Opinion ID: 3158914
Heading Depth: 2
Heading Rank: 2

Heading: Allco’s Preemption Claim

Text: Allco also seeks equitable relief through what it describes as “a straightforward pre‐emption claim for regulating wholesale sales.” Appellant’s Supp. Br. 2. This preemption claim requests two forms of relief: (1) enjoining the Commissioner from conducting future procurements that violate the Federal Power Act or PURPA and (2) voiding the Section 6 contract awards to Fusion Solar and Number Nine. We analyze each form of relief separately.
First, we affirm the district court’s dismissal of Allco’s claims seeking equitable relief regarding future procurements conducted by the Commissioner. For such relief to redress Allco’s injury, it must be “likely, as opposed to merely speculative,” that Allco receive the Section 6 contract that it seeks. Friends of the Earth, Inc. v. Laidlaw Envtl Servs. (TOC), Inc., 528 U.S. 167, 181 (2000). Again, under Allco’s theory, the only way in which the Commissioner can issue a Section 6 contract that is not preempted by the Federal Power Act is if that contract meets the requirements of the PURPA exception. As Allco acknowledges, its “status as a 16 small power producer” under PURPA “is relevant to [its] Article III standing and to explain[ing] why [its] injury is redressable.” Appellant’s Supp. Br. 2. As such, any equitable relief relating to future contracts awarded under Section 6 necessarily implicates PURPA; otherwise, such relief would provide no path by which Allco could eventually obtain a non‐preempted Section 6 contract. To the extent that Allco seeks to enforce PURPA’s requirements through a “straightforward pre‐emption claim,” Appellant’s Supp. Br. 2, it “cannot avoid the administrative exhaustion requirement of [§ 824a‐3(h)(2)(B)] simply by restating its PURPA claim under a different heading,” Niagara Mohawk Power Corp. v. FERC, 306 F.3d 1264, 1270 (2d Cir. 2002). This Court has held that a party cannot evade PURPA’s administrative exhaustion requirement by characterizing an otherwise covered PURPA‐related equitable claim as a Supremacy Clause claim. Id. Therefore, if Allco’s preemption claim—regardless of how it is characterized—is covered by § 824a‐3(h)(2)(B)’s administrative exhaustion requirement, then Allco’s claim must be dismissed. 17 PURPA requires administrative exhaustion for claims brought by qualified facilities6 that are attempting to enforce the requirements of § 824a‐3(f). See § 824a‐ 3(h)(2)(B). Section 824a‐3(f) requires states to “implement” FERC’s rules promulgated under 16 U.S.C. § 824a‐3(a)7 by “issuing regulations, by resolving disputes on a case‐by‐case basis, or by taking any other action reasonably designed to give effect to FERC’s rules.” FERC v. Mississippi, 456 U.S. 742, 751 (1982). In Niagara Mohawk, we dismissed a preemption claim for failure to exhaust PURPA’s administrative remedies because the claim challenged “a state rate‐ setting regulation promulgated pursuant to [§ 824a‐3(f)], the provision that [§ 824a‐3(h)(2)(B)] petitions are intended to enforce.” 306 F.3d at 1270. Niagara Mohawk is an example of a straightforward application of § 824a‐3(h)(2)(B)’s administrative exhaustion requirement—a qualified‐facility plaintiff brought a 6 It is undisputed that Allco is a qualified facility under § 824a‐3(h)(2)(B). See J.A. 9. 7 Section 824a‐3(a) empowers FERC to promulgate rules to encourage cogeneration and small power production. Allco’s claim can be characterized as an attempt to enforce § 210(a) rules, including 18 C.F.R. § 292.304(d), that require utilities to buy power from Allco at a rate at or below the avoided cost. 18 preemption claim challenging a state regulation promulgated under § 824a‐3(f). See id. Allco’s preemption claim presents us with a novel application of PURPA’s administrative exhaustion requirement. Allco’s attempt to enforce PURPA’s requirements stems not from a challenge to a state regulation promulgated under § 824a‐3(f) but from a challenge to a state procurement law—Section 6. This distinction, however, does not relieve Allco of its obligation to exhaust its administrative remedies under § 824a‐3(h)(2)(B) because its claim is still an attempt to enforce § 824a‐3(f). A state’s ongoing obligation under § 824a‐3(f) to “implement” PURPA regulations can be accomplished in a variety of ways, but, at a minimum, § 824a‐3(f) undoubtedly prevents states from violating § 824a‐3(a). See Mississippi, 456 U.S. at 751; see also POLICY STATEMENT REGARDING COMM’N’S ENF’T ROLE UNDER SECTION 210 OF [PURPA], 23 FERC P 61,304, 61,644 (1983). The heart of Allco’s claim is that the Commissioner failed to follow § 824a‐3(a) regulations when conducting the Section 6 procurement and the procurement is therefore preempted. Allco’s characterization of its cause of action “under a different heading” does not transform its claim into something other than what it 19 is: an action to compel a state to implement § 824a‐3(a). Niagara Mohawk, 306 F.3d at 1270. Our reading of §§ 824a‐3(f) and 824a‐3(a) comports with our holding in Niagara Mohawk. In Niagara Mohawk, we distinguished our holding from Freehold Cogeneration Ass’n L.P. v. Board of Regulatory Commissioners, 44 F.3d 1183 (3d Cir. 1995), on the grounds that the claim in Freehold was not a challenge to a state regulation promulgated under § 824a‐3(f). 306 F.3d at 1270. We now distinguish our holding from Freehold on similar, yet distinct, grounds. The preemption claim in Freehold did not require § 824a‐3(h)(2)(B) exhaustion because the claim was an attempt to enforce the exemption provisions contained in § 824a‐3(e), not an attempt to enforce the qualified‐facility regulations in § 824a‐3(a). See Freehold, 44 F.3d at 1184–85. Allco’s preemption claim is subject to § 824a‐3(h)(2)(B)’s administrative exhaustion requirement because Allco’s claim is an attempt to enforce § 824a‐3(f), which requires Connecticut to implement FERC’s rules promulgated under § 824a‐3(a). 20 This Court has also held that the administrative exhaustion requirement is jurisdictional.8 See Niagara Mohawk Power, 306 F.3d at 1270 (“We hold that the District Court correctly dismissed [the plaintiff’s] PURPA claim as against the [defendants] for lack of subject matter jurisdiction because of [the plaintiff’s] failure to exhaust its administrative remedy by petitioning FERC to bring an enforcement action against the [state regulatory agency] in the first instance.”); see also id. (“[B]ecause [the plaintiff] has not satisfied this [exhaustion] requirement, its [Supremacy Clause] claims against the [defendants] should have been dismissed for lack of subject matter jurisdiction.”). Accordingly, Allco’s attempts to characterize its PURPA‐enforcement efforts as preemption or Supremacy Clause claims are unavailing, and we affirm the dismissal of those claims on the 8 Allco argues that, in light of more recent Supreme Court decisions in Sebelius v. Auburn Regional Medical Center, 133 S. Ct. 817, 824 (2013), and Arbaugh v. Y&H Corp., 546 U.S. 500, 516 (2006), PURPA’s administrative exhaustion requirement is not actually a jurisdictional bar. We need not determine whether these Supreme Court decisions call into question that part of the holding in Niagara Mohawk Power because Allco’s claims would be dismissed for failure to exhaust administrative remedies regardless of whether the requirement is jurisdictional. 21 alternative grounds that Allco failed to comply with the administrative exhaustion requirement. 2. Equitable Relief Voiding Fusion Solar and Number Nine’s Contracts Having disposed of Allco’s claims seeking equitable relief regarding future procurements, we must finally resolve Allco’s claims that seek solely to invalidate the results of the challenged procurement and void its competitors’ contracts. To the extent that these claims seek only to invalidate the results of the prior procurement—and not also to require the Commissioner to conduct future procurements in compliance with PURPA—Allco lacks standing because that requested relief does not redress its injury, i.e., its not being selected for a Section 6 contract. Allco contends that its preemption claim should be permitted because it can redress its injuries simply by invalidating the Commissioner’s prior selections and voiding the contracts given to Fusion Solar and Number Nine. But those forms of relief, standing alone, fail to redress Allco’s injuries, as they do not make it “likely, as opposed to merely speculative,” that Allco will eventually receive a Section 6 contract. Friends of the Earth, 528 U.S. at 181. Allco must show, at a 22 minimum, that the requested relief provides a path for Allco to eventually obtain a Section 6 contract. But invalidating the Section 6 contracts awarded to Fusion Solar and Number Nine would simply deny Allco’s competitors a contractual benefit without redressing Allco’s injury— its not being selected for a Section 6 contract. Because merely voiding its competitors’ contracts would not redress Allco’s injury, Allco also lacks standing to seek such equitable relief.