807 F.3d 883
8th Cir.2015Background
- Beverly and Gregory Swecker own an Iowa farm QF (wind generator) and sold surplus power to Midland Power Cooperative under a rate set by the Iowa Utilities Board and PURPA/FERC rules.
- Midland is a retail distribution cooperative that buys wholesale power from Central Iowa Power Cooperative (CIPCO) under an all‑requirements contract; CIPCO is Midland’s all‑requirements supplier.
- FERC regulations define a QF purchase rate as the utility’s "avoided cost" and provide an alternate path (§ 292.303(d)) allowing an all‑requirements utility to transmit a QF’s energy to its supplier if the QF consents, in which case the supplier is treated as the purchaser.
- The Sweckers repeatedly litigated Midland’s avoided‑cost rate in state and federal fora and before FERC; FERC declined enforcement on their theory that Midland must pay the rate Midland itself pays its supplier (CIPCO’s avoided cost), citing City of Longmont and Carolina Power precedent.
- The Sweckers sued in federal court seeking declaratory and injunctive relief that Midland must pay the Sweckers at Midland’s own avoided cost (not CIPCO’s) because § 292.303(d) requires QF consent before the supplier’s avoided cost can apply. The district court dismissed under Rule 12(b)(6); the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 292.303(d) requires QF consent before an all‑requirements supplier's avoided cost may be used when a non‑generating all‑requirements utility (Midland) purchases directly from a QF | Swecker: § 292.303(d) requires QF consent; absent consent Midland must pay its own avoided cost | Midland/CIPCO: FERC precedent (City of Longmont/Carolina Power) permits using supplier’s avoided cost even without QF consent to prevent QFs from bypassing suppliers | Court: FERC’s longstanding interpretation is controlling; supplier’s avoided cost may set the maximum rate and the Sweckers’ lack of consent is irrelevant here; dismissal affirmed |
| Whether the district court should defer to FERC’s interpretation of its regulation | Swecker: FERC’s rule conflicts with the regulation and Order No. 69; thus deference is unwarranted | Defendants: Auer deference applies; FERC’s interpretation is consistent and longstanding | Court: Auer deference appropriate; FERC interpretation not plainly erroneous or inconsistent; defer and reject Sweckers’ contrary reading |
| Whether plaintiffs stated a plausible claim for relief under PURPA and FERC regulations | Swecker: Complaint alleges unlawful use of CIPCO avoided cost without consent; seeks declaratory/injunctive relief | Defendants: Complaint conflicts with FERC precedent and fails to allege grounds to depart from established avoided‑cost definition | Court: Complaint fails to state a claim given controlling FERC interpretation; 12(b)(6) dismissal affirmed |
| Whether the district court abused discretion by denying Rule 59(e) motion | Swecker: District court overlooked legal errors and FERC regulation language | Defendants: No error of law requiring amendment | Court: No abuse of discretion; denial proper |
Key Cases Cited
- Auer v. Robbins, 519 U.S. 452 (agency interpretations of their own regulations are controlling unless plainly erroneous or inconsistent)
- FERC v. Mississippi, 456 U.S. 742 (PURPA § 210 purpose and QF enforcement standing)
- American Paper Institute, Inc. v. American Electric Power Service Corp., 461 U.S. 402 (FERC rules implementing PURPA)
- Briehl v. General Motors Corp., 172 F.3d 623 (standard of review for Rule 12(b)(6) in Eighth Circuit)
- Decker v. Northwest Environmental Defense Center, 133 S. Ct. 1326 (discussing appropriateness of Auer deference when agency view is consistent with prior practice)