Source: http://nm.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20190516_0001095.DNM.htm/qx
Timestamp: 2020-08-14 15:19:57
Document Index: 218931538

Matched Legal Cases: ['§ 824', '§ 824', '§ 292', '§ 292', '§ 292', '§ 824', '§ 17', '§ 824', '§ 1331', '§ 2201']

FindACase™ | Great Divide Wind Farm 2 LLC v. Becentiaguilar
Great Divide Wind Farm 2 LLC v. Becentiaguilar
GREAT DIVIDE WIND FARM 2 LLC, a Delaware corporation, and GREAT DIVIDE WIND FARM 3 LLC, a Delaware corporation, Plaintiffs,
THERESA BECENTIAGUILAR; CYNTHIA HALL; JEFFERSON BYRD; VALERIE ESPINOZA, and STEPHEN FISCHMANN, in their official capacities as the Commissioners of the New Mexico Public Regulation Commission, Defendants.
Jason A. Marks Jason Marks Law, LLC Albuquerque, New Mexico -and- Adam Wenner Cory Lankford Jonathon Guy Orrick, Herrington & Sutcliff, LLP Washington, D.C. Attorneys for the Plaintiffs
Judith E. Amer New Mexico Public Regulation Commission Santa Fe, New Mexico Attorneys for the Defendants Theresa Becenti Aguilar, Cynthia Hall, Jefferson Byrd, Valerie Espinoza, and Stephen Fischmann
Ron Moss Winstead PC Austin, Texas -and- Carol A. Clifford Jerry Todd Wertheim Jones, Snead, Wertheim & Clifford, P. A. Santa Fe, New Mexico Attorneys for the Proposed Intervenor El Paso Electric Company
THIS MATTER comes before the Court on: (i) Defendant Theresa Becenti Aguilar's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 19); (ii) Defendant Jefferson Byrd's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 20); (iii) Defendant Valerie Espinoza's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 21); (iv) Defendant Stephen Fischmann's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 22); and (v) Defendant Cynthia Hall's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 23)(collectively, "MTD").[2] The Court held a hearing on May 2, 2019. The primary issue is whether Plaintiffs Great Divide Wind Farm 2 LLC, and Great Divide Wind Farm 3 LLC (collectively, "Great Divide") bring against Aguilar, Byrd, Espinoza, Fischmann, and Hall (collectively, "the Commission") an as-implemented challenge - alleging that rule 570 of the New Mexico Administrative Code, promulgated by the New Mexico Public Regulation Commission ("NMPRC"), violates the Public Regulatory Policies Act of 1978, 16 U.S.C. § 824a-3 ("PURPA"), and the regulations of the Federal Energy Regulatory Commission's ("FERC") promulgating PURPA - or an as-applied challenge - asking that the Court overturn the Final Order Dismissing Complaint Without Prejudice, In the Matter of the Formal Complaint of Great Divide Wind Farm 2 and Great Divide Wind Farm 3, No. 18-00267-UT (N.M. Pub. Regulation Comm'n Nov. 7, 2018), filed in federal court February 6, 2019 (Doc. 1-l)("N.M. Order"). Under PURPA, the Court has subject-matter jurisdiction over as-implemented challenges but does not have jurisdiction over as-applied challenges. The Court concludes that Great Divide challenges neither rule 57O's lawfulness nor the lawfulness of the NMPRC's interpretation of rule 570, and rather brings a claim for relief from the NMPRC's application of its law to Great Divide. The Court concludes, accordingly, that Great Divide brings only as-applied claims. Should Great Divide amend the Great Divide's Complaint for Declaratory and Injunctive Relief, filed February 6, 2019 (Doc. l)("Complaint"), to state clearly its theory of the case as challenging rule 570 or the NMPRC's interpretation of rule 570, the Court has jurisdiction; otherwise, the Court dismisses the case without prejudice. The Court will, therefore, grant the MTD in part and dismiss it in part.
The Court takes its facts largely from the Complaint. The Court provides these facts for background. It does not adopt them as the truth, and it recognizes that these facts are largely Great Divide's version of events.
Great Divide is developing two wind energy projects (the "Projects") in the State of New Mexico. See Complaint ¶ 1, at 2. The Projects are located around "16 miles northeast of Lordsburg," New Mexico and are "1.16 miles apart." Complaint ¶ 33, at 9. Each Project will include "19 wind turbines, for a total of 79.8 [megawatts] maximum output." Complaint ¶ 34, at 9. The Projects are qualifying small power production facilities ("qualifying facilities") under PURPA.[3] See Complaint ¶ 1, at 2. On August 7, 2018, Great Divide filed with FERC for self- certification of the Projects as qualifying facilities. See Complaint ¶ 14, at 4-5; iji ¶ 36, at 9. Great Divide is a qualifying small power producer.[4] See Complaint ¶ 14, at 4-5.
PURPA provides that FERC will establish rules that require "electric utilities to offer to - (1) sell electric energy to qualifying cogeneration facilities and qualifying small power production facilities and (2) purchase electric energy from such facilities." 16 U.S.C. § 824a-3. In the rules implementing PURPA, FERC provides that electric utilities may purchase electric energy from qualifying facilities either as the energy becomes available for purchase or "pursuant to a legally enforceable obligation." 18 C.F.R. § 292.304(d). Energy utilities that purchase pursuant to a legally enforceable obligation may pay at the qualified facilities' choice either "(i) [t]he avoided costs calculated at the time of delivery; or (ii) [t]he avoided costs calculated at the time the obligation is incurred." 18 C.F.R. § 292.304(d)(2). The avoided costs are "the . . . costs to an electric utility of electric energy or capacity or both which . . . such utility would generate itself or purchase from another source," if the electric utility did not purchase from the qualifying facility. 18 C.F.R. § 292.101(b)(6).
Congress delegates to the states the authority to implement the FERC regulations. See Complaint ¶26, at 7; 16 U.S.C. § 824a-3(f). In accordance with this authority, the NMPRC promulgated rule 570 of the New Mexico Administrative Code. See Complaint ¶ 29, at 8. Rule 570 provides:
Each utility shall purchase power from a qualifying facility from the date of interconnection at the utility's avoided cost. An electric utility is obligated to purchase power from a qualifying facility at the utility's avoided cost regardless of whether the electric utility making such purchase is simultaneously selling power to the qualifying facility.
N.M. Code R. § 17.9.570.9(A). Rule 570 does not contain the words "legally enforceable obligation" or address the concept of legally enforceable obligations. Complaint ¶ 31, at 8. The NMPRC considered a rulemaking to define "legally enforceable obligation," but did not undertake the rulemaking. Complaint ¶ 31, at 8 (citing N.M. Order ¶ 8, at 2-3).
Great Divide filed a complaint with the NMPRC on August 27, 2018. See Complaint ¶ 37, at 9. Great Divide asked the NMPRC to declare that El Paso Electric Company ("El Paso Electric") has a legally enforceable obligation to purchase the Projects' output when the Projects begin "commercial operation" in 2020. Complaint ¶ 37, at 9. Great Divide asked NMPRC to declare that El Paso Electric must purchase the output in advance for El Paso Electric's avoided costs for thirty years calculated at the time that El Paso Electric incurs the legally enforceable obligation. See Complaint ¶ 37, at 9. Great Divide proposed a methodology for determining the avoided costs at the time that El Paso Electric incurs the obligation, because rule 570.9 does not provide a methodology for such calculations. See Complaint ¶ 38, at 9.
"On September 27, 2018, [El Paso Electric] filed a motion to dismiss Plaintiffs' NMPRC complaint." Complaint ¶ 39, at 9. El Paso Electric cited the NMPRC's decision in Western Water and Power Production Limited LLC v. Public Service Company of New Mexico, No. 11-00466-UT (N.M. Pub. Regulation Comm'n Nov. 7, 2018)("Western Water and Power case"). See Complaint ¶ 39, at 9. El Paso Electric argued that, according to rule 570, and to the NMPRC's decision in the Western Water and Power case, El Paso Electric did not have a legally enforceable obligation at the time, so the NMPRC should dismiss Great Divide's case. See Complaint ¶ 39, at 9.
The NMPRC granted El Paso Electric's motion and dismissed the case on November 7, 2018. See Complaint ¶40, at 10 (citing generally N.M. Order). The NMPRC relied on its determination from the Western Water and Power case that rule 570.9 required that qualifying facilities "must be ready to interconnect and deliver energy before any legally enforceable obligation may be created to purchase the power at avoided cost rates." Complaint ¶ 41, at 10 (citing N.M. Order ¶¶ 8, 9, at 2-3; id ¶ 17, at 6). The NMPRC noted that, in the order that FERC issued in Western Water and Power's enforcement action, FERC had not commented on rule 570.9 and the NMPRC reasoned that the silence suggested FERC's approval of the NMPRC's decision. See Complaint ¶ 42, at 10 (citing N.M. Order ¶ 12, at 4; id ¶ 17, at 6). The NMPRC determined that, because the Projects were not built, they did not meet rule 57O's interconnectedness requirement.[5] See MTD at 3. The NMPRC did not address "any methodology for determining avoided energy cost calculated at the time the obligation is incurred between Plaintiffs and EPE or . . . offer to resolve disputes between Plaintiffs and EPE regarding the calculation of the avoided cost rate." Complaint ¶ 44, at 10. See id ¶ 54, at 12.
On December 6, 2018, Great Divide brought an enforcement action before FERC to overturn the N.M. Order for the NMPRC's "failure to implement PURPA consistent with federal law and FERC s regulations." Complaint ¶ 15, at 5. On February 4, 2019, FERC issued the Notice of Intent Not to Act and Declaratory Order, Great Divide Wind Farm 2 LLC, Great Divide Wind Farm 3 LLC, 166 FERC ¶61, 090, filed February 6, 2019 (Doc. 1-2)("FERC Order"). See Complaint ¶ 16, at 5. FERC declined to begin an enforcement action, but notified Great Divide that Great Divide might bring an action in the appropriate court. See Complaint ¶ 16, at 5 (citing FERC Order ¶ 2, at 1). FERC also stated that its silence was not a comment on the parties' arguments, and that the NMPRC should not have treated FERC's silence in the Western Water and Power enforcement action as a substantive comment on the NMPRC's ruling. See Complaint ¶ 17, at 5 (citing FERC Order ¶¶ 20-21, at 8).
Great Divide argues that, before it completes construction on the Projects, it is entitled to a determination that El Paso Electric has a legally enforceable obligation to purchase the Projects' output. See Complaint ¶ 45, at 10-11. Great Divide contends that the N.M. Order injures it by removing the certainty of a legally enforceable obligation, and consequently harming Great Divide's opportunities to obtain financing before the Projects reach a state at which the Projects can interconnect and deliver energy. See Complaint ¶ 46, at 11. Great Divide contends that the "NM Order violates PURPA and FERC regulations because it requires Plaintiffs to construct their facilities and obtain signed interconnection agreements as a prerequisite to the creation of a legally enforceable obligation." Complaint ¶ 53, at 12. Great Divide also argues that
the NM Order violates PURPA and FERC regulations because, in ruling that no legally enforceable obligation exists at this time, the NMPRC also failed to develop any methodology for determining avoided energy cost calculated at the time the obligation is incurred between Plaintiffs and EPE or to offer to resolve disputes between Plaintiffs and EPE regarding the calculation of the avoided cost rate.
Complaint ¶ 54, at 12. Great Divide adds that the N.M. Order harms the "public interest," because Congress has determined that the public benefits from encouraging small power production facilities. Complaint ¶ 56, at 12.
Great Divide filed the Complaint after it obtained FERC's consent to file a claim in federal court. See MTD at 4 (citing FERC Order ¶ 18, at 7). Great Divide seeks a declaration that "the New Mexico Public Regulation Commission's Order, dated November 7, 2018, violates federal law and for injunctive relief." Complaint at 1 (citing generally N.M. Order). Great Divide asks for a judgment
[d]eclaring that the NM Order violates PURPA and FERC regulations insofar as it places improper obligations on Plaintiffs before EPE is obligated to enter into a contract or other legally enforceable obligation to purchase the output of [the Projects] for the specified term, and for injunctive relief requiring that the NMPRC issue an order that complies with federal law.
Complaint ¶ a, at 13. Great Divide also asks that the Court enjoin
.... Defendants to issue a new order implementing FERC's rules under PURPA in a manner consistent with federal law, ruling that Plaintiffs need not construct their Projects and obtain signed interconnection agreements as a prerequisite to the creation of a legally enforceable obligation, and implementing a methodology for determining avoided energy costs calculated at the time the obligation is incurred or offering to resolve disputes between Plaintiffs and EPE regarding the calculation of an avoided cost rate.
Complaint ¶ b, at 13.
1. The MTD.
The Commission asks that the Court dismiss the Complaint for lack of subject-matter jurisdiction. See MTD at 1-2. According to the Commission, PURPA delineates two challenges to state regulatory actions: (i) as-applied challenges that "involve[] a contention that the agency's implementation plan is unlawful as it applies to or affects an individual petitioner"; and (ii) as-implemented challenges that "allege[] that the state agency has failed to comply with its obligation under Section 210(f)(2) of PURPA to devise a plan that implements PURPA and FERC's PURPA-related regulations." MTD at 4 (citing 16 U.S.C. § 824a-3(g)-(h); Power Res. Grp. v. Pub. Util. Comm'n of Tex. 422 F.3d 231, 233, 235 (5th Cir. 2005); Mass. Inst, of Tech. v. Mass. Dep't of Pub. Utils. 941 F.Supp. 233, 237 (D. Mass. l996)(Lindsay, J.); Greensboro Lumber Co. v. Ga. Power Co.. 643 F.Supp. 1345, 1374 (N.D.Ga. l986)(Moye, J.)). The Commission explains that federal courts have jurisdiction over only as-implemented claims. See MTD at 4-5.
The Commission argues that Great Divide brings an as-applied challenge. See MTD at 5. The Commission contends that Great Divide's requested relief would benefit only Great Divide and affect only Great Divide's relationship with El Paso Electric. See MTD at 5. The Commission contends that, in the Complaint, Great Divide admits that the NMPRC implements PURPA and the related FERC regulations through rule 570, and does not challenge rule 570's legality, but argues that rule 570 does not address legally enforceable obligations. See MTD at 17-18. According to the Commission, rule 570 prescribes the date on which an energy utility's legally enforceable obligation arises. See MTD at 18.
The Commission cites two cases to support its arguments. See MTD at 19-20. According to the Commission, in Exelon Wind 1. L.L.C. v. Nelson. 766 F.3d 380 (5th Cir. 2014), the United States Court of Appeals for the Fifth Circuit concluded that a qualified facility raised an as-applied challenge where the qualified facility's claims rested largely on the order that the Public Utility Commission of Texas ("PUCT") issued rather than on a rule that the PUCT promulgated. See MTD at 19 (citing Exelon Wind 1. L.L.C. v. Nelson. 766 F.3d at 390). The Commission states that, in Exelon Wind 1, L.L.C. v. Nelson, the Fifth Circuit also rested its conclusions on the qualified facility's requested relief - that the federal court require that the PUCT reopen the considerations in its particular case and not enforce the prior order against it. See MTD at 19 (citing Exelon Wind 1, L.L.C. v. Nelson, 766 F.3d at 390). The Commission also cites Power Resource Group v. Klein. No. A-03-CA-762-H, 2004 U.S. Dist. Lexis 28820 (W.D. Tex. Feb. 18, 2OO4)(Hudspeth, J.), in which the qualifying facility asked the federal court to declare that the PUCT's actions affecting the qualifying facility violated PURPA. See MTD at 19-20 (citing Power Res. Grp. v. Klein. 2004 U.S. Dist. Lexis 28820, at *23). According to the Commission, the qualifying facility "requested injunctive relief requiring the PUCT to promulgate new regulations and to reconsider the qualifying facility's petition under those new regulations." MTD at 20 (citing Power Res. Grp. v. Klein. 2004 U.S. Dist. Lexis 28820, at *23). The Commission describes that the Honorable Harry Lee Hudspeth, then-Senior United States District Judge for the Western District of Texas, held that the qualifying facility brought an as-applied claim. See MTD at 20 (citing Power Res. Grp. v. Klein, 2004 U.S. Dist. Lexis 28820, at *23).
The Commission also avers that courts have concluded that 28 U.S.C. § 1331 does not grant subject-matter jurisdiction where a more specific statute elsewhere grants subject-matter jurisdiction. See MTD at 20. The Commission states that PURPA provides exclusive subject-matter jurisdiction to state courts over as-applied challenges, so the Court lacks subject-matter jurisdiction here. See MTD at 20-21. The Commission likewise argues that the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, does not provide an independent jurisdictional basis for federal cases, so Great Divide cannot rely on the Declaratory Judgment Act for subject-matter jurisdiction. See MTD at 21.
Great Divide responds. See Plaintiffs' Response in Opposition to Defendants' Joint Motion to Dismiss, filed March 15, 2019 (Doc. 29)("Response"). Great Divide agrees with the Commission that PURPA provides different mechanisms for bringing as-applied challenges and as-implemented challenges. See Response at 2-3. Great Divide argues that it brings an as-implemented challenge. See Response at 3. Great Divide cites FERC's Policy Statement Regarding the Commission's Enforcement Role Under Section 210 of the Public Utility Regulatory Policies Act of 1978, 23 FERC ¶ 61, 304 (l983)("FERC Policy Statement"), as an authority that describes the difference between as-applied and as-implemented challenges. See Response at 5-6. Great Divide describes that, in the FERC Policy Statement, FERC clarifies its authority to ensure that state agencies both implement the FERC regulations and promulgate regulations that are consistent with those regulations. See Response at 6. According to Great Divide, FERC describes that state courts, and not FERC or federal courts, have authority to review state actions implementing regulations that appropriately apply PURPA and the FERC regulations, and to consider qualifying facility's claims where the state misapplied such a regulation. See Response at 6 (citing FERC Policy Statement at 61, 645).
To support its arguments, Great Divide cites Winding Creek Solar L.L.C. v. Peevey, 293 F.Supp.3d 980 (N.D. Cal. 2Ol7)(Donato, J.). See Response at 7. Great Divide argues that, in that case, the Honorable James Donato, United States District Judge for the Northern District of California, concluded that a challenge to orders of the California Public Utilities Commission ("CPUC") "capping utility purchases from QFs [(qualifying facilities)] and setting prices at rates different from the 'avoided cost' pricing required by FERC's rules failed to comply with PURPA and FERC's rules." Response at 7. According to Great Divide, the qualified facility's challenge to the orders constituted an as-implemented challenge whereas a claim about a "specific avoided cost price" posed an as-applied challenge. See Response at 7.
Great Divide concludes that, here, Great Divide brings an as-implemented challenge, because it argues that rule 570 violates FERC's regulations by requiring a qualified facility be constructed and be ready to be interconnected before a legally enforceable obligation is deemed to bind an energy utility to purchase from the qualified facility. See Response at 7-8. Great Divide argues that rule 570 forms the basis for the NMPRC's decision. See Response at 10. Great Divide avers that the N.M. Order applies rule 570's plain meaning and does not incorrectly apply a lawful regulation. See Response at 8. Great Divide emphasizes that the Western Water and Power case on which the NMPRC relies in the N.M. Order uses the same interpretation of rule 570 as the interpretation in the N.M. Order. See Response at 8-9. For Great Divide, this series of NMPRC decisions reflects that the N.M. Order applies a rule of general applicability to Great Divide. See Response at 8-9.
Great Divide further argues that its FERC enforcement action raised an as-implemented challenge to rule 570. See Response at 10-11. Great Divide states that the NMPRC and El Paso Electric intervened in the enforcement action to argue that rule 570 did not improperly implement PURPA and the FERC regulations, but did not argue that Great Divide raised an as-applied challenge. See Response at 11-12. Great Divide adds that, in the FERC Order, FERC stated: "'Great Divide thus may bring its own enforcement action against the New Mexico [Public Regulation] Commission in the appropriate United States district court"' Response at 13 (emphasis and alteration in Response)(quoting FERC Order ¶ 18, at 7). Great Divide posits that this statement reflects FERC's view that Great Divide raises an as-implemented challenge. See Response at 13.
For Great Divide, the Complaint reflects an as-implemented challenge. See Response at 13-15. Great Divide explains that it asks that the Court declare the NMPRC's implementation of PURPA and the FERC regulations unlawful, and enj oin the NMPRC to issue an order that lawfully implements PURPA and the FERC regulations. See Response at 13. According to Great Divide, the Complaint explains that the N.M. Order relies on rule 570. See Response at 13. Great Divide addresses the Commission's argument regarding whether Great Divide argues that New Mexico implemented PURPA and the FERC regulations. See Response at 14. Great Divide characterizes the argument as suggesting that qualified facilities may bring enforcement actions only when a state takes no steps to implement PURPA and the FERC regulations. See Response at 14. According to Great Divide, FERC rejects this interpretation of PURPA in the FERC Policy Statement in which FERC provides that it has "authority to require the commencement of implementation [of PURPA]" where a state regulatory agency has enacted an unlawful implementation of PURPA and the FERC regulations. Response at 14 (citing FERC Policy Statement, 23 FERC at 61, 644).
Great Divide also disputes that its case relates only to its relationship with El Paso Electric. See Response at 15. According to Great Divide, its arguments about rule 570 would affect all qualified facilities and energy utilities in New Mexico. See Response at 15. Great Divide argues that the Commission's theory that as-implemented challenges cannot be brought where the challenged implementation affects the petitioner's project would prevent any party from having standing to bring such a challenge. See Response at 15. Great Divide adds that the cases that the Commission cites involve as-implemented claims wherein the challenged implementation would injure the qualified facility. See Response at 16-18. Great Divide argues that, in Power Resource Group Inc., v. Public Utility Commission of Texas, the Fifth Circuit upheld Judge Hudpeth's conclusion that a qualified facility raised an as-implemented challenge after the PUCT dismissed its petition for an order determining that an energy utility had a legally enforceable obligation. See Response at 16-17 (citing Power Res. Grp. Inc., v. Pub. Util. Comm'n of Tex., 422 F.3d at 238). Great Divide also contends that, in Exelon Wind 1, L.L.C. v. Nelson, the Fifth Circuit treated as as-implemented challenges those parts of the qualified facility's complaint that '"would necessarily require the PUC[T] to alter its current rules.'" Response at 17-18 (quoting Exelon Wind 1, L.L.C. v. Nelson, 766 F.3d 380 at 393).
The Commission replies. See Defendants' Reply to Plaintiffs' Response in Opposition to Defendants' Joint Motion to Dismiss, filed April 1, 2019 (Doc. 34)("Reply"). The Commission argues that, in the Complaint, Great Divide does not ask that the Court overturn rule 570, but asks that the Court overturn the N.M. Order that applies rule 570 and that the Court enjoin the NMPRC to issue a new order. See Reply at 2. The Commission describes that Great Divide could have brought an as-implemented challenge by directly challenging rule 570 and asking the Court to strike rule 570. See Reply at 3.
The Commission analyzes the Complaint. See Reply at 4. The Commission directs the Court to Great Divide's first request for relief- that the Court declare that the N.M. Order violates PURPA and the FERC regulations. See Reply at 4. The Commission emphasizes that the Complaint does not request that the Court overturn rule 570 - the rule of general applicability that the N.M. Order applies. See Reply at 4. The Commission contends that Great Divide's second request for relief likewise does not mention rule 570, and instead asks that the Court order the NMPRC to grant Great Divide relief from the NMPRC's application of rule 570 and to establish a methodology for calculating the avoided costs. See Reply at 5. The Commission emphasizes that Great Divide does not even mention rule 570 in its requests for relief and that Great Divide routinely states that the N.M. Order violates PURPA and the FERC regulations. See Reply at 5-6.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Commission disputes Great Divide&#39;s characterization of Winding Creek Solar L.L.C. v. Peevey. See Reply at 6. The Commission argues that, in Winding Creek Solar L.L.C. v. Peevey, Judge Donato addressed three CPUC orders that applied broadly to all qualified facilities and energy utilities. See Reply at 6. The Commission ...