Wash.-St. Tammany Elec. Coop., Inc. v. La. Generating, LLC

• Decision Date: 18 February 2020
• Docket Number: CIVIL ACTION NO. 17-405-JWD-RLB
• Parties: WASHINGTON-ST. TAMMANY ELECTRIC COOPERATIVE, INC., AND CLAIBORNE ELECTRIC COOPERATIVE, INC. v. LOUISIANA GENERATING, LLC
• Court: U.S. District Court — Middle District of Louisiana

WASHINGTON-ST. TAMMANY ELECTRIC COOPERATIVE, INC.,AND CLAIBORNE ELECTRIC COOPERATIVE, INC. v. LOUISIANA GENERATING, LLC

CIVIL ACTION NO. 17-405-JWD-RLB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

February 18, 2020

RULING AND ORDER

This matter is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction ("Motion") filed by Louisiana Generating LLC ("Defendant" or "LaGen"). (Doc. 183.) LaGen also filed Louisiana Generating LLC's Memorandum in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction. (Doc. 188.) In response, Plaintiff filed Memorandum in Opposition to Louisiana Generating LLC's Motion to Dismiss. (Doc. 193.) In reply, Defendant filed Louisiana Generating LLC's Reply Memorandum in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction. (Doc. 197.) The Court held oral argument on the Motion on January 16, 2020.¹ Having considered the arguments raised by the parties, the facts,the law and for reasons set out below, the Court will grant the Motion and dismiss the case for lack of subject matter jurisdiction.

I. RELEVANT FACTS

a. Factual background

Washington St. Tammany Electric Cooperative, Inc. and Claiborne Electric Cooperative, Inc., (together, "Plaintiffs") are member-owned, non-profit electric cooperative corporations organized under the laws of Louisiana and domiciled in Louisiana. (Doc. 1 at ¶¶ 1-2.) Plaintiffs filed this case alleging that Louisiana Generating, LLC ("LaGen" or "Defendant") breached its contracts with Plaintiffs by charging Plaintiffs for costs associated with remediation of environmental conditions that existed before the contracts were executed. Plaintiffs also seek a declaration that LaGen may not assess such costs in the future. (Doc. 1 at 1.)

Defendant owns and operates electric power generation and transmission operations including the plants at issue in the case. (Doc. 1 at ¶ 3.) As a producer of electricity, LaGen has a market-based tariff ("LaGen Tariff") with the Federal Electric Regulatory Commission ("FERC") that states in relevant part:

LOUISIANA GENERATING LLC

FERC ELECTRIC TARIFF, VOLUME NO. 1

1. Availability: Louisiana Generating LLC ("Seller") makes available under this Tariff the following services to customers with whom Seller has contracted:

a. electric energy and capacity available under this tariff to any purchaser; and

b. ancillary services, as described in section 5 below.

2. Applicability: This Tariff is applicable to all wholesale power sales, including energy and capacity sales not otherwise subject to a particular rate schedule of Seller, and applicable ancillary services.

3. Rates: All sales shall be made at rates established by agreement between the purchaser and Seller.

4. Other Terms and Conditions: All other terms and conditions shall be established by agreement between the purchaser and Seller. . . .

(Doc. 188-5 at 4.) LaGen had previous market-based tariffs starting on March 29, 2000. (Doc. 188 at 6, n.13 (citing Doc. 1).)

Pursuant to the LaGen Tariff, Plaintiffs contracted with LaGen in Power Supply and Service Agreements ("PSSAs") that set the rates, charges and terms and conditions for the electrical power. (Doc. 1 at ¶ 4.) The PSSAs are filed with FERC. (Doc. 1 at ¶ 4.) At issue in this case is Section 10.4 ("Environmental Law Clause") of the PSSAs, which states in relevant part:

BUYER and SELLER agree that the rates contained in this Agreement make no provision for the potential effects of a change in Environmental Law (including without limitation any new law or regulation, any change in any existing law or regulation or any change in the interpretation of any law or regulation), the additional costs of complying with such change in continuing to provide electric service to BUYER or any increased costs incurred by SELLER due to a decrease in operating efficiency caused by such a change. In the event of such change, then the Parties shall meet, upon written notice from SELLER, to discuss the effect of such change on SELLER and the Parties' efforts to mitigate the costs thereof. BUYER agrees to pay its portion of such costs in a manner computed by SELLER to recover all of such costs (including a reasonable return of and return on capital in accordance with the terms of this Section) from SELLER's customer. In no event shall Buyer be required to pay the cost of any activities to remediate any environmental condition in existence at the Plants prior to such change of law or any penalties charges or costs resulting from the breach or violation of any Environmental Law (now existing or hereinafter enacted).

(Doc. 1-1 at 35; and Doc. 1-3 at 30.)

In 2009, the United States Environmental Protection Agency ("EPA") filed a complaint against LaGen alleging violations of the Prevention of Significant Deterioration ("PSD") provisions of the Clean Air Act. (Doc. 1 at ¶ 11.) To resolve this action LaGen entered into a consent decree with EPA ("Consent Decree") and agreed to take certain remediation measures.(Doc. 1 at ¶ 16-17.) A recital in the Consent Decree states that LaGen "affirms that a portion of the emissions technology, including related to PM emissions and refueling, under this consent decree, will allow it to comply with the Mercury Air Toxics Rule [sic], a change in environmental law promulgated after the filing of the Complaint." (Doc. 1 at ¶ 21.) Plaintiffs allege that Defendant has passed on the charges of compliance with the Consent Decree impermissibly by improperly classifying remediation costs required under the Consent Decree as related to the Mercury Air Toxics Rule ("MATS"). (Doc. 1 at ¶ 21-26.)

Plaintiffs' Complaint contains two counts: Count 1 - Breach of Contract; and Count II - Declaratory Judgment.

b. The jurisdictional allegations of the Complaint relate to the Federal Power Act

Plaintiffs allege in the Complaint that federal jurisdiction is appropriate because the PSSAs:

are within the scope of the Federal Power Act, 16 U.S.C. §§ 791a et seq., which provides that:

all rates and charges made, demanded, or received by any public utility for or in connection with the transmission or sale of electric energy subject to the jurisdiction of the [Federal Energy Regulatory] Commission, and all rules and regulations affecting or pertaining to such rates or charges shall be just and reasonable, and any such rate or charge that is not just and reasonable is hereby declared to be unlawful.

16 U.S.C. § 824d(a). The [PSSAs], along with the tariffs contained therein, specify the rates, charges, terms and conditions for the sale of electric energy at wholesale in interstate commerce, and were filed with, and accepted by, the Federal Energy Regulatory Commission under the Federal Power Act as required by the [PSSAs]. . . .

(Doc. 1. at ¶ 4.) Plaintiffs further allege original jurisdiction arises because:

LaGen now seeks to unilaterally and unreasonably alter those rates in contravention of the Federal Power Act and the Contracts. Under these circumstances, this court has original jurisdiction over the subject matter of this civil action pursuant to 28 U.S.C. § 1331, because this action presents questions of federal law, and, more particularly pursuant to 28 U.S.C. § 1337, because this action arises under federal laws regulating commerce. See Montana-Dakota Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246 (1951).

(Doc. 1 at ¶ 5.)

II. APPLICABLE STANDARD

Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claims. In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 668 F.3d 281, 286-87 (5th Cir. 2012) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Stockman v. FEC, 138 F.3d 144, 151 (5th Cir. 1998), Hall v. Louisiana, 12 F. Supp. 3d 878 (M.D. La. 2014)). Under Federal Rule of Civil Procedure 12(b)(1), a claim is "properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate" the claim. Id. (quoting Home Builders Ass'n, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998)).

The Fifth Circuit Court of Appeals has explained the standard for motions pursuant to Rule 12(b)(1) as follows:

Motions filed under Rule 12(b)(1) of the Federal Rules of Civil Procedure allow a party to challenge the subject matter jurisdiction of the district court to hear a case. Fed. R. Civ. P. 12(b)(1). Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996).

The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. McDaniel v. United States, 899 F.Supp. 305, 307 (E.D. Tex. 1995). Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist. Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir. 1980). When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits. Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1977) (per curiam).

Considering a Rule 12(b)(1) motion to dismiss first "prevents a court without jurisdiction from prematurely dismissing a case with prejudice." In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 668 F.3d at 286-87.

In examining a Rule 12(b)(1) motion, the district court is empowered to consider matters of fact which may be in dispute. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981). Ultimately, a motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle plaintiff to

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