the Tariff was not discharged by the ISO’s alleged failure to comply with other provisions of the Tariff relating to creditworthiness of scheduling coordinators. The Court also found that Defendants were “disingenuous” in arguing that the Court was engaging in selective enforcement of the ISO Tariff, explaining that it could only adjudicate the claims properly before it. The threat of irreparable harm prong of the test was met because California was confronting an energy crisis of “catastrophic proportions,” and injury to the public may suffice as irreparable harm in private actions where the public is essentially the real party in interest. This harm was not removed by DWR’s ability to purchase electricity.
United States District Court for the District of Delaware
Indeck Maine Energy, LLC v. ISO New England, Inc., 167 F. Supp. 2d 675 (D. Del. October 9, 2001)
Plaintiff Indeck Maine Energy, owner and operator of two power plants in Maine, sued ISO New England on state breach of contract grounds. Indeck alleged that the ISO had breached a contract to pay Indeck its bid price of $9,999 MWh in the energy market operated by the ISO. ISO-NE removed the case to federal court. The Court denied Indeck’s motion to remand to state court, finding that, although the Federal Power Act does not completely preempt state law in the field of electric power regulation, Indeck’s state law claims, however styled, really requested a remedy pursuant to the ISO-NE Market Rules and thus arose under federal law. The Court found that Indeck sought to present a challenge to a federally-approved tariff in the guise of a state contractual claim. The Court granted ISO-NE’s motion to dismiss for failure to state a claim on the grounds that, under the filed rate doctrine, the Court had no authority to impose a remedy that would change a rate approved by FERC.
United States District Court for the District of Columbia
Torch Operating Co. v. Babbitt, 172 F. Supp. 2d 113 (D.D.C. October 24, 2001)
Plaintiffs, oil producers under federal oil and gas leases, sued the Minerals Management Service (MMS) as a result of MMS’s change of policy on royalty calculations which resulted in higher royalty fees for plaintiffs. This case addresses the same MMS policy change addressed by the Fifth Circuit in Shell Offshore, Inc. v. Babbitt, 238 F.3d 662 (5th Cir. 2001), described supra. The Court granted Plaintiffs’ motion for summary judgment finding: (1) that MMS’s interpretation of its regulation was plainly erroneous; and (2) that MMS’s change in interpretation of its policy constituted an impermissible change in interpretation without notice and comment procedures, in violation of the APA, relying on Shell.
Duke Energy Field Serv. Assets, LLC v. FERC, 150 F. Supp. 2d 150 (D.D.C. July 18, 2001)
District Court granted defendant FERC’s motion to dismiss suit by Plaintiffs, gas pipeline operators, challenging requirement of FERC Order No. 639 that owners of natural gas facilities in areas subject to Outer Continental Shelf Lands Act (“OCSLA”) publicly file rates charged for gas transportation service. Plaintiffs failed to comply with 43 U.S.C. § 1349(a)(2) requiring notice of an alleged violation of OCSLA to be given, under oath, to the Secretary of Energy and any other appropriate federal official at least sixty days prior to commencing an action thereunder. Request for rehearing before FERC did not satisfy “under oath” requirement. Further, APA did not confer an independent jurisdictional basis for the suit. Finally, Order No. 639 did not immediately affect a legal interest of Plaintiff such that action would be allowed to proceed.
United States District Court for the Northern District of Iowa
Windway Technologies Inc. v. Midland Power Coop., 2001 U.S. Dist. LEXIS 3430 (N.D. Iowa, March 5, 2001)
Plaintiffs contended that tariffs imposed by the Defendants violated certain FERC regulations implementing PURPA. The Court granted Defendants’ motion to dismiss for lack of subject matter jurisdiction. The Court concluded that, in evaluating jurisdictional claims under PURPA, a distinction must be made between claims challenging the implementation of PURPA regulations and claims challenging the application of such regulations. An implementation claim involves the contention that the state agency or non-regulated utility has failed to implement a lawful implementation plan under Section 824(a)-3(f) of PURPA. An “as applied” claim contends that the state agency’s or non-regulated utility’s implementation plan was unlawful as applied to or as it affected an individual petitioner. The Court concluded that PURPA limits federal court jurisdiction to “implementation claims” and that Plaintiffs’ claims were properly characterized as “as applied” claims. The Court indicated that state court was the proper forum for claim that a non-regulated utility had failed to adhere to an implementation plan.
United States District Court for the District of Massachusetts
Karak v. Bursaw Oil Corp., 147 F. Supp. 2d 9 (D. Mass. May 30, 2001)
Plaintiffs, operators of gas station, sued Defendant, motor fuel products distributor, seeking injunctive relief from termination of Plaintiffs’ lease pursuant to the Petroleum Marketing Practices Act (“PMPA”). The Court granted Defendant’s motion for summary judgment, finding that PMPA was not applicable because no “franchise relationship” existed between Plaintiffs and Defendant. Although Defendant was a “distributor” under PMPA, Plaintiffs did not fall with the statutory definition of “retailer.” The Court reviewed the agreement between the parties as well as a number of other factors to determine that Plaintiffs were not retailers for purposes of the Act.
United States District Court for the District of Minnesota
Alliant Energy, Inc. v. Nebraska Pub. Power Dist., 2001 U.S. Dist. LEXIS 17802 (D. Minn. October 18, 2001)
Plaintiffs, members of the Mid-Continent Area Power Pool (“MAPP”) brought a breach of contract action against the Nebraska Public Power District (“NPPD”) contending that NPPD, also a MAPP member, had breached the MAPP Restated Agreement, a contract governing the membership of MAPP and setting forth the contractual rights and obligations of all members. Previously, FERC issued an order requiring MAPP members to make refunds based on its finding that a certain MAPP tariff provision was not just and reasonable. NPPD refused to make refunds. The Court found that the Restated Agreement was unambiguous and could be interpreted as a matter of law. Because the Agreement specifically provided that it was subject to regulation by FERC, FERC’s modification of the Restated Agreement was binding on NPPD and, the Court explained, the revisions removed the authority to collect the monies NPPD refused to refund. The Court concluded that “absent authority for collecting the tariff charges in the first place, NPPD must pay refunds” regardless of whether the contract amendments resulted from a FERC order.
United States District Court for the Western District of Missouri
Southern Union Co. v. Missouri Pub. Serv. Comm’n, 138 F. Supp. 2d 1201 (W.D. Mo. March 12, 2001)
Plaintiff Southern Union sued Commissioners of the MoPSC arising out of MoPSC’s denial of Southern Union’s application seeking blanket approval to make non-control investments, either directly or through a subsidiary, in the stocks or bonds of non-Missouri electric or natural gas utilities. The subject of Southern Union’s suit was Mo. Rev. Stat. § 383.190(2), which required utility companies operating in the state to receive MoPSC approval before purchasing the stock of another utility company. Southern Union challenged Section 383.190(2) on the grounds that it was preempted by PUHCA and the Securities and Exchange Act, especially the Williams Act Amendments governing tender offers. Alternatively, Southern Union contended that the statute violated the Dormant Commerce Clause. On cross-motions for summary judgment, the Court rejected Southern Union’s argument that the statute violated the SEA, noting that 383.190(2) had nothing to do with tender offers to take control of a corporation, and that Southern Union had only asked the Commission for approval to purchase non-control investments. Moreover, the Court noted that timing requirements of the Williams Act did not preempt the Missouri statute because delay itself is not a sufficient reason to find that a state statute is preempted by the Williams Act. The Court also rejected Southern Union’s assertion that the statute erected a barrier in the national securities market, explaining that federal regulation was not designed to displace state Blue Sky laws. Southern Union’s PUHCA-based preemption argument was denied on the ground that “the purpose of PUHCA is to supplement state regulation, not supplant it.” The Court concluded that the statute was not per se violative of the Dormant Commerce Clause because it did not attempt to gain advantage for the citizens of Missouri at the expense of the citizens of a sister state, and that, even under a balancing test, Section 383.190(2) passed muster because it placed a minimal and indirect burden on interstate commerce, which burden was outweighed by the substantial interest of the state in maintaining a steady supply of natural gas for its citizens.
United States District Court for the District of Nebraska
Entergy Arkansas, Inc. v. Nebraska, 161 F. Supp. 2d 1001 (D. Neb. August 29, 2001)
This case represents the District Court’s consideration of the Non-Commission Plaintiffs’ due process claims remanded by the Eighth Circuit in Entergy v. Nebraska, 241 F.3d 979, summarized above. On remand, the District Court characterized the issue as whether the Defendants denied Plaintiffs procedural and substantive due process when, after accepting tens of millions of dollars from Plaintiffs to process the license application, Defendants denied the license for “crude political purposes.” The Court explained that the pivotal question was whether Nebraska’s discretion to issue the license to the applicant was substantially limited. If it was, the applicant had a property interest in the license. The Court found that no property interest existed because Nebraska retained such great discretion in issuing licenses that the applicable state regulations, although nominally mandatory in nature, could not be said to provide the applicant with “ a legitimate claim of entitlement” to a license.
United States District Court for the District of Nevada
In re California Retail Nat. Gas and Elec. Anti-Trust Lit., 170 F. Supp. 2d 1052 (D. Nev. 2001)
Suits by California citizens against El Paso and SoCal Edison for restraint of trade, unfair competition and unfair business practices in violation of California law. District Court hearing case pursuant to the Judicial Panel on Multi-District Litigation considered motion by Plaintiffs to remand the cases to California state courts after they had been removed to federal court by Defendants. Noting that diversity jurisdiction did not exist in the case, the Court considered whether Plaintiffs’ claims arose under federal law. The Court found that Plaintiffs did not assert any federal claims and that the suits could not be considered state law claims that “arose under” federal law. The Court held in this regard that there was no complete preemption under the Federal Power Act, Natural Gas Act or the Natural Gas Policy Act, nor did federal law present an essential element of the complaint. Motions to remand were granted.
United States District Court for the Eastern District of New York
Boyland v. Wing, 2001 U.S. Dist. LEXIS 7496 (E.D.N.Y. April 6, 2001)
District Court certified a class of plaintiffs in suit against Commissioner of the Office of Temporary and Disability Assistance of the New York State Department of Family Assistance and Commissioner of the New York City Human Resources Administration, alleging that the City, as a matter of policy and practice, misadministered the Federal Emergency Low Income Home Energy Assistant Program and that the State failed to correct the City’s illegal policies and practices in violation of Plaintiffs’ constitutional right to due process, as well as in violation of various other federal and state laws and regulations. The Court found that all of the requirements for class certification were met.
United States District Court for the Northern District of New York
Niagara Mohawk Power Corp. v. FERC, 162 F. Supp. 2d 107 (N.D.N.Y. August 27, 2001)
Niagara Mohawk sued FERC, the New York PSC and the New York PSC Commissioners seeking relief from rates charged under purchase power agreements with PURPA Qualifying Facilities (“QFs”), arguing that a New York state law and PSC implementing decisions violated PURPA by allowing QF contract rates higher than allowed by FERC. Niagara also sought to bring claims against FERC under PURPA, arguing that FERC had improperly failed to apply to Niagara its decision that states could not authorize QFs to charge more than rates authorized by FERC under PURPA. After a lengthy review of the background and implementation of PURPA in New York and at FERC, the Court granted Defendants’ motions to dismiss. The Court found that Niagara’s claims against FERC must be dismissed because: (1) they did not state a cause of action under PURPA; (2) Niagara had no APA right to review of FERC order declining to apply new interpretation of PURPA retroactively; (3) FERC’s refusal to modify PURPA contracts retroactively was committed to agency discretion and unreviewable under Heckler v. Chaney, 470 U.S. 821 (1985); and (4) the Court lacked subject matter jurisdiction because FERC’s actions were not final agency action. The Court also dismissed claims against the PSC and its Commissioners, finding that, while subject matter jurisdiction existed under Niagara’s constitutional claim, Niagara was barred from litigating the QF issue by res judicata. Finally, the Court found that the claims against the New York PSC and the Commissioners must be dismissed because PURPA preempted the PSC from altering previously-approved contracts, even where the modification was ostensibly to bring the contracts into compliance with PURPA.
United States District Court for the Southern District of Ohio
United States v. American Elec. Power Serv. Corp., 137 F. Supp. 2d 1060 (S.D. Ohio March 30, 2001)
Plaintiffs, non-profit organizations, filed suit against defendants, utilities owning coal-fired power plants, under Section 304(a)(3) of the Clean Air Act, 42 U.S.C. § 7604(a)(3), for alleged violations of the Act. The Court denied Defendants’ motion to dismiss Plaintiffs’ complaint. First, the Court found that Plaintiffs’ suit did not encroach upon the power of the executive branch because there was nothing in the CAA requiring actions under Section 304(a)(3) to be subject to the notice and diligent prosecution requirements that apply to certain other aspects of the Act. The Court also rejected Defendants’ claim that allowance of the suit would be contrary to separation of powers, holding that it is within the province of Congress to create statutory rights and obligations and to determine who may enforce them and in what manner. The District Court also rejected as illogical Defendants’ textual argument that they could only be held liable for “constructing” a facility rather than “operating” such a facility without complying with permit requirements. Also rejected were the Defendants’ arguments that (i) the statute of limitations had expired as to all violations; (ii) that Plaintiffs could not obtain injunctive relief under Section 304(a)(3); (iii) Plaintiffs’ suit was barred by laches; and (iv) Plaintiffs’ request for injunctive relief amounted to a penalty because it would require defendants to install “billions of dollars worth of controls.” Finally, the Court rejected Defendants’ assertion that the concurrent remedy rule barred Plaintiffs’ claims for injunctive relief. Under this rule, equity withholds its relief where the applicable statute of limitations would bar the concurrent legal remedy. The Court found that the concurrent remedy rule wasn’t applicable because Plaintiffs’ suit was primarily grounded in equity and the civil penalties they sought would be paid to the U.S. Treasury and were primarily for deterrence.
United States v. American Elec. Power Serv. Corp., 136 F. Supp. 2d 808 (S.D. Ohio March 30, 2001)
This is a companion ruling to the decision summarized above. Here the Court, with one exception, denied Defendants’ motion to dismiss Clean Air Act claims brought by the EPA and certain intervening states. The arguments offered, and the Court’s response thereto, were similar to those in the case above, including statute of limitations issues, concurrent remedy rule, “construction” versus “operation,” and laches. The Court did dismiss claims for civil penalties for days of violation prior to November 3, 1994, a date which was five years before the filing of the suit. The court found, and the government conceded, that such civil penalties were precluded by 28 U.S.C. § 2462.
United States District Court for the Eastern District of Pennsylvania
Cargill-Alliant, LLC v. GPU Serv., Inc., 2001 U.S. Dist. LEXIS 1220 (E.D. Pa. Feb. 7, 2001)
Plaintiff, energy trader, sued Defendant, electricity supplier, for breach of contract to supply electricity. After a bench trial, the Court made findings of fact and ruled in favor of supplier. Plaintiff charged supplier with having violated its obligation to deliver “firm LD electricity” at the PJM Western Hub which Plaintiff could then transmit to customers outside of PJM. The evidence demonstrated that declaration of an emergency in PJM on the date transaction was supposed to occur restricted Plaintiff’s ability to transmit the electricity to its customers outside of PJM. The Court found that Defendant-supplier fulfilled its commitment to deliver energy to the PJM Western Hub, and that it did not promise or guarantee delivery to third-party customers outside PJM.