JOHN W. DeGRAVELLES, District Judge.
This matter is before the Court on a Motion to Dismiss for Lack of Subject Matter Jurisdiction ("Motion") filed by Louisiana Generating LLC ("Defendant" or "LaGen"). (Doc. 183.) LaGen also filed Louisiana Generating LLC's Memorandum in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction. (Doc. 188.) In response, Plaintiff filed Memorandum in Opposition to Louisiana Generating LLC's Motion to Dismiss. (Doc. 193.) In reply, Defendant filed Louisiana Generating LLC's Reply Memorandum in Support of Motion to Dismiss for Lack of Subject Matter Jurisdiction. (Doc. 197.) The Court held oral argument on the Motion on January 16, 2020.
Washington St. Tammany Electric Cooperative, Inc. and Claiborne Electric Cooperative, Inc., (together, "Plaintiffs") are member-owned, non-profit electric cooperative corporations organized under the laws of Louisiana and domiciled in Louisiana. (Doc. 1 at ¶¶ 1-2.) Plaintiffs filed this case alleging that Louisiana Generating, LLC ("LaGen" or "Defendant") breached its contracts with Plaintiffs by charging Plaintiffs for costs associated with remediation of environmental conditions that existed before the contracts were executed. Plaintiffs also seek a declaration that LaGen may not assess such costs in the future. (Doc. 1 at 1.)
Defendant owns and operates electric power generation and transmission operations including the plants at issue in the case. (Doc. 1 at ¶ 3.) As a producer of electricity, LaGen has a market-based tariff ("LaGen Tariff") with the Federal Electric Regulatory Commission ("FERC") that states in relevant part:
3. Rates: All sales shall be made at rates established by agreement between the purchaser and Seller.
(Doc. 188-5 at 4.) LaGen had previous market-based tariffs starting on March 29, 2000. (Doc. 188 at 6, n.13 (citing Doc. 1).)
Pursuant to the LaGen Tariff, Plaintiffs contracted with LaGen in Power Supply and Service Agreements ("PSSAs") that set the rates, charges and terms and conditions for the electrical power. (Doc. 1 at ¶ 4.) The PSSAs are filed with FERC. (Doc. 1 at ¶ 4.) At issue in this case is Section 10.4 ("Environmental Law Clause") of the PSSAs, which states in relevant part:
(Doc. 1-1 at 35; and Doc. 1-3 at 30.)
In 2009, the United States Environmental Protection Agency ("EPA") filed a complaint against LaGen alleging violations of the Prevention of Significant Deterioration ("PSD") provisions of the Clean Air Act. (Doc. 1 at ¶ 11.) To resolve this action LaGen entered into a consent decree with EPA ("Consent Decree") and agreed to take certain remediation measures. (Doc. 1 at ¶ 16-17.) A recital in the Consent Decree states that LaGen "affirms that a portion of the emissions technology, including related to PM emissions and refueling, under this consent decree, will allow it to comply with the Mercury Air Toxics Rule [sic], a change in environmental law promulgated after the filing of the Complaint." (Doc. 1 at ¶ 21.) Plaintiffs allege that Defendant has passed on the charges of compliance with the Consent Decree impermissibly by improperly classifying remediation costs required under the Consent Decree as related to the Mercury Air Toxics Rule ("MATS"). (Doc. 1 at ¶ 21-26.)
Plaintiffs' Complaint contains two counts: Count 1 — Breach of Contract; and Count II — Declaratory Judgment.
Plaintiffs allege in the Complaint that federal jurisdiction is appropriate because the PSSAs:
(Doc. 1. at ¶ 4.) Plaintiffs further allege original jurisdiction arises because:
(Doc. 1 at ¶ 5.)
Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claims. In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 668 F.3d 281, 286-87 (5th Cir. 2012) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Stockman v. FEC, 138 F.3d 144, 151 (5th Cir. 1998), Hall v. Louisiana, 12 F.Supp.3d 878 (M.D. La. 2014)). Under Federal Rule of Civil Procedure 12(b)(1), a claim is "properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate" the claim. Id. (quoting Home Builders Ass'n, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998)).
The Fifth Circuit Court of Appeals has explained the standard for motions pursuant to Rule 12(b)(1) as follows:
Considering a Rule 12(b)(1) motion to dismiss first "prevents a court without jurisdiction from prematurely dismissing a case with prejudice." In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 668 F.3d at 286-87.
Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
Defendant argues in the Motion to Dismiss that the Court lacks subject matter jurisdiction over the case because there is no federal question jurisdiction. (Doc. 188 at 9.) Defendants maintain that federal question jurisdiction does not exist because: (1) Plaintiffs' cause of action arises under the Louisiana law of obligations; (2) Plaintiffs' right to relief does not depend on the resolution of a substantial question of federal law; and (3) federal question jurisdiction does not exist merely because the dispute arises out of a contract that is filed with Federal Energy Regulatory Commission ("FERC"). (Doc. 188 at 9-24.)
Defendant argues that federal question jurisdiction can be invoked by (1) either pleading a cause of action created by federal law or (2) by pleading a state law claim that implicates significant federal issues. (Doc. 188 at 9.) If federal question jurisdiction is based on a state law claim that implicates significant federal issues then, Defendant argues, a plaintiff must show that: (1) resolving the federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities. (Doc. 188 at 9 (citing, Singh v. Duane Morris LLP, 538 F.3d 334, 337-38 (5th Cir. 2008)).)
Defendant maintains that Plaintiffs' cause of action does not arise under federal law because the Federal Powers Act, 16 U.S.C. § 824d(a), does not create a private right of action. (Doc. 188 at 9 (citing, Montana-Dakota Utilities Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246 (1951)).) As such, Defendant maintains that there is no private right of action under the FPA to seek a "just and reasonable" rate. (Doc. 188 at 9.) In support of its argument, Defendant cites City of Gainesville v. Florida Power & Light Co., 488 F.Supp. 1258, 1270-1275 (S.D. Fla. 1980) for the proposition that the FPA provides neither an express nor implied private cause of action. Defendant asserts that in City of Gainesville, the court stated that Congress's intent under § 824d(a) was "to create a fairly common rate-making and regulatory scheme." (Doc. 188 at 9 (citing, 488 F.Supp. at 1271-72).) Defendant argues that the structure of the FPA supports this analysis as it provides an exclusive administrative remedy before FERC to contest rates or tariff violations and provides appeals rights. (Doc. 188 at 11.) Therefore, Defendants argue that federal law cannot form the basis of Plaintiffs' claims.
Defendant argues because federal law does not form the basis of Plaintiffs' claims, federal question jurisdiction can only arise if the state law claim implicates federal issues. (Doc. 188 at 11-12.) Defendant states the Supreme Court in Grable & Sons Metal Prods, Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005), set out a four part test to determine federal question jurisdiction over state law claims: "(1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and(4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities." (Doc. 188 at 12.)
First, Defendant argues that resolution of the case depends on the interpretation of Section 10.4 of the PSSAs, which is a state-law contract issue. (Doc. 188 at 13.) Defendant points to the fact that Plaintiffs' Motion for Partial Summary Judgment on liability does not reference the FPA, the FERC tariff; or "just and reasonable rates." (Doc. 188 at 13.) Instead, Defendant highlights that Plaintiffs case rests on an alleged contractual right, not a federal right, and interpretation of the contractual provision will not affect any party outside of those contracted. (Doc. 188 at 13.) In support of its argument, Defendant points the Court to Pacific Gas and Elec. Co. v. Arizona Elec. Power Coop., Inc., 479 F.Supp.2d 1113, 1125-26 (E.D. Cal. 2007). The court in Pacific Gas, explained,
(Doc. 188 at 13-14 (citing, 479 F. Supp. 2d at 1125-26).) Defendant argues that this case is analogous and therefore, resolving a federal issue is not necessary to the resolution of the Plaintiffs' claims. (Doc. 188 at 14.)
Second, Defendant argues that the alleged federal question is not in dispute. (Doc. 188 at 14.) Specifically, Defendant maintains that there is no dispute that Section 10.4 of the PSSAs is just and reasonable as provided under Section 15.16 of the PSSAs. (Doc. 188 at 14.) Instead, the dispute centers on the interpretation of the contractual provision and application of that interpretation to the facts of the case. (Doc. 188 at 14.) Because it is not necessary to interpret any provision of the tariff or whether its terms are just and reasonable, there is no dispute as to the federal question. (Doc. 188 at 14.)
Third, Defendant argues the alleged federal question is not substantial because a court's decision as to the contractual provision will not impinge on the operation of public utilities in other states. (Doc. 188 at 14-15.) Defendant asserts that courts routinely hold that a federal question is not substantial when it does not present a "a nearly pure issue of law, one that could be settled once and for all and thereafter would govern numerous ... cases," but rather is "fact-bound and situation-specific." (Doc. 188 at 15 (citing, Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation, 770 F.3d 944, 947-48 (10th Cir. 2014); and Bennett v. Southwest Airlines Co., 484 F.3d 907, 910 (7th Cir. 2007) (holding no federal question jurisdiction where there was "a fact-specific application of rules that come from both federal and state law rather than a context-free inquiry into the meaning of a federal law.")).)
Defendant analogizes this case to that of Great Lakes Gas Transmission Ltd. P'ship v. Essar Steel Minnesota LLC, 843 F.3d 325 (8th Cir. 2016).
(Doc. 188 at 15 (citing, 843 F.3d at 332-333) (internal quotations and citations omitted).) Defendant likewise points out that because there is no private right of action under the FPA, Congress did not intend to have the interpretation of a FERC-filed contract to confer federal question jurisdiction. (Doc. 188 at 16.)
Last, Defendant asserts that the exercise of federal question jurisdiction would disturb the balance of federal and state judicial responsibilities because state courts should resolve state-law contract claims. (Doc. 188 at 16.) Defendant again cites to the Eighth Circuit's analysis in Great Lakes Gas Transmission, in which the court explained that the balance of federal and state judicial responsibilities would be disturbed because:
(Doc. 188 at 16-17 (citing, Great Lakes Gas Transmission, 843 F.3d at 334) (emphasis in original) (internal quotations and citations omitted).) Defendant maintains that this same federal and state balance is at issue in this case. (Doc. 188 at 17.)
Defendant likewise argues this case does not arise under federal law merely because the relevant contract was filed with FERC pursuant to a FERC tariff and FERC tariffs have the force of federal law. (Doc. 188 at 17.) Defendant first points the Court to Monforte Expl. LLC v. ANR Pipeline Co., No. 09-3395, 2010 WL 143712 (S.D. Tex. Jan. 7, 2010). In the context of a motion to remand, the court in Monforte examined whether federal question jurisdiction existed over a breach of contract dispute between a natural gas producer and a natural gas pipeline company. At issue in the case was an Operational Flow Order that was issued pursuant to a FERC tariff. The defendant in Monforte argued that the implementation of the Operational Flow Order, required interpretation of the FERC tariff and thereby created federal question jurisdiction. The court was not persuaded and explained
Monforte Expl. L.L.C. v. ANR Pipeline Co., No. 09-3395, 2010 WL 143712, at *4 (S.D. Tex. Jan. 7, 2010). Defendant analogizes this reasoning to this case arguing,
(Doc. 188 at 18-19.)
Defendant next points the Court to Fla. Gas Transmission Co., LLC v. Bay Gas Storage Co., No. CIV.A. H-08-3472, 2009 WL 361592, at *3 (S.D. Tex. Feb. 11, 2009). The court in this case observed, "Importantly, once filed, tariffs take on the force of federal law." Fla. Gas Transmission Co., LLC v. Bay Gas Storage Co., No. CIV.A. H-08-3472, 2009 WL 361592, at *3 (S.D. Tex. Feb. 11, 2009) (citing, Carter v. Am. Tel. & Tel. Co., 365 F.2d 486, 496 (5th Cir.1966) ("[A] tariff, required by law to be filed, is not a mere contract. It is the law.")). However, the court reasoned that there was still not federal question jurisdiction because the contract between the parties "exists apart from the filed tariffs and the [contract] fundamentally defines the parties' respective obligations" and the plaintiff's claims did not challenge the reasonableness of a federal law, regulation or tariff. (Id. at 4.) Defendant argues this reasoning is applicable in this case because
(Doc. 188 at 19.)
Defendant also reiterates the applicability of Pacific Gas and Elec. Co. v. Arizona Elec. Power Coop., Inc., in which the agreement between the parties and the terms of the agreement would be construed according to state law. (Doc. 188 at 20.) The court determined that federal question jurisdiction did not exist, even though FERC tariffs were incorporated by reference into the agreement. The court explained,
Pacific Gas & Elec. Co. v. Arizona Elec. Power Coop., Inc., 479 F.Supp.2d 1113, 1123 (E.D. Cal. 2007). Defendant states that this case is similar because
(Doc. 188 at 21.) Further the PSSAs provide:
(Doc. 188 at 21.) Therefore, because no form of preemption has been alleged, Defendant maintains that it is "the contract language, standing only as a representation of the agreement between the Parties that will inform the resolution of this matter." (Doc. 188 at 21.)
Last, Defendant cites again to Great Lakes Gas Transmission Ltd. P'ship v. Essar, for the proposition that the jurisdictional provision of the FPA does not create an express cause of action under which a plaintiff can recover. The Eighth Circuit explained, interpreting the identical jurisdictional provision under the National Gas Act ("NGA"):
Great Lakes, 843 F.3d at 329. Defendant reasons that in this case
(Doc. 188 at 22.)
Plaintiffs argue that there is federal question jurisdiction because the case arises under federal law and presents substantial federal questions. (Doc. 193 at 1.) Plaintiffs maintain that the case arises under federal law because
(Doc. 193 at 1.) Plaintiffs also argue that the dispute requires interpretation of the Clean Air Act and its regulations, and a federal consent decree issued by this Court resolved alleged violations of federal law. Plaintiffs also take issue with the fact that Defendant filed this motion after discovery had been completed and the parties had filed motions for summary judgment. (Doc. 293 at 4.)
Plaintiffs argue that although the central claim in the dispute is a breach-of-contract claim, the case still arises under federal law because "the PSSAs are governed by the FPA, are filed with FERC under [Defendant's] tariff, and are considered federal regulations by operation of law." (Doc. 193 at 8.) Plaintiffs maintain that service agreements filed under a FERC tariff apply with the force of federal law and are therefore the equivalent to a federal regulation. (Doc. 193 at 8-9 (citing, Bryan v. BellSouth Commc'ns, Inc., 377 F.3d 424, 429 (4th Cir. 2004) ([A] filed tariff carries the force of federal law."); Cahnmann v. Sprint Corp., 133 F.3d 484, 488 (7th Cir. 1998); and Mississippi ex rel. Hood v. Entergy Miss., Inc., No. 3:08-cv-780, 2015 WL 13448017, at *6 (S.D. Miss. Apr. 10, 2015)).)
Overall, Plaintiffs maintain that the PSSAs have the force of federal law because they are linked to the LaGen tariff. Plaintiffs argue:
(Doc. 193 at 9.) Plaintiffs' argument that the PSSAs have the force of federal law is first, a tariff is defined by the FERC regulations as "compilation, in book form, of rate schedules of a particular public utility, effective under the [FPA], and a copy of each form of service agreement." (Doc. 193 at 9 (citing, 18 C.F.R. § 35.2(b), n.1 (2000)).) Second, that rate schedules "may take the physical form of a contractual document, purchase or sale agreement, lease of facilities, tariff or other writing." (Doc. 193 at 9, (citing, 18 C.F.R. § 35.2(b) (2000)).) Third, the PSSAs are rate schedules. (Id.) Therefore, Plaintiffs reason that the PSSAs are tariffs with the force and effect of federal law. (Id.)
Plaintiffs cite cases in support of the proposition that the agreements between parties that are filed with FERC have the force and effect of federal law. First, Plaintiffs point the Court to New York State Gas & Elec. v. New York Indep. Sys. Operator, Inc., No. CIV.00-CV-1526HGMGJD, 2001 WL 34084006, at *6 (N.D.N.Y. Jan. 19, 2001). In New York State Gas & Elec., the court examined whether there was federal question jurisdiction in a breach of contract case where the contracts specifically incorporated the tariffs into the service agreements between the parties. New York State Gas & Elec, 2001 WL 34084006, at *1. The court found:
Id. at *6. Plaintiffs argue that this case is analogous to New York State Gas & Elec. because the key fact relied on by the court to determine "federal jurisdiction is also present here: the service agreements are incorporated into LaGen's FERC tariff as the means of establishing rates, and thus, assume the mantel of federal law." (Doc. 193 at 10-11.)
Plaintiffs likewise point the Court to City of Chanute, Kan. v. Kansas Gas & Elec. Co., No. 06-4096, 2007 WL 1041763 (D. Kan. Apr. 4, 2007). City of Chanute, the defendant argued for removal and federal jurisdiction stating,
City of Chanute, Kan. v. Kansas Gas & Elec. Co., No. 06-4096, 2007 WL 1041763, at *2 (D. Kan. Apr. 4, 2007). The court reasoned:
City of Chanute, 2007 WL 1041763, at *3 (citing New York State Gas & Elec., 2001 WL 34084006, at *6). Ultimately, the court found:
City of Chanute, 2007 WL 1041763, at *3. Plaintiffs again analogize to City of Chanute and states that the same facts are present in this litigation because:
(Doc. 193 at 11.)
Last, Plaintiffs cite City of Osceola, Ark. v. Entergy Arkansas, Inc., 791 F.3d 904, 907-08 (8th Cir. 2015) to support the proposition that FERC "`filed tariffs are the equivalent of a federal regulation,' and therefore a suit to enforce them arises under federal law." (Doc. 193 at 12 (citing, City of Osceola, Ark., 791 F.3d 904 at 907-908).) The Eighth Circuit explained,
City of Osceola, Ark, 791 F.3d at 907-08. Plaintiffs maintain that this case is analogous and federal jurisdiction exists. (Doc. 193 at 12.)
Plaintiffs next argue that the Defendant's cited cases are readily distinguishable. First, Plaintiffs state Monforte is inapplicable because the plaintiff did not allege a breach of a FERC tariff, only a private agreement. (Doc. 193 at 12-13.) Plaintiffs maintain that the argument for federal jurisdiction in Monforte was a federal defense, which does not provide a basis for removal. (Doc. 193 at 13.) Plaintiffs argue that Monforte is therefore distinguishable because the PSSAs were filed under the FERC tariff and the court in Monforte did not address the meaning of a contract filed with FERC. (Doc. 193 at 13.) Second, Plaintiffs maintain Florida Gas is not applicable because the court found that the agreements existed apart from the filed tariffs, which they argue is not the case here. (Doc. 193 at 14.) Third, Plaintiffs assert Pacific Gas does not apply because the court relied on the fact that the dispute was between a non-public utility that is exempt from FERC oversight to support its conclusion that no federal jurisdiction existed. (Doc. 193 at 14.) Plaintiffs point out that Defendant is a public utility and there is no exemption at issue in this case. (Id.) Last, Plaintiffs maintain Great Lakes Gas Transmission, is likewise distinguishable because it differs in material aspects: (1) Although the agreement at issue in Great Lakes incorporated the terms of a tariff, the agreement was not filed with FERC; and (2) the claims in Great Lakes centered on the interpretation of provisions of the agreement that were unrelated to the FERC tariff and the "FERC approved rate formula." (Doc. 193 at 15.) Because the PSSAs were filed with FERC and the claims challenge the application of the rate formula, Plaintiffs maintain that this case is distinguishable.
Last, Plaintiffs argue that no private right of action is necessary for a claim to "arise under" federal law. (Doc. 193 at 15.) Plaintiffs maintain that the courts in New York Gas & Elec., City of Chanute, and City of Osceola did not consider whether there was a private right of action to find federal jurisdiction. (Id.) Further, Plaintiffs detail that pre-Gable case law demonstrates that arising under jurisdiction can be found regardless of whether the Grable test is met. (Id. (citing MCI Telecomm. Corp. v. Garden State Inv. Corp., 981 F.2d 385, 388 (8th Cir. 1992) (" Because the service relationship . . . arises under the Communications Act and the tariff required by the Act, we conclude the district court had subject matter jurisdiction over [the] lawsuit under 28 U.S.C. § 1337(a). Thus, the district court did not need to consider whether there is a need for uniform federal common law as a basis for jurisdiction.").)
Plaintiffs maintain that the Court has jurisdiction under the Grable doctrine because "(1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities." (Doc. 193 at 16 (citing, Singh v. Duane Morris LLP, 538 F.3d 334, 338 (5th Cir. 2008)).)
First, Plaintiffs argue that resolving federal issues is necessary to the resolution of the state-law claims because a contract filed with FERC has the force and effect of federal law and therefore the interpretation of those contracts is a federal question. (Doc. 193 at 16-17 (citing Prairie Horizon Agri-Energy, LLC v. Tallgrass Interstate Gas Transmission, LLC, No. 14-1236-JTM, 2014 WL 7384767, at *2 (D. Kan. Dec. 29, 2014) ("a claim that involves the validity, construction, or effect of a filed FERC tariff invokes federal subject matter jurisdiction.") (citation omitted); T & E Pastorino Nursery, 268 F. Supp. 2d at 1247 ("Because the parties' contractual duties arise under the terms of the . . . tariff, any claim stemming from Defendants' breach of their obligations under the ancillary services contracts is necessarily based on an assumed violation of the tariff itself.")).) Plaintiffs assert that to resolve the claims, the Court must interpret the meaning of the PSSAs as federal law to determine if Defendant improperly implemented a rate formula in a FERC filed contract. (Doc. 193 at 16.)
Plaintiffs also list other federal questions they maintain pervade the case relating to the specific terms of the consent decree entered by the Court and the relevant regulations under the Clean Air Act. (Doc. 193 at 17.) Taken together Plaintiffs maintain that these support the argument that resolution of federal law issues is necessary to the resolution of the Plaintiffs' state law claims. (Doc. 193 at 17.)
Second, Plaintiffs argue that the federal issues are actually disputed because the interpretation of the PSSAs is a matter of federal law. (Doc. 193 at 18.) Plaintiffs therefore reason that because the PSSAs operate with the force of federal law, the dispute as to the meaning of and the implementation of the PSSAs is actually disputed federal law. (Id.) In addition, Plaintiffs point to the consent decree and the Clean Air Act regulations as actually disputed federal issues. (Doc. 193 at 18.)
Third, Plaintiffs argue that the federal issues are substantial because the PSSAs have the force and effect of federal law. Plaintiffs detail, "[D]ismissal for lack of subject-matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is so insubstantial, implausible, foreclosed by prior decisions of [the Supreme] Court, or otherwise completely devoid of merit as not to involve a federal controversy." (Doc. 193 at 19-20 (citing, Gilbert v. Donahoe, 751 F.3d 303, 311 (5th Cir. 2014) (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89 (1998)) (internal quotation marks omitted)).) Plaintiffs maintain that there is a substantial federal interest in "ensuring [the] calculation of rates, or allocation of costs under rate formulae." This substantial federal interest is evidenced by the exclusive authority to oversee tariffs that is vested in FERC and the ongoing reporting requirements with which Defendant is obliged to comply. (Doc. 193 at 20.) Plaintiffs next argue that the federal issues are substantial because, "[i]f states are permitted to interpret provisions of FERC-filed tariffs and agreements directly related to rates or rate calculations, each state could enforce its own findings as to the meaning of a filed tariff or agreement." (Id.) Plaintiffs also assert that a private right of action is not dispositive as to whether there is a substantial federal issue. (Doc. 193 at 21.) Instead, Plaintiffs maintain that a private right of action is merely evidence relative to whether there is a substantial federal issue. (Doc. 193 at 21 (quoting Grable, 545 U.S. at 318 ("Merrell Dow should be read in its entirety as treating the absence of a federal private right of action as evidence relevant to, but not dispositive of, the `sensitive judgments about congressional intent' that § 1331 requires.")).)
Plaintiffs again cite to the disputes regarding the consent decree, and the Clean Air Act regulations as presenting substantial federal issues. In support, Plaintiffs cite to a pre-Gable Fourth Circuit case, Ormet Corp. v. Ohio Power Co., 98 F.3d 799, 807 (4th Cir. 1996), which explained, "resolution of the dispute requires the interpretation and application of the Act to the contractual arrangement between the parties. This is undoubtedly a federal question and, we believe, sufficiently substantial to justify invocation of federal-question jurisdiction." (Doc. 193 at 21.) Moreover, Plaintiffs maintain that there is a substantial federal issue because of the consent decree negotiated by the EPA that was intended to resolve violations of the federal CAA will necessarily need to be construed because both parties rely on it in support of their case. In a case where the parties disputed dispositive issues as to the requirements of a consent decree, the Sixth Circuit found that there was a substantial federal interest. United States v. City of Loveland, Ohio, 621 F.3d 465, 472 (6th Cir. 2010). Plaintiffs argue that because the EPA has entered similar consent decrees with other utility providers, there is a need for uniformity of interpretation of any consent decree provisions. (Doc. 193 at 22.)
Last, Plaintiffs maintain that federal question jurisdiction will not disturb the balance of federal and state judicial responsibilities because FPA issues and FERC-filed tariffs have traditionally been left to the federal courts. (Doc. 193 at 23.) Plaintiffs argue that there would not be a flood of state-based claims if the Court kept jurisdiction because it would only apply to claims arising from contracts filed with FERC under FERC-filed tariffs. (Doc. 193 at 23.) Plaintiffs maintain that federal courts already have jurisdiction over the consent decree and the Clean Air Act regulations so there is no harm in maintaining jurisdiction over the case from that perspective.
Plaintiffs argue that under Federal Rule of Civil Procedure 16(f), the Court may sanction Defendant for filing the Motion to Dismiss outside of the timeframes set by the scheduling order. (Doc. 193 at 24) (citing United States v. Ken Mar Associates, Ltd., 697 F.Supp. 400, 404 (W.D. Okla. 1987) (sanctioning a plaintiff for moving to dismiss after the dispositive motion deadline because "the circumstances and evidence supporting the . . . Motion to Dismiss [existed] at the time of the [dispositive motion] deadline.")).) Plaintiffs argue all the facts necessary for Defendant to raise the issue were developed long before the dispositive motions deadline and that the Court should therefore sanction the Defendant. (Doc. 193 at 24.)
In reply, Defendant maintains Plaintiffs concede that there is no private cause of action under the FPA. (Doc. 197 at 1.) Defendant argues that the Court should reject Plaintiffs' argument that "(1) a FERC tariff has the force of federal law; (2) the PSSAs are filed with FERC under [Defendant's] FERC tariff; (3) the PSSAs are thus legally tethered to the tariff; and (4) therefore, a claim for breach of the PSSAs arises under federal law" is superficial and overlysimplistic. (Doc. 197 at 1-2.) Defendant argues that Plaintiffs' logic fails because the LaGen Tariff is a market-based tariff that allows Defendant and its customers the freedom to contract the rates and all other terms and provisions. (Doc. 197 at 2 (citing Doc. 188-3).) The LaGen Tariff is not a cost-based tariff that FERC approves as "just and reasonable." (Doc. 197 at 2.)
Defendant asserts that the filing of the PSSAs does not federalize the PSSAs because (1) FERC considers such filings information; (2) FERC does not examine the service agreement for reasonableness; and (3) FERC's acceptance of the service agreement "does not constitute approval of any service, rate, charge, classification or any rule, regulation, contract or practice affecting such rate or service provided in the filed documents." (Doc. 197 at 2.) As such, Defendant argues that FERC leaves the terms and conditions to the contracting parties and in this case, that contractual language provides that it "shall be governed by the laws of the State of Louisiana." (Doc. 197 at 3, n.5.) Because the PSSA is filed under a market-based tariff, Defendant maintains that the PSSA does not have the force and effect of federal law and that therefore, arising under jurisdiction is not warranted.
Defendant argues that the Grable test is not met because Plaintiffs' analysis—that the FERC filed PSSAs necessarily raise significant and important federal issues of interpretation— fails. Defendant argues that market-based service agreements that are interpreted under state law do not have federal significance.
Defendant reiterates that the cases it originally cited are on point and analogous. Regarding Monforte, Defendant states, "Plaintiffs seek to distinguish Monforte because the plaintiff did not allege a breach of the FERC tariff, but Plaintiffs also have not alleged a breach of any provision of LaGen's market-based tariff." (Doc. 197 at 4.) Instead, Defendant maintains that Plaintiffs only seek an interpretation of the contracts entered into under the LaGen Tariff. (Doc. 197 at 4, n.6.) As to Florida Gas, Defendant argues,
(Doc. 197 at 5.) Regarding Pacific Gas, Defendant refutes that the court relied solely on the status of the defendants as exempt from the FPA because the court stated that this exemption was not dispositive. (Doc. 197 at 5.) Last, as to Great Lakes, Defendant argues that Plaintiffs' attempt to distinguish Great Lakes does not stand because the fact that the agreement was not filed with FERC did not impact the Grable analysis. Therefore, Defendant maintains that, like in Great Lakes, "Plaintiffs claims involve the interpretation of provisions of the PSSAs that are not dictated by any provision of the FERC tariff and are unrelated to any FERC-approved rate formula or any FERC ruling or order." (Doc. 197 at 6.) Defendant also points the Court to Newmont Nevada Energy Inv., LLC v. Sierra Pac. Power Co., No. 3:12-CV-00349-RCJ, 2012 WL 4339572 (D. Nev. Sept. 20, 2012), which also involved a dispute arising out of a contract entered into by the parties and filed with FERC. (Doc. 197 at 6.) The court explained:
Newmont Nevada Energy Inv., LLC v. Sierra Pac. Power Co., No. 3:12-CV-00349-RCJ, 2012 WL 4339572, at *6 (D. Nev. Sept. 20, 2012).
Defendant argues that in contrast, Plaintiffs' cases either pre-date Grable, do not address Grable, fail to recognize the Grable factors, or fail to recognize that state law determines the resolution of the matter. (Doc. 197 at 7.) Defendant also asserts:
(Doc. 197 at 7.) Defendant reasons that, unlike these cases, because the provisions of the market-based tariffs are not at issue, and Plaintiffs' claims do not invoke any provision of the FPA or rely on any FERC finding, order, or ruling, Plaintiffs' state law claims do not invoke a substantial federal question. (Doc. 197 at 7-8.)
Regarding the third factor, whether the federal issues are substantial, Defendant argues Plaintiffs' concern—that "if states are permitted to interpret provisions of FERC-filed tariffs and agreements directly related to rates or rate calculations, each state could enforce its own findings as to the meaning of a filed tariff or agreement"—does not apply because the LaGen Tariff is market-based. (Doc. 197 at 11.) As such, the terms of sale do not rely on any provisions of the tariff but are reflected in the contract, which is interpreted as a matter of state law. (Doc. 197 at 11.)
Defendant argues that Plaintiffs assert a new argument that their breach of contract claim is intertwined with federal environmental law so as to warrant jurisdiction under Grable. (Doc. 197 at 8.) However, Defendant asserts that the argument is a red herring because "Plaintiffs are not seeking to enforce the Consent Decree (they cannot because they are not parties to it) and are not bringing an action under [the Clean Air Act regulations] (which would require a Clean Air Act citizen suit complaint)." (Doc. 197 at 8.) Instead, Defendant maintains the Clean Air Act regulations only interact with the Plaintiffs' claims as "factual background for interpretation of the specific language, and if deemed relevant the parties' intent, in the PSSAs." (Doc. 197 at 8.) As such, any interpretation by the court would be strictly factual.
Under the first Grable factor, Defendant maintains that federal environmental law does not need to be interpreted to determine if Defendant breached Section 10.4. of the PSSA, which states,
(Doc. 197 at 8.) Defendant argues Plaintiffs do not expressly allege and have not presented evidence through an expert witness or otherwise to show that Defendant violated any Clean Air Act regulation. (Doc. 197 at 9.) Because liability for violating the federal environmental laws is not at issue, Defendant argues any reference to the consent decree of the Clean Air Act regulations will merely be context for the contract interpretation. (Doc. 197 at 9.) Defendant points out that, in response to Defendant's motion for summary judgment, Plaintiffs argued "
Further, Defendant states Plaintiffs' reliance on the pre-Grable case of Ormet Corp. does not advance their argument because, unlike in Ormet Corp., Plaintiffs have not alleged a violation of environmental law and there is no question of Defendant's compliance with the terms and conditions of the consent decree. (Doc. 197 at 10.)
As to the second factor, whether the federal issues are actually disputed, Defendant argues "there are no federal environmental law issues to be resolved because those issues are solely factual background for deciding the true dispute under the PSSAs." (Doc. 197 at 10.) As such, Defendant maintains the only relevant question as to the federal environmental laws or the consent decree is "what effect the Consent Decree, and LaGen's affirmation that some of those technologies that it agreed to install (refueling Unit 2 and PM emission controls) will allow it to comply with MATS, should have on the interpretation of the PSSAs." (Doc. 197 at 11.) This does not rise to an actual dispute. (Id.)
Regarding the third factor, whether the federal issues are substantial, Defendant argues
(Doc. 197 at 12.) As such, Defendant maintains City of Loveland, does not apply because that case involved the termination of the actual consent decree requirements, which are not at issue in the case. (Doc. 197 at 12-13.) Similarly, Defendant argues that Herrold does not apply because "nothing about the interpretation requested or the relief sought in this case will impact the Consent Decree in any way." (Doc. 197 at 14.)
Last, Defendant reiterates that the federal state balance favors a finding of no jurisdiction because Louisiana and its state courts have a substantial interest in resolving contract disputes under state law. (Doc. 197 at 14.)
Defendant argues that sanctions are not warranted and that Plaintiffs' reliance on United States v. Ken Mar Associates, Ltd., 697 F.Supp. 400 (W.D. Okla. 1987) is inappropriate because that case involved a motion to dismiss under sovereign immunity grounds which is a dispositive motion. (Doc. 197 at 14.) Moreover, Defendant urges that Plaintiffs have not shown hardship and that the jurisdictional issues were properly brought before the Court. (Doc. 197 at 15.)
"Federal courts are courts of limited jurisdiction." Gunn v. Minton, 568 U.S. 251, 256 (2013) ("Federal courts are courts of limited jurisdiction, possessing only that power authorized by Constitution and statute.") (quoting Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994)). Federal district courts "have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The Supreme Court has stated:
Gunn, 568 U.S. at 257-258; see Singh v. Duane Morris LLP, 538 F.3d 334, 337-38 (5th Cir. 2008) ("A federal question exists "only [in] those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.").
Courts apply the Grable test to determine if a case is within the "special and small category of cases in which arising under jurisdiction still lies." Gunn, 568 U.S. at 257. Interpreting Grable the Fifth Circuit explained:
Singh v. Duane Morris LLP, 538 F.3d 334, 338 (5th Cir. 2008) (citing Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 813 (1986) and Grable, 545 U.S. at 314). Therefore, when an action involves a highly fact bound and situation specific inquiry, federal jurisdiction is likely lacking. Id.; see Baca v. Sabine River Auth., No. CV 17-253-BAJ-EWD, 2017 WL 9485534, at *5 (M.D. La. Oct. 31, 2017), report and recommendation adopted, No. CV 17-00253-BAJ-EWD, 2017 WL 5957099 (M.D. La. Nov. 30, 2017); State v. Astrazeneca AB, No. CV 15-274-JWD-RLB, 2015 WL 5813342, at *4 (M.D. La. Sept. 14, 2015), report and recommendation adopted, No. 15-274-JWD-RLB, 2015 WL 5838487 (M.D. La. Oct. 5, 2015).
As the Court states in Gunn, there are only two ways in which a case can arise under federal law: (1) ". . . when federal law creates the cause of action asserted" and (2) in that "small and special category of cases" where "even where the claim finds its origins in state rather than federal law," there is a federal component in the case substantial enough such that "arising under jurisdiction still lies." Gunn, 568 U.S. at 257-258 (internal quotations and citations omitted).
Plaintiffs argue first, to use the language of Gunn, that "federal law creates the cause of action" asserted by them. Alternatively, they argue that, even if this dispute "finds its origins in state rather than federal law" there is federal question jurisdiction under the Grable test as reiterated in Gunn. The Court rejects both of these arguments.
The Federal Power Act ("FPA") was enacted "to curb abusive practices of public utility companies by bringing them under effective control, and to provide effective federal regulation of the expanding business of transmitting and selling electric power in interstate commerce." Gulf States Utilities Co. v. Fed. Power Comm'n, 411 U.S. 747, 758 (1973). The FPA created FERC, which is granted broad regulatory power. Id. 16 U.S.C. § 824d, Rates and charges; schedules; suspension of new rates; automatic adjustment clauses, states:
16 U.S.C. § 824d(a). The Supreme Court in Montana-Dakota Utilities Co. v. Nw. Pub. Serv. Co., recognized that § 824d(a) did not give rise to an express private cause of action. 341 U.S. 246, 251 (1951) ("[Plaintiff] cannot litigate in a judicial forum its general right to a reasonable rate, ignoring the qualification that it shall be made specific only by exercise of the Commission's judgment, in which there is some considerable element of discretion. It can claim no rate as a legal right that is other than the filed rate, whether fixed or merely accepted by the Commission, and not even a court can authorize commerce in the commodity on other terms.")
Further, courts have refused to read an implied private cause of action into § 824d(a) because:
City of Gainesville v. Fla. Power & Light Co., 488 F.Supp. 1258, 1272 (S.D. Fla. 1980); see Great Lakes Gas Transmission Ltd. P'ship v. Essar Steel Minnesota LLC, 843 F.3d 325, 331 (8th Cir. 2016) ("Therefore, we find no implied federal cause of action for breach of contract in the NGA."); Allco Renewable Energy Ltd. v. Massachusetts Elec. Co., 875 F.3d 64, 73 (1st Cir. 2017) ("Moreover, a number of courts have concluded that the NGA does not contain such a right. See Great Lakes Gas Transmission Ltd. P'ship v. Essar Steel Minn. LLC, 843 F.3d 325, 32 9-30 (8th Cir. 2016); Columbia Gas Transmission, LLC v. Singh, 707 F.3d 583, 587 (6th Cir. 2013); Clark v. Gulf Oil Corp., 570 F.2d 1138, 1150 (3d Cir. 1977). We agree with them, and thus conclude that the FPA does not provide a private right either.")
No private cause of action is likewise created by 16 U.S.C. § 825p, Jurisdiction of offenses; enforcement of liabilities and duties, which states:
16 U.S.C. § 825p. The court in City of Gainesville also considered § 825p, finding that the jurisdictional provision: (1) created a cause of action in favor of FERC to prosecute actions in equity; and (2) interpreted the phrase "actions at law" to mean "the explicit private causes of action for damages" enumerated in the FPA. 488 F.Supp. at 1272-74, (citing Touche Ross & Co. v. Redington, 442 U.S. 560, 577 (1979) ("The source of plaintiffs' rights must be found, if at all, in the substantive provisions of the . . . Act which they seek to enforce, not in the jurisdictional provision.").
Under the FPA, an electric producer must file its tariff with FERC. 18 C.F.R. § 35.1. When the parties first contracted in the PSSAs in 2000, the term tariff was defined as, "[A] compilation in book form of rate schedules of a particular public utility effective under the Federal Power Act, and a copy of each form of service agreement."
Cahnmann v. Sprint Corp., 133 F.3d 484, 488-89 (7th Cir. 1998) (internal citations omitted). Therefore, courts agree that there is federal subject matter jurisdiction in an action to enforce the terms of a FERC tariff or to determine a "just and reasonable rate." Ne. Rural Elec. Membership Corp. v. Wabash Valley Power Ass'n, 707 F.3d 883, 897 (7th Cir. 2013), as amended (Apr. 29, 2013).
As to Plaintiffs' argument, that federal law creates the cause of action asserted by them, Plaintiffs contend that "the PSSAs are governed by the FPA, are filed with FERC under [Defendant's] tariff, and are considered federal regulations by operation of law." (Doc. 193 at 8.) Plaintiffs cite cases in support of their argument. For example, a court in the Southern District of California found exclusive federal jurisdiction over a breach of an ancillary service contract. The court stated:
T & E Pastorino Nursery v. Duke Energy Trading & Mktg., L.L.C., 268 F.Supp.2d 1240, 1247 (S.D. Cal. 2003). The Plaintiffs also cite New York State Gas & Elec., in which the Northern District of New York found:
New York State Gas & Elec., 2001 WL 34084006, at *6.
While there is no Fifth Circuit jurisprudence on this question, the Court is persuaded by the rulings from the Seventh and Eighth Circuits, district court rulings, as well as FERC's rulings on jurisdiction, which rejected the same arguments made by Plaintiffs herein.
For example, a court in the Eastern District of California found that a service agreement does not create a federal question created by federal law, explaining:
Pacific Gas & Elec. Co. v. Arizona Elec. Power Coop., Inc., 479 F.Supp.2d 1113, 1121 (E.D. Cal. 2007).
The Seventh Circuit distinguished when a breach of contract action under a federally filed tariff arises under federal law, reasoning,
Ne. Rural Elec. Membership Corp., 707 F.3d at 896. See Great Lakes Gas Transmission Ltd. P'ship v. Essar Steel Minnesota LLC, 843 F.3d 325, 331 (8th Cir. 2016) (". . . this claim was not brought to enforce the terms of a tariff as previously interpreted by FERC. This dispute did not "center[ ] on" an interpretation of a "FERC approved rate formula," nor did the FAC seek "damages permissible under" the NGA or FERC decisions. See id. Rather, the FAC alleged a simple breach of contract claim. There was no indication that federal law created this cause of action or played any role in Great Lakes's right to relief.")
In addition, the Seventh Circuit also recognized that FERC routinely declines to exercise jurisdiction over state-law contract claims, stating:
Ne. Rural Elec. Membership Corp., 707 F.3d at 896-897. In addition, where the tariff is market-based, and therefore all rates are set by contract between the parties, FERC routinely expresses that market-based rate disputes are contractual disputes not appropriate for the regulatory commission to respond to. FERC has explained:
Clarksdale Pub. Utilities Comm'n, 93 FERC ¶ 61002, 61005-06 (Oct. 2, 2000).
The Court agrees that tariffs have the force of federal law; however, the Court does not find that federal law "creates the cause of action asserted" because the PSSAs between the parties "exist[] apart from the filed tariffs and the [contract] fundamentally defines the parties' respective obligations" and the Plaintiffs' claim does not challenge the reasonableness of a federal law, regulation, or tariff. Fla. Gas, 2009 WL 361592, at *4; see Newmont Nevada Energy Inv., LLC v. Sierra Pac. Power Co., No. 3:12-CV-00349-RCJ-VPC, 2012 WL 4339572, at *6 (D. Nev. Sept. 20, 2012) ("When contract language `inform[s] the resolution of this matter' rather than the federal tariff itself, there is no federal question jurisdiction.") (citing, Pacific Gas and Elec. Co. v. Ariz. Elec. Power Coop., Inc., 479 F.Supp.2d 1113, 1125 (E.D.Cal.2007)).
In this case, the PSSAs were filed under the LaGen Tariff, which in relevant part states:
(Doc. 188-5 at 4.) Therefore, as a market-based tariff, the LaGen Tariff acknowledges that the parties have freedom of contract to set the rates and terms of their obligations. The PSSAs, while created under the LaGen Tariff, exist apart from the LaGen Tariff and the PSSAs define the parties' obligations. Moreover, Plaintiffs do not challenge any provision of the LaGen Tariff or allege that Defendant breached the terms of the LaGen Tariff. Instead, Plaintiffs challenge whether LaGen breached its contractual obligation in the PSSAs. In resolving the breach of contract claim, a court will have to consider the context of LaGen Tariff, which has the force of a federal regulation. But it does not follow that consideration of the LaGen Tariff for this purpose means that the Plaintiffs' claim for breach of the PSSAs arise under federal law. See Monforte Expl. LLC v. ANR Pipeline Co., No. 09-3395, 2010 WL 143712, at *4 (S.D. Tex. Jan. 7, 2010) ("Since resolving the breach of contract claim will likely require an analysis of the validity and enforceability of the OFO under the FERC tariff, a court addressing this dispute will have to consider federal law. This does not mean, however, that [Plaintiff's] claim arises under federal law."); see also Michigan Elec. Transmission Co. v. Consumers Energy Co., No. 1:17-CV-259, 2018 WL 3146728, at *7 (W.D. Mich. Jan. 29, 2018) ("In short, the Court concludes that the fact that the parties' FERC-filed Agreements have the force of a federal regulation does not compel the conclusion that METC's state-law claims necessarily raise a federal issue, actually disputed and substantial.").
In conclusion, the Court concludes that there is not a federal law which creates, expressly or impliedly a cause of action under which this case arises. This brings the Court to Plaintiff's alternative argument, i.e. that even if this case arises under state law, there is a federal component in the case substantial enough that arising under jurisdiction still lies.
Under Grable, courts have declined to find federal question jurisdiction over the state law claims involving a power service agreement. Great Lakes, 843 F.3d at 334; see Crosstex LIG, LLC v. BG Energy Merchants, LLC, No. 3:11-CV-1259-B, 2011 WL 4368002, at *2 (N.D. Tex. Sept. 16, 2011) (reasoning that where the terms of the tariff did not impact the resolution of the case there is no federal question jurisdiction over a breach of contract case involving a service agreement under the NGA); and Michigan Elec. Transmission Co. v. Consumers Energy Co., No. 1:17-CV-259, 2018 WL 3146728, at *7 (W.D. Mich. Jan. 29, 2018); see also Enable Mississippi River Transmission, 844 F.3d at 499 (holding under the NGA that "[b]ecause no element of a Louisiana civilian conversion claim requires the resolution of a federal law issue, there is no federal question jurisdiction over this suit.").
Under the first and second prongs, whether a federal issue is necessarily raised and actually disputed, courts examining a breach of contract claim have gone both ways. For example, as cited by Defendant, in Monforte Expl. L.L.C. v. ANR Pipeline Co., the Southern District of Texas explained:
No. 09-3395, 2010 WL 143712, at *4 (S.D. Tex. Jan. 7, 2010); On the other hand, the Eighth Circuit acknowledged that a federal issue may necessarily be raised and actually disputed by a power service agreement under a federal tariff. Great Lakes, 843 F.3d at 332.
Under the first prong, Plaintiffs argue that by virtue of the PSSAs being filed with FERC a federal issue is necessarily raised. The Court disagrees. As the court in Pacific Gas stated:
479 F. Supp. 2d at 1125-26; see Enable Mississippi River Transmission, 844 F.3d at 499 (holding under the NGA that "[b]ecause no element of a Louisiana civilian conversion claim requires the resolution of a federal law issue, there is no federal question jurisdiction over this suit."). This case involves a contract between two parties formed under the terms of a federal tariff. However, the federal tariff does not give life to the Plaintiffs' claims because Plaintiffs claims are limited to the interpretation of Section 10.4 of the PSSAs. There is no element of a breach of contract claim under Louisiana law that requires the resolution of a federal law issue. Therefore, this dispute does not necessarily raise a federal issue.
Under the second prong, whether the federal issue is actually disputed, the Court is also unpersuaded by Plaintiffs arguments. Again, Plaintiffs argue that by virtue of filing the PSSAs with FERC, a breach of contract claim presents an actually disputed federal issue. However, as Defendant points out, determining whether Section 10.4 of the PSSAs was breached does not implicate any terms of the LaGen Tariff and there are no allegations that the LaGen Tariff was not "just and reasonable."
Plaintiffs' arguments regarding the Consent Decree, and the Clean Air Act regulations are also unpersuasive. First, Plaintiffs' reliance on cases decided prior to Grable are unavailing. For example, in Ormet Corp. the court found federal question jurisdiction in a case where the claims were for violations of federal environmental law and the terms of a prior consent decree. Plaintiffs in this case are not parties to the Consent Decree. There are no allegations that the Consent Decree or federal environmental law has been violated. Instead, the Clean Air Act regulations and the Consent Decree are fact-specific frameworks that are implicated by breach of contract arguments. Because neither the federal energy regulatory framework of the LaGen Tariff nor the fact-specific framework of federal environmental law is actually disputed, the Court finds that the federal issue is not actually disputed.
Under the third prong, the Supreme Court in Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 700-701 (2006), recognized that substantial issues of federal law are raised when there is a "nearly pure issue of law" that "could be settled once and for all and thereafter would govern" the area of federal law. Id. at 701. The Supreme Court reasoned that when a case is "fact-bound and situation-specific" the case does not present a substantial issue of federal law. As Magistrate Judge Bourgeois explained:
State v. Astrazeneca AB, No. 15-274-JWD-RLB, 2015 WL 5813342, at *4 (M.D. La. Sept. 14, 2015), report and recommendation adopted, No. 15-274-JWD-RLB, 2015 WL 5838487 (M.D. La. Oct. 5, 2015).
Applying the third prong to PSSAs under the FPA, courts have found that the federal issue is not substantial when the agreement is (1) fact-specific to the parties; (2) interpreted under state law; and (3) does not otherwise challenge the terms of the tariff or the FPA. The Eighth Circuit explained:
Great Lakes, 843 F.3d at 332-33 (quoting Pacific Gas, 479 F.Supp.2d at 1123 (E.D. Cal. 2007); Michigan Elec. Transmission Co. v. Consumers Energy Co., No. 1:17-CV-259, 2018 WL 3146728, at *6 (W.D. Mich. Jan. 29, 2018) ("Hence, even assuming arguendo that METC's state-law claims necessarily give rise to a disputed federal issue based on the force of their Agreements, the federal issue is not substantial.").
The Court is persuaded by the reasoning of the Eighth Circuit. In this case, the federal issue is not substantial because: (1) the PSSAs are by agreement to be construed under Louisiana state law, which minimizes the importance of the federal issue at stake as any interpretation will not have an impact outside of the state; (2) the issues are fact specific to the parties in this case and therefore affect only the parties; and (3) there is not an express or implied challenge of a specific federal agency action as the Plaintiffs do not challenge the terms of the LaGen Tariff and the federal environmental laws are merely a fact-specific framework; and (4) there is not a pure issue of law at stake.
Under the fourth prong, the Eighth Circuit likewise explained how mandating federal jurisdiction would disturb the federal-state balance approved by Congress, explaining:
Great Lakes, 843 F.3d at 334 (internal quotations and citations omitted.)
Again, the Court agrees with the reasoning of the Eighth Circuit. In this case, under the fourth prong, the Court finds that it is not capable of resolving the case in federal court without disrupting the federal-state balance approved by Congress. This is a breach of contract claim brought under state law, and therefore interests of comity dictate that state courts have a strong incentive in interpreting and enforcing the law of contracts in their state. While the state courts may have to reference federal law, including the federal environmental framework within which the dispute arose and the federal Consent Decree, the state courts are competent and able to do so.
The Plaintiffs' claims do not arise under federal law and do not present a federal issue that is necessarily raised, actually disputed, and substantial and which will not disrupt the federal-state court balance envisioned by Congress; therefore, the Court finds there is no federal question jurisdiction in this case. The Court likewise denies Plaintiffs request for sanctions.
Heimer v. Knight, No. 3:13CV115TSL-JMR, 2013 WL 12209912, at *1 (S.D. Miss. May 16, 2013).
(internal citations omitted).
18. U.S.C. § 35.2(c)(2).