Occidental Chemical v. Louisiana Public Service

• Decision Date: 12 June 2007
• Docket Number: Civil Action No. 06-894-JJB.,Civil Action No. 06-903-JJB.
• Citation: 494 F.Supp.2d 401
• Parties: OCCIDENTAL CHEMICAL CORPORATION v. LOUISIANA PUBLIC SERVICE COMMISSION, et al. Carville Energy, L.L.C. v. Louisiana Public Service Commission, et al.
• Court: U.S. District Court — Middle District of Louisiana

494 F.Supp.2d 401

OCCIDENTAL CHEMICAL CORPORATION v. LOUISIANA PUBLIC SERVICE COMMISSION, et al.

Carville Energy, L.L.C. v. Louisiana Public Service Commission, et al.

Civil Action No. 06-894-JJB.

Civil Action No. 06-903-JJB.

United States District Court, M.D. Louisiana.

June 12, 2007.

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Luke F. Piontek, Corinne M. Blache, Gayle Thomasson Kellner, Jon Kenton Parsons, Roedel, Parsons, Koch, Blache, Balhoff & McCollister, Baton Rouge, LA, Daniel A. Hagan, Earle H. O'Donnell, Zori G. Ferkin, White & Case, LLP, Washington, DC, Mike Stenglein, Ryan H. Downton, Dewey Ballantine LLP, Austin, TX, for Occidental Chemical Corporation.

Paul Zimmering, Dana M. Shelton, Noel Joseph Darce, Walter F. Wolf, III, Stone, Pigman, Walther, Wittmann, LLC, New Orleans, LA, Daria Burgess Diaz, Stone, Pigman, Walther, Wittmann, LLC, Baton Rouge, LA, Douglas G. Green, Frank H. Griffin, IV, Jennifer Quinn-Barabanov, Steptoe & Johnson, Washington, DC, Wayne J. Anderson, Karen H. Freese, Margaret Jenkins Savoye, Timothy Scott Cragin, Entergy Services Inc., New Orleans, LA, for Louisiana Public Service Commission et al.

Arthur W. Abercrombie, Jr., Edward Daniel Hughes, James Leeper Ellis, Taylor, Porter, Brooks & Phillips, Baton Rouge, LA, Ashley C. Parrish, Evan C. Zoldan, James W. Draughn, Jr., Neil L. Levy, Kirkland & Ellis, Washington, DC, John N. Bellinger, Calpine Corporation, Houston, TX, for Carville Energy, LLC.

RULING ON MOTIONS TO DISMISS

BRADY, District Judge.

In these consolidated actions, the defendants Louisiana Public Service Commission and commissioners Jack Blossman, Jr., James Field, Lambert Boissiere, III, C. Dale Sittig, and Foster Cambell (collectively "LPSC") have together filed motions to dismiss in both cases on the basis of Fed. Rule Civ. P. 12(b)(1) and 12(b)(6) (does. 9 (action 06-894), 13 (action 06-903)). Co-defendant Entergy Louisiana, L.L.C. has filed a motion to dismiss in action 06-894 (doc. 12), and co-defendant Entergy Gulf States, Inc. has filed a motion to dismiss in action 06-903 (doc. 18).

Occidental opposes the motions to dismiss in action 06-894 (doc. 26). The LPSC and Entergy Louisiana have filed separate reply briefs (docs.34, 35). Carville opposes the motions to dismiss in action 06-903 (doc. 37), and the LPSC and Entergy Gulf have filed separate reply briefs (docs.42, 43). Jurisdiction in 06-894 is purportedly based on federal question and diversity, pursuant to 28 U.S.C. §§ 1331, 1332. Jurisdiction in action 06-903 is purportedly based on federal question and supplemental jurisdiction, pursuant to 28 U.S.C. §§ 1331, 1367. Oral argument is unnecessary.¹

Standard of Review

The motions to dismiss presently before the court have been filed pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Rule 12(b)(1) motions come in two forms (1) facial attacks and (2) factual attacks. See U.S. v. Ortega, 644 F.2d 512, 513 (5th Cir.1981). A facial attack consists of a Rule 12(b)(1) motion unaccompanied by supporting evidence, and it challenges jurisdiction based solely on the pleadings. Id. When ruling on a facial attack, the court must presume that the factual allegations in the complaint are true and determine whether they establish subject matter jurisdiction. Id. On the other hand, a Rule 12(b)(1) motion makes a factual attack at jurisdiction when the movant provides supporting evidence that contradicts the jurisdictional allegations in the complaint. Id.

In the case at bar, the defendants' 12(b)(1) motions are "facial" attacks because the motions attack jurisdiction on the basis of the pleadings alone, and not by resorting to supporting evidence. While it is true that Entergy has filed certain exhibits along with its motions to dismiss, it is clear that the basis for its 12(b)(1) motions is that Occidental and Carville cannot state a federal cause of action. This is the same basis for their motions to dismiss for failure to state a cause of action, pursuant to Rule 12(b)(6). The jurisdictional issues are intertwined with the merits, and thus the court will limit its "jurisdictional inquiry to facial scrutiny and reserve factual scrutiny for the merits." Xerox Corp. v. Genmoora Corp., 888 F.2d 345, 350 (5th Cir.1989).² Because the defendants' facial attack on subject matter jurisdiction is that no federal cause of action exists, on the basis of the pleadings, it is proper to analyze this case under the familiar Rule 12(b)(6) standard of review.

Rule 12(b)(6) authorizes a dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R.Civ.P. 12(b)(6). While the movant no longer needs to show that dismissal is warranted "beyond a doubt," a court must refrain from dismissing on the pleadings because it thinks the claims are weak or that recovery is unlikely. See Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1965, 1969, 167 L.Ed.2d 929 (2007) (abrogating the holding in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) that the movant must prove, beyond doubt, that no relief is warranted on the basis of the factual allegations in the pleadings). It is still the law in this circuit that a motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir.1982). The court accepts all well-pleaded facts as true, and it views them in a light most favorable to the nonmovant. Capital Parks, Inc. v. Southeastern, Adver. and Sales Sys., Inc., 30 F.3d 627, 629 (5th Cir.1994); Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir.1994).

At the same time, however, conclusory allegations and unwarranted factual deductions masquerading as well-pleaded facts will be ignored. Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir.1994): Associated Builders, Inc. v. Ala. Power Co., 505 F.2d 97, 100 (5th Cir.1974). In the end, the defendants have a very high burden in proving dismissal on the basis of barebone pleadings. The Fifth Circuit has stated that "[d]ismissal on the basis, of barebone pleadings is a precarious disposition with a high mortality rate." Int'l Erectors, Inc. v. Wilhoit Steel Erectors & Rental Serv., 400 F.2d 465, 471 (5th Cir.1968).

Statement of Facts

With the applicable standard of review in mind, the court addresses the wellpleaded facts as found in the complaints of Carville and Occidental.

Under the Federal Power Act, 16 U.S.C. § 791, et seq., Congress granted the Federal Energy Regulatory Commission ("FERC") with exclusive jurisdiction and authority to regulate the sale of electric power at wholesale in interstate commerce. In 1978, Congress amended the Federal Power Act by enacting the Public Utility Regulatory Policies Act ("PURPA"). See 16 U.S.C. § 824a-3, et seq. PURPA was enacted in response to a then-present nationwide energy crisis. See FERC v. Mississippi, 456 U.S. 742, 745, 102 S.Ct. 2126, 72 L.Ed.2d 532 (1982). § 210 of PURPA was enacted to encourage the development of cogeneration facilities and small power production facilities, and to reduce the demand for fossil fuels. The cogeneration facilities are known in the industry as "qualifying facilities" ("QF's").

Prior to enactment of PURPA, traditional electric utilities hesitated from purchasing electric power from QF's. In order to overcome this obstacle, Congress enacted § 210(a) of PURPA, which directed the FERC to promulgate rules to encourage cogeneration and small power production, including rules requiring electric utilities to purchase electricity from, and sell electricity to, QF's. FERC v. Mississippi, 456 U.S. at 750-51, 102 S.Ct. 2126. Pursuant to § 210(b) of PURPA, utilities must purchase electricity from QF's at the utility's "avoided cost." The FERC has defined "avoided cost" as "the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility or qualifying facilities, such utility would generate itself or purchase from another source." 18 C.F.R. § 292.101(b)(6).

To ensure that utilities are properly implementing the requirements of PURPA (by paying QF's the full avoided cost), Congress requires each state agency with regulatory authority over electric public utilities (in this case the LPSC) to fully and properly implement PURPA's provisions. 16 U.S.C. § 824a-3(f). Federal circuits have recognized that a state commission's failure to ensure that utilities pay QF's for energy at a rate equal to the utilities' full avoided cost "is a failure to comply with a regulation implementing" PURPA. See Conn. Valley Elec. Co. v. FERC, 208 F.3d 1037, 1043 (D.C.Cir.2000): New York State Elec. Gas Corp. v. FERC, 117 F.3d 1473, 1476 (D.C.Cir.1997); Indep. Energy Producers Ass'n v. Cal. Pub. Utils. Comm'n, 36 F.3d 848, 858-59 (9th Cir. 1994).

The LPSC initially implemented PURPA and FERC regulations in 1982. On February 27, 1998, the LPSC issued a "General Order" amending and superceding its 1982 order. The General Order, inter alia, required utilities subject to the jurisdiction of the LPSC to purchase all energy and capacity made available by QF's at prices equal to the purchasing utilities'"avoided cost." The 1998 General Order' defined "avoided cost" in the exact same way as the FERC's definition. The General Order required a purchasing utility to determine its, avoided cost on an hourly basis using an economic dispatch model that calculated the difference between the cost of energy actually furnished by the utility and the cost the utility would have been required to incur absent the presence of the QF's supply.

On August 31, 2002, Carville and Entergy Gulf entered into a power purchase agreement confirming the terms under which Entergy Gulf (being the regulated utility) would purchase power from Carville (being the QF). Occidental (being another QF) entered into a similar power purchase...