Indeck Maine Energy v. Com'R of Energy, SJC-10332.

• Court: United States State Supreme Judicial Court of Massachusetts
• Writing for the Court: Cordy
• Citation: 454 Mass. 511,911 N.E.2d 149
• Parties: INDECK MAINE ENERGY, LLC, & others<SMALL><SUP>1</SUP></SMALL> v. COMMISSIONER OF ENERGY RESOURCES & others.<SMALL><SUP>2</SUP></SMALL>
• Docket Number: SJC-10332.
• Decision Date: 11 August 2009

911 N.E.2d 149 454 Mass. 511 INDECK MAINE ENERGY, LLC, & others¹
v.
COMMISSIONER OF ENERGY RESOURCES & others.² SJC-10332. Supreme Judicial Court of Massachusetts, Suffolk. Argued April 7, 2009. Decided August 11, 2009.

[911 N.E.2d 150]

William J. Dodge, Berlington, VT, for the plaintiffs.

Sookyoung Shin, Assistant Attorney General, for the defendant.

M. Curtis Wittaker, of New Hampshire, for the interveners.

Present: MARSHALL, C.J., IRELAND, SPINA, COWIN, CORDY, BOTSFORD, & GANTS, JJ.

CORDY, J.

454 Mass. 512

On further appellate review, we must decide whether owners and operators of renewable energy generating facilities authorized to participate in the renewable energy portfolio standard program established pursuant to G.L. c. 25A, § 11F, have standing to challenge governmental actions permitting other facilities to participate in the program, thereby threatening their competitive position. Because we conclude that the effect on the competitive position of such owners and operators does not fall within the area of concern sought to be protected or furthered by the statute, they do not have standing to sue for their purported injuries, and we therefore affirm the judgment of dismissal entered in the Superior Court.

Background. The plaintiffs, Indeck Maine Energy, LLC (Indeck); Ridgewood Providence Power Partners, LP; and

911 N.E.2d 151

Ridgewood Rhode Island Generation, LLC (the latter two collectively Ridgewood), as well as the interveners, Greenville Steam Company (Greenville) and Boralex Livermore Falls, Inc. (Boralex), each operate advanced biomass renewable energy facilities in New England.³ All of their facilities were originally placed into service prior to 1998. Each facility has received a statement of qualification as a "new renewable energy generating source" from the Department of Energy Resources (department).⁴ Having obtained statements of qualification, the facilities are permitted to sell renewable energy certificates (also known as credits) to retail electricity suppliers selling electricity to end-use customers in Massachusetts. See G.L. c. 25A, § 11F; 225 Code Mass. Regs. §§ 14.01 (2002).⁵ A credit, once purchased, is counted toward

454 Mass. 513

the retail electricity supplier's compliance with the renewable energy portfolio standard, which requires purchases of renewable energy from qualifying renewable energy generators. See infra at 518-520, 911 N.E.2d. 149.

On May 5, 2006, Indeck and Ridgewood filed a complaint in the Superior Court against the department seeking the rescission of the statements of qualification issued to Greenville and Boralex pursuant to G.L. c. 25A, § 11F, and 225 Code Mass. Regs. §§ 14.02 and 14.06. The complaint sought injunctive and declaratory relief, or, in the alternative, relief in the nature of mandamus. It alleged irregularities in the department's issuance of statements of qualification to Greenville and Boralex, including that they were issued without requiring a "[v]intage [w]aiver," 225 Code Mass. Regs. § 14.05(2),⁶ and without the required notice and comment period. The complaint also alleged that the department inappropriately permitted Greenville and Boralex to use construction and debris wood as a renewable fuel.

With respect to their standing to sue, the plaintiffs alleged that they made substantial investments to construct and operate their facilities before applying for and

911 N.E.2d 152

obtaining their statements of qualification, and that the department's "actions threaten [their] business positions in the [renewable energy credit] market." More specifically, the plaintiffs alleged that in order to obtain their statements of qualification, the department required them to

454 Mass. 514

obtain vintage waivers (that reduced the output of their facilities that could be counted toward renewable energy credits) while not requiring Greenville and Boralex, although similarly situated, to obtain such waivers. In addition, the plaintiffs alleged that the department further "threatens [their] competitive position" by issuing statements of qualification to Greenville and Boralex even though those facilities use construction and debris wood as fuel, contrary to the regulation defining eligible biomass fuel. Quoting from the department's own "Policy Statement on the [Renewable Energy Portfolio Standard] Eligibility of Retooled Biomass Plants" (Oct. 27, 2005), the plaintiffs alleged that a policy change on eligibility can result in "an influx of [renewable energy credits]" that could in turn "severely damage the [renewable energy credit] market in Massachusetts and adversely affect the goal of the [renewable energy portfolio standard] program to promote the development of `new' renewable energy generating facilities." Finally, the plaintiffs alleged that the Massachusetts renewable energy portfolio standard program is a "regulated industry"; that the plaintiffs' interest in ensuring that the department does not either violate the laws relating to the program or "unlawfully expand or disregard its own regulations" falls within an area of concern of the statute establishing and governing the program; and that the department's actions causing the plaintiffs' injuries are "inconsistent with the aims and purposes of the entire regulatory scheme."

The department filed a motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Mass. R. Civ. P. 12(b)(1), 365 Mass. 754 (1974), and after their motions to intervene were allowed, Greenville and Boralex did the same. A Superior Court judge determined that the plaintiffs lacked the requisite standing to sue and dismissed the case. The judge reasoned that "injury from business competition is insufficient to confer standing to challenge government action" unless the plaintiffs are "competitors in a regulated industry." He then concluded that the plaintiffs were not participants in a "regulated industry," as that term is presently understood, because G.L. c. 25A, § 11F, does not regulate competition, control pricing, or control the market in which electricity is generated and sold. The judge characterized the department's role as one of "a gatekeeper, not a regulator."

454 Mass. 515

In a well-reasoned opinion, the Appeals Court disagreed with this conclusion, reversed the judgment of dismissal, and remanded the case for further proceedings. See Indeck Me. Energy, LLC v. Commissioner of the Div. of Energy Resources, 72 Mass.App.Ct. 92, 888 N.E.2d 994 (2008). After noting that "there is no formally-stated test in Massachusetts jurisprudence for determining when an industry is `regulated,'" the Appeals Court pointed to several factors that led it to conclude that the plaintiffs were part of a regulated industry and had established standing to sue. Id. at 98, 888 N.E.2d 994. Those factors were that: the renewable energy portfolio standard program is "entirely a creature of government"⁷; the department "retains the exclusive control

911 N.E.2d 153

over the annual percentage of the electricity portfolio that must be comprised of renewable energy and must be purchased from the market established by the Legislature and administered by the [department]"⁸; "the competitors are regulated by the [department] at all stages of the process";

454 Mass. 516

and G.L. c. 25A, § 11F, "embodies a scheme to promote and to control competition in the renewable energy marketplace." Indeck Me. Energy, LLC v. Commissioner of the Div. of Energy Resources, supra at 98-102, 888 N.E.2d 994. Finally, the Appeals Court concluded that the plaintiffs had established standing because their claims "fall within the scope of G.L. c. 25A, § 11F, as they allege that the [department's] procedural and substantive irregularities in issuing the statements of qualification disrupted pricing in the renewable energy credit market and inappropriately awarded the allegedly nonqualifying facilities permission to participate in the Massachusetts market." Id. at 102-103, 888 N.E.2d 994. We granted the department's application for further appellate review.⁹

Discussion. Because the Superior Court judge decided the standing issue as

911 N.E.2d 154

a matter of law, we review that legal conclusion de novo. See Anastos v. Sable, 443 Mass. 146, 149, 819 N.E.2d 587 (2004).

Standing is an issue of subject matter jurisdiction that is properly challenged by way of a motion to dismiss under rule 12(b)(1). Ginther v. Commissioner of Ins., 427 Mass. 319, 322, 693 N.E.2d 153 (1998). Neither G.L. c. 231A (declaratory judgment) nor G.L. c. 249, § 5 (mandamus), provides an independent statutory basis for standing. See Enos v. Secretary of Envtl. Affairs, 432

454 Mass. 517

Mass. 132, 135, 731 N.E.2d 525 (2000); Perella v. Massachusetts Turnpike Auth., 55 Mass. App.Ct. 537, 539, 772 N.E.2d 70 (2002). Consequently, to establish standing to challenge administrative agency actions, a plaintiff must "allege an injury within the area of concern of the statute or regulatory scheme under which the injurious action has occurred."¹⁰ Massachusetts Ass'n of Indep. Ins. Agents & Brokers v. Commissioner of Ins., 373 Mass. 290, 293, 367 N.E.2d 796 (1977), and cases cited. That is, to have standing here the plaintiffs' interests "must come within the `"zone of interests" arguably protected by [G.L. c. 25A, § 11F].'" Enos v. Secretary of Envtl. Affairs, supra at 135, 731 N.E.2d 525, quoting Penal Insts. Comm'r for Suffolk County v. Commissioner of Correction, 382 Mass. 527, 532, 416 N.E.2d 958 (1981).

Normally, an injury derived from business competition is not sufficient to confer standing. Circle Lounge & Grille, Inc. v. Board of Appeal of Boston, 324 Mass. 427, 429, 86 N.E.2d 920 (1949). We have stated, however, that "[t]his rule does not apply . . . to competitors in a regulated industry . . . who are attempting to challenge governmental action threatening their competitive position." Everett Town Taxi, Inc. v. Aldermen of Everett, 366 Mass. 534,...