Coalition For Competitive Electricity v. Zibelman, 092718 FED2, 17-2654-cv

Docket Nº:17-2654-cv
Opinion Judge:Dennis Jacobs, Circuit Judge
Party Name:Coalition for Competitive Electricity, Dynergy Inc., Eastern Generation, LLC, Electric Power Supply Association, NRG Energy, Inc., Roseton Generating LLC, Selkirk Cogen Partners, L.P., Plaintiffs-Appellants, v. Audrey Zibelman, in her official capacity as Chair of the New York Public Service Commission, Patricia L. Acampora, in her official...
Attorney:Donald B. Verrilli, Jr., Munger Tolles & Olson LLP, Washington, DC; Henry Weissmann, Fred A. Rowley, Jr., Mark R. Yohalem, Munger, Tolles & Olson LLP, Los Angeles, California; Jonathan D. Schiller, David A. Barrett, Boies Schiller Flexner LLP, New York, New York; Stuart H. Singer, Boies Schiller ...
Judge Panel:Before: Jacobs, Livingston, Circuit Judges, Chen, District Judge.
Case Date:September 27, 2018
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Coalition for Competitive Electricity, Dynergy Inc., Eastern Generation, LLC, Electric Power Supply Association, NRG Energy, Inc., Roseton Generating LLC, Selkirk Cogen Partners, L.P., Plaintiffs-Appellants,

v.

Audrey Zibelman, in her official capacity as Chair of the New York Public Service Commission, Patricia L. Acampora, in her official capacity as Commissioner of the New York Public Service Commission, Gregg C. Sayre, in his official capacity as Chair of the New York Public Service Commission Diane X. Burman, in her official capacity as Commissioner of the New York Public Service Commission, Defendants-Appellees,

Exelon Corp., R.E. Ginna Nuclear Power Plant LLC, Constellation Energy Nuclear Group, LLC, Nine Mile Point Nuclear Station LLC, Intervenor-Defendants-Appellees.

No. 17-2654-cv

United States Court of Appeals, Second Circuit

September 27, 2018

Argued: March 12, 2018

Before: Jacobs, Livingston, Circuit Judges, Chen, District Judge. 1

Plaintiffs, a group of electrical generators and trade groups of electrical generators, appeal from a judgment of the United States District Court for the Southern District of New York (Caproni, J.) granting Defendants' Rule 12(b)(6) motions to dismiss. Plaintiffs challenge the constitutionality of New York's Zero Emissions Credit ("ZEC") program, which subsidizes qualifying nuclear power plants with "ZECs": state-created and state-issued credits certifying the zero- emission attributes of electricity produced by a participating nuclear plant.

Plaintiffs argue that the program is preempted under the Federal Power Act ("FPA") and that it violates the dormant Commerce Clause. We conclude as follows: (1) the ZEC program is not field preempted because Plaintiffs have failed to identify an impermissible "tether" under Hughes v. Talen Energy Marketing, LLC, 136 S.Ct. 1288, 1293 (2016), between the ZEC program and wholesale market participation; (2) the ZEC program is not conflict preempted because Plaintiffs have failed to identify any clear damage to federal goals; and (3) Plaintiffs lack Article III standing to raise a dormant Commerce Clause claim. Affirmed.

Donald B. Verrilli, Jr., Munger Tolles & Olson LLP, Washington, DC; Henry Weissmann, Fred A. Rowley, Jr., Mark R. Yohalem, Munger, Tolles & Olson LLP, Los Angeles, California; Jonathan D. Schiller, David A. Barrett, Boies Schiller Flexner LLP, New York, New York; Stuart H. Singer, Boies Schiller Flexner LLP, Fort Lauderdale, Florida, for Plaintiffs- Appellants.

Scott H. Strauss (Peter J. Hopkins, Jeffrey A. Schwarz, Amber L. Martin, on the brief), Spiegel & McDiarmid LLP, Washington, DC; Paul Agresta, General Counsel, John Sipos, Deputy General Counsel, John C. Graham, Public Service Commission of the State of New York, Albany, New York, for Defendants-Appellees.

Matthew E. Price (David W. DeBruin, Zachary C. Schauf, William K. Dreher, on the brief), Jenner & Block LLP, Washington, DC, for Intervenors-Defendants-Appellees.

Aaron M. Panner, Kellogg, Hansen, Todd, Figel & Frederick, P.L.L.C., Washington, DC, for amici curiae Energy Economists, in support of Plaintiffs-Appellants.

Ben Norris, American Petroleum Institute, Washington, DC; Dena Wiggins, Natural Gas Supply Association, Washington, DC, for amici curiae American Petroleum Institute, Natural Gas Supply Association in support of Plaintiffs-Appellants.

Jeffrey W. Mayes, General Counsel, Monitoring Analytics, LLC, Eagleville, Pennsylvania, for amicus curiae Independent Market Monitor for PJM, in support of Plaintiffs-Appellants.

Ari Peskoe, Harvard Law School Environmental Policy Initiative, Cambridge, Massachusetts, for amici curiae Electricity Regulation Scholars in support of Defendants-Appellees.

Richard L. Revesz (Bethany A. Davis Noll, Avi Zevin, on the brief), Institute for Policy Integrity at New York University School of Law, New York, New York, for amicus curiae Institute for Policy Integrity, in support of Defendants-Appellees.

Thomas Zimpleman (Miles Farmer, on the brief), Natural Resources Defense Council, Washington, DC; Michael Panfil, Environmental Defense Fund, Washington, DC, for amici curiae Natural Resources Defense Council, Environmental Defense Fund, in support of Defendants-Appellees.

Jonathan M. Rund (Ellen C. Ginsberg, on the brief), Nuclear Energy Institute, Washington, DC, for amicus curiae Nuclear Energy Institute, in support of Defendants- Appellants.

Clare E. Kindall, Assistant Attorney General (Seth A. Hollander, Assistant Attorney General, on the brief), for George Jepsen, Attorney General of Connecticut, New Britain, Connecticut; M. Elaine Meckenstock, Deputy Attorney General (Kathleen A. Kenealy, Chief Assistant Attorney General, Robert W. Byrne, Senior Assistant Attorney General, Sally Magnani, Senior Assistant Attorney General, Gavin G. McCabe, Supervising Deputy Attorney General, Melinda Piling, Deputy Attorney General, Myung J. Park, Deputy Attorney General, Dennis L. Beck, Jr., Deputy Attorney General, on the brief), for Xavier Becerra, Attorney General of California, Oakland, California, for amici curiae States of California, Connecticut, Illinois, Massachusetts, New York, Oregon, Vermont, and Washington, in support of Defendants-Appellees.

Samuel T. Walsh, Harris, Wiltshire & Grannis LLP, Washington, DC, for amici curiae Independent Economists, in support of Defendants-Appellees.

Julia Dreyer (Gene Grace, on the brief), American Wind Energy Association, Washington, DC, for amicus curiae American Wind Energy Association, in support of neither party.

Dennis Jacobs, Circuit Judge

Plaintiffs, a group of electrical generators and trade groups of electrical generators, appeal from a judgment of the United States District Court for the Southern District of New York (Caproni, J.) granting Defendants' Rule 12(b)(6) motions to dismiss. In August 2016, the New York Public Service Commission ("PSC") adopted the Zero Emissions Credit ("ZEC") program as part of a larger energy reform plan to reduce greenhouse-gas emissions by 40 percent by 2030. The program subsidizes qualifying nuclear power plants by creating "ZECs": state-created and state-issued credits certifying the zero-emission attributes of electricity produced by a participating nuclear plant. The PSC has determined that three nuclear power plants (FitzPatrick, Ginna, and Nine Mile Point) qualify for the ZEC program; other facilities, including facilities located outside New York, may be selected in the future.

Plaintiffs allege that the ZEC program influences the prices that result from the wholesale auction system established by the Federal Energy Regulatory Commission ("FERC") and distorts the market mechanism for determining which energy generators should close. Plaintiffs challenge the program's constitutionality on two grounds: that the program is preempted under the Federal Power Act ("FPA") and that it violates the dormant Commerce Clause.

Defendants, who are members of the PSC, and Intervenors, who are the nuclear generators (and their owners, including Exelon Corporation) receiving ZECs, moved to dismiss on the grounds that Plaintiffs lack a private cause of action to pursue their preemption claims because the FPA implicitly forecloses equity jurisdiction, and that (in any event) Plaintiffs' claims fail as a matter of law.

We conclude that the ZEC program is not field preempted, because Plaintiffs have failed to identify an impermissible "tether" under Hughes v. Talen Energy Marketing, LLC, 136 S.Ct. 1288, 1293 (2016) between the ZEC program and wholesale market participation; that the ZEC program is not conflict preempted, because Plaintiffs have failed to identify any clear damage to federal goals; and that Plaintiffs lack Article III standing as to the dormant Commerce Clause claim. These conclusions are consistent with the recent Seventh Circuit decision in Elec. Power Supply Ass'n v. Star, No. 17-2433, 2018 WL 4356683, at *1 (7th Cir. Sept. 13, 2018).

The judgment of the district court is affirmed.

I

A

The FPA establishes a collaborative scheme between the states and federal government to regulate electricity generation. States have exclusive jurisdiction over "facilities used for the generation of electric energy," including production and retail sales. 16 U.S.C. § 824(b)(1). FERC regulates electricity sales at wholesale, ensuring "rates and charges made, demanded, or received . . . for or in connection with" such sales are "just and reasonable." Id. § 824d(a).

FERC has determined that just and reasonable rates for wholesale electricity should be set by competitive auctions. The New York Independent System Operator ("NYISO") manages two types of wholesale auctions under FERC-approved rules and procedures: energy and capacity. In energy auctions, generators bid the lowest price they will accept to...

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