Allco Finance Ltd. v. Klee, 805 F.3d 89

Background

Allco Finance (Allco), a PURPA-qualified small power producer, submitted bids in Connecticut’s 2013 Section 6 renewable procurement; two contracts were awarded to Number Nine (allegedly too large to be a qualifying facility) and Fusion Solar (a qualifying facility that was selected over lower-priced Allco bids).
Allco sued the Connecticut Commissioner (Klee) in federal court alleging the Section 6 procurements violated the Federal Power Act (FPA) and PURPA, seeking damages under 42 U.S.C. §§ 1983/1988 and equitable relief (voiding contracts and enjoining future noncompliant procurements).
The district court dismissed for lack of standing and, alternatively, for failure to state a claim (including that § 1983 was not available to enforce PURPA and that the procurements were not preempted).
On appeal, the Second Circuit affirmed on alternative grounds: (1) §§ 1983/1988 cannot be used to enforce PURPA because PURPA provides its own private enforcement scheme; (2) Allco failed to exhaust PURPA’s administrative remedies (the FERC petition/district-court backstop under 16 U.S.C. § 824a-3(h)(2)(B)); and (3) Allco lacked Article III standing to seek equitable relief that would only void the awarded contracts because such relief would not make it likely Allco would obtain a Section 6 contract.
The court held that labeling a claim as a Supremacy Clause/preemption action does not avoid PURPA’s exhaustion requirement when the substance is an attempt to force state implementation of FERC’s PURPA rules.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 1983/§ 1988 may be used to enforce PURPA rights	Allco sought money damages and fees under § 1983/§ 1988 for lost contracts, arguing alternative remedies were available	Commissioner argued PURPA’s own enforcement scheme displaces § 1983 remedies	Held: § 1983/§ 1988 cannot be used to enforce PURPA because PURPA provides an express private remedy meant to foreclose § 1983 relief
Whether Allco had exhausted administrative remedies under PURPA before suing	Allco chose not to petition FERC and instead sued directly in federal court	Commissioner asserted Allco must use § 824a-3(h)(2)(B) procedures (petition FERC, then sue if FERC does not act)	Held: Allco failed to exhaust PURPA’s mandatory administrative remedy; dismissal affirmed
Whether Allco’s preemption/Supremacy Clause claim avoids PURPA exhaustion	Allco characterized claim as Supremacy Clause/preemption to bypass PURPA procedures	Commissioner argued substance enforces § 824a-3(f)/(a) rules and thus triggers exhaustion	Held: Labeling as preemption does not avoid exhaustion when the claim seeks to compel state implementation of FERC PURPA rules
Standing to obtain equitable relief voiding existing contracts	Allco argued voiding competitors’ contracts would redress its injury (not being selected)	Commissioner argued voiding contracts alone would not make it likely Allco would receive a contract	Held: Allco lacks Article III standing to seek only voiding of prior contracts because that relief would not likely redress its injury

Key Cases Cited

Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) (statutory rights must be unambiguously conferred to support § 1983 action)
City of Rancho Palos Verdes v. Abrams, 544 U.S. 113 (2005) (existence of statutory remedies can foreclose § 1983)
Smith v. Robinson, 468 U.S. 992 (1984) (detailed statutory enforcement schemes may displace § 1983 relief)
Middlesex Cty. Sewerage Auth. v. Nat’l Sea Clammers Ass’n, 453 U.S. 1 (1981) (statutory enforcement procedures may not be bypassed via § 1983)
Niagara Mohawk Power Corp. v. FERC, 306 F.3d 1264 (2d Cir. 2002) (PURPA exhaustion requirement applies to preemption claims challenging state implementation)
Steel Co. v. Citizens for Better Env’t, 523 U.S. 83 (1998) (redressability element of standing requires likely, not speculative, relief)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
Friends of the Earth, Inc. v. Laidlaw Envtl Servs., 528 U.S. 167 (2000) (plaintiff must show redressability is likely, not speculative)