Great Divide Wind Farm 2 LLC v. Aguilar

• Decision Date: 16 May 2019
• Docket Number: No. CIV 19-0099 JB\CG,CIV 19-0099 JB\CG
• Citation: 405 F.Supp.3d 1071
• Parties: GREAT DIVIDE WIND FARM 2 LLC, a Delaware corporation, and Great Divide Wind Farm 3 LLC, a Delaware corporation, Plaintiffs, v. Theresa BECENTI AGUILAR; Cynthia Hall ; Jefferson Byrd ; Valerie Espinoza, and Stephen Fischmann, in their official capacities as the Commissioners of the New Mexico Public Regulation Commission, Defendants.
• Court: U.S. District Court — District of New Mexico

405 F.Supp.3d 1071

GREAT DIVIDE WIND FARM 2 LLC, a Delaware corporation, and Great Divide Wind Farm 3 LLC, a Delaware corporation, Plaintiffs,

v.Theresa BECENTI AGUILAR; Cynthia Hall ; Jefferson Byrd ; Valerie Espinoza, and Stephen Fischmann, in their official capacities as the Commissioners of the New Mexico Public Regulation Commission, Defendants.

No. CIV 19-0099 JB\CG

United States District Court, D. New Mexico.

Filed May 16, 2019

Jason A. Marks, Jason Marks Law, LLC, Albuquerque, New Mexico and Adam Wenner, Cory Lankford, Jonathon Guy, Orrick, Herrington & Sutcliff, LLP, Washington, D.C., Attorneys for the Plaintiffs.

Judith E. Amer, New Mexico Public Regulation Commission, Santa Fe, New Mexico, Attorneys for the Defendants Theresa Becenti Aguilar, Cynthia Hall, Jefferson Byrd, Valerie Espinoza, and Stephen Fischmann.

Ron Moss, Winstead PC, Austin, Texas and Carol A. Clifford, Jerry Todd Wertheim, Jones, Snead, Wertheim & Clifford, P.A., Santa Fe, New Mexico, Attorneys for the Proposed Intervenor El Paso Electric Company.

MEMORANDUM OPINION AND ORDER ¹

JAMES O. BROWNING, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on: (i) Defendant Theresa Becenti Aguilar's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 19); (ii) Defendant Jefferson Byrd's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 20); (iii) Defendant Valerie Espinoza's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 21); (iv) Defendant Stephen Fischmann's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 22); and (v) Defendant Cynthia Hall's Defendants' Joint Motion to Dismiss and Memorandum of Law in Support Thereof, filed March 1, 2019 (Doc. 23)(collectively, "MTD").² The Court held a hearing on May 2, 2019. The primary issue is whether Plaintiffs Great Divide Wind Farm 2 LLC, and Great Divide Wind Farm 3 LLC (collectively, "Great Divide") bring against Aguilar, Byrd, Espinoza, Fischmann, and Hall (collectively, "the Commission") an as-implemented challenge -- alleging that rule 570 of the New Mexico Administrative Code, promulgated by the New Mexico Public Regulation Commission ("NMPRC"), violates the Public Utility Regulatory Policies Act of 1978, 16 U.S.C. § 824a-3 ("PURPA"), and the regulations of the Federal Energy Regulatory Commission's ("FERC") promulgating PURPA -- or an as-applied challenge -- asking that the Court overturn the Final Order Dismissing Complaint Without Prejudice, In the Matter of the Formal Complaint of Great Divide Wind Farm 2 and Great Divide Wind Farm 3, Case No. 18-00267-UT, 2018 WL 5924350 (N.M. Pub. Regulation Comm'n Nov. 7, 2018), filed in federal court February 6, 2019 (Doc. 1-1)(" N.M. Order"). Under PURPA, the Court has subject-matter jurisdiction over as-implemented challenges but does not have jurisdiction over as-applied challenges. The Court concludes that Great Divide challenges neither rule 570's lawfulness nor the lawfulness of the NMPRC's interpretation of rule 570, and rather brings a claim for relief from the NMPRC's application of its law to Great Divide. The Court concludes, accordingly, that Great Divide brings only as-applied claims. Should Great Divide amend the Great Divide's Complaint for Declaratory and Injunctive Relief, filed February 6, 2019 (Doc. 1)("Complaint"), to state clearly its theory of the case as challenging rule 570 or the NMPRC's interpretation of rule 570, the Court has jurisdiction; otherwise, the Court dismisses the case without prejudice.

The Court will, therefore, grant the MTD in part and dismiss it in part.

FACTUAL BACKGROUND

The Court takes its facts largely from the Complaint. The Court provides these facts for background. It does not adopt them as the truth, and it recognizes that these facts are largely Great Divide's version of events.

Great Divide is developing two wind energy projects (the "Projects") in the State of New Mexico. See Complaint ¶ 1, at 2. The Projects are located around "16 miles northeast of Lordsburg," New Mexico and are "1.16 miles apart." Complaint ¶ 33, at 9. Each Project will include "19 wind turbines, for a total of 79.8 [megawatts] maximum output." Complaint ¶ 34, at 9. The Projects are qualifying small power production facilities ("qualifying facilities") under PURPA.³ See Complaint ¶ 1, at 2. On August 7, 2018, Great Divide filed with FERC for self-certification of the Projects as qualifying facilities. See Complaint ¶ 14, at 4-5; id. ¶ 36, at 9. Great Divide is a qualifying small power producer.⁴ See Complaint ¶ 14, at 4-5.

PURPA provides that FERC will establish rules that require "electric utilities to offer to -- (1) sell electric energy to qualifying cogeneration facilities and qualifying small power production facilities and (2) purchase electric energy from such facilities." 16 U.S.C. § 824a-3. In the rules implementing PURPA, FERC provides that electric utilities may purchase electric energy from qualifying facilities either as the energy becomes available for purchase or "pursuant to a legally enforceable obligation." 18 C.F.R. § 292.304(d). Energy utilities that purchase pursuant to a legally enforceable obligation may pay at the qualified facilities' choice either "(i) [t]he avoided costs calculated at the time of delivery; or (ii) [t]he avoided costs calculated at the time the obligation is incurred." 18 C.F.R. § 292.304(d)(2). The avoided costs are "the ... costs to an electric utility of electric energy or capacity or both which ... such utility would generate itself or purchase from another source," if the electric utility did not purchase from the qualifying facility. 18 C.F.R. § 292.101(b)(6).

Congress delegates to the states the authority to implement the FERC regulations.

See Complaint ¶ 26, at 7; 16 U.S.C. § 824a-3(f). In accordance with this authority, the NMPRC promulgated rule 570 of the New Mexico Administrative Code. See Complaint ¶ 29, at 8. Rule 570 provides:

Each utility shall purchase power from a qualifying facility from the date of interconnection at the utility's avoided cost. An electric utility is obligated to purchase power from a qualifying facility at the utility's avoided cost regardless of whether the electric utility making such purchase is simultaneously selling power to the qualifying facility.

N.M. Code R. § 17.9.570.9(A). Rule 570 does not contain the words "legally enforceable obligation" or address the concept of legally enforceable obligations. Complaint ¶ 31, at 8. The NMPRC considered a rulemaking to define "legally enforceable obligation," but did not undertake the rulemaking. Complaint ¶ 31, at 8 (citing N.M. Order ¶ 8, at 2-3 ).

Great Divide filed a complaint with the NMPRC on August 27, 2018. See Complaint ¶ 37, at 9. Great Divide asked the NMPRC to declare that El Paso Electric Company ("El Paso Electric") has a legally enforceable obligation to purchase the Projects' output when the Projects begin "commercial operation" in 2020. Complaint ¶ 37, at 9. Great Divide asked NMPRC to declare that El Paso Electric must purchase the output in advance for El Paso Electric's avoided costs for thirty years calculated at the time that El Paso Electric incurs the legally enforceable obligation. See Complaint ¶ 37, at 9. Great Divide proposed a methodology for determining the avoided costs at the time that El Paso Electric incurs the obligation, because rule 570.9 does not provide a methodology for such calculations. See Complaint ¶ 38, at 9.

"On September 27, 2018, [El Paso Electric] filed a motion to dismiss Plaintiffs' NMPRC complaint." Complaint ¶ 39, at 9. El Paso Electric cited the NMPRC's decision in Western Water and Power Production Limited LLC v. Public Service Company of New Mexico, Case No. 11-00466-UT (N.M. Pub. Regulation Comm'n Nov. 7, 2018)("Western Water and Power case"). See Complaint ¶ 39, at 9. El Paso Electric argued that, according to rule 570, and to the NMPRC's decision in the Western Water and Power case, El Paso Electric did not have a legally enforceable obligation at the time, so the NMPRC should dismiss Great Divide's case. See Complaint ¶ 39, at 9.

The NMPRC granted El Paso Electric's motion and dismissed the case on November 7, 2018. See Complaint ¶ 40, at 10 (citing generally N.M. Order ). The NMPRC relied on its determination from the Western Water and Power case that rule 570.9 required that qualifying facilities "must be ready to interconnect and deliver energy before any legally enforceable obligation may be created to purchase the power at avoided cost rates." Complaint ¶ 41, at 10 (citing N.M. Order ¶¶ 8, 9, at 2-3 ; id. ¶ 17, at 6 ). The NMPRC noted that, in the order that FERC issued in Western Water and Power's enforcement action, FERC had not commented on rule 570.9 and the NMPRC reasoned that the silence suggested FERC's approval of the NMPRC's decision. See Complaint ¶ 42, at 10 (citing N.M. Order ¶ 12, at 4 ; id. ¶ 17, at 6 ). The NMPRC determined that, because the Projects were not built, they did not meet rule 570's interconnectedness requirement.⁵ See MTD at 3. The NMPRC did not address "any methodology for determining avoided energy cost calculated at the time the obligation is incurred between Plaintiffs and EPE or ... offer to resolve disputes between Plaintiffs and EPE regarding the calculation of the avoided cost rate." Complaint ¶ 44, at 10. See id. ¶ 54, at 12.

On December 6, 2018, Great Divide brought an enforcement action before FERC to overturn the N.M. Order for the NMPRC's "failure to implement PURPA consistent with federal law and FERC's regulations." Complaint ¶ 15, at 5. On February 4, 2019, FERC issued the Notice of Intent Not to Act and Declaratory Order, Great Divide Wind Farm 2 LLC, Great Divide Wind Farm 3 LLC, 166 FERC ¶ 61,090, filed February 6, 2019 (Doc. 1-2) (" FERC Order"). See Complaint ¶ 16, at...