Court Opinion

ID: 9907774
Source: CourtListenerOpinion
Date Created: 2023-12-06 23:00:23.425734+00
Date Added: 2024-06-11T10:01:27.609097
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 23-1391

 TYNGSBORO SPORTS II SOLAR, LLC and 201 OAK PEMBROKE SOLAR LLC,
  individually and on behalf of all others similarly situated,

                     Plaintiffs, Appellants,

                               v.

   NATIONAL GRID USA SERVICE COMPANY, INC. and MASSACHUSETTS
                       ELECTRIC COMPANY,

                     Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Richard G. Stearns, U.S. District Judge]

                             Before

                  Rikelman, Selya, and Howard,
                        Circuit Judges.

          Andrew M. McNeela, with whom John R. Low-Beer, David E.
Kovel, Kirby McInerney LLP, Seth H. Handy, and Handy Law LLC were
on brief, for appellants.
          Richard H. Brown, with whom Michael J. Fitzpatrick and
Day Pitney LLP were on brief, for appellees.

                        December 6, 2023
           HOWARD, Circuit Judge.          For the past nine years, various

renewable-energy generators have unsuccessfully petitioned state

authorities   to    prohibit     utility    companies   from   charging     them

certain tax-related fees. Seeking better fortune in federal court,

two such generators brought this putative class action, but the

district court dismissed the case after finding that it lacked

subject-matter jurisdiction.         The generators now appeal, arguing

that the court had jurisdiction based on the suit's connection to

federal tax law.         Yet their complaint does not bring any claim

that arises under federal law.           Accordingly, we affirm.

                                I. BACKGROUND

                                A. The Parties

           The fees at issue are features of service agreements

between Tyngsboro Sports II Solar, LLC and 201 Oak Pembroke Solar

LLC   (collectively,      the   "Solar   Companies"     or   "Companies")   and

National   Grid    USA    Service   Company    and   Massachusetts   Electric

Company (collectively, "National Grid").1             National Grid operates

an "electric distribution network" -- a system that delivers

electricity from a "transmission network" to customers.2 The Solar

Companies operate solar-generation projects in Massachusetts.

      1The appellees are both subsidiaries of the same utility
conglomerate. Any distinction between the two is irrelevant to
this appeal.
      2For the purposes of this dispute, a transmission network is
critically different from a distribution network.     Transmission
networks operate at a very high voltage and move electricity from
                                     - 2 -
           To     deliver         solar-generated      electricity        to     their

Massachusetts-based customers, the Solar Companies need to connect

to   National     Grid's    distribution       network,       and    to   make   this

connection, National Grid must modify its hardware.                   National Grid

charges the Companies for the right to use the distribution network

and for the costs of the modifications.                 These arrangements are

governed     in   part      by     standardized       interconnection          service

agreements (ISAs) between National Grid and each Company.                          The

ISAs are at the heart of a long-running dispute between the Solar

Companies and National Grid, specifically, their requirement that

the Solar Companies pay a "tax gross up" that compensates National

Grid for any tax liability incurred by the transaction.

                                   B. The Dispute

           National        Grid     contends   that     the    Solar      Companies'

interconnection payments are taxable income to it and therefore

the Companies must pay National Grid a tax gross up to offset the

liability.      The Solar Companies disagree.           While they acknowledge

that payments by "customers" to utilities are taxable under federal

law, the Companies insist that they are not "customers" because

National Grid intends to resell the electricity.                    26 U.S.C. § 118.

generator plants to distribution networks. Distribution networks
operate at a much lower voltage and transfer electricity to
customers.

                                       - 3 -
            After other renewable-energy generators raised similar

concerns,    National     Grid   requested     that   the    Internal      Revenue

Service (IRS) weigh in on the matter.          The IRS then issued a public

notice clarifying the scope of the relevant tax safe harbor.

I.R.S. Notice 2016-36, 2016-25 I.R.B. 1029 (June 10, 2016).                   This

notice, however, did little to abate the parties' dispute.                     The

IRS   accepted     that   renewable-energy     generators     are    not    always

considered "customers."          Id. at 1029.         But in its "Purpose"

section, the notice stated that this safe harbor applied only to

fees related to interconnections to transmission systems.                     Id.

Further, when setting forth the specific requirements for the safe

harbor,    the   notice    referenced   only    transmission     systems,      not

distribution systems.        Id. at 1029-31.      Yet, it also stated that

"a generator (such as a solar or wind farm) may contribute an

intertie to a utility that qualifies under the new safe harbor

even if the generator is interconnected with a distribution system,

rather than a transmission system, if all                   of the [specific]

requirements . . . are met."          Id. at 1031.      Muddying the waters

even further, the notice defined "intertie" as an interconnection

to    a   transmission     network   without     referencing        distribution

networks.    Id.

            A predictable disagreement followed: the Solar Companies

viewed the notice as clearly establishing that the fees are not

taxable, and National Grid thought the notice was unclear. Seeking

                                     - 4 -
guidance, National Grid solicited an opinion from an independent

auditor, Ernst & Young LLP (E&Y).         E&Y thought the notice created

a safe harbor for payments made by energy companies only when a

company purchases an interconnection to a transmission system, not

a   distribution   system.3      E&Y   thus      concluded    that   the   Solar

Companies' interconnection payments were taxable to National Grid.

National Grid charged the Companies for the expected tax liability,

and the Companies ultimately paid.

           Over    the   past   decade,    the    Companies    and   similarly

situated parties have asked state agencies to block National Grid

from assessing this charge.       Before the IRS issued its guidance,

a renewable-energy generator challenged National Grid's tax gross

up in a petition to the Rhode Island Public Utilities Commission

(RIPUC).   In Re: Petition of Wind Energy Dev., LLC, No. 4483, 2017

WL 6295387 (RIPUC Nov. 27, 2017).          The RIPUC found that National

Grid's position was reasonable and dismissed the petition.                  The

Rhode Island Supreme Court affirmed but acknowledged that the 2016

IRS notice had not definitively resolved the federal tax question

and expressed its "fervent hope that the IRS will provide clear

      3The Companies allege that, before the 2016 notice, National
Grid sent a letter to the IRS indicating that it did not believe
the tax provision to make this distinction. Further still, the
Companies claim that after reviewing the notice, National Grid
admitted in an email to the IRS that it thought that
interconnection payments to distribution networks were still not
taxable.

                                   - 5 -
and concise guidance to these parties in the near future."     ACP

Land, LLC v. R.I. Pub. Utils. Comm'n, 228 A.3d 328, 338 (R.I.

2020).

          The Massachusetts Department of Public Utilities (MDPU),

the entity that approves National Grid's ISAs in that state, heard

a similar challenge against a different utility -- Eversource.

Petition of NStar Elec. Co., No. 17-05-B, 2018 WL 369344 (Mass.

D.P.U. Jan. 5, 2018). Despite having jurisdiction over the matter,

the MDPU declined to decide whether a similar tax gross up was

justified.   Id. at *133.   Instead, it recommended that the issue

be decided in a separate MDPU proceeding "with the intent to set

a uniform practice for all electric distribution companies."   Id.

          Unsatisfied with the results at the state level, the

Solar Companies and other renewable-energy generators filed a

federal putative class action lawsuit in the District of Rhode

Island.   After the court dismissed them from the suit, the Solar

Companies filed this suit in Massachusetts.4 The complaint brought

four claims against National Grid: a request for declaratory relief

under the Declaratory Judgment Act (DJA) (Count I); a state-law

claim for a breach of the covenant of good faith and fair dealing

     4 Other energy companies that were also dismissed from the
Rhode Island action filed a similar complaint in the Northern
District of New York. That court ruled for the utility on subject-
matter-jurisdiction grounds. Sunvestment Energy Grp. NY 64 LLC v.
Nat'l Grid USA Servs. Co., No. 22-1085, 2023 WL 5175933, at *9
(N.D.N.Y. Aug. 11, 2023).

                               - 6 -
(Count II); a state-law claim for restitution and unjust enrichment

(Count III); and a state-law claim for violating a statutory

requirement that public utilities assess only just and reasonable

charges (Count IV).

             The district court dismissed the complaint due to a lack

of subject-matter jurisdiction.          Tyngsboro Sports II Solar, LLC v.

Nat'l Grid USA Serv. Co., Inc., No. 22-11791, 2023 WL 2992524, at

*2 (D. Mass. Apr. 18, 2023).              It first found that the Solar

Companies' request for declaratory judgment was barred by the DJA.

Tyngsboro Sports II Solar, LLC, 2023 WL 299524, at *1.                 But even

if    the   DJA   claim   were   not   barred,   the   court    explained,       the

Companies would lack standing to pursue the claim because, absent

participation in the litigation by the IRS, the court lacked

capacity to grant effective relief for their injuries.                     It then

noted that, to the extent that the plaintiffs sought to limit their

declaratory-relief request to the rights of the parties, it still

declined to exercise jurisdiction over the claim because an adverse

judgment could subject National Grid to inconsistent obligations.

Id.    at   *2.     Finally,     the   court     concluded     that   it    lacked

jurisdiction over the three remaining state-law claims, because

none of them contained an embedded federal question.                       Id.    In

reaching this conclusion, it held that Counts II and IV do not

necessarily raise the tax issue, and to the extent that Count III

does raise the tax issue, the issue is insubstantial.                 Id.

                                       - 7 -
                                II. DISCUSSION

           The Solar Companies appeal from the district court's

judgment on all four counts.              We address the request for a

declaratory judgment first and then turn to the state-law claims.

           We    review   a    dismissal     for    lack    of   subject-matter

jurisdiction de novo.         Efreom v. McKee, 46 F.4th 9, 16 (1st Cir.

2022) (citing Davison v. Gov't of P.R.-P.R. Firefighters Corps,

471 F.3d 220, 222 (1st Cir. 2006)).                In doing so, we take the

plaintiffs' well-pleaded facts as true and afford them the benefit

of all reasonable inferences. Id.

                          A. Declaratory Judgment

           The   Companies      contend    that    the     district   court   has

federal-question    jurisdiction      over    their      declaratory    judgment

request.   A court has federal-question jurisdiction over cases

that "aris[e] under" federal law.           28 U.S.C. § 1331.         This power

is limited, however, by the so-called "well-pleaded complaint"

rule, which requires that a federal matter appear "on the face" of

a plaintiff's complaint. R.I. Fishermen's All., Inc. v. R.I. Dep't

of Envt'l Mgmt., 585 F.3d 42, 48 (1st Cir. 2009) (citing Franchise

Tax Bd. Of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463

U.S. 1, 13 (1983)).5      The "well-pleaded complaint" refers only to

     5  The district court did not address the well-pleaded-
complaint doctrine, instead holding that the DJA bars the claim.
Because we are cognizant that "subject-matter delineations must be
policed by the courts," we affirm the dismissal of the declaratory-
                                    - 8 -
a plaintiff's affirmative claims and not any extraneous material

such as anticipated defenses.      Id.    As a result, a litigant cannot

establish federal-question jurisdiction by merely asserting a

state-law claim to which there is a federal defense.

           This seemingly simple principle becomes somewhat more

complicated when applied to declaratory judgments.          The DJA does

not by itself create a federal cause of action.            Colonial Penn

Grp., Inc. v. Colonial Deposit Co., 834 F.2d 229, 232 (1st Cir.

1987) ("Congress enlarged the range of remedies available in the

federal courts but did not extend their jurisdiction." (quoting

Skelly Oil v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950))).

A   federal court    consequently cannot exercise        federal-question

jurisdiction over a request for declaratory relief "if, but for

the   availability   of   the   declaratory   judgment    procedure,   the

federal claim would arise only as a defense to a state created

action."   Franchise Tax Bd., 463 U.S. at 16.        Otherwise, a party

could circumvent the well-pleaded complaint rule through "artful

pleading" by reshaping an anticipated federal defense into a

request for declaratory relief.       Skelly Oil, 339 U.S. at 673-74.

judgment claim on the alternative basis argued by the parties.
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999); see also
United States v. Millennium Lab'ys., Inc., 923 F.3d 240, 248 (1st
Cir. 2019) ("A federal appellate court normally must 'satisfy
itself both of its own subject-matter jurisdiction and of the
subject-matter jurisdiction of the trial court before proceeding
further.'" (quoting Royal Siam Corp. v. Chertoff, 484 F.3d 139,
143 (1st Cir. 2007))).

                                  - 9 -
To avoid such a scenario, when assessing whether federal-question

jurisdiction exists over a request for declaratory relief under

the DJA, we reverse the positions of the parties and look at a

hypothetical coercive action initiated by the defendant against

the plaintiff.    Great Clips, Inc. v. Hair Cuttery of Greater Bos.,

591 F.3d 32, 35 (1st Cir. 2010).      If -- and only if -- a federal

claim appears on the face of that hypothetical complaint, we have

subject-matter jurisdiction.     See id.

          The     Solar   Companies   do   not   meet   this     threshold

requirement.     In an inverted coercive action, National Grid would

sue the Solar Companies for breaching the ISAs by failing to pay

the tax gross up.     There, National Grid's well-pleaded complaint

would not raise a federal question; it would merely contain a

state-law breach-of-contract claim. The tax issue would then arise

only as a defense asserted by the Solar Companies.             Without the

"availability of the declaratory judgment procedure," the federal

tax issue could only arise as a defense to a state-law claim.

Franchise Tax Bd., 463 U.S. at 16 (quoting Charles R. Wright,

Arthur K. Miller, & Mary K. Kane, Federal Practice and Procedure

§ 2767, at 744-45 (2d ed. 1983)).

          In their reply brief, the Solar Companies insist that

this conceptual realignment of the parties is inappropriate in

assessing the nature of their claim.         A conceptual realignment

would make it so National Grid would be suing them for failing to

                                - 10 -
pay the tax gross up.      Yet, as they emphasize, they have already

paid National Grid.        In turn, they contend, this conceptual

realignment is untenable.      Therefore, they conclude, it should not

be   deployed   to   dismiss   their    pleading    as   merely   an   "artful

defensive   maneuver."         This    argument     falls   flat.      It   is

"irrefragable that the burden of establishing jurisdiction must

fall to the party who asserts it."         Woo v. Spackman, 988 F.3d 47,

53 (1st Cir. 2021).     The Solar Companies do not carry this burden

because they fail to explain how, but for the DJA, the federal tax

issue could arise as anything but a defense to a nonfederal claim.

They do emphasize that it can arise in service of their restitution

claim in Count III, but that logic only holds if Count III

independently gives rise to federal jurisdiction, and as we explain

below in Section II.B, it does not.               Thus, the district court

correctly determined that it lacked subject-matter jurisdiction

over the request for declaratory relief.6

      6The Companies also argue that the district court abused its
discretion by failing to issue a declaration that merely
"resolv[ed] the liabilities of the parties," thereby "avoid[ing]
the standing issue."    However, this presupposes that the court
would have had jurisdiction over such a claim. See Covidien LP v.
Esch, 993 F.3d 45, 52 (1st Cir. 2021). Because such a declaration
would encounter the same well-pleaded complaint issue, we need not
determine whether the district court exceeded its discretion in
refusing to rule on it.

                                  - 11 -
                             B. State Law Claims

              The Solar Companies acknowledge that their remaining

claims -- Counts II-IV -- derive from state law.              They maintain,

however, that the district court nevertheless had subject-matter

jurisdiction       because   these   state-law    claims   contain    embedded

federal issues.        The Supreme Court has recognized that federal-

question jurisdiction exists over a state-law claim when (1) the

state-law claim necessarily raises a federal issue, (2) the federal

issue is substantial, (3) the parties actually dispute the federal

issue, and (4) the court's exercise of jurisdiction would not upset

"any   congressionally       approved   balance    of    federal    and   state

judicial responsibilities."          Grable & Sons Metal Prods., Inc. v.

Darue Eng'g & Mfg., 545 U.S. 308 (2005).          Here, the parties clearly

dispute the federal issue; National Grid claims the payments are

taxable, and the Solar Companies disagree. But the Solar Companies

nonetheless fail to clear the Grable bar.               As we explain below,

Counts II and IV do not necessarily raise a federal issue, while

in Count III, the federal issue is not substantial.

              Necessity.     The first prong of the Grable test requires

that a state-law claim "necessarily raise" the federal issue. Rhode

Island v. Shell Oil Prods. Co., 35 F.4th 44, 56 (1st Cir. 2022).

We have explained that a state action necessarily raises a federal

issue when "it is not logically possible for the plaintiff[] to

prevail   .    .   .   without   affirmatively    answering   the    [federal]

                                     - 12 -
question."   R.I. Fishermen's All., 585 F.3d at 49.             The plaintiff

must do more than bring claims that are merely "bound up" with

federal interests; federal law must be an "essential element" of

the state-law claims.      Rhode Island, at 56-57.

          Under this standard, Counts II and IV do not necessarily

raise federal issues because the Companies can prevail on either

without answering the tax question.

          Count II alleges that National Grid violated the implied

covenant of good faith and fair dealing when it charged the tax

gross up, ignored the IRS guidance, and solicited the E&Y opinion

contrary to industry custom.        By the complaint's own allegations,

the Companies can prevail on this count without demonstrating that

the payments were in fact taxable.           The complaint states:

          Defendants   further violated the implied
          covenant of good faith by: (i) ignoring clear
          IRS guidance and the opinion of their own
          Director of U.S. Tax Research and Planning;
          and (ii) soliciting an opinion that was
          contrary to industry custom and practice and
          would support the result they sought in order
          to further their interest in increasing
          Plaintiffs' interconnection costs.

Neither of these allegations require proof that the payments were

not taxable; rather, they only require proof that National Grid

ignored the IRS guidance, ignored the opinion of their own officer,

and   solicited    the   E&Y   opinion      in   bad   faith.     And   under

Massachusetts     law,   any   of   those    grounds   could    independently

establish bad faith and unfair dealing.          See Guldseth v. Fam. Med.

                                    - 13 -
Assocs. LLC, 45 F.4th 526, 537 (1st Cir. 2022) ("To show a breach

of the implied covenant, one party has to show that the other

violated   her    'reasonable     expectations     .   .   .   concerning   the

obligations of the contract.'" (quoting 477 Harrison Ave., LLC v.

JACE Bos., LLC, 134 N.E.3d 91, 101 (Mass. 2019))).

              Count IV suffers from a similar infirmity.           It alleges

that National Grid violated a Massachusetts statute requiring

public utilities to assess only "just and reasonable" charges.

Mass. Gen. Laws ch. 164, § 94.              And the Solar Companies can

certainly "logically . . . prevail" on this claim without a ruling

on the tax issue.       R.I. Fishermen's All., 585 F.3d at 49.          As did

the   Rhode    Island   Supreme    Court    when   reviewing     the   RIPUC's

determination, a court could merely assess whether National Grid's

reading of the statute and I.R.S. Notice 2016-36 was reasonable.

ACP Land, 288 A.3d at 338.        Counts II and IV therefore both fail

the necessity prong.7

      7 Jacobson, the Second Circuit case on which the Solar
Companies rely to establish necessity, supports our conclusion.
There, the plaintiff alleged that a bank had violated the New York
False Claims Act by filing tax returns with the IRS that
fraudulently stated that the bank qualified for a certain federal
tax status, thereby improperly avoiding New York state taxes. N.Y.
ex rel Jacobson v. Wells Fargo Nat'l Bank, N.A., 824 F.3d 308, 310
(2d Cir. 2016). Because the plaintiff had to show that the banks
didn't qualify for the tax status to prove that the Bank made a
false statement, the state law claims necessarily raised the
federal tax-status issue. Id. at 317. The Solar Companies' good-
faith and unreasonable-charges claims, by contrast, can be
established without a ruling on the federal tax question.

                                   - 14 -
            Conversely, Count III does necessarily raise the federal

tax   issue.        It    does       not   allege    that     National     Grid    acted

unreasonably or in bad faith but rather that it mistakenly paid

the tax.       Under Massachusetts law, a party that is mistakenly

overcharged by its contractual counterparty may "recover the value

of the benefit conferred in excess of the recipient's contractual

entitlement."       Metro. Life Ins. Co. v. Cotter, 984 N.E.2d 835, 849

(Mass.   2013)      (quoting      Restatement       (Third)    of   Restitution      and

Unjust Enrichment § 35(1) (Am. L. Inst. 2011)).                       To prove that

they overpaid National Grid, the Solar Companies must necessarily

prove that the tax was not actually owed to the IRS.                            This of

course is the federal issue.

            In response, National Grid argues that Count III does

not require resolving the federal issue because it incorporates an

allegation from Count II that National Grid "further violated" the

implied covenant of good faith and fair dealing by ignoring clear

IRS guidance and soliciting an opinion from E&Y that contravened

industry practice.            But those incorporated allegations could not,

by themselves, serve as bases for finding for the Solar Companies

on Count III.       The court would have to find that the payment was

not   "in   excess       of    the    recipient's      contractual       entitlement,"

regardless     of     whether        National       Grid    acted   in    bad     faith.

Restatement (Third) of Restitution and Unjust Enrichment § 35 (Am.

                                           - 15 -
Law Inst. 2011).      Thus, we must then turn to the substantiality

prong of the Grable analysis.

          Substantiality.         In addition to its necessity prong,

Grable also requires that the embedded federal issue be substantial

to "the federal system as a whole."          Gunn v. Minton, 568 U.S. 251,

260 (2013).        The substantiality inquiry turns on whether the

resolution    of    the   suit   would   measurably   affect   the   federal

government.   AMTAX Holdings 227, LLC v. Tenants' Dev. II Corp., 15

F.4th 551, 558 (1st Cir. 2021) ("The common thread that runs

through all such suits is that they entail some appreciable measure

of risk to the federal sovereign.").           Such impact usually occurs

when the suit challenges the action of a federal actor or would

"otherwise yield 'a new interpretation of [federal law] which will

govern a large number of cases.'"            Id. (alteration in original)

(quoting Mun. of Mayaguez v. Corporación Para el Desarollo del

Oeste, Inc., 726 F.3d 8, 14 (1st Cir. 2013)).         Compare One and Ken

Valley Hous. Grp. v. Me. State Hous. Auth., 716 F.3d 218, 225 (1st

Cir. 2013) (finding an issue substantial where its resolution could

require HUD to "scale back the scope of the Section 8 program"),

with Mayaguez, 726 F.3d at 15 ("[N]or was there any risk that the

outcome of the dispute would impact HUD's ability to demand

repayment of federal funds in any future case.").          While the court

must consider "the totality of the circumstances" when assessing

whether a claim is substantial, one factor that weighs in favor of

                                    - 16 -
finding substantiality is when a case "present[s] 'a nearly pure

issue of law that could be settled once and for all and thereafter

would govern numerous cases.'"       One and Ken Valley, 716 F.3d at

224-25 (quoting Bender v. Jordan, 623 F.3d 1128, 1130 (D.C. Cir.

2010)).   By contrast, when a case is "fact-bound and situation-

specific" it is often not substantial under the Grable test.

Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 700-01

(2006).

           When   read   together,   Grable   and   Gunn   illuminate   the

bounds of the substantiality inquiry.         The state claim in Grable

-- found to raise a substantial federal issue -- required the Court

to interpret the statute providing the IRS's notice protocols when

seizing property.    545 U.S. at 315.     While the case would not bind

the IRS, which was not a party to the action, the agency had a

"strong interest" in being able to seize property to recover

delinquent taxes, and a judgment in favor of the plaintiffs would

likely force it to alter its notice procedures.            Id.   The state

claim in Gunn, by contrast, raised only a situation-specific

federal issue that was held not to be substantial: whether a

plaintiff would have prevailed on a patent claim.             568 U.S. at

259.   A decision would not affect any federal agency or actor, and

in fact, it would not even affect the status of the federal patent.

Id. at 261.

                                 - 17 -
              With these limits in mind, we conclude that the federal

tax   issue    that   is   necessarily   raised   in   Count    III   is   not

substantial.     Even after taking the Solar Companies' well-pleaded

facts as true and affording the Companies the benefit of all

reasonable inferences, the complaint fails to show that a judgment

would pose a risk to some federal actor or program.            The Companies

do allege that "hundreds" of independent energy companies have

entered similar ISAs with National Grid and another utility,

Eversource.     While it is then reasonable to infer that a judgment

for the Companies would affect how those utilities and the related

state agencies draft, approve, and enforce ISAs, there is no

indication that the IRS would be affected.        The Solar Companies do

not allege that the IRS itself was assessing these taxes, do not

estimate the aggregate value of the tax gross up adders collected

by the utilities, and do not even claim that the utilities were

paying the tax to the IRS.

              The Companies also fail to establish that their suit

requires the district court to issue "a new interpretation of

[federal law] . . . which will govern a large number of cases."

Mayaguez, 726 F.3d at 14.       To be sure, a decision by the district

court would answer a mixed question of federal law and fact --

whether the tax code covers fees paid to connect to distribution

networks -- which would govern the Companies' action and the few

virtually identical actions brought by other energy generators.

                                  - 18 -
But this is not a pure question of law, and we fail to see how its

resolution would affect a sufficiently large class of cases.      The

question relates only to the select group of energy generators that

have identical contracts with a utility and that connect to the

utility's distribution, not transmission, systems.     And outside of

these situations, the Solar Companies do not point to any cases that

would be governed by a judgment in their suit.   In fact, they concede

that actual taxpayers -- the utilities -- have no incentive to

challenge the relevant provision.   Based on the complaint, then, the

tax issue would not govern a "large number" of cases, as required by

our precedent, and is instead specific to the relatively unique

situation presented in this case and the parallel litigations.    Id.

Hence Count III does not raise a substantial federal issue.

                           III. CONCLUSION

          This class action unquestionably relates to federal taxes.

But federal-question jurisdiction demands that a litigant show more

than a mere relation between its case and a federal statute or actor;

the action must arise under federal law.   Unfortunately for the Solar

Companies, they have not shown that their claims are so intertwined

with the laws of the United States, and thus the district court lacked

subject-matter jurisdiction over the matter.

     Affirmed.

                               - 19 -