Court Opinion

ID: 4574076
Source: CourtListenerOpinion
Date Created: 2020-10-07 21:01:22.777191+00
Date Added: 2024-06-11T13:32:16.478798
License: Public Domain

NOT FOR PUBLICATION                        FILED
                    UNITED STATES COURT OF APPEALS                        OCT 7 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                              FOR THE NINTH CIRCUIT

PACIFIC GAS & ELECTRIC COMPANY,                 No.    19-71615

                Petitioner,                     FERC Nos. EL19-35-000
                                                          EL19-36-000
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS,
                                                MEMORANDUM*
                Petitioner-Intervenor,

 v.

FEDERAL ENERGY REGULATORY
COMMISSION,

                Respondent,

NEXTERA ENERGY, INC.; et al.,

                Respondents-Intervenors.

                     On Petition for Review of an Order of the
                     Federal Energy Regulatory Commission

In re: PG&E CORPORATION; PACIFIC                No.    19-16833
GAS & ELECTRIC COMPANY,
                                                D.C. No. 3:19-bk-30088
             Debtors,
______________________________

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
PACIFIC GAS & ELECTRIC COMPANY;
PG&E CORPORATION,

                   Plaintiffs-Appellees,

OFFICIAL COMMITTEE OF
UNSECURED CREDITORS,

                   Intervenor,

  v.

FEDERAL ENERGY REGULATORY
COMMISSION,

             Defendant-Appellant,
______________________________

CALIFORNIA DEPARTMENT OF
WATER RESOURCES STATE WATER
PROJECT,

                   Intervenor.

In the Matter of: PACIFIC GAS &                No.   19-16834
ELECTRIC COMPANY; PG&E
CORPORATION,                                   D.C. No. 3:19-ap-3003

                   Debtors,

------------------------------

PACIFIC GAS & ELECTRIC COMPANY;
PG&E CORPORATION,

                   Plaintiffs-Appellees,

                                           2
 v.

AV SOLAR RANCH 1, LLC; et al.,

               Intervenors-Appellants,

 v.

FEDERAL ENERGY REGULATORY
COMMISSION,

               Defendant.

                 Appeal from the United States Bankruptcy Court
                     for the Northern District of California
                  Dennis Montali, Bankruptcy Judge, Presiding

                     Argued and Submitted August 14, 2020
                             Pasadena, California

Before: CALLAHAN, BUMATAY, and VANDYKE, Circuit Judges.

      Pacific Gas & Electric Corporation (PG&E) petitions for review of two

orders of the Federal Energy Regulatory Commission (FERC), and FERC appeals

an order of the bankruptcy court. The orders all involved the same question:

whether a Chapter 11 debtor can cease performing under its wholesale power

contracts with the approval of the bankruptcy court, or whether FERC’s consent is

also needed. In its orders, FERC declared that it must approve such changes,

whereas the bankruptcy court rejected that position. We need not—and cannot—

reach the merits of this dispute, because the cases became moot when the

                                         3
bankruptcy court confirmed a reorganization plan requiring PG&E to assume,

rather than reject, the contracts at issue. The only remaining question is how to

treat the underlying orders. Applying the rule set forth in Munsingwear v. United

States, 340 U.S. 36 (1950), we vacate all three.

      Munsingwear holds that “[w]hen a case becomes moot on appeal, the

‘established practice’ is to reverse or vacate the decision below with a direction to

dismiss.” NASD Dispute Resolution, Inc. v. Jud. Council of State of Cal., 488 F.3d

1065, 1068 (9th Cir. 2007) (quoting Arizonans for Official English v. Arizona, 520

U.S. 43, 71 (1997)). This “‘clears the path for future relitigation of the issues

between the parties,’ preserving ‘the rights of all parties,’ while prejudicing none

‘by a decision which . . . was only preliminary.’” Alvarez v. Smith, 558 U.S. 87, 94

(2009) (quoting Munsingwear, 340 U.S. at 40). Vacatur is “generally automatic,”

NASD, 488 F.3d at 1068 (quotations omitted), and these principles apply not only

to judicial decisions, but also to agency orders. A.L. Mechling Barge Lines, Inc. v.

United States, 368 U.S. 324, 329 (1961); Oregon v. FERC, 636 F.3d 1203, 1206

(9th Cir. 2011).

      The parties generally agree that we should vacate the bankruptcy court’s

order. They disagree, however, over whether we ought to also vacate FERC’s.

Relying on U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18

(1994), FERC and the intervenors urge us to leave the agency’s orders in place.

                                           4
Bancorp instructs us that, absent “exceptional circumstances,” a party that

voluntarily moots its appeal surrenders its claim “to the equitable remedy of

vacatur.” Id. at 25, 29; accord ACLU of Nev. v. Masto, 670 F.3d 1046, 1065-66

(9th Cir. 2012). FERC and the intervenors point out that PG&E proposed

assuming the power contracts in the reorganization plan ultimately confirmed by

the bankruptcy court. They argue that PG&E’s involvement in this process renders

vacatur inappropriate.

      We disagree. The circumstances here justify vacatur even accepting that

PG&E had a hand in mooting its petition.1 Importantly, the company did not

intend to circumvent our review of FERC’s orders. See Alvarez, 558 U.S. at 96–

97; All. for the Wild Rockies v. U.S. Forest Serv., 907 F.3d 1105, 1121 (9th Cir.

2018) (finding “no reason not to vacate the lower court’s decision” where

“mootness was not caused by the [appellant] in an attempt to evade an adverse

decision”). Rather, PG&E twice moved for expedited consideration of these cases

so that we could resolve them prior to resolution of the bankruptcy proceedings.

1
       We reject FERC’s argument that these cases were not ripe for review. The
ripeness inquiry asks “whether the issues presented are definite and concrete, not
hypothetical or abstract.” Wolfson v. Brammer, 616 F.3d 1045, 1058 (9th Cir.
2010) (citation omitted). Here, FERC’s orders directly affected PG&E’s rights
within the bankruptcy proceeding. The company has thus established a “definite
and concrete” dispute. See Associated Gen. Contractors of Cal., Inc. v. Coal. for
Econ. Equity, 950 F.2d 1401, 1407 n.5 (9th Cir. 1991) (finding controversy ripe
where a challenged ordinance’s effects were not “confined to the future” but,
rather, were presently influencing the parties’ decisions).

                                         5
The company also urged us to hear the cases over FERC’s related ripeness

arguments.

      In addition, PG&E’s actions were prompted by outside interference. Cf.

Bancorp, 513 U.S. at 29 (noting that the circumstances there did nothing to

“diminish[] the voluntariness of the abandonment of review”). That is, mootness

here is attributable, at least in part, to coercion from California. As the bankruptcy

court explained, PG&E was “under pressure from various sources,” including the

state’s governor, to reach a “prompt and viable reorganization.” In particular, the

state established a $21 billion wildfire-liability compensation fund, which was

critical to PG&E’s ability to reorganize. The state conditioned PG&E’s access to

this fund on the company having a confirmed reorganization plan in place by June

20. The state presumably so pressured PG&E because it thought a speedy

reorganization was in the public interest.

      Finally, vacating FERC’s unreviewed orders prevents them from adversely

impacting PG&E or any other utility down the road. At the heart of these cases

lies a dispute concerning FERC’s powers over contract performance, including a

question of what constitutes a rate change under the filed-rate doctrine and Federal

Power Act. These issues could well arise outside of bankruptcy. While the orders

are declaratory, and we cannot say with certainty how they might affect PG&E or

others, we think the better course is to eliminate that concern. See Am. Family Life

                                             6
Assurance Co. of Columbus v. FCC, 129 F.3d 625, 631 (D.C. Cir. 1997) (vacating

an agency order where doing so removed the “remote possibility of residual

collateral harm”). This decision does not especially harm FERC, as it can easily

re-assert its position in future proceedings. Indeed, it already has. ETC Tiger

Pipeline LLC, 171 FERC 61,248 (June 22, 2020) (taking the same position in the

context of the Natural Gas Act).

      Accordingly, we dismiss PG&E’s petition for review (No. 19-71615) with

instructions for FERC to vacate its orders.2 We likewise dismiss FERC’s

consolidated appeal (Nos. 19-16833, 19-16834) with instructions for the

bankruptcy court to vacate its order. In taking these actions, we express no opinion

on the merits of the dispute, which we leave for future courts to evaluate. See

Bancorp, 513 U.S. at 28 (stressing the “inappropriateness of disposing of cases,

whose merits are beyond judicial power to consider, on the basis of judicial

estimates regarding their merits”).

      PETITION FOR REVIEW & APPEAL DISMISSED.

2
       We typically remand for the district court to “decide whether to vacate its
judgment in light of ‘the consequences and attendant hardships of dismissal or
refusal to dismiss’ and ‘the competing values of finality of judgment and right to
relitigation of unreviewed disputes.’” Dilley v. Gunn, 64 F.3d 1365, 1371 (9th Cir.
1995) (quoting Ringsby Truck Lines, Inc. v. W. Conf. of Teamsters, 686 F.2d 720,
722 (9th Cir. 1982)). But considering that FERC, unlike a district court, has a
stake in this dispute and has made clear that it would not vacate its orders if given
the chance to do so, we direct vacatur.

                                          7