United States District Court, D. Colorado
RECOMMENDATION OF UNITED STATES MAGISTRATE
Y. WANG UNITED STATES MAGISTRATE JUDGE.
matter comes before the court on three pending motions:
(1) Prospective Intervenor Public Service Company of
Colorado's (“Public Service”) Motion to
Intervene [#15, filed Apr. 6, 2017];
(2) Defendants Colorado Public Utilities Commission, Jeffery
P. Ackermann, Frances A. Koncilja, and Wendy M. Moser's
(collectively, “Defendants”) Motion to Dismiss
Under Fed.R.Civ.P. 12(b)(1) and 12(b)(6) (the “Motion
to Dismiss”) [#16, filed Apr. 7, 2017]; and
(3) Prospective Intervenor Black Hills/Colorado Electric
Utility Company, LP's (“Black Hills”) Motion
to Intervene [#20, filed Apr. 21, 2017].
undersigned Magistrate Judge considers the pending motions
pursuant to 28 U.S.C. § 636(b), the Order Referring Case
dated May 1, 2017 [#32], and the memorandum dated May 1, 2017
[#33]. This court concludes that oral argument would not
materially assist in the resolution of this matter.
Accordingly, upon careful review of the pending motions and
associated briefing, the applicable law, and entire case
file, this court respectfully RECOMMENDS that the Motion to
Dismiss be GRANTED and the Motions to Intervene be DENIED AS
MOOT with leave to re-file, if necessary, after the
disposition of this Recommendation.
sPower Development Company, LLC (“Plaintiff” or
“sPower”) initiated this action by filing its
Complaint for declaratory and injunctive relief on March 16,
2017. [#1]. Plaintiff, a Delaware limited liability company,
develops and builds electric generation facilities powered by
renewable energy resources. [Id. at ¶ 5].
sPower requests that the court “overturn a state
regulation adopted by Defendants that violates [the Public
Utility Regulatory Policies Act of 1978 (“PURPA”
or “Act”)] and unlawfully restricts the process
by which certain independent companies can supply electric
energy and/or capacity to electric utilities.”
[Id. at ¶ 1]. Accordingly, sPower brings this
action pursuant to section 210(h)(2)(B) of the Act against
the Colorado Public Utilities Commission
(“COPUC”), including its Commissioners Mr.
Ackermann and Mses. Koncilja and Moser, a “State
regulatory authority” as defined under the Act.
[Id. at ¶¶ 7-9].
sPower is developing eleven electric generation facilities in
Colorado- facilities the Federal Energy Regulatory Commission
(“FERC”) certified as Qualifying Facilities
(“QFs”) under the PURPA. [Id. at
¶¶ 5-6, 17-18]; see also 16 U.S.C. §
824a-3; 18 C.F.R. § 292.101(b)(1). Under the Act and the
FERC's implementing regulations, electric utilities are
required to purchase a QF's offered energy and/or
capacity at the utility's “avoided costs, ”
i.e., “the incremental costs to the utility” of
capacity and/or energy that the utility would have produced
or purchased elsewhere had it not purchased the
energy/capacity from the QF. [Id. at ¶¶ 2,
19-21]. This is commonly referred to as the PURPA's
“must-buy” provision. See [id.
at ¶¶ 2, 19]; see also 16 U.S.C. §
824a-3(a); 18 C.F.R. § 292.303(a). QFs and utilities
have the ability to enter into contracts or legally
enforceable obligations under the “must-buy”
provision. [Id. at ¶ 2].
avers that, although state regulatory authorities have some
latitude in setting avoided costs, they must still comply
with the Act's “must-buy” provision and the
FERC's implementing regulations. [#1 at ¶¶ 2,
23-29]. Here, sPower challenges Defendants' Rule 3902(c)
of the Rules Regulating Electric Utilities that applies to
QFs with a design capacity of greater than 100 kilowatts
(“kW”). [Id. at ¶¶ 3, 33-34];
see also 4 Colo. Code Regs. § 723-3:3902(c).
Rule 3902(c) states, in relevant part, that utilities
“shall use a bid or an auction or a combination
procedure to establish its avoided costs for facilities . . .
[t]he utility is obligated to purchase capacity or energy
from a [QF] only if the [QF] is awarded a contract
under the bid or auction or combination process.” 4
Colo. Code Regs. § 723-3:3902(c) (emphasis added). The
“bid or auction or combination process” referred
to in the rule is the electric resource planning
(“ERP”) process that applies to every utility
regulated by the COPUC, and the ERP process occurs every four
years. [#1 at ¶¶ 35-36]. The purpose of the
quadrennial ERP is for utilities “to acquire new
utility resources” for its customers. [Id. at
¶ 37]; 4 Colo. Code Regs. § 723-3:3611(a). However,
the COPUC “regularly approves contracts for the
acquisition of resources outside of the ERP process.”
[#1 at ¶ 39].
alleges that Rule 3902(c) “places an unlawful
restriction on a QF's ability to enter a contract with a
utility at an avoided cost rate, thereby violating
PURPA's must-buy requirement[.]” [#1 at ¶ 38].
Specifically, the FERC's regulations provide QFs with two
mechanisms for selling their electrical output to a utility:
(1) on an “as available” basis with avoided costs
calculated at the time of delivery; or (2) through a contract
or legally enforceable obligation with avoided costs
calculated at the time of delivery or at the time the
obligation is incurred. See [id. at
¶¶ 24, 40]; 18 C.F.R. § 292.304(d). However,
sPower asserts that Rule 3902(c) prevents a QF, such as
sPower, from exercising these rights by requiring it to win
“an infrequently-held [request for proposals
(“RFP”)]” before selling its output. [#1 at
¶ 41]. Plaintiff contends that Defendants have thus
prevented it from procuring contracts or legally enforceable
obligations from Colorado utilities to buy its electrical
output from its eleven QFs in Colorado-a violation of both
the PURPA and the FERC's implementing regulations.
[Id. at ¶¶ 42-43, 60]. Further, sPower
asserts that the FERC, on two prior occasions, has held that
similar rules violate the PURPA and its own regulations.
[Id. at ¶¶ 4, 44].
December 30, 2016, sPower filed its Petition for Enforcement
pursuant to section 210(h) of the Act with the FERC.
[Id. at ¶ 45]; 16 U.S.C. § 824a-3(h).
Plaintiff requested that the FERC invalidate the ERP
requirement of Rule 3902(c); the FERC then had sixty (60)
days to initiate enforcement proceedings. [Id. at
¶¶ 46-47]; 16 U.S.C. § 823a-4(h). However,
because the FERC did not possess the necessary quorum to
initiate such proceedings, it did not act on sPower's
petition within the requisite 60 days; thus, Plaintiff filed
the instant action in this court pursuant to section
210(h)(2)(B) of the Act. [#1 at ¶¶ 48-53]; 16
U.S.C. § 824a-3(h)(2)(B).
April 6, 2017, prospective Intervenor Public Service filed
its Motion to Intervene. [#15]. The following day, Defendants
filed their Motion to Dismiss, seeking dismissal of
Plaintiff's Complaint in its entirety. [#16]. Then, on
April 21, 2017, prospective Intervenor Black Hills filed its
Motion to Intervene. [#20]. A Scheduling Conference is
currently set for June 22, 2017, before the undersigned
Magistrate Judge. [#40]. The pending motions are now ripe for
move to dismiss sPower's Complaint for three reasons.
First, Defendants argue that this court lacks subject matter
jurisdiction over Plaintiff's claim, because Plaintiff
lacks standing to challenge Rule 3902(c). [#16 at 6-9].
Second, Defendants argue that, to the extent sPower levies an
“as applied” challenge to the rule, such a claim
must be filed in state court pursuant to section 210(g) of
the PURPA. [Id. at 9-10]. Lastly, despite these
jurisdictional shortcomings, Defendants argue that Plaintiff
fails to state a claim for relief under Rule 12(b)(6).
[Id. at 10-13]. Because this court concludes that
sPower lacks standing, it does not reach their alternative
arguments. See Cunningham v. BHP Petroleum Great Britain
PLC, 427 F.3d 1238, 1245 (10th Cir. 2005) (holding that
once a federal court determines that it is without subject
matter jurisdiction, it must not proceed to consider any
courts are courts of limited jurisdiction and, as such,
“are duty bound to examine facts and law in every
lawsuit before them to ensure that they possess subject
matter jurisdiction.” The Wilderness Soc. v. Kane
Cty., Utah, 632 F.3d 1162, 1179 n.3 (10th Cir. 2011)
(Gorsuch, J., concurring). Under Article III of the United
States Constitution, federal courts only have jurisdiction to
hear certain “cases” and
“controversies.” Susan B. Anthony List v.
Driehaus, 134 S.Ct. 2334, 2341 (2014). To satisfy
Article III's case or controversy requirement, Plaintiff
must establish: (1) an injury in fact; (2) a sufficient
causal connection between the injury and the conduct