United States District Court, D. Vermont
ORDER RULING ON DEFENDANTS' MOTIONS TO DISMISS
AND PLAINTIFF'S MOTION TO FILE A SUR-REPLY (DOCS. 4, 6,
J. Garvan Murtha, United States District Judge.
Otter Creek Solar LLC (“Otter Creek”) filed suit
against Green Mountain Power Corporation (“GMP”)
and VEPP, Inc. (“VEPP”) (collectively,
“Defendants”) alleging GMP--or in the alternative
VEPP--is in violation of the Federal Power
(“FPA”) and Public Utilities Regulatory Policies
(“PURPA”) Acts. (Doc. 1 (“Compl.”).)
Otter Creek seeks declaratory and injunctive relief and
damages against GMP for violating Otter Creek's rights
under the FPA and PURPA by refusing to agree to purchase
energy and capacity from Otter Creek's solar projects at
the long-term rate required by PURPA. Id. ¶ 12.
Because GMP has asserted VEPP has the obligation to purchase
the energy and capacity from Otter Creek, Otter Creek seeks
relief against VEPP in the alternative. Id. ¶
13. GMP and VEPP move to dismiss for lack of subject matter
jurisdiction, failure to state a claim, and failure to
exhaust administrative remedies under Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6). (Docs. 4, 6.) Otter Creek
opposes the motions (Doc. 7) and Defendants filed replies
(Doc. 8, 9). Otter Creek moves for leave to file a surreply
in further response to GMP's motion. (Doc. 10.) GMP
opposes the motion. (Doc. 12.) The motion to file a surreply
following facts are assumed to be true for purposes of the
pending motions and are gleaned from the complaint. Otter
Creek Solar LLC is the owner and developer of small solar
facilities in Vermont that it alleges will be
“qualified facilities.” Green Mountain Power
Corporation is a Vermont retail electric company with a
principal place of business in Colchester, Vermont. GMP is
regulated by the Vermont Public Service Board
(“PSB”). Vt. Stat. Ann. Tit. 30, § 218.
VEPP, Inc., a Vermont corporation, is the entity designated
by the Vermont PSB as the agent and facilitator for certain
1, 2013, Otter Creek filed a petition for enforcement against
the PSB with the Federal Energy Regulatory Commission
(“FERC”). On June 27, 2013, FERC issued a notice
of intent not to act. Otter Creek Solar LLC, 143 FERC ¶
61, 282 (2013). Otter Creek had argued the Vermont PSB's
“avoided cost rate pricing determination and mechanism
in [its] feed-in tariff program, referred to as . . . SPEED,
” violated PURPA and the [FPA]. Id.
Creek alleges it began discussions with GMP regarding
contracts under PURPA in December 2013. On January 15, 2016,
Otter Creek made a final offer to GMP by sending complete and
executed power purchase agreements (“PPAs”).
Otter Creek offered three options for the long-run avoided
cost rate to be paid: (1) a fixed level rate of 15.5 cents
per kilo-watt-hour (“KWh”); (2) a fixed level
rate of 12.8 cents per KWh; and (3) a variable rate generally
increasing over time. The first option was based on the
25-year avoided cost rate, including environmental
attributes, for similarly situated solar projects as
determined by the PSB; the second option was based on the
25-year avoided costs, not including environmental
attributes, for similarly situated solar projects as GMP
testified to the PSB, and the third option was based on
year-by-year projected avoided costs as determined by an
energy consulting firm. Otter Creek offered to allow VEPP to
be the obligor and purchaser as an alternative to GMP.
Neither GMP nor VEPP returned executed copies of the PPAs.
Ten days later, on January 25, 2016, this suit was commenced.
to its 2013 petition to FERC, Otter Creek here alleges GMP
violated the FPA and PURPA because GMP has an obligation to
purchase any and all energy and capacity offered to it by
Otter Creek's qualified facilities and it refused to
purchase the energy and capacity offered. Compl. ¶¶
33-35 (Count I). Otter Creek alleges, in the alternative, if
the Court finds GMP has no obligation to purchase the energy
and capacity of Otter Creek's qualified facilities
because VEPP has the obligation, VEPP violated the FPA and
PURPA. Id. ¶¶ 37-38 (Count II). As a
result, Otter Creek has been unable to obtain financing to
construct its qualified facilities.
motion to dismiss tests the legal rather than the factual
sufficiency of a complaint. See, e.g., Sims v.
Ortiz, 230 F.3d 14, 20 (2d Cir. 2000). The Court will
grant a motion to dismiss only if the pleader fails to show a
“plausible entitlement to relief.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Court
must accept all facts alleged in the pleading as true and
draw all reasonable inferences in favor of the pleader.
Natural Res. Def. Council v. Johnson, 461 F.3d 164,
171 (2d Cir. 2006). When resolving a jurisdictional question,
the Court may consider materials outside the pleadings.
Hamm v. United States, 483 F.3d 135, 137 (2d Cir.
2007). The plaintiff bears the burden of proving subject
matter jurisdiction by a preponderance of the evidence.
the Federal Power Act, 16 U.S.C. § 791, et seq.,
Congress granted FERC exclusive authority to regulate sales
of electricity at wholesale in interstate commerce.
See 16 U.S.C. § 824(b)(1). States may not act
in this area unless Congress creates an exception.
Id. § 824(b). In 1978, Congress amended the FPA
to create one such exception by enacting PURPA, 16 U.S.C.
§ 824a-3. Prior to the enactment of PURPA, traditional
electric utilities hesitated from purchasing power from small
power producers. To overcome this obstacle, Congress enacted
PURPA, which directed FERC to promulgate rules to encourage
cogeneration and small power production, including rules
requiring electric utilities to purchase electricity from and
sell electricity to producers deemed “qualifying”
facilities. See id. § 824a-3(a).
(a) of PURPA requires FERC to prescribe rules as it
determines necessary to encourage small power production,
including rules requiring electric utilities to offer to
purchase energy from qualifying facilities. Id.
§ 824a-3(a). Section (f) then requires state regulatory
authorities and nonregulated electric utilities to implement
the rules prescribed by FERC. Id. § 824a-3(f).
Accordingly, a state may regulate wholesale sales by
qualifying facilities, i.e., power production facilities that
have no more than 80 megawatts of capacity and use renewable
generation technology. Id. § 824a-3(f)(1);
see also id. § 796(17)(A). Those facilities
must receive a price for their electricity that is just and
reasonable to consumers and non-discriminatory to QFs,
generally determined to be equal to the buying utility's
“avoided costs, ” i.e., the costs the utility
would have otherwise incurred in procuring the same quantity
of electricity from another source. Id. §
824a-3(b); 18 C.F.R. § 292.304(b)(2).
emphasize, PURPA imposes obligations on each state
regulatory authority to implement FERC's PURPA
regulations. See 16 U.S.C. § 824a-3(f)(1)
(“[E]ach State regulatory authority shall, after notice
and opportunity for public hearing, implement [a new FERC]
rule (or revised rule) for each electric utility for which it
has ratemaking authority.”).
also provides FERC and certain private parties with the
ability to enforce the requirement that states implement
PURPA. Section (h) provides that, if a state regulatory
authority or a nonregulated electric utility fails to
implement FERC's rules, FERC may institute an enforcement
action. 16 U.S.C. § 824a-3(h). Section (h) also permits
a QF to petition FERC to initiate an enforcement action and,
if FERC fails to do so within sixty days of the filing of the
petition, the QF may bring an action in a federal district
court to require the state authority or nonregulated utility
to comply with section (f)'s requirement that FERC's
rules be implemented. Id. § 824a-3(h)(2)(B).
Importantly, “PURPA provides a private right ...