City of Osceola, Arkansas v. Entergy Arkansas, Inc.
2015 U.S. App. LEXIS 11429
| 8th Cir. | 2015Background
- Entergy (a multi-company system) implemented FERC’s bandwidth remedy after Opinion No. 480 to equalize production costs; Entergy alone owed bandwidth payments 2007–2009 and billed those costs to wholesale customers as "purchased energy."
- The City of Osceola bought wholesale power from Entergy under a FERC‑filed Power Coordination, Interchange, and Transmission Agreement; Entergy billed Osceola $4,087,668.10 in bandwidth payments.
- FERC and later the D.C. Circuit addressed a similar dispute brought by Union Electric and concluded Union Electric’s contract did not permit billing bandwidth payments as "purchased energy," ordering refunds in Opinions 505/505‑A; Osceola did not challenge its charges in the FERC proceedings.
- Osceola sued Entergy in Arkansas state court for breach of contract seeking recovery of the bandwidth payments and alleged relief "permissible under the Federal Power Act and decisions of FERC." Entergy removed to federal court.
- The district court denied remand, granted Entergy summary judgment based on the filed rate doctrine and res judicata, and dismissed the case; the Eighth Circuit affirmed but converted the dismissal to one without prejudice and held FERC has primary jurisdiction.
Issues
| Issue | Plaintiff's Argument (Osceola) | Defendant's Argument (Entergy) | Held |
|---|---|---|---|
| Whether the case belongs in federal court / removal proper | State breach‑of‑contract claim; no federal question | Claim depends on FERC‑filed tariff and FERC remedies, so federal jurisdiction exists | Removal proper; federal law implicated because suit enforces FERC‑filed tariff |
| Whether the filed rate doctrine bars Osceola’s suit | Seeks interpretation of contract rate formula, not a challenge to a filed rate; seeks relief allowed by FERC decisions | Filed rate doctrine gives FERC exclusive authority over wholesale rates; courts cannot alter filed rates | Filed rate doctrine did not automatically bar the claim because case centers on contract interpretation, not setting a new filed rate |
| Whether FERC has primary jurisdiction over tariff interpretation and bandwidth treatment | Court can decide contract interpretation | FERC has expertise and uniformity interest; agency should decide treatment of bandwidth charges | FERC has primary jurisdiction; referral appropriate because technical/expert issues and need for uniformity |
| Appropriate disposition (dismiss vs. retain) | Plaintiffs can still seek relief at FERC; dismissal okay if not prejudicial | Dismissal without prejudice and referral to FERC is proper | Case dismissed without prejudice to allow resolution by FERC (uniformity and agency expertise); affirmed with modification to without prejudice |
Key Cases Cited
- Caterpillar Inc. v. Williams, 482 U.S. 386 (federal question from well‑pleaded complaint rule)
- Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953 (FERC has plenary authority over interstate wholesale rates)
- Ak. La. Gas Co. v. Hall, 453 U.S. 571 (filed rate doctrine bars courts from imposing rates other than those filed with FERC)
- Cent. Iowa Power Coop. v. Midwest Indep. Transmission Sys. Operator, Inc., 561 F.3d 904 (breach claims challenging filed rates are preempted; not all disputes over filed agreements confer exclusive FERC jurisdiction)
- W. Pac. R.R. Co. v. United States, 352 U.S. 59 (tariff terms used in technical sense should first go to agency)
- Reiter v. Cooper, 507 U.S. 258 (court may dismiss without prejudice and defer to agency if primary jurisdiction applies)
- Cahnmann v. Sprint Corp., 133 F.3d 484 (filed tariffs are equivalent to federal regulation; enforcement arises under federal law)