Windway Technologies v. Midland Power Cooperative, No. C00-3089MWB (N.D. Iowa 3/5/2001), C00-3089MWB.

CourtUnited States District Courts. 8th Circuit. Northern District of Iowa
Writing for the CourtMark W. Bennett
Docket NumberNo. C00-3089MWB.,C00-3089MWB.
Decision Date05 March 2001

Page 1

No. C00-3089MWB.
United States District Court, N.D. Iowa, Central Division.
March 5, 2001.

MARK W. BENNETT, Chief Judge.


The plaintiffs, Windway Technologies, Inc. ("Windway"), Welch Motels, Inc. ("Welch"), Gregory Swecker and Beverly Swecker ("Sweckers"), bring this claim against Midland Power Cooperative ("Midland") and Iowa Lakes Electric Cooperative ("Iowa Lakes"), alleging that the tariffs imposed by defendants violate the Public Utility Regulatory Policies Act of 1978 ("PURPA") and regulations implementing this statute, to wit: 18 C.F.R. § 292.304, 292.305, and 292.306. Midland moves to dismiss the complaint on the ground that the court lacks subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1).1 Specifically, Midland contends that: (1) the plaintiffs' claims, which cite PURPA, are not claims that arise under federal law for jurisdictional purposes and, therefore, must be brought in state court because state court has exclusive jurisdiction to enforce any requirement of a non-regulated utility's PURPA implementation plan; and (2) the plaintiffs' remaining claims are traditional state law tort claims and do not turn on federal law, and the PURPA would not preempt application of state law on those claims.2 In response, plaintiffs assert that this court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 and 16 U.S.C. § 824a-3(h)(2)(B).

A. Rule 12(b)(1) Challenges To Jurisdiction

For the court to dismiss for lack of subject matter jurisdiction under FED. R. CIV. P. 12(b)(1), the complaint must be successfully challenged on its face or on the factual truthfulness of its averments. Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). The court in Titus distinguished between the two kinds of challenges:

In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction. Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 731-32 (11th Cir. 1982). . . .

If the [defendant] wants to make a factual attack on the jurisdictional allegations of the complaint, the court may receive competent evidence such as affidavits, deposition testimony, and the like in order to determine the factual dispute. Land v. Dollar, 330 U.S. 731, 735 n. 4 (1947) [footnote omitted]. The proper course is for the defendant to request an evidentiary hearing on the issue. Osborn [v. United States], 918 F.2d [724,] 730 (citing Crawford v. United States, 796 F.2d 924, 928 (7th Cir. 1986)).


In Osborn v. United States, 918 F.2d 724 (8th Cir. 1990), the Eighth Circuit Court of Appeals presented its most exhaustive discussion of the procedures and requirements for determination of a 12(b)(1) motion to dismiss.

The district court was correct in recognizing the critical differences between Rule 12(b)(1), which governs challenges to subject matter jurisdiction, and Rule 56, which governs summary judgment. Rule 12 requires that Rule 56 standards be applied to motions to dismiss for failure to state a claim under Rule 12(b)(6) when the court considers matters outside the pleadings. [Citations omitted.] Rule 12 does not prescribe, however, summary judgment treatment for challenges under 12(b)(1) to subject matter jurisdiction where a factual record is developed. Nonetheless, some courts have held that Rule 56 governs a 12(b)(1) motion when the court looks beyond the complaint. We agree, however, with the majority of circuits that have held to the contrary. . . . [Citations omitted.]

The reason for treating a 12(b)(1) motion differently than a 12(b)(6) motion, which is governed by Rule 56 when matters outside the pleadings are considered, "is rooted in the unique nature of the jurisdictional question." Williamson [v. Tucker], 645 F.2d [404,] 413 [(5th Cir.), cert. denied, 454 U.S. 897 (1981)]. It is "elementary," the Fourth [sic] Circuit stated, that a district court has "broader power to decide its own right to hear the case than it has when the merits of the case are reached." Id. Jurisdictional issues, whether they involve questions of law or of fact, are for the court to decide. Id. Moreover, because jurisdiction is a threshold question, judicial economy demands that the issue be decided at the outset rather than deferring it until trial, as would occur with denial of a summary judgment motion.

Osborn, 918 F.2d at 729.

The court in Osborn found the distinction between facial and factual attacks on the complaint under 12(b)(1) to be critical. Id. (citing Menchaca v. Chrysler Credit Corp., 613 F.2d 507, 511 (5th Cir.), cert. denied, 449 U.S. 953 (1980), and Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). The court stated that

[i]n the first instance, the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6). The general rule is that a complaint should not be dismissed "`unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" In a factual attack, the court considers matters outside the pleadings, and the non-moving party does not have the benefit of 12(b)(6) safeguards.

Id. at 729 n. 6 (citations omitted). A factual challenge to jurisdiction under 12(b)(1) is unique:

[H]ere the trial court may proceed as it never could under 12(b)(6) or FED. R. CIV. P. 56. Because at issue in a factual motion is the trial court's jurisdiction-its very power to hear the case-there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist.

Id. at 730 (quoting Mortensen, 549 F.2d at 891). The Osborn court stated that the proper course is for the defendant to request an evidentiary hearing on the issue, and, since no statute or rule prescribes the format of such a hearing, "`any rational mode of inquiry will do.'" Id. (quoting Crawford, 796 F.2d at 929).

Once the evidence is submitted, the district court must decide the jurisdictional issue, not simply rule that there is or is not enough evidence to have a trial on the issue. [Crawford, 796 F.2d at 929.] The only exception is in instances when the jurisdictional issue is "so bound up with the merits that a full trial on the merits may be necessary to resolve the issue." Id.


Although the district court has the authority to consider matters outside the pleadings on a motion challenging subject matter jurisdiction under FED. R. CIV. P. 12(b)(1), Drevlow v. Lutheran Church, Mo. Synod, 991 F.2d 468, 470 (8th Cir. 1993), and Midland has submitted matters outside of the pleadings, the court finds that Midland makes a facial challenge to subject matter jurisdiction over the PURPA claims here, rather than mounting a factual challenge to the truthfulness of its averments. See Titus, 4 F.3d at 593 (distinguishing between facial and factual challenges to subject matter jurisdiction). Specifically, Midland asserts that the PURPA simply does not provide for a federal cause of action asserted in the plaintiffs' claims. Therefore, the court will restrict itself to the face of the pleadings, and afford the non-moving party, the plaintiffs, the same protections they would receive defending against a motion brought under Rule 12(b)(6). Osborn, 918 F.2d at 729 n. 6.

B. Overview of The Public Utility Regulatory Policies Act ("PURPA")

Under the Federal Power Act, 16 U.S.C. § 791a et seq., any entity that owns or operates facilities used to transmit or sell electric energy in interstate commerce is subject to the jurisdiction and the regulatory powers of the Federal Energy Regulatory Commission ("FERC"). See 16 U.S.C. § 824. In 1978, as part of a package of legislation designed to combat the nationwide energy crisis, Congress passed the Public Utility Regulatory Policies Act ("PURPA").3 FERC v. Mississippi, 456 U.S. 742, 742 (1982). In enacting PURPA, "Congress' overall strategy was to `control power generation costs and ensure long-term economic growth by reducing the nation's reliance on oil and gas and increasing the use of more abundant, domestically produced fuels.'" Crossroads Cogeneration Corp. v. Orange & Rockland Utilities, Inc., 159 F.3d 129, 132 (3d Cir. 1998) (citing Freehold Cogeneration Associates, L.P. v. Board of Regulatory Commissioners of the State of New Jersey, 44 F.3d 1178, 1182 (3d Cir. 1995)). Section 210 of PURPA seeks to encourage the development of cogeneration facilities and small power production facilities. American Paper Inst. v. American Elec. Power Serv. Corp., 461 U.S. 402, 404 (1983). Prior to the enactment of the PURPA, Congress identified two problems that thwarted the development of non-traditional generational facilities: (1) traditional electric utilities were reluctant to purchase power from, and sell power to nontraditional electric generation facilities; and (2) regulation of non-traditional facilities by state and federal utility authorities imposed undue financial burdens on the non-traditional facilities, thereby discouraging their development. Freehold Cogeneration Associates, L.P. v. Board of Regulatory...

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