Allco Fin. Ltd. v. Klee, Docket No. 15–20.

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: KATZMANN, Chief Judge
• Citation: 805 F.3d 89
• Parties: ALLCO FINANCE LIMITED, Plaintiff–Appellant, v. Robert J. KLEE, in his official capacity as Commissioner of the Connecticut Department of Energy and Environmental Protection, Defendant–Appellee, Office of Consumer Counsel, Fusion Solar LLC, Number Nine Wind Farm LLC, Greenskies Renewable Energy, LLC, Intervenors–Appellees.
• Docket Number: Docket No. 15–20.
• Decision Date: 06 November 2015

805 F.3d 89

ALLCO FINANCE LIMITED, Plaintiff–Appellant
v.
Robert J. KLEE, in his official capacity as Commissioner of the Connecticut Department of Energy and Environmental Protection, Defendant–Appellee
Office of Consumer Counsel, Fusion Solar LLC, Number Nine Wind Farm LLC, Greenskies Renewable Energy, LLC, Intervenors–Appellees.

Docket No. 15–20.

United States Court of Appeals, Second Circuit.

Submitted: Sept. 2, 2015.
Decided: Nov. 6, 2015.
Amended: Dec. 1, 2015.

805 F.3d 90

Thomas Melone, Allco Renewable Energy Limited, New York, NY, for Plaintiff–Appellant.

805 F.3d 91

Robert D. Snook, Assistant Attorney General, for George Jepsen, Attorney General of the State of Connecticut, Hartford, CT, for Defendant–Appellee.

Bradford S. Babbitt and James R. Nault, Robinson & Cole LLP, Hartford, CT, for Intervenors–Appellees Fusion Solar LLC and Number Nine Wind Farm LLC.

Joseph A. Rosenthal, Principal Attorney, for Elin Swanson Katz, Consumer Counsel of the State of Connecticut, New Britain, CT, for Intervenor–Appellee Office of Consumer Counsel.

Before: KATZMANN, Chief Judge, HALL and LIVINGSTON, Circuit Judges.

Opinion

KATZMANN, Chief Judge:

Plaintiff–Appellant Allco Finance Limited (“Allco”) appeals from a final judgment entered on December 11, 2014 by the United States District Court for the District of Connecticut (Arterton, J.), which dismissed Allco's complaint. Allco brought this action against Defendant–Appellee Robert Klee (“Commissioner”), in his official capacity as Commissioner of the Connecticut Department of Energy and Environmental Protection. Allco alleges that the Commissioner's actions, which were taken pursuant to section 6 of Connecticut Public Act 13–303 (“Section 6”) and include his awarding two power purchase agreements to Intervenors–Appellees Number Nine Wind Farm LLC (“Number Nine”) and Fusion Solar LLC (“Fusion Solar”), are preempted by the Federal Power Act and the Public Utility Regulatory Policies Act (“PURPA”).¹ In addition to seeking damages and fees under 42 U.S.C. §§ 1983 and 1988, Allco sought equitable relief in the form of voiding the intervenors' contracts and enjoining the Commissioner from violating the Federal Power Act and PURPA in any future Section 6 procurement process. The district court dismissed Allco's complaint, concluding that Allco lacked standing to sue and, in the alternative, that Allco failed to state a claim. Allco contests both determinations on appeal.

We AFFIRM the district court's judgment on alternative grounds. Specifically, we hold that: (1) Allco cannot bring claims under §§ 1983 and 1988 to vindicate any rights conferred by PURPA because PURPA's private right of action forecloses these remedies; (2) Allco failed to exhaust its administrative remedies, a prerequisite for any qualified facility to bring an equitable action seeking to vindicate specific rights conferred by PURPA; and (3) Allco lacks standing to bring a preemption action seeking solely to void the contracts awarded to Intervenors Fusion Solar and Number Nine.

BACKGROUND

A. The Federal Power Act and PURPA Statutory Schemes

We begin with some background on the Federal Power Act and PURPA statutory schemes. The Federal Power Act gives the Federal Energy Regulatory Commission (“FERC”) exclusive authority to regulate sales of electricity at wholesale in interstate commerce. See 16 U.S.C. § 824(b)(1). States may not act in this area unless Congress creates an exception. Id. § 824(b). PURPA contains one such exception that permits states to foster electric generation by certain power production

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facilities (“qualifying facilities”) that have no more than 80 megawatts of capacity and use renewable generation technology. Id. § 824a–3 ; see also id. § 796(17)(A). A state may regulate wholesale sales by qualifying facilities, but those facilities must generally receive a price for their electricity equal to the buying utility's “avoided costs”—that is, those costs that the utility would have otherwise incurred in procuring the same quantity of electricity from another source. 18 C.F.R. § 292.304(b)(2) ; 16 U.S.C. § 824a–3(b). PURPA imposes obligations on each state regulatory authority to implement FERC's PURPA regulations. See 16 U.S.C. § 824a–3(f)(1) (“[E]ach State regulatory authority shall, after notice and opportunity for public hearing, implement [a new FERC] rule (or revised rule) for each electric utility for which it has ratemaking authority.”). PURPA also provides FERC and certain private parties with the ability to enforce the requirement that states implement PURPA. See id. § 824a–3(h). Relevant to this appeal, PURPA provides a private right of action to “qualifying cogenerator[s]” to enforce a state's obligations under PURPA. Id. § 824a–3(h)(2)(B).

Even though Allco concedes that it “does not rely on the private right of action under” 16 U.S.C. § 824a–3(h)(2)(B), Appellant's Supp. Br. 1, this private right of action is relevant to several aspects of this appeal, so we briefly describe its structure. First, “qualifying cogenerator[s],” such as Allco, “may petition [FERC] to enforce” a state's requirements to comply with PURPA. § 824a–3(h)(2)(B). Then, “[i]f the Commission does not initiate an enforcement action ... against a State regulatory authority,” such as the Connecticut Department of Energy and Environmental Protection, “within 60 days following the date on which a petition is filed ..., the petitioner may bring an action in the appropriate United States district court to require such State regulatory authority ... to comply with such requirements.” Id. The district court may then “issue such injunctive or other relief as may be appropriate.” Id. Additionally, FERC “may intervene as a matter of right in any such action.” Id.²

B. Factual Background

This case centers on Connecticut's implementation of a 2013 state statute that empowered the Commissioner of Connecticut's Department of Energy and Environmental Protection to solicit proposals for renewable energy, select winners of the solicitation, and direct Connecticut's utilities to enter into wholesale energy contracts with the chosen winners. See Act Concerning Connecticut's Clean Energy Goals, 2013 Conn. Acts 13–303, § 6.

Implementing this statute, the Commissioner solicited Section 6 proposals in July 2013. Allco submitted proposals for five solar projects, each of which was no more than 80 megawatts and satisfied PURPA's criteria for a qualifying facility.

In September 2013, the Commissioner selected Number Nine as one of the recipients of a contract with the utilities. Number Nine received a fifteen-year contract at a fixed price. According to Allco, Number Nine is too large to be a qualifying facility under PURPA, so its selection prevented the selection of at least one of Allco's projects. The Commissioner also directed the utilities to enter into a separate

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fixed-price contract with Fusion Solar, a generator that was a qualifying facility. According to Allco, Fusion Solar's fixed price will differ from the price that Number Nine otherwise would have received from selling its electricity into the FERC-approved energy market, thereby also violating the Federal Power Act and PURPA regulatory schemes.

In a determination accompanying its selection of Number Nine and Fusion Solar, the Connecticut Department of Energy and Environmental Protection “describ[ed] the basis for its selection of [these] two renewable energy projects to enter into long-term power purchase agreements pursuant to Section 6.” J.A. 55. In so doing, the Department set forth a ranked list of proposals. Allco's Harwinton Solar project appeared fourth on that list. Other Allco projects ranked seventh, tenth, and thirteenth. Additionally, Allco bid a project at a lower price than Fusion Solar, but that project was excluded, without explanation, from the ranked list.

After failing to receive a Section 6 contract, Allco filed a complaint in the U.S. District Court for the District of Connecticut, alleging that the Commissioner's implementation of Section 6 was preempted by the Federal Power Act. The complaint alleged that Number Nine was too large to be a qualifying facility and that the Commissioner's action in compelling a wholesale electricity transaction could be lawful only with respect to a qualifying facility under PURPA. Additionally, the complaint asserted that the Commissioner violated PURPA by selecting a higher bid from the qualifying facility Fusion Solar instead of one of Allco's lower-priced bids.

The Commissioner moved to dismiss this complaint, and the district court granted that motion for two independent reasons. The district court first concluded that Allco lacked standing, both because its injuries were not within the Federal Power Act and PURPA's “zone of interests” and because its injuries were not likely to be redressed by a favorable judgment. Allco Fin. Ltd. v. Klee, No. 13–cv–1874, 2014 WL 7004024, at *3–6 (D.Conn. Dec. 10, 2014). In the alternative, the district court concluded that Allco failed to state a claim, both because the Commissioner's actions...