Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating District
673 F.3d 84
2d Cir.2012Background
- National Grid challenges the District's annual headwater-benefit assessments on its Hudson River parcels as preempted by the FPA and as unconstitutional takings/equal protection violations.
- The District is a New York public-benefit corporation authorized to regulate flow and apportion costs for the Great Sacandaga Lake/GSL project; the DEC approves district apportionments but does not set rates or audit them.
- The GSL project headwater-benefit scheme historically allocated roughly 95% of benefits to headwater parcels and 5% to downstream municipalities, with costs allocated accordingly under NY environmental law.
- FERC became involved in the 1990s, leading to a 2000 Offer of Settlement that preserved NY apportionment procedures but required a reapportionment; a reapportionment was attempted and completed by 2010.
- National Grid filed this federal action in 2009 seeking declaratory judgments that the FPA preempts the District's scheme and that the pre-2010 assessments violated its rights; the district court dismissed the DEC and preemption claims but abstained on remaining constitutional claims.
- The Second Circuit held that the FPA does not preempt the District's state-law assessment authority over National Grid's vacant, non-FERC-licensed parcels, reversed the abstention and remanded the constitutional claims for resolution, and affirmed dismissal of the DEC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the FPA preempt the District's assessments of National Grid's parcels? | National Grid argues the FPA occupies the field and preempts state headwater assessments. | The District contends FPA preemption is limited to licensed projects and does not cover non-licensee properties. | No express or implicit preemption; FPA does not preempt the District's authority over the subject parcels. |
| Does Section 10(f) preempt the District's assessments of non-licensed land? | National Grid asserts 10(f) requires reimbursement only for interest, maintenance, depreciation. | 10(f) governs relations among licensees and beneficiaries, not non-hydropower non-licensed lands. | 10(f) does not preempt or restrict state assessments of non-licensed, non-hydropower parcels. |
| Are National Grid's federal constitutional claims barred by abstention? | Abstention would deprive Plaintiff of federal rights; parallel state actions risk piecemeal adjudication. | State proceedings already address related issues; abstention aligns with Colorado River/Wilton principles. | Abstention was improper; the district court abused its discretion and these claims are remanded for resolution. |
| Was the District's dismissal of the DEC proper? | DEC should be included; its actions relate to reapportionment and regulatory oversight. | DEC lacked the authority to order reapportionment and the complaint insufficiently connected DEC to claims. | DEC dismissal affirmed; National Grid waived or failed to preserve the issue, so review is limited. |
Key Cases Cited
- First Iowa Hydro-Elec. Coop. v. FPC, 327 U.S. 152 (U.S. 1946) (integration of state and federal jurisdictions in licensing water power projects)
- California v. FERC, 495 U.S. 490 (U.S. 1990) (FPA preemption is limited to conflicts with federal law; leaves many state powers intact)
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (U.S. 1976) (abstention framework; six-factor test; avoidance of piecemeal litigation)
- Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (deference to parallel state proceedings; exceptional circumstances required)
- Wilton v. Seven Falls Co., 515 U.S. 277 (U.S. 1995) (declaratory judgment discretion; stay rather than dismiss typically preferred; not absolute for federal questions)
- Albany Eng'g Corp. v. FERC, 548 F.3d 1071 (D.C. Cir. 2008) (DC Circuit on Albany Engineering preemption of headwater benefits; closely relevant to FPA field preemption analysis)
- California v. FERC, See above (See above) (cited for field vs. conflict preemption discussion in context of FPA)
- First Iowa Hydro-Elec. Coop. v. Federal Power Commission, 328 U.S. 152 (U.S. 1946) (discusses dual regulatory system and field limits of federal power)
- Youell v. Exxon Corp., 74 F.3d 373 (2d Cir. 1996) (Wilton abstention considerations in federal cases with parallel state actions)
- Village of Westfield v. Welch's, 170 F.3d 116 (2d Cir. 1999) (factors for evaluating abstention and federal rights)