A New Mexico Federal District Court Tries to Slam Shut the PURPA “Implementation” Claims Window

In the last year, two decisions from judges sitting on the bench of the United States Court for the District of New Mexico have opined that PURPA claims made by plaintiffs were “as applied” rather than “implementation” claims and thus could not be heard in federal court. The first decision, in Great Divide I, was a close call and provided an in-depth discussion of the “as applied” versus “implementation” precedent. There, had the case been pled more broadly, as an attack on the legally enforceable obligation (“LEO”) standard established by the New Mexico commission, the court said it would have heard the case on its merits. Indeed, the issue of whether a LEO standard meets PURPA’s requirements had been heard recently by the Montana federal court system. The Great Divide I court invited a better-styled complaint, indicating the complaint could be transformed into an implementation claim. The plaintiffs filed such an amended complaint, and the court did review the merits of the case, issuing an order on the merits in Great Divide II (2019 WL 5847060) last November. The court found that the New Mexico LEO standard did not violate PURPA, especially given FERC’s silence on appropriate prerequisites which gave the New Mexico Commissioners “the wiggle room” to implement a prerequisite. This decision has been appealed and may be mooted by FERC’s PURPA Final Rule. Now, the newest decision from New Mexico District Court – Vote Solar, – indicates that at least one judge in New Mexico would not have entertained any attempt by the Great Divide I plaintiffs to replead their case. Vote Solar is a profound departure from existing “as applied” versus “implementation” case law and calls out the decision in Great Divide I as erroneous. “Though the Court agrees with the disposition in Great Divide [I], the Court disagrees with the implementation-versus-application approach taken in it and similar cases.” The court in Vote Solar takes a near literalist view of implementation claims under PURPA Section 210(h), finding that:

First, FERC issues a rule under Section 210(a). Second, a state PUC or nonregulated independent utility implements that rule by incorporation into its procedures or regulations under Section 210(f). Then, an aggrieved party may challenge in state court whether or not that PUC or nonregulated utility’s actions comply with FERC’s requirements under Section 210(g). If a PUC or nonregulated utility outright fails to implement a FERC rule, FERC (or a petitioning party on FERC’s behalf) may step in and force them do so under Section 210(h), either through FERC administrative proceedings or in federal district court. This reading moves away from the “application” and “implementation” debate, and focuses on distinguishing compliance with FERC rules versus compliance with PURPA’s mandate to make reasonable implementation efforts. Federal jurisdiction under Section 210(h) should not be stretched to cover disputes over how well a regulatory entity implements FERC’s rules or the propriety of that entity’s state or local rules.

As a result, nearly every alleged violation of PURPA committed by a state commission or non-regulated utility would fall into the “as applied” category. Implementation claims largely would consist of claims that a state commission or non-regulated utility did not implement a PURPA regulation at all. As the court explained, “PURPA thus leaves post-implementation disputes in the hands of the state courts.” Legally, the court relied heavily on its interpretation of 16 U.S.C. Section 2633. It found that Section 2663(a) “largely forecloses federal jurisdiction under PURPA.” Section 2663(c) “commands state court jurisdiction over state and local utility-related decisions.” The court conclude that read as a whole, “Section 2633 presumes state court judicial review under PURPA except where: (1) a plaintiff seeks to vindicate a federal right to intervene in ratemaking proceedings; or (2) a plaintiff seeks review of a federal agency’s decision.” Unless Vote Solar is upheld on appeal, whether it will sway any other district courts is an open question. But, it will presumably impact arguments made to both FERC and the courts as to whether they should hear cases in the first place. It also should encourage plaintiffs unhappy with state commission and non-regulated utility decisions on PURPA to pursue both state court and federal relief simultaneously. Indeed, no matter how clearly a case appears to fall into the implementation claim bucket, a potential plaintiff should pursue state court appeals as well in order to avoid finding itself with no avenue of relief.