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Bear Gulch Solar, LLC v. Montana Public Service Commission

United States District Court, D. Montana, Helena Division

November 30, 2018

BEAR GULCH SOLAR, LLC, et al., Plaintiffs,
v.
MONTANA PUBLIC SERVICE COMMISSION, et al., Defendants.

          OPINION & ORDER

          CHARLES C. LOVELL SENIOR UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiffs' Motion for Summary Judgment. (Doc. No. 35) and Defendants' Cross-Motion for Summary Judgment (Doc. No. 60). The motions were argued on October 16, 2018. Jennifer Selendy of Selendy & Gay PLLC argued for Plaintiffs. She was accompanied by Steve Levitas of Plaintiff Cypress Creek Renewables Development, by Daniel P. Mach of Quinn Emmanuel Urquhart & Sullivan, LLP, and by Brianne C. McClafferty of Holland & Hart LLP. Phillip J. Roselli of Wilkinson Barker Knauer LLP argued for Defendants. He was accompanied by Justin Kraske, Chief Legal Counsel for the Montana Public Service Commission and Defendant Commissioner Roger Koopman.

         PROCEDURAL BACKGROUND

         Plaintiffs filed their Complaint against the Montana Public Service Commission and Commissioners Bob Lake, Travis Kavulla, Brad Johnson, Roger Koopman, and Tony O'Donnell in their official capacity (collectively MPSC or Montana Commission) on January 12, 2018. Plaintiffs claim that the Montana Commission has violated Section 210 of the Public Utility Regulatory Policies Act (PURPA), 16 U.S.C. § 824a-3 and regulations enacted by the Federal Energy Regulatory Commission (FERC or the Commission).

         On March 13, 2018, the MPSC filed a motion to stay the proceeding pending their ongoing rulemaking and to dismiss Plaintiffs' "as-applied" challenge for lack of subject matter jurisdiction and failure to state a claim. (Doc. 29). On April 19, 2018, Plaintiffs filed their motion for summary judgment. (Doc. 35). Rather than responding to the motion for summary judgment, the Montana Commission filed a motion to hold the summary judgment motion in abeyance until the Court ruled on the MPSC's motion to stay and motion to partially dismiss Plaintiffs' complaint. The Court set a hearing on the MPSC's motions for June 4, 2018.

         On June 5, 2018, the Court issued its order denying Defendants' partial motion to dismiss and motion to stay. The Court held that Plaintiffs' complaint pled an implementation claim pursuant to PURPA sufficient to give the Court subject matter jurisdiction. The Court denied the MPSC's motion to stay the proceedings while the MPSC completed a new rulemaking process, noting that the MPSC could have begun its amendment process as early as January of 2017, after the Federal Energy Regulatory Commission issued its declaratory order on December 15, 2016. The Court also denied the MPSC's Motion to Hold in Abeyance Plaintiffs' Motion for Summary Judgment and set a briefing schedule requiring the MPSC to file its answer, response to Plaintiffs' summary judgment motion, and any cross-motion for summary judgment on or before June 27, 2018. The MPSC's reply brief on its cross-motion for summary judgment was filed on August 1, 2018. The Court has reviewed the parties' briefs and received argument and is prepared to rule.

         STANDARD OF REVIEW

         Fed.R.Civ.P. 56(a) permits a party to seek summary judgment "identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought." Summary judgment or adjudication is appropriate when the movant shows "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Matsushita Elec. Indus, v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Assn., 809 F.2d 626, 630 (9th Cir.1987). The purpose of summary judgment is to "pierce the pleadings and assess the proof in order to see whether there is a genuine need for trial." Matsushita, 47'5 U.S. at 586, n. 11.

         On summary judgment, a court must decide whether there is a "genuine issue as to any material fact," not weigh the evidence or determine the truth of contested matters. Fed.R.Civ.P. 56(a), (c); see also, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, whether he is ruling on a motion for summary judgment or for a directed verdict." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The evidence of the party opposing summary judgment is to be believed and all reasonable inferences from the facts must be drawn in favor of the opposing party. Anderson, 477 U.S. at 255.

         The moving party, in supporting its burden of production, "must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir.2000). A "complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial" to entitle the moving party to summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "[T]o carry its ultimate burden of persuasion on the motion, the moving party must persuade the court that there is no genuine issue of material fact." Nissan Fire, 210 F.3d at 1102. "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248.

         Once the moving party has met its initial burden, the burden shifts to the non-moving party to establish the existence of a general issue of material fact. Matsushita, 475 U.S. at 586 - 87. The non-moving party may not rely on the allegations or denials of its pleadings but must cite to facts in the record. Fed, R.Civ. P. 56(c)(1); Matsushita, 475 U.S. at 586, n. 11. When a party fails to properly address another party's assertion of fact by citing to the record, as the MPSC did in this case by citing to its own answer, the Court may consider the fact undisputed for purposes of the moving party's motion for summary judgment. Fed.R.Civ.P. 56(e)(2).

         STATEMENT OF FACTS[1]

1. Plaintiffs Bear Gulch Solar, LLC, Canyon Creek Solar, LLC, Couch Solar, LLC, Fox Farm Solar, LLC, Glass Solar, LLC, Malt Solar, LLC, Martin Solar, LLC, Middle Solar, LLC, River Solar, LLC, Sage Creek Solar, LLC, Sypes Canyon Solar, LLC, Valley View Solar, LLC, and Ulm Solar, LLC (collectively, QF Plaintiffs) are each a "qualifying facility" under PURPA and Federal Energy Regulatory Commission (FERC) regulations. (Doc. 65 at ¶ 1).
2. Plaintiff Cypress Creek Renewables Development, LLC (Cypress Creek) is an affiliate of each QF Plaintiff and is the successor-in-interest to FLS Energy, which formerly operated QF Plaintiffs. (Doc. 65 at ¶ 5).
3. Defendant Montana Public Service Commission is an agency of the state of Montana that regulates matters of electrical generation, distribution, and sales within the state and is charged with implementing FERC regulations under PURPA. (Doc 65 at ¶¶ 7 - 8).
4. Defendants Brad Johnson, Travis Kavulla, Tony O'Donnell, Roger Koopman, and Bob Lake are MPSC Commissioners. (Doc. 65 at ¶ 9).
5. Northwestern Energy is an electric utility regulated by the MPSC. (Doc. 68 at ¶ 3).
6. Each QF Plaintiff is developing a solar photovoltaic project within the service area of Northwestern Energy in Montana with a nameplate capacity greater than 100 kilowatts and less than 3 megawatts. (Doc. 65 at ¶ 2).
7. As a solar generator with a capacity of 3 megawatts or less, each QF Plaintiff is eligible for Option 1(a) of the Schedule QF-1 Tariff offered by Northwestern and approved, as revised from time to time, by the MPSC. (Doc. 65 at ¶ 3).
8. From October 2015 until June 16, 2016, the avoided-cost rate at which Montana's QFs were entitled to sell power to Northwestern Energy under Option 1(a) of the Schedule QF-1 Tariff was $92.73 per megawatt-hour in peak hours and $53.14 per megawatt-hour in off-peak hours (the Prior QF-1 Tariff). The Option 1(a) blended rate under the Prior QF-1 Tariff was roughly $66 per megawatt-hour. (Doc. 68 at ¶ 4).
9. In reliance on the Prior QF-1 Tariff, FLS Energy expended approximately $750, 000 to develop new solar QFs throughout Montana. (Doc. 65 at ¶ 12).
10. In the first half of 2016, FLS Energy began negotiating with Northwestern Energy to execute power purchase agreements pursuant to which each QF would sell power to Northwestern Energy at prices set by Option 1(a) of the Prior QF-1 Tariff. (Doc. 65 at ¶13).
11. By early May of 2016, FLS Energy and North West Energy had nearly completed their negotiation concerning the power purchase agreements. (Doc. 32-1, May Decl., at ¶ 10).
12. On May 13, 2016, the MPSC issued a "Notice of Application and Intervention Deadline" in Docket No. (Dkt.) D2016.5.39 in response to Northwestern Energy's May 3, 2016, filing of an "Application for Approval of Avoided Cost Tariff Schedule QF-1." (MPSC docket information for Dkt. D2016.5.39 is available on the MPSC's website).
13. Northwestern Energy confirmed with FLS Energy that the new rates proposed in its May 3, 2016, application would not take effect for several months even on an interim basis and continued to assure FLS Energy of its intention to execute PPAs with the other QF Plaintiffs at the Prior QF-1 Tariff rates. (Doc. 32-1, May Decl, at ¶ 10).
14. On May 17, 2016, Northwestern Energy filed a "Motion for Emergency Suspension of the QF-1 Tariff for New Solar Qualifying Facilities with Nameplate Capacities Greater than 100 KW" in MPSC Dkt. D2016.5.39. (Doc. 38, Selendy Decl. at ¶ 4; Doc. 38-3).
15. In its May 24, 2016, Notice of North Western Energy's emergency motion, the MPSC indicated that a hearing on the motion was tentatively scheduled for June 9, 2016. (Doc. 57-1).
16. Shortly after June 2, 2016, FLS Energy and Northwestern Energy finalized their agreement as to the terms of the power purchase agreement to be signed by the ...

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