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Allco Finance Ltd. v. Klee

United States Court of Appeals, Second Circuit

November 6, 2015

ALLCO FINANCE LIMITED, Plaintiff-Appellant,
v.
ROBERT J. KLEE, in his official capacity as Commissioner of the Connecticut Department of Energy and Environmental Protection, Defendant-Appellee, OFFICE OF CONSUMER COUNSEL, FUSION SOLAR LLC, NUMBER NINE WIND FARM LLC, GREENSKIES RENEWABLE ENERGY, LLC, Intervenors-Appellees

Submitted September 2, 2015.

Amended December 1, 2015.

Appeal from a district court judgment (Arterton, J.), which dismissed the plaintiff's complaint. We hold that: (1) the plaintiff cannot bring claims under 42 U.S.C. § § 1983 and 1988 to vindicate any rights conferred by the Public Utility Regulatory Policies Act (" PURPA" ) because PURPA's private right of action forecloses such a remedy; (2) the plaintiff failed to exhaust administrative remedies, a prerequisite to bringing an equitable action seeking to vindicate any rights conferred by PURPA; and (3) the plaintiff lacks standing to bring a preemption action seeking solely to void the contracts awarded to the intervenors. Accordingly, we AFFIRM the district court's judgment on alternative grounds.

Page 90

Thomas Melone, Allco Renewable Energy Limited, New York, New York, for Plaintiff-Appellant.

Robert D. Snook, Assistant Attorney General, for George Jepsen, Attorney General of the State of Connecticut, Hartford, Connecticut, for Defendant-Appellee.

Bradford S. Babbitt and James R. Nault, Robinson & Cole LLP, Hartford, Connecticut, for Intervenors-Appellees Fusion Solar LLC and Number Nine Wind Farm LLC.

Joseph A. Rosenthal, Principal Attorney, for Elin Swanson Katz, Consumer Counsel of the State of Connecticut, New Britain, Connecticut, for Intervenor-Appellee Office of Consumer Counsel.

Before: KATZMANN, Chief Judge, HALL and LIVINGSTON, Circuit Judges.

OPINION

Page 91

Katzmann, Chief Judge :

Plaintiff-Appellant Allco Finance Limited (" Allco" ) appeals from a final judgment entered on December 11, 2014 by the United States District Court for the District of Connecticut (Arterton, J. ), which dismissed Allco's complaint. Allco brought this action against Defendant-Appellee Robert Klee (" Commissioner" ), in his official capacity as Commissioner of the Connecticut Department of Energy and Environmental Protection. Allco alleges that the Commissioner's actions, which were taken pursuant to section 6 of Connecticut Public Act 13-303 (" Section 6" ) and include his awarding two power purchase agreements to Intervenors-Appellees Number Nine Wind Farm LLC (" Number Nine" ) and Fusion Solar LLC (" Fusion Solar" ), are preempted by the Federal Power Act and the Public Utility Regulatory Policies Act (" PURPA" ).[1] In addition to seeking damages and fees under 42 U.S.C. § § 1983 and 1988, Allco sought equitable relief in the form of voiding the intervenors' contracts and enjoining the Commissioner from violating the Federal Power Act and PURPA in any future Section 6 procurement process. The district court dismissed Allco's complaint, concluding that Allco lacked standing to sue and, in the alternative, that Allco failed to state a claim. Allco contests both determinations on appeal.

We AFFIRM the district court's judgment on alternative grounds. Specifically, we hold that: (1) Allco cannot bring claims under § § 1983 and 1988 to vindicate any rights conferred by PURPA because PURPA's private right of action forecloses these remedies; (2) Allco failed to exhaust its administrative remedies, a prerequisite for any qualified facility to bring an equitable action seeking to vindicate specific rights conferred by PURPA; and (3) Allco lacks standing to bring a preemption action seeking solely to void the contracts awarded to Intervenors Fusion Solar and Number Nine.

BACKGROUND

A. The Federal Power Act and PURPA Statutory Schemes

We begin with some background on the Federal Power Act and PURPA statutory schemes. The Federal Power Act gives the Federal Energy Regulatory Commission (" FERC" ) exclusive authority to regulate sales of electricity at wholesale in interstate commerce. See 16 U.S.C. § 824(b)(1). States may not act in this area unless Congress creates an exception. Id. § 824(b). PURPA contains one such exception that permits states to foster electric generation by certain power production

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facilities (" qualifying facilities" ) that have no more than 80 megawatts of capacity and use renewable generation technology. Id. § 824a-3; see also id. § 796(17)(A). A state may regulate wholesale sales by qualifying facilities, but those facilities must generally receive a price for their electricity equal to the buying utility's " avoided costs" --that is, those costs that the utility would have otherwise incurred in procuring the same quantity of electricity from another source. 18 C.F.R. § 292.304(b)(2); 16 U.S.C. § 824a-3(b). PURPA imposes obligations on each state regulatory authority to implement FERC's PURPA regulations. See 16 U.S.C. § 824a-3(f)(1) (" [E]ach State regulatory authority shall, after notice and opportunity for public hearing, implement [a new FERC] rule (or revised rule) for each electric utility for which it has ratemaking authority." ). PURPA also provides FERC and certain private parties with the ability to enforce the requirement that states implement PURPA. See id. § 824a-3(h). Relevant to this appeal, PURPA provides a private right of action to " qualifying cogenerator[s]" to enforce a state's obligations under PURPA. Id. § 824a-3(h)(2)(B).

Even though Allco concedes that it " does not rely on the private right of action under" 16 U.S.C. § 824a-3(h)(2)(B), Appellant's Supp. Br. 1, this private right of action is relevant to several aspects of this appeal, so we briefly describe its structure. First, " qualifying cogenerator[s]," such as Allco, " may petition [FERC] to enforce" a state's requirements to comply with PURPA. § 824a-3(h)(2)(B). Then, " [i]f the Commission does not initiate an enforcement action . . . against a State regulatory authority," such as the Connecticut Department of Energy and Environmental Protection, " within 60 days following the date on which a petition is filed . .., the petitioner may bring an action in the appropriate United States district court to require such State regulatory authority . . . to comply with such requirements." Id. The district court may then ...


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