Exelon Wind 1, L.L.C. v. Donna Nelson, et a
766 F.3d 380
| 5th Cir. | 2014Background
- PURPA directs FERC to create rules encouraging purchases from Qualifying Facilities (QFs); states must implement those rules (Texas implemented via PUC rulemaking).
- FERC regulation 18 C.F.R. § 292.304(d) gives each QF an option to sell either as-available (priced at delivery) or via a "legally enforceable obligation" (LEO) priced at delivery or at time obligation incurred.
- Texas PUC Rule 25.242 conditions the availability of an LEO on the QF’s ability to provide "firm power;" the PUC defines non-firm power as delivery "as available."
- Exelon (wind QFs unable to guarantee firm deliveries) sought LEOs from a utility; utility refused. PUC adjudicated Exelon’s petition, found Exelon’s power non-firm and no LEO; Exelon appealed administratively, then sought FERC guidance; FERC issued a declaratory order saying the PUC order was inconsistent with FERC’s regulation.
- Exelon sued PUC commissioners in federal court seeking (a) declarations/injunctions that the PUC order and Rule 25.242 fail to implement FERC’s regulation and (b) reopening of Exelon’s PUC proceeding; district court granted summary judgment for Exelon. The Fifth Circuit reviews jurisdiction and the implementation claim on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction: whether Exelon’s challenges are implementation (federal jurisdiction) or as-applied (state jurisdiction) | Exelon: claims challenge PUC Order and Rule 25.242 as failing to implement FERC rules (implementation) | PUC/Intervenors: Exelon primarily challenges the PUC Order as applied to Exelon (as-applied), so federal court lacks jurisdiction | Court: Exelon’s challenges to the PUC Order are as‑applied and must be dismissed for lack of federal jurisdiction; Exelon’s challenge to Rule 25.242 is an implementation claim and remains reviewable in federal court |
| Merits: whether PUC Rule 25.242 fails to implement FERC §292.304(d) by limiting LEOs to "firm power" QFs | Exelon: the FERC regulation says "each qualifying facility shall have the option" to use an LEO; Texas may not categorically bar non-firm QFs from LEOs; defer to FERC’s declaratory order | PUC/Occidental: FERC left states discretion to set LEO parameters; Rule 25.242 reasonably distinguishes firm vs non-firm QFs to protect consumers and avoid burdensome long-term contracts | Court: Affirming circuit precedent, the PUC acted within its discretion; Rule 25.242 reasonably implements FERC’s regulation — reverse district court’s grant for Exelon on Rule challenge and remand |
| Deference to FERC’s informal Declaratory Order | Exelon: FERC’s Letter is persuasive and treats the claim as implementation; FERC says non-firm QFs may form LEOs | PUC/Appellants: FERC’s letter is informal guidance and not entitled to Chevron/Auer deference; Fifth Circuit precedent constrains deference here | Court: FERC’s informal letter is only persuasive (Skidmore), but Fifth Circuit precedent (Power Resource III) controls; no Chevron/Auer deference to override state implementation discretion |
Key Cases Cited
- FERC v. Mississippi, 456 U.S. 742 (1982) (upheld cooperative federalism in PURPA and explained states may implement FERC rules via adjudication or rulemaking)
- Power Res. Grp. v. Pub. Util. Comm’n, 422 F.3d 231 (5th Cir. 2005) (state agencies have discretion to set parameters for LEOs; distinguishes implementation vs as-applied claims)
- Chevron U.S.A. v. Nat. Res. Def. Council, 467 U.S. 837 (1984) (two-step framework for deference to agency statutory interpretations)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference doctrine for agency interpretations of their own regulations)
- Christensen v. Harris County, 529 U.S. 576 (2000) (informal agency interpretations lack Chevron-style deference; may receive Skidmore respect)
- Nat'l Cable & Telecomm. Ass'n v. Brand X Internet Servs., 545 U.S. 967 (2005) (prior judicial construction can preclude later agency deference when the court found the text unambiguous)