Transmission Agency, North. Cal. v. Sierra Pacific

• Decision Date: 16 April 2002
• Docket Number: No. 01-15449.,01-15449.
• Parties: TRANSMISSION AGENCY OF NORTHERN CALIFORNIA, Plaintiff-Appellant, v. SIERRA PACIFIC POWER COMPANY, Bonneville Power Administration, Pacificorp, and Portland General Electric, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

295 F.3d 918

TRANSMISSION AGENCY OF NORTHERN CALIFORNIA, Plaintiff-Appellant, v. SIERRA PACIFIC POWER COMPANY, Bonneville Power Administration, Pacificorp, and Portland General Electric, Defendants-Appellees.

No. 01-15449.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 11, 2002.

Filed April 16, 2002.

Amended July 8, 2002.

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Dennis L. Viglione, Montague, Cochrane & Viglione, Sacramento, CA, for the plaintiff-appellant.

Bruce G. Forrest, Department of Justice, Washington, D.C., John A. Sturgeon, White & Case LLP, Los Angeles, CA, and David S. Aman, Tonkon Torp LLP, Portland, OR, for the defendants-appellees.

Appeal from the United States District Court for the Eastern District of California; William B. Shubb, District Judge, Presiding.

Before DAVID R. THOMPSON, W. FLETCHER, and BERZON, Circuit Judges.

ORDER

DAVID R. THOMPSON, Circuit Judge.

The opinion filed April 16, 2002 is amended as follows:

At slip opinion page 5765, in the first full paragraph, the fourth sentence that begins "TANC cannot obtain state law money damages ..." is amended to read: "TANC cannot obtain state law money damages allegedly resulting from the operation of an interstate electricity intertie expressly approved by FERC, where the manner of operation was necessarily contemplated at the time of approval."

At slip opinion page 5766, in the first full paragraph, the fifth sentence that begins "Offering an analogy of our own ..." is amended to read: "Offering an analogy of our own, allowing TANC to sue under state law for damage allegedly caused to its transmission system by an interconnected interstate system approved by FERC would be akin to allowing an airline to sue under state law for economic damages caused by another airline's FAA-approved flight plans."

With these amendments, the panel named above has voted to deny the petition for rehearing. Judges W. Fletcher and Berzon have voted to deny the petition for rehearing en banc, and Judge Thompson has recommended denial of that petition.

The full court has been advised of the petition for rehearing en banc, and no judge has requested a vote on that petition.

The petition for rehearing and petition for rehearing en banc are DENIED.

OPINION

The Transmission Agency of Northern California (TANC) is a joint exercise of powers agency composed of over a dozen Northern and Central California municipalities. It brought suit against the Bonneville Power Administration (BPA), a federal power marketing agency of the United States Department of Energy,¹ and the defendant regional utility companies. TANC asserted claims for equitable relief and damages allegedly incurred as a result of the BPA and the other defendants constructing, and interconnecting with, an electricity intertie known as the Alturas Intertie.

The district court did not reach the merits of TANC's claims. It dismissed the claims against the BPA for lack of subject matter jurisdiction, concluding that those claims challenged final agency action by the BPA and fell within the Ninth Circuit Court of Appeals' exclusive original jurisdiction. See 16 U.S.C. § 839f(e)(5). It also dismissed, as preempted under the Federal Power Act, 16 U.S.C. §§ 791-828c, TANC's claims against the defendant utility companies. TANC appeals. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

I Facts and Proceedings

Because this case comes before us on appeal from a dismissal under Federal Rule of Civil Procedure 12(b)(6), all facts alleged in TANC's complaint are taken as true and construed in the light most favorable to it. Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir.1996).

TANC alleged that in 1991 it entered into an "Interim Interconnection Agreement" and "Schedule and Coordination Agreement" (collectively the "Agreements") with the defendants BPA, Portland General Electric, and PacifiCorp (collectively the "Northwest Parties") to jointly construct and operate an interconnection of two electricity interties. Under the Agreements, the Northwest Parties agreed to upgrade from 3200 MW to 4800 MW an existing intertie that they own in Oregon, known as the Northwest AC Intertie. TANC, in turn, agreed to construct a new 1600 MW line known as the California-Oregon Transmission Project. TANC also agreed to connect the California-Oregon Transmission Project to an already existing intertie in California, the 3200 MW Pacific AC Intertie,² to form the 4800 MW California-Oregon Intertie. Finally, TANC and the Northwest Parties agreed to join the California-Oregon Intertie with the Northwest AC Intertie, creating a transfer capability of 4800 MW north-to-south at the California-Oregon Border between the two interties. The parties performed under the Agreements, and the Federal Energy Regulatory Commission (FERC) allocated to TANC's California-Oregon Transmission Project one-third of the newly-created transfer capability.

In 1996, the BPA announced its decision to join the Northwest AC Intertie with the new 300 MW Alturas Intertie, which was to be constructed by defendant Sierra Pacific. See Decision to Interconnect with Sierra Pacific Power Company's Alturas Transmission Line Project, 61 Fed.Reg. 7095 (Feb. 26, 1996). Sierra Pacific completed construction of the Alturas Intertie in late 1998.

The Alturas Intertie stretches from Nevada through northern California and into Oregon, where it connects with the Northwest AC Intertie. When operational, the Alturas Intertie causes a megawatt-for-megawatt reduction in the ability of the Northwest AC Intertie to deliver power to the California-Oregon Intertie. As a result, if the Alturas Intertie is operating at its maximum 300 MW capacity, then the California-Oregon Intertie has 300 MW of excess capacity.

Prior to the Alturas Intertie commencing operations, TANC (and other companies and instrumentalities not parties to this litigation) filed an unsuccessful protest with FERC, alleging that the Alturas Intertie would create a megawatt-for-megawatt reduction in the capacity of the California-Oregon Intertie. In that proceeding, TANC requested that FERC ensure that procedures were put in place to protect the "then existing" contractual relationships, including the California-Oregon Intertie's alleged first-priority access to 4800 MW of transfer capability under the Agreements. Alternatively, TANC asked FERC to delay operation of the Alturas Intertie until either Congress approved the intertie, or the Northwest AC Intertie's capacity was increased to 5100 MW. FERC denied these requests and, on November 30, 1998, it approved operation of the Alturas Intertie. See 85 F.E.R.C. ¶ 61,314 (Nov. 30, 1998).

In February 1999, however, after operation of the Alturas Intertie had commenced, FERC initiated a hearing into the connection agreement creating the Alturas Intertie. FERC considered the hearing necessary to address allegations regarding the megawatt-for-megawatt reduction in the California-Oregon Intertie's capacity, the inconsistency between the Alturas scheduling agreement and the California-Oregon Intertie's scheduling needs, and related issues.

Before the FERC case was resolved,³ TANC filed the present lawsuit in December 1999 in California Superior Court against the BPA, Sierra Pacific, Portland General Electric, and PacifiCorp. As amended, TANC's complaint alleged breach of contract, tort, and property claims and requested legal and equitable relief. Specifically, TANC alleged that the reduction in capacity of transfers from the Northwest AC Intertie to the California-Oregon Intertie breached the Agreements and caused damage to the California-Oregon Transmission Project. TANC also asserted a fraud claim, alleging that Sierra Pacific had made misrepresentations before unspecified governmental agencies to obtain approval for the Alturas Intertie.

The BPA, a federal agency, exercised its right to remove the action to federal court, see 28 U.S.C. §§ 1442(a)(1), 1446(a), and the remaining defendants followed suit, asserting federal question and diversity jurisdiction. See 28 U.S.C. §§ 1331, 1332. Once in federal court, the defendants moved to dismiss under Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 19(b). TANC then voluntarily dismissed its tort claims against the BPA and its claims for equitable relief. The district court dismissed the remainder of TANC's claims under Rules 12(b)(1) and 12(b)(6). The court held that the claims against the BPA were subject to the exclusive original jurisdiction of this court under 16 U.S.C. § 839f(e)(5), and that TANC's claims against Sierra Pacific, PacifiCorp, and Portland General Electric were preempted by the Federal Power Act. This appeal followed.

II Claims Against BPA

TANC raises two challenges to the district court's dismissal of its claims against the BPA. TANC contends that (1) the district court erred in holding that its claims were challenges to final agency action by the BPA and thus within the exclusive original jurisdiction of the Ninth Circuit Court of Appeals, and (2) even if the district court was correct that it lacked jurisdiction, instead of dismissing the claims, it should have transferred them under 28 U.S.C. § 1631 from the district court to this court or, alternatively, to the Court of Federal Claims. We are unpersuaded by TANC's arguments, and affirm the decision of the district court.

A

The district court ruled that it lacked subject matter jurisdiction over TANC's claims against the BPA because those claims were challenges to final agency action by the BPA over which this court has exclusive original jurisdiction under section 9(e)(5) of the Northwest Power Planning Act, codified at 16 U.S.C. § 839f(e)(5). We review de novo the district court's conclusion that it lacks subject matter jurisdiction. Wilson v. A.H. Belo Corp., 87 F.3d 393, 396 (9th Cir.1996).

Section 9(e)(5) of the Northwest Power...