American Energy Solutions v. Alabama Power Co.

• Decision Date: 29 July 1998
• Docket Number: Civil Action No. 97-D-96-N.
• Citation: 16 F.Supp.2d 1346
• Parties: AMERICAN ENERGY SOLUTIONS, INC.; Alabama Electric Consumers Coalition; and Citizens for a Sound Economy Foundation, Plaintiffs, v. ALABAMA POWER COMPANY; Alabama Public Service Commission President Jim Sullivan, in his official capacity; Alabama Public Service Commissioner Jan Cook, in her official capacity; and Alabama Public Service Commission Associate Commissioner Charles Martin, in his official capacity, Defendants.
• Court: U.S. District Court — Middle District of Alabama

16 F.Supp.2d 1346

AMERICAN ENERGY SOLUTIONS, INC.; Alabama Electric Consumers Coalition; and Citizens for a Sound Economy Foundation, Plaintiffs, v. ALABAMA POWER COMPANY; Alabama Public Service Commission President Jim Sullivan, in his official capacity; Alabama Public Service Commissioner Jan Cook, in her official capacity; and Alabama Public Service Commission Associate Commissioner Charles Martin, in his official capacity, Defendants.

Civil Action No. 97-D-96-N.

United States District Court, M.D. Alabama, Northern Division.

July 29, 1998.

COPYRIGHT MATERIAL OMITTED

Barry D. Woodham, Montgomery, AL, James C. Huckaby, Jr., William M. Slaughter, Birmingham, AL, for Plaintiff.

David R. Boyd, Montgomery, AL, Michael D. Freeman, Lyle D. Larson, Birmingham, AL, Robert M. Weinberg, William Prendergast, James E. Wilson, Montgomery, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

DE MENT, District Judge.

Before the court are Motions to Dismiss by Defendant Alabama Power Company ("Alabama Power") and the Alabama Public Service Commission ("APSC") Defendants, both filed March 18, 1997. Alabama Power filed a Brief in Support of its Motion ("Br. in Supp.") on March 18, 1997. Plaintiffs filed a Brief in Opposition to Defendants' Motion to Dismiss ("Pls.' Br. in Opp.") on May 7, 1997. Defendant Alabama Power filed a Reply Brief in Support of Motion to Dismiss ("Ala. Power Reply") on May 29, 1997. The APSC Defendants filed a Reply Memorandum in Support of Motion to Dismiss ("PSC Reply") on June 9, 1997. Plaintiffs then filed a Surreply Brief in Opposition to Defendants' Motion to Dismiss ("Pls.' Surreply") on October 29, 1997. Finally, on December 3, 1997, Defendant Alabama Power filed a Response to Plaintiffs' Surreply ("Resp. to Surreply"). After careful consideration of the arguments of counsel, the relevant law and the record as a whole, the court finds that Defendants' Motion is due to be granted.

BACKGROUND

Defendant Alabama Power, a public utility regulated by Defendant APSC, provides retail electric service in the state of Alabama.¹ As a public utility, Alabama Power is statutorily required to construct and maintain a power system for the generation, transmission and distribution of all the electricity requirements of the public within the area Alabama Power has a legal obligation to serve.

Under Alabama law, the APSC is responsible for supervising and regulating all utilities doing business in Alabama. Ala.Code § 37-1-32. APSC is required to remain "informed" as to the manner and method in which "utilities" conduct their business. Id. The APSC is required to periodically "examine such utilities" so as to monitor their general condition, to set their "rates," and to regulate the "manner" in which their plants, equipment, and other property are controlled and operated. Id.

In May 1996, the Alabama Legislature enacted Ala.Code § 37-4-30, addressing the issue of stranded costs and investments that could result from the increased competition taking place in the electric utility industry.² The statute defines "stranded costs" as "all verifiable costs ... incurred by a utility in order to provide service to electric customers ... that cannot actually be recovered through mitigation upon the transfer of the ... customer to another supplier." Ala.Code § 37-4-30(b).

The statute establishes a procedure whereby consumers of electric energy in the State of Alabama contemplating changing electric suppliers from Defendant Alabama Power to a private contract for electric service must first notify Alabama Power of the consumer's intent to change its electric supplier. Ala. Code § 37-4-30(a).³ Where Alabama Power determines that it or other electric customers "will be adversely affected by the loss of the existing electric customer," Alabama Power may file a petition for review of the contract with the APSC. Ala.Code § 37-4-30(a). After such a petition is filed, the APSC shall review the contract and the surrounding circumstances to determine if the contract is consistent with the public interest. Ala.Code § 37-4-30(a)(1).⁴ Where the APSC determines that the new contract is not inconsistent with the public interest, it then must determine whether Alabama Power is entitled to be reimbursed by the consumer for any "reasonable stranded costs associated with the transfer." Ala.Code § 37-4-30(a)(i).⁵

Plaintiffs in this action are American Energy Solutions, Inc., a business engaged in providing intermediary electric services to electric customers; Alabama Electric Consumers Coalition, a nonprofit association representing the interests of industrial consumers of electric services in the State of Alabama; and Citizens for a Sound Economy Foundation, a nonprofit corporation representing the interests of 3,500 residential electric consumers in the State of Alabama.

Plaintiffs commenced this action on January 27, 1998, pursuant to 28 U.S.C. § 2201, the Declaratory Judgment Act, seeking pre-enforcement declaratory and injunctive relief preventing the imposition of Alabama Code § 37-4-30 on numerous federal constitutional and statutory grounds, as well as state constitutional grounds. Specifically, Plaintiffs contend that the statute: (1) impermissibly burdens interstate commerce in violation of the Commerce Clause of the United States Constitution, Art. 1, Section 8 (Compl., Count I); (2) violates the federal scheme established under the Public Utility Regulatory Policies Act of 1978, 16 U.S.C. § 796 et seq., (Compl., Count II); (3) impermissibly intrudes on the exclusive jurisdiction of the Federal Regulatory Commission over wholesale transactions in interstate commerce, and is therefore preempted by the Federal Power Act, 16 U.S.C. § 824 et seq., (Compl., Count III); (4) violates the Due Process Clause of the Fourteenth Amendment to the United States Constitution, (Compl., Count IV); and (5) "perpetuates and protects the monopolistic control of the electric markets in Alabama by Alabama Power" in violation of Sections 22 and 103 of the Alabama Constitution. (Compl., Counts V and VII).

Defendants urge the court to dismiss Plaintiff's Complaint on numerous grounds, including: (1) failure to present the court with an actual case or controversy; (2) failure to state a claim under the dormant Commerce Clause; (3) failure to establish that Plaintiffs are within the "zone of interests" protected by the federal statutes they seek to invoke; and (4) the Eleventh Amendment's bar against federal courts hearing state law claims, like those asserted by the Plaintiffs, where the relief sought is an injunction against state officials. Plaintiffs concede that their state constitutional claims are due to be dismissed. (Pls.' Br. in Opp. at 39.) Hence, the court finds that Counts V and VI of Plaintiff's Complaint are due to be dismissed without prejudice. The court now turns to Defendants' standing argument, as the court finds that this issue is dispositive of Plaintiffs' claims.

DISCUSSION

Article III of the Constitution restricts the jurisdiction of the federal courts only to those disputes in which there is an actual "case" or "controversy." See Raines v. Byrd, 521 U.S. 811, ___, 117 S.Ct. 2312, 2317, 138 L.Ed.2d 849, ___ (1997). An essential element of the case-or-controversy requirement is that Plaintiffs have standing to sue. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Allen v. Wright, 468 U.S. 737, 750-51, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). The question of standing is the threshold question in every federal case. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

To meet the standing requirements of Article III, Plaintiffs must allege "personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." Raines, ___ U.S. at ___, 117 S.Ct. at 2317 (quoting Allen, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984); Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 474-75, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982)). The alleged injury must be "distinct and palpable," and not "abstract," "conjectural," or "hypothetical." Allen, 468 U.S. at 751, 104 S.Ct. 3315 (citations omitted). From this requirement, the Supreme Court has distilled three elements necessary to establish standing: (1) the plaintiff must have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between the injury and the conduct complained of — the injury has to be fairly traceable to the challenged action of the defendant and not the result of the independent action of some third party not before the court; and (3) it must be likely, as opposed to merely "speculative," that the injury will be redressed by a favorable decision. Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130 (citing Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990); Simon v. Eastern Ky. Welfare Rights Organization, 426 U.S. 26, 41-42, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); Warth, 422 U.S. at 508, 95 S.Ct. 2197; Sierra Club v. Morton, 405 U.S. 727, 740-41, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972)).⁶

The most important of these is the injury requirement. Cone Corp. v. Florida Dep't of Transportation, 921 F.2d 1190, 1203 (11th Cir.1991). It is well-settled that the party invoking the federal court's jurisdiction bears the burden of establishing these three elements. United States v. Hays, 515 U.S. 737, 743, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995); Lujan, 504 U.S. at 561, 112 S.Ct. 2130; Warth, 422 U.S. at 518, 95 S.Ct. 2197.

The Supreme Court requires strict compliance with the...