Commerce Clause and Supremacy Clause Challenges to RPS and PURPA Implementation
Allco Renewable Energy Ltd. v. National Grid, O’Connor, et al.
Commerce Clause and Supremacy Clause Challenge to Contract for Wind Energy
Town of Barnstable, Massachusetts, et al., v. Ann G. Berwick, et al.
Commerce Clause Challenges to RPS and RFP In-State Requirements
TransCanada Power Marketing v. Ian Bowles, et. al.
Allco Renewable Energy Ltd. v. National Grid, O’Connor, et al., Civil Action No. 15-cv-13515-PBS
Most Recent Development: Allco filed its complaint in October 2015. The court granted Allco’s PURPA claim against the state and denied its claim against the utility in September 2016.
In Federal District Court, a renewable energy developer challenged on separate grounds two Massachusetts policies, its renewable portfolio standard (RPS) and its implementation of the Public Utilities Regulatory Policy Act of 1978 (PURPA).
Massachusetts’ RPS requires the state’s retail electric providers to hold and retire renewable energy credits (REC) representing a percentage of that entity’s sales each year. RECs must be generated from a renewable resource located in New England or from a generator in an adjacent region that has the ability to deliver the energy into New England. The plaintiff developer argues that this locational restriction amounts to regional protectionism and violates the dormant Commerce Clause by facially discriminating against businesses based on their location and having the purpose and effect of discriminating against such businesses. The plaintiff has filed a similar claim in federal court in Connecticut about a regional RFP for new renewable generation. The regional requirement at issue in this case is distinct from the in-state requirements that were at issue in the TransCanada complaint described below.
The developer’s second claim is about the Department of Public Utilities’ (DPU) implementation of PURPA, a federal law that requires utilities to purchase power from generators that meet the statute’s definition of a “qualifying facility” (QF) at a rate that reflects a utility’s “avoided costs.” The plaintiff argues that DPU regulations that set the avoided cost rate equal to the hourly spot prices generated by the ISO-New England wholesale market is inconsistent with PURPA. It asks the court to find that DPU’s regulations are preempted and seeks monetary damages from National Grid, the local utility that refused to purchase energy from plaintiff’s QFs at a rate equal to the plaintiff’s measure of the utility’s avoided costs.
The developer has also filed a complaint in Massachusetts state court on this issue, and has made similar arguments in federal court in California about the relationship between PURPA and a state program that sets a rate for certain renewable generators.
District Court’s Memorandum and Order (Sep. 23, 2016) (the dormant commerce claim was not decided, and the plaintiff agreed to dismiss it because the issue is before the Second Circuit)
Complaint (Oct. 6, 2015)
Amended Complaint (Feb. 11, 2016)
National Grid Memo in Support of Motion to Dismiss (filed Feb. 8, 2016; amended memo fuled Feb. 18, 2016)
Allco Memo in Opposition to Motion to Dismiss (Mar. 2, 2016)
National Grid Reply Brief in Support of Motion to Dismiss (Mar. 25, 2016)
Allco’s Surreply(Apr. 5, 2016)
Allco Motion for Summary Judgment (May 4, 2016)
National Grid’s Opposition to Motion for Summary Judgment (June 24, 2016)
Federal Energy Regulatory Commission’s Amicus Brief (June 24, 2016)
Allco’s Request for Consideration of Sep. 23 District Court Order (Oct. 19, 2016)
National Grid’s Opposition to Reconsideration (Nov. 1, 2016)
Allco’s Motion for Leave to File Reply (Nov. 15, 2016)
Allco’s Reply (Nov. 15, 2016)
Massachusetts Department of Public Utilities Order Rejecting Allco’s Petition (Jul. 22, 2014)
Notice of Intent Not to Act and Declaratory Order (Jul. 21, 2016)
Town of Barnstable, Massachusetts, et al., v. Ann G. Berwick, et al., Civil Action No. 14-cv-10148-RGS
Most Recent Developments: In May 2014, a Federal district court dismissed plaintiffs’ complaint. In May 2015, the First Circuit reversed the district court’s dismissal based on the 11th Amendment and remanded for further proceedings. In February 2016, the district court dismissed the case because the contract at issue was terminated.
In Federal District Court, long-time opponents of Cape Wind, a proposed 130 turbine offshore wind facility, challenged the validity of a contract it signed with NStar, a Massachusetts distribution company.
The disputed contract was signed following a settlement agreement about NStar’s proposed merger with Northeast Utilities. Their merger required approval by the Massachusetts’ Department of Public Utilities (DPU). The Department of Energy Resources (DOER) intervened in the DPU proceeding to raise issues with the proposed merger, including a proposal. Plaintiffs alleged that DOER withdrew its protests in exchange for NStar’s commitment to sign a contract with Cape Wind that has “substantially the same” terms as a contract that Cape Wind had signed in 2010 with National Grid, another distribution company.
According to Plaintiffs, DOER’s settlement agreement with NStar, requiring it to sign a contract with “substantially the same” terms, effectively set the contract price between NStar and Cape Wind. But, according to the complaint, regulating the price of that wholesale power contract is under the Federal Energy Regulatory Commission’s (FERC) exclusive jurisdiction. DOER’s attempt to set the contract rate is therefore preempted by Federal authority and invalid under the Constitution’s Supremacy Clause.
Plaintiffs also alleged that regulators favored Cape Wind over other renewable energy generators because of its in-state economic benefits. Such in-state favoritism, Plaintiffs argued, violates the dormant Commerce Clause.
In May 2014, the court granted Defendants’ motion to dismiss. The court’s dismissal was based primarily on the 11th Amendment, which generally shields States from suits in Federal court unless the plaintiffs seek prospective relief from an ongoing violation of Federal law. Plaintiffs had sought a declaration that Massachusetts illegally compelled NStar to enter into a contract with Cape Wind and an injunction barring the DPU from enforcing the contract. According to the court, that relief would have been retroactive and is thus barred by the 11th Amendment.
In footnotes, the court dismissed Plaintiffs’ substantive claims. With regard to the Commerce Clause, the court found that the Plaintiffs, who are in-state ratepayers and not out-of-State energy sellers, lack standing. The court also found it unlikely that Plaintiffs had the right to “act as a private Attorney General in seeking to secure FERC’s Supremacy Clause authority.” However, assuming Plaintiffs did have standing under the Supremacy Clause, the court found that their argument that the DPU was attempting to usurp FERC’s exclusive authority over wholesale rates was already rejected by FERC in a proceeding about a different Cape Wind contract. Furthermore, the court understood’s FERC’s authority to allow it modify wholesale rates only after those rates had been filed with FERC and found to be unlawful. Even if Massachusetts had influenced NStar’s negotiations with Cape Wind, the Commonwealth’s actions would not infringe on FERC’s authority to review those rates.
In May 2015, the First Circuit held that the 11th Amendment did not insulate the state from plaintiffs’ claims. It expressed no opinion on whether plaintiffs have standing or on the substantive claims, and remanded the case to the district court for further proceedings. In February 2016, the district court dismissed the case with prejudice after all parties agreed that the contract between NStar and Cape Wind had terminated due to missed deadlines.
First Circuit Opinion (May 18, 2015)
District Court Memorandum and Order Dismissing Complaint (May 2, 2014)
Complaint (Jan. 21, 2014)
Massachusetts’ Memo in Support of Motion to Dismiss (Mar. 21, 2014)
Cape Wind’s Memo in Support of Motion to Dismiss (Mar. 21, 2014)
NStar’s Memo in Support of Motion to Dismiss (Apr. 3, 2014)
Plaintiffs’ Opposition to Motions to Dismiss (Apr. 14, 2014)
Massachusetts’ Reply Brief (Apr. 18, 2014)
Cape Wind’s Reply Brief (Apr. 18, 2014)
NStar’s Reply Brief (Apr. 18, 2014)
Joint Status Report (Jul. 1, 2015; following receipt of this report, the court issued an order staying the case until January 1, 2016)
TransCanada Power Marketing v. Ian Bowles, et. al., Civil Action No. 4:10-cv-40070-FDS
Most Recent Development: Settlement reached in 2010.
In 2008, the Massachusetts Legislature passed the Green Communities Act, wide-ranging environmental and energy reform legislation. The Act required electric distribution companies to solicit proposals for and enter into long-term contracts with renewable energy generators located in Massachusetts. The Act also added a solar carve-out to the Commonwealth’s Renewable Portfolio Standard (RPS), which required retail electricity sellers to procure a certain amount of solar energy generated in Massachusetts each year. TransCanada challenged both in-state requirements as facially unconstitutional under the Commerce Clause.
TransCanada argued that the Act’s in-state requirement for new renewable generation prohibited its wind facility in Maine from obtaining a contract. As a retail electricity supplier in the Commonwealth, TransCanada also claimed that the in-state preference under the solar carve-out restricted supply, which would raise TransCanada’s compliance costs.
TransCanada and Massachusetts quickly reached a settlement. Regulators agreed to drop the in-state requirement for long-term contracts and grandfather in existing solar contracts for purposes of complying with the solar requirement. In 2012, the Massachusetts legislature removed the in-state requirement for long-term contracts from the Act.
Complaint (Apr. 16, 2010)