Petition for Writ of Certiorari — Allco Finance Limited, Petitioner v. Robert J. Klee, Commissioner, Connecticut Department of Energy and Environmental Protection, et al.

1a

APPENDIX A

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

August Term, 2016

Argued: December 9, 2016

Decided: June 28, 2017

Docket Nos. 16-2946, 16-2949

ALLCO FINANCE LIMITED, Plaintiff-Appellant,

- v. –

ROBERT J. KLEE, in his official capacity as

Commissioner of the Connecticut Department of

Energy and Environmental Protection, DefendantAppellee,

KATHERINE S. DYKES, JOHN W. BETKOSKI, III,

and MICHAEL CARON, in their official capacities

as Commissioners of the Connecticut Public Utilities

Regulatory Authority, Defendants-Appellees.*

Before:

Judges.

CALABRESI,

RAGGI,

LYNCH,

Circuit

* The Clerk of Court is respectfully directed to amend the

caption to conform to the caption above.

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Thomas Melone, Allco Renewable Energy Limited,

New York, New York, for Plaintiff-Appellant.

Robert D. Snook, Assistant Attorney General,

Hartford, Connecticut, for George Jepsen, Attorney

General for the State of Connecticut, for DefendantAppellee Robert J. Klee.

Seth Hollander, Assistant Attorney General (Clare

E. Kindall, Assistant Attorney General, on the brief),

New Britain, Connecticut, for George Jepsen,

Attorney General for the State of Connecticut, for

Defendants-Appellees Katherine S. Dykes, John W.

Betkoski, III, and Michael Caron.

Ann H. Rubin, Carmody Torrance Sandak &

Hennessey LLP, Waterbury, Connecticut, for Amicus

Curiae The Connecticut Light and Power Company,

DBA Eversource Energy, in support of Defendants-

Appellees.

Gene Grace (Julia Dreyer, on the brief), American

Wind Energy Association and RENEW Northeast,

Washington, D.C., for Amicus Curiae American

Wind Energy Association, in support of DefendantsAppellees.

M. Elaine Meckenstock, Deputy Attorney General

(Robert W. Byrne, Senior Assistant Attorney

General, Gavin G. McCabe, Supervising Deputy

Attorney General, and Melinda Pilling, Deputy

Attorney General, on the brief), Oakland, California,

for Xavier Becerra, Attorney General, California

Office of the Attorney General, for Amici Curiae

States of Massachusetts, New York, Oregon,

Vermont, and Washington, and the California Air

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Resources

Appellees.

Board,

in

support

of

Defendants

CALABRESI, Circuit Judge:

Plaintiff-Appellant Allco Finance Limited ("Allco" or

"Plaintiff") appeals from a final judgment entered by

the United States District Court for the District of

Connecticut (Haight, J.), which dismissed two of

Allco's related, but not formally consolidated,

Complaints ("the Complaints"). The Complaints

focus

on

Connecticut's

implementation

of

Connecticut Public Acts 13-303 and 15-107, which

empower the state's energy regulator to solicit

proposals for renewable energy generation, to select

winning bids from such solicitations, and then to

"direct" Connecticut's utilities to "enter into"

wholesale energy contracts with the winning

bidders. One of the Complaints also challenges a

separate Connecticut program, the Renewable

Portfolio Standard, which requires Connecticut's

utilities either to produce renewable energy

themselves or to buy renewable energy credits from

other renewable energy producers located in the

region.

Allco brought these two actions against the

Commissioners of Connecticut's state energy

regulators in their official capacities ("the

Defendants"), arguing that the state programs

violate federal law and the dormant Commerce

Clause of the United States Constitution, and that

Connecticut's implementation of the programs has

injured Allco. In addition to seeking damages and

fees under 42 U.S.C. §§ 1983 and 1988, Allco sought

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declaratory judgments that Connecticut regulators

had violated federal law in their implementation of

the programs, and that any contracts that arose out

of solicitations conducted under Public Acts 13-303

and 15-107 were void. Allco also sought equitable

relief in the form of an injunction barring

Connecticut from violating federal law in any

pending or future solicitation.

In each action, the Defendants moved to dismiss the

Complaint for lack of standing and for failure to

state a claim. Allco opposed these motions, and

moved for preliminary injunctive relief. On August

18, 2016, in a single omnibus decision, the district

court granted Defendants' motions to dismiss the

Complaints and denied Allco's motions for injunctive

relief as moot. Allco filed a timely notice of appeal on

August 23, 2016, and then, on October 3, 2016, filed

a motion for an emergency injunction pending this

appeal. On November 2, 2016, a motions panel of

this court granted the emergency injunction and

expedited this appeal. We heard oral arguments on

December 9, 2016, and vacated the emergency

injunction on December 12, 2016.

We now AFFIRM the district court's judgment. We

hold: (1) that Allco failed to state a claim that

Connecticut's

renewable

energy

solicitations

conducted pursuant Connecticut Public Acts 13-303

and 15-107 are preempted by federal law, and (2)

that Allco failed to state a claim that Connecticut's

Renewable Portfolio Standard program violates the

dormant Commerce Clause.

I. BACKGROUND

5a

A. The Federal Power Act and the Public Utility

Regulatory Policies Act

The Federal Power Act ("FPA") gives the Federal

Energy Regulatory Commission ("FERC") exclusive

authority to regulate the sale of electric energy at

wholesale in interstate commerce. See 16 U.S.C. §

824(b)(1); Hughes v. Talen Energy Mktg., LLC, 136

S. Ct. 1288, 1292, 194 L. Ed. 2d 414 (2016). A "sale of

electric energy at wholesale" is defined as a "sale of

electric energy to any person for resale." 16 U.S.C. §

824(d). The FPA requires "FERC to oversee all prices

for those interstate transactions and all rules and

practices affecting such prices," and further

"provides that 'all rates and charges made,

demanded or received by any public utility for or in

connection with' interstate transmissions or

wholesale sales . . . must be 'just and reasonable.'"

FERC v. Elec. Power Supply Ass'n, 136 S. Ct. 760,

767, 193 L. Ed. 2d 661 (2016) ("EPSA") (quoting 16

U.S.C. § 824d(a)). "If 'any rate [or] charge,' or 'any

rule, regulation, practice, or contract affecting such

rate [or] charge' falls short of that standard," FERC

"must rectify the problem: It then shall determine

what is 'just and reasonable' and impose 'the same

by order.'" Id. (quoting 16 U.S.C. § 824e(a))

(alterations in original). Although the FPA "places

beyond FERC's power, leaving to the States alone,

the regulation of 'any other sale'—i.e., any retail

sale—of electricity," id. at 762 (quoting 16 U.S.C. §

824(b)), states may not regulate interstate wholesale

sales of electricity unless Congress creates an

exception to the FPA. 16 U.S.C. § 824(b).

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The Public Utility Regulatory Policies Act1

("PURPA") contains such an exception, permitting

states to foster electric generation by certain power

production facilities ("qualifying facilities" or "QFs")

that have no more than 80 megawatts of capacity

and use renewable generation technology. Id. § 824a3; see id. § 796(17)(A). A state may regulate

wholesale sales of electricity made by QFs by

requiring utilities to purchase power from QFs at the

utilities' "avoided costs," which are the costs that

the utility would have otherwise incurred in

procuring the same quantity of electricity from

another source. See id. § 824a-3(b); 18 C.F.R. §

292.304(b)(2). Section 210(a) of PURPA, 16 U.S.C. §

824a-3(a), also provides all QFs with a guaranteed

right to sell their energy and capacity to electricity

utilities at the utilities' avoided costs. See 16 U.S.C.

§ 824a-3(b), (d); 18 C.F.R. § 292.304(b)(2); see also

Am. Paper Inst., Inc. v. Am. Elec. Power Serv. Corp.,

461 U.S. 402, 404-06, 417, 103 S. Ct. 1921, 76 L. Ed.

2d 22 (1983). PURPA imposes obligations on each

state regulatory authority to implement FERC's

PURPA regulations, 16 U.S.C. § 824a-3(f)(1), and

provides a private right of action to QFs to enforce a

state's obligations under PURPA, see id. § 824a-

1 Although PURPA is technically one of several amendments to

the Federal Power Act, see 16 U.S.C. §§ 791-828; PURPA, Pub.

L. No. 95-617, 92 Stat. 3117 (1978) (codified in part at 16

U.S.C. § 824a-3), any reference to the "Federal Power Act" in

this opinion excludes the sections of the Act enacted under

PURPA.

7a

3(h)(2)(B); FERC v. Mississippi, 456 U.S. 742,

772, 102 S. Ct. 2126, 72 L. Ed. 2d 532 & n.2 (1982).2

B. The Interstate Electricity Market

Three general categories of actors in the interstate

electricity market are relevant to this opinion:

generators, load serving entities (LSEs), and

transmitters. See Hughes, 136 S. Ct. at 1292.

Generators include power plants and other sources

of electricity production. LSEs, otherwise known as

utilities, sell electricity at retail to end users. Id.

Transmitters

transmit

the

electricity

from

generators to the LSEs. Id.

"Until relatively recently, most state energy markets

were vertically integrated monopolies—i.e., one

entity, often a state utility, controlled electricity

generation, transmission, and sale to retail

consumers." Id. Over the past few decades, however,

2 The

private right of action under PURPA has the following

structure. First, "qualifying cogenerator[s]," such as Allco, "may

petition [FERC] to enforce" a state's requirements to comply

with PURPA. § 824a-3(h)(2)(B). Then, "[i]f the Commission

does not initiate an enforcement action . . . against a State

regulatory authority," such as the Connecticut Department of

Energy and Environmental Protection, "within 60 days

following the date on which a petition is filed . . . , the

petitioner may bring an action in the appropriate United States

district court to require such State regulatory authority . . . to

comply with such requirements." Id. The district court may

then "issue such injunctive or other relief as may be

appropriate." Id. Additionally, FERC "may intervene as a

matter of right in any such action." Id.; see Allco Fin. Ltd. v.

Klee, 805 F.3d 89, 92 (2d Cir. 2015), as amended (Dec. 1, 2015)

("Allco II").

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many

states,

including

Connecticut,

have

deregulated their energy markets. Id. In deregulated

markets, LSEs purchase electricity at wholesale

from independent power generators. Id. In order "[t]o

ensure reliable transmission of electricity from

independent generators to LSEs, FERC has charged

nonprofit entities, called Regional Transmission

Organizations (RTOs) and Independent System

Operators (ISOs), with managing certain segments

of the electricity grid." Id. The New England ISO

("ISO-NE"), the transmitter involved in this case,

manages the grid in most of New England, including

all of Connecticut.

Given the changes to the energy market that came

with deregulation, FERC altered its regulatory

methods, and today it "often forgoes the cost-based

rate-setting

traditionally

used

to

prevent

monopolistic pricing. [FERC] instead undertakes to

ensure 'just and reasonable' wholesale rates by

enhancing competition—attempting . . . 'to break

down regulatory and economic barriers that hinder a

free market in wholesale electricity.'" EPSA, 136 S.

Ct. at 768 (quoting Morgan Stanley Capital Grp. Inc.

v. Pub. Util. Dist. No. 1 of Snohomish Cty., 554 U.S.

527, 536, 128 S. Ct. 2733, 171 L. Ed. 2d 607 (2008)).

Thus, in Connecticut and other states that have

deregulated their

energy

markets,

interstate

wholesale transactions typically occur through two

FERC-regulated mechanisms. The first mechanism

is bilateral contracting, whereby LSEs agree to

purchase a certain amount of electricity from

generators at a particular rate over a specified

period of time. Hughes, 136 S. Ct. at 1292. After the

parties have agreed to contract terms, FERC may

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review the rate to ensure it is "just and reasonable"

under 16 U.S.C. 824d(a). See Morgan Stanley, 554

U.S. at 531-32. If these bilateral contracts are made

in good faith and are the result of arm's-length

negotiations, FERC presumes their terms are

reasonable. See NRG Power Mktg., LLC v. Me. Pub.

Utils. Comm'n, 558 U.S. 165, 167, 175, 130 S. Ct.

693, 175 L. Ed. 2d 642 n.4 (2010); Morgan Stanley,

554 U.S. at 545-48. Second, RTOs and ISOs

administer a number of competitive wholesale

auctions. FERC extensively regulates the structure

and rules of such auctions, in order to ensure that

they produce just and reasonable results. See

Hughes, 136 S. Ct. at 1293-94; EPSA, 136 S. Ct. at

769.

Allco's first claim is that Connecticut's renewable

energy solicitation program conducted pursuant to

Connecticut Public Acts 13-303 and 15-107—which

aims to encourage the creation of new bilateral

wholesale energy contracts between LSEs and

generators—violates the FPA and PURPA. As we

shall see, Allco has made several attempts to put

forth that argument.

C. Connecticut's Renewable Energy Procurement

Program

1. The 2013 RFP, Allco I, and Allco II

In 2013, the Connecticut Department of Energy and

Environmental Protection ("DEEP"), which oversees

energy policy and planning in Connecticut, see Conn.

Gen. Stat. § 16a-3, issued a memorandum setting

forth the state's first "Comprehensive Energy

Strategy," which included findings and policy goals

10a

to direct the state's energy and environmental

planning. 2013 Comprehensive Energy Strategy for

Connecticut, Dep't of Energy and Envtl. Prot. (Feb.

19,

2013),

available

at

http://www.ct.gov/deep/lib/deep/energy/cep/2013_ces_

final.pdf ("2013 CES"). The 2013 CES articulates a

commitment (a) to promoting "diversification" of

Connecticut's energy generation sources in order to

mitigate "price and reliability risks," id. at 81-82,

and (b) to increasing renewable energy generation in

the state and in adjacent states in order to meet the

requirements of various environmental regulatory

programs, such as the Global Warming Solutions Act

and the Regional Greenhouse Gas Initiative, id. at

76 & n.20.

The Connecticut legislature enacted a statute that

authorized the DEEP Commissioner, "in accordance

with the policy goals outlined in the [2013 CES],

adopted pursuant to [Conn. Gen. Stat. § 16a-3d]," (a)

to solicit proposals for renewable energy, (b) to select

winners of the solicitation, and (c) to "direct

[Connecticut's utilities] to enter into" bilateral

contracts, called "power purchase agreements," with

the chosen winners "for energy, capacity and

environmental attributes, or any combination

thereof, for periods of not more than twenty years."

Act Concerning Connecticut's Clean Energy Goals,

2013 Conn. Pub. Acts 13-303, § 6 (codified at Conn.

Gen. Stat. § 16a-3f) ("Section 6").3 Any contracts that

3 As

will be discussed further below, Allco alleges that this

statutory authorization to "direct" utilities to "enter into"

bilateral contracts, 2013 Conn. Pub. Acts 13-303, effectively

allows the DEEP Commissioner to "compel" utilities to accept

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were successfully negotiated between utilities and

winning bidders also required the approval of the

Connecticut Public Utilities Regulatory Authority

("PURA"), id., the agency charged with regulating

the two principal utility companies in Connecticut.

In July 2013, the DEEP Commissioner solicited

proposals, under Section 6, from providers of

renewable energy (the "2013 RFP"). Allco, an owner,

operator, and developer of various solar projects

throughout the country, submitted proposals for five

solar projects, each of which had less than of 80

megawatts of capacity, and therefore were QFs

under PURPA. The DEEP Commissioner did not

select Allco's projects. Instead, it chose two others:

(a) a wind project located in Maine called Number

Nine Wind—which, with 250 megawatts of capacity,

was too large to be a QF—and (b) a QF solar

project located in Connecticut, called Fusion Solar,

which was independent of Allco. The DEEP

Commissioner then "directed" the Connecticut

utilities to execute power purchase agreements with

the generators that had been selected. PURA

subsequently reviewed the resulting contracts, and

approved them.

Disappointed by its failure to receive a contract

through the 2013 RFP, Allco sued the DEEP

Commissioner in the United States District Court for

the District of Connecticut, alleging that the DEEP

Commissioner's implementation of Section 6, by

means of the 2013 RFP, was preempted by the FPA.

the terms of selected proposals. Complaint ¶ 30, Allco Fin. Ltd.

v. Klee, No. 3:15-cv-608 (D. Conn. Apr. 26, 2015), ECF No. 1

("Allco III Compl.").

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Allco

complained

that

the

Commissioner's

implementation of the 2013 RFP had the effect of

"fixing" wholesale energy prices, a power that Allco

alleged was reserved to FERC under the FPA. Allco

argued that the DEEP Commissioner's actions could

avoid preemption by the FPA only if they were

conducted in compliance with the limited authority

granted to Connecticut by PURPA to regulate some

wholesale interstate sales, and that the 2013 RFP

failed to operate within the scope of this authority.

In addition to seeking damages and fees under 42

U.S.C. §§ 1983 and 1988, Allco sought equitable

relief to void the contract with Number Nine Wind4

and to enjoin the DEEP Commissioner from

violating the FPA or PURPA in any similar

procurement process in the future.

The district court dismissed the complaint for two

independent reasons. First, it held that Allco lacked

standing because its injuries were not within the

FPA or PURPA's "zone of interests," and because its

injuries were not likely to be redressed by a

favorable judgment. Allco Fin. Ltd. v. Klee, No. 13cv-1874, 2014 U.S. Dist. LEXIS 170674, 2014 WL

7004024, at *3-6 (D. Conn. Dec. 10, 2014) ("Allco I").

Alternatively, the district court concluded that

Allco's claim failed on the merits because the State

Defendants' "implementation of Section 6 does not

4 Allco explained that it did not seek to invalidate the Fusion

Solar contract, because Fusion Solar was a QF under PURPA.

See Allco Fin. Ltd. v. Klee, No. 13-cv-1874, 2014 U.S. Dist.

LEXIS 170674, 2014 WL 7004024, at *7 n.7 (D. Conn. Dec. 10,

2014) ("Allco I").

13a

seek to regulate wholesale energy sales but rather is

a permissible regulation of utilities under the State's

jurisdiction." Allco I, 2014 U.S. Dist. LEXIS 170674,

2014 WL 7004024, at *10.

On November 6, 2015, a panel of our court affirmed

the district court's dismissal of the Allco I complaint

on "alternative grounds." Allco Fin. Ltd. v. Klee, 805

F.3d 89, 91 (2d Cir. 2015), as amended (Dec. 1, 2015)

("Allco II"). Specifically, the panel determined (1)

that PURPA's private right of action under 16 U.S.C.

§ 824a-3(h)(2)(B), which was created to vindicate any

rights conferred by PURPA, foreclosed Allco's claims

under 42 U.S.C. §§ 1983 and 1988; (2) that Allco had

failed to exhaust its administrative remedies under

16 U.S.C. § 824a-3(h)(2)(B), a prerequisite for its

equitable action seeking to enjoin the DEEP

Commissioner from conducting future procurements

that violate the FPA and PURPA; and (3) that Allco

lacked standing to bring a preemption action seeking

solely to void the contracts awarded to the successful

2013 RFP bidders, because doing so would "not

redress its injury, i.e., its not being selected for a

Section 6 contract." Allco II, 805 F.3d at 94-98.

2. The 2015 RFP and the Allco III Complaint

While the Allco II appeal was pending, Allco filed

another Complaint in the District of Connecticut,

this time against both the DEEP Commissioner and

the PURA Commissioners. The suit—which we will

call Allco III—is one of the two suits now before us

on appeal.

14a

The Complaint in Allco III focused on a draft RFP

that the DEEP Commissioner issued on February

26, 2015, soliciting a second round of interstate

wholesale energy generation proposals ("the 2015

RFP") under Sections 6 and 7 of Connecticut Public

Act 13-303, as well as Connecticut Public Act 15107.5 This solicitation was to be closed to generators

with less than 20 megawatts of capacity and open to

bidders with more than 80 megawatts of capacity—

i.e., it excluded bids from smaller QFs and accepted

bids from renewable energy generators too large to

be QFs. Although the 2015 RFP was to be

accompanied by a contemporaneous RFP open

exclusively to bidders with 2-20 megawatts of

capacity, the amount of generation capacity solicited

through that RFP was smaller, and so Allco claimed

it presented a less-valuable opportunity for Allco's

facilities.

The draft 2015 RFP included new language stating

that, "[t]his RFP process . . . does not obligate

[utilities] to accept any bid." Allco III App. at 29.

Allco nonetheless alleged in its Complaint that

DEEP "plans to issue the final request for proposals,

which is likely to be in substantially the same form

as the draft RFP . . . , in the spring of 2015 and

compel wholesale energy transactions soon after it

completes its review of proposals." Complaint ¶ 30,

5 Section

7 of Public Act 13-303 authorizes the DEEP

Commissioner to select proposals including not only "Class I"

renewable energy sources, but also large-scale hydropower. See

Conn. Gen. Stat. § 16a-3g. Public Act 15-107 further authorized

the DEEP Commissioner to solicit proposals including certain

energy storage systems. See id. § 16a-3i.

15a

Allco Fin. Ltd. v. Klee, No. 3:15-cv-608 (D. Conn.

Apr. 26, 2015), ECF No. 1 ("Allco III Compl.")

(emphasis added).

Allco's preemption argument in Allco III, with

respect to the 2015 RFP, thus differed slightly from

the preemption argument it made against the 2013

RFP in Allco I and Allco II. Instead of focusing on

the allegation that Connecticut violated PURPA and

the FPA by "fixing" wholesale rates outside of

PURPA, Allco put forth the theory that Connecticut

violated PURPA and the FPA because "the outcome

of the . . . RFP process will likely be the

Commissioner's decision to force a utility to enter a

wholesale power contract." Allco III Compl. ¶ 43

(emphasis added). According to Allco, this

"compulsion

of

transactions

for

wholesale

transmissions services," id. ¶ 39, constitutes state

regulation of wholesale sales not authorized by

PURPA, and therefore in violation of the FPA, id. ¶¶

43-45. Allco also argued that (1) minimum

generation capacity limits placed on the generators

allowed to submit bids into the 2015 RFP and (2) the

fees charged to generators submitting bids

constituted a regulation of the interstate wholesale

energy market in violation of the FPA. Id. ¶¶ 47, 53.

Additionally,

Allco

attacked

Connecticut's

implementation of its Renewable Portfolio Standard

program (see infra Section I.C, discussing this

claim), id. ¶¶ 63-71, and asserted §§ 1983 and 1988

claims similar to those in Allco I, id. ¶¶ 72-80.

3. FERC's Notice of Intent Not To Act, and the Allco

IV Complaint

16a

On November 9, 2015, several days after we issued

our decision in Allco II, and while the Allco III suit

was still before the district court, Plaintiff filed with

FERC a petition for enforcement under PURPA, see

16 U.S.C. § 824a-3(h), thereby pursuing the

administrative remedy that the Allco II panel held

had not been properly exhausted. Allco's petition

alleged that both the 2013 RFP and the 2015

RFP violated or would violate PURPA, asked FERC

to invalidate the 2013 RFP, and also asked FERC to

enjoin Connecticut from proceeding with the 2015

RFP. Allco Renewable Energy Ltd., Notice of

Petition for Enforcement, FERC Docket No. EL1611-000 (filed Nov. 9, 2015). On January 8, 2016,

FERC issued a Notice of Intent Not To Act on Allco's

petition. Allco Renewable Energy Ltd., Notice of

Intent Not To Act, FERC Docket No. EL16-11-000,

154 FERC ¶ 61,007 (2016). The Notice expressed no

opinion on the merits of Allco's claims under

PURPA.

Claiming that it had now exhausted its

administrative remedies regarding both the 2013

RFP and the 2015 RFP, Allco filed, on March 30,

2016, the second Complaint at issue in this appeal,

which we will call Allco IV. While the Allco III

Complaint concerned only the draft 2015 RFP, the

Allco IV Complaint, in addition to addressing the (by

then, finalized) 2015 RFP, also reached back to the

2013 RFP. The Complaint sought to invalidate the

Number Nine Wind contract that resulted from the

2013 RFP and to enjoin the 2015 RFP from

proceeding.

17a

As in the Allco III Complaint, the Allco IV Complaint

asserted that Connecticut was violating PURPA and

the FPA by issuing an RFP under which Connecticut

would "compel[]" and "order" the utilities to enter

into wholesale energy contracts on a particular set of

proposed terms. Complaint ¶¶ 8, 28, Allco Fin. Ltd.

v. Klee, No. 3:16-cv-508 (D. Conn. Mar. 30, 2016),

ECF No. 1 ("Allco IV Compl."). Allco also argued that

both the 2013 RFP and the 2015 RFP, by virtue of

the restrictions and fees imposed on bidders,

regulated wholesale sales of electricity, and that

because they did not fit within the limited regulatory

authority over wholesale sales granted to

Connecticut by PURPA, they violated the FPA.6 Id.

¶¶ 7-8, 48.

On July 11, 2016, Allco notified the district court

that because the Number Nine Wind contract had

been terminated for reasons unrelated to Allco's

lawsuits, Allco's claims regarding the 2013 RFP were

moot and it was proceeding solely on its claims

related to the 2015 RFP.7

6 Plaintiff

subsequently moved for a temporary restraining

order and a preliminary injunction in Allco III. These sought to

compel Defendants to cease all activity in connection with the

2015 RFP.

7 Allco's

only remaining requests for relief pertaining to the

2013 RFP—i.e., its request for a declaratory judgment that the

2013 RFP was preempted—do not require an analysis separate

from that which we apply to its claims related to the 2015 RFP.

We therefore only consider Allco's claims that pertain to the

2015 RFP.

18a

D. Connecticut's

Program

Renewable

Portfolio

Standard

In its Complaint in Allco III, Allco claims that a

separate Connecticut program, the Renewable

Portfolio Standard ("RPS"), Conn. Gen. Stat. § 16245a(b), violates the dormant Commerce Clause.

Connecticut's RPS program requires utilities to have

an increasing percentage of their generation

portfolios be "generated from" renewable energy.

Conn. Gen. Stat. § 16-245a(a). Connecticut's RPS

program allows utilities to satisfy this requirement

either by generating renewable energy themselves,

or by purchasing renewable energy certificates

("RECs"). See id. § 16-245a(b). (Each REC represents

one megawatt-hour of renewable energy produced by

a third-party generator.)8

"RECs are inventions of state property law whereby

the renewable energy attributes are 'unbundled'

from the energy itself and sold separately."

Wheelabrator Lisbon, Inc. v. Conn. Dep't of Pub.

Util. Control, 531 F.3d 183, 186 (2d Cir. 2008) (per

curiam). As such, different states define RECs

differently, focusing on various attributes which they

deem to be especially relevant.

See Brief

for Massachusetts et al. as Amici Curiae 2. ("Twenty-nine

States currently have RPS programs. Many of those States,

including State Amici here, allow the use of state-created RECs

for compliance with at least part of their RPS programs'

renewable energy requirements.").

8 Several other states have adopted similar programs.

19a

Connecticut's RPS program defines two types of

RECs that count towards the requirement placed on

Connecticut utilities. Each of these involves

particular kinds of renewable energy generation

technology that Connecticut is seeking to encourage,

see Conn. Gen. Stat. §§ 16-245a(b) (limiting eligible

RECs to those produced by "Class I" and "Class II"

generators), 16-1(a)(20)-(21) (defining "Class I" and

"Class II" RECs based on the type of renewable

power generation technology used). And each of

these must be issued and tracked by the New

England Power Pool Generation Information System

("NEPOOL-GIS"), see id. § 16-245a(b), an

independent association of electric utilities, which

was founded in 1971, and which is supervised by

FERC, see Braintree Elec. Light Dep't v. FERC, 550

F.3d 6, 9, 384 U.S. App. D.C. 6 (D.C. Cir. 2008).

The first type is a REC that is generated by a

renewable energy source located within the

Connecticut,

jurisdiction

of

ISO-NE

(i.e.,

Massachusetts, Vermont, New Hampshire, Rhode

Island, and most of Maine). The second type is a

REC that is issued by NEPOOL-GIS for energy that

may be imported into the ISO-NE grid from

generators in adjacent control areas, pursuant to

NEPOOL-GIS Operating Rule 2.7(c). Conn. Gen.

Stat. § 16-245a(b). These adjacent control areas

include ISO-New York, the Northern Maine

Independent System Administrator, Inc., and

Quebec and New Brunswick in Canada. Although

Connecticut utilities are free to purchase RECs that

do not meet these requirements—for example, RECs

from generators which cannot transmit their energy

into the ISO-NE grid pursuant to NEPOOL-GIS

20a

Rule 2.7(c)—such RECs will not count towards their

requirements under the RPS.

Connecticut has articulated several reasons for

incorporating these geographic limitations into its

RPS program. Central among these is the State's

interest in encouraging the development of new

renewable energy generation facilities that are able

to transmit their electricity into the ISO-NE grid.

See The Conn. Dep't of Energy & Envtl. Prot.,

Restructuring Connecticut's Renewable Portfolio

Standard,

at

i

(Apr.

26,

2013),

http://www.ct.gov/deep/lib/deep/energy/rps/rps_final.

pdf; 2013 CES at 81-82. Connecticut argues that

increased in-region renewable energy production

would improve air quality for its citizens and protect

them from price and supply shocks that could result

if, for example, there was a natural gas shortage or a

nuclear power plant were to go off-line. See 2013

CES at 82. The state contends that placing regional

limitations on RECs, if they are to satisfy the RPS

requirement, is necessary if the program is to help

increase the development of renewable generation

facilities that are capable of effectuating these and

similar goals.

Plaintiff, in its Allco IV Complaint, argues that it

has been injured by two different features of

Connecticut's RPS program, both of which, Plaintiff

claims, amount to discriminatory "regional

protectionism" in violation of the dormant Commerce

Clause. First, Allco alleges that it has a solar power

facility in Georgia that has been discriminated

against by Connecticut's RPS program insofar as

Connecticut utilities cannot satisfy the RPS

21a

program's requirements by purchasing the Georgia

RECs. Second, Allco argues that it has been injured

by the fact that renewable energy generators in

adjacent control areas—though able to sell

qualifying RECs—must pay a fee to transmit their

energy into the ISO-NE grid in order to sell their

RECs to Connecticut utilities pursuant to NEPOOL

GIS Rule 2.7(c). Allco asserts that it owns such a

renewable facility in New York, and that it "will not

deliver its electricity into the ISO-New England

control area because of the additional cost burdens

involved in doing so." Allco III Compl. ¶ 34.

E. The District Court's Decision in Allco III and Allco

IV

On August 18, 2016, the district court dismissed

both of Allco's Complaints, with prejudice, in a single

ruling. Allco Fin. Ltd. v. Klee, No. 3:15-CV-608, 2016

U.S. Dist. LEXIS 109786, 2016 WL 4414774, at *25

(D. Conn. Aug. 18, 2016).

With regard to Allco's preemption claims, the district

court dismissed them for lack of Article III standing,

finding that even though Allco had exhausted its

administrative remedies under PURPA,9 Allco

nonetheless failed to demonstrate injury-in-fact or

9 The district court reviewed the enforcement request made by

Allco to FERC and concluded that it was sufficiently broad to

satisfy the exhaustion requirement with respect to both the

2013 RFP and the 2015 RFP, and that Allco therefore had

satisfied the jurisdictional prerequisite we noted in Allco II.

Allco Fin. Ltd. v. Klee, No. 3:15-CV-608, 2016 U.S. Dist. LEXIS

109786, 2016 WL 4414774, at *7 (D. Conn. Aug. 18, 2016); see

Allco II, 805 F.3d at 97.

22a

redressability. 2016 U.S. Dist. LEXIS 109786, [WL]

at *19. With regard to Allco's dormant Commerce

Clause claim, the district court found that Allco had

standing to challenge Connecticut's RPS program.

2016 U.S. Dist. LEXIS 109786, [WL] at *22. It

nonetheless dismissed the claim on the grounds that

"the dormant Commerce Clause does not apply . . .

because the RPS [program] creates a market for

RECs, rather than impeding a previously existing

national market. Furthermore, Connecticut is not

obligated to pass the benefits of its subsidy program

without restriction to those producing clean energy

in Georgia." 2016 U.S. Dist. LEXIS 109786, [WL] at

*25. Finally, having held that Allco's preemption and

dormant Commerce Clause claims were not viable,

the district court dismissed Allco's §§ 1983 and 1988

claims, and denied its motion for preliminary

injunctive relief as moot. Id.

Allco timely appealed on August 23, 2016,

challenging the district court's dismissal of its

preemption and dormant Commerce Clause claims,

the district court's denial of its request for a

preliminary injunction, and the district court's

decision to dismiss the Complaints with prejudice.

II. DISCUSSION

A. Standards of Review

We review de novo a district court's dismissal of a

complaint for lack of standing pursuant to Federal

Rule of Civil Procedure 12(b)(1), and for failure to

state a claim pursuant to Federal Rule of Civil

Procedure 12(b)(6). See Klein & Co. Futures, Inc. v.

23a

Bd. of Trade, 464 F.3d 255, 259 (2d Cir. 2006);

Chambers v. Time Warner, Inc., 282 F.3d 147, 152

(2d Cir. 2002). "To survive a motion to dismiss, a

complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is

plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662,

678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)

(citations and internal quotation marks omitted). A

claim is facially plausible "when the plaintiff pleads

factual content that allows the court to draw the

reasonable inference that the defendant is liable for

the misconduct alleged." Id. On de novo review,

"[w]e are entitled to affirm the judgment on any

basis that is supported by the record." Crawford v.

Franklin Credit Mgmt. Corp., 758 F.3d 473, 482 (2d

Cir. 2014).

B. Preemption Claim

1. Standing

To establish Article III standing, Allco must

demonstrate: "(1) injury-in-fact, which is a 'concrete

and particularized' harm to a 'legally protected

interest'; (2) causation in the form of a 'fairly

traceable' connection between the asserted injury-infact and the alleged actions of the defendant; and (3)

redressability, or a non-speculative likelihood that

the injury can be remedied by the requested relief."

W.R. Huff Asset Mgmt. Co., LLC v. Deloitte &

Touche LLP, 549 F.3d 100, 106-07 (2d Cir. 2008)

(quoting Lujan v. Defenders of Wildlife, 504 U.S.

555, 560-61, 112 S. Ct. 2130, 119 L. Ed. 2d 351

(1992)). In its Complaints, Allco proffers several

theories through which it has suffered injury under

24a

the 2015 RFP. For example, it asserts that standing

is conferred by PURPA, the QF status of its

facilities, reduced demand for electricity it generates,

and the charging of fees as well as the

disqualification of certain Allco facilities from the

2015 RFP. Because we find that the last of these

theories establishes a basis for Article III standing,

we do not address the others.

a. Injury-in-Fact and Causation

Allco alleges, inter alia, that it has suffered an

injury-in-fact because its smaller generating

facilities were excluded from the 2015 RFP by virtue

of that RFP's minimum size requirement, and

because the RFP imposed unlawful fees on bidders—

both of which, it alleges, violate the FPA. According

to Allco, had the 2015 RFP been conducted in

accordance with the FPA and PURPA, Connecticut

would have been required to accept bids placed by

Allco's smaller facilities, and would have been

unable to charge bidding fees. We find these claimed

injuries

to

be

sufficiently

"concrete"

and

"particularized" to qualify as injuries-in-fact. See

Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1548-50, 194

L. Ed. 2d 635 (2016).10 Allco's asserted injuries are

10 Defendants

argue that these injuries are not sufficient to

establish standing because the 2015 RFP does not violate

federal law. This, however, is a merits issue, which we need not

decide in analyzing whether Allco has standing to sue. See

Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S. Ct. 1717, 109

L. Ed. 2d 135 (1990) ("Our threshold inquiry into standing 'in

no way depends on the merits of the [plaintiff's claim.]'"

(quoting Warth v. Seldin, 422 U.S. 490, 500, 95 S. Ct. 2197, 45

L. Ed. 2d 343 (1975))); Denney v. Deutsche Bank AG, 443 F.3d

25a

also clearly "fairly traceable to the challenged

conduct" of the Defendants, who structured and

implemented the 2015 RFP. Id. at 1547.

b. Redressability

To satisfy the redressability requirement of Article

III standing, the plaintiff must show that "it is

likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision."

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.

(TOC), Inc., 528 U.S. 167, 180-81, 120 S. Ct. 693, 145

L. Ed. 2d 610 (2000). The redresses that Allco

requests in relation to these two particular injuries

253, 264 (2d Cir. 2006) ("[A]n injury-in-fact differs from a 'legal

interest'; an injury-in-fact need not be capable of sustaining a

valid cause of action . . . .").

Defendants also suggest that Allco's smaller facilities did not

suffer an injury-in-fact because they were allowed to

participate in a solicitation that was open only to smaller

generators (i.e., 2-20 megawatts of capacity), and because

Allco's QFs still were still able to take advantage of PURPA's

Section 210(a), which gives QFs a guaranteed right to sell their

energy and capacity to utilities at the utilities' avoided cost.

However, "the fact that an injury may be outweighed by other

benefits, while often sufficient to defeat a claim for damages,

does not negate standing." Ross v. Bank of Am., N.A. (USA),

524 F.3d 217, 222 (2d Cir. 2008) (quoting Denney, 443 F.3d at

264). Moreover, Allco has plausibly alleged that the prize it

sought through the 2015 RFP was distinct from the contracts it

would have been able to secure through either of these avenues:

the contracts that Allco's facilities would have been able to

secure under Section 210 of PURPA would not have provided

the long-term fixed-rate contract that was available through

the 2015 RFP; and the RFP directed to smaller-capacity

generators solicited bids for a smaller overall amount of

generation.

26a

are (1) a declaration that the 2015 RFP is preempted

by the FPA, and (2) an accompanying injunction

halting any further action relating to the 2015 RFP

and barring Defendants from issuing any future

similar RFPs that are inconsistent with the FPA and

PURPA. Allco III Compl. at 19; Allco IV Compl. at

15. We find that these forms of relief meet the

Article III standing requirement for redressability,

at least with regard to the injuries under discussion

here.

Of course, if Allco's requested relief were granted,

there is no guarantee that Connecticut would

undertake yet another procurement (or a

procurement that, given the relief sought, would be

free from the alleged defects). The DEEP

Commissioner has, however, already conducted two

procurements, and Connecticut has articulated a

commitment to obtaining more renewable energy

generation for its regulated utilities in order to meet

various environmental and energy goals. See 2013

CES at 76; see also Conn. Gen. Stat. Ann. § 16a-1

("[T]he necessity of enacting the provisions of this

chapter to provide for equitable distribution

and conservation of energy is declared as a matter of

legislative determination."); Brief for Appellee Klee,

at 6-9. Nor is there any suggestion that the

Connecticut statutes authorizing the DEEP

Commissioner to initiate such renewable energy

procurements would prevent the Commissioner from

initiating future procurements that are free from the

specific terms under consideration here that

allegedly injure Allco. For these reasons, we

conclude that Allco has successfully shown that it is

"substantially likely," Utah v. Evans, 536 U.S. 452,

27a

460, 122 S. Ct. 2191, 153 L. Ed. 2d 453 (2002), that

such future procurements would be conducted if its

requested relief were granted—and that this is

sufficient to show Article III redressability. Cf. id. at

463-64 (finding that the state of Utah had standing

to challenge a census report, even though the

requested relief could not directly remedy its claimed

under-representation

in

the

House

of

Representatives, because a victory for Utah would

make it "substantially likely that the President and

other executive and congressional officials would

abide by an authoritative interpretation of the

census statute," leading to a new, more favorable

apportionment of representatives (quoting Franklin

v. Massachusetts, 505 U.S. 788, 803, 112 S. Ct. 2767,

120 L. Ed. 2d 636 (1992))); cf. also Alvin Lou Media

Inc. v. FCC, 571 F.3d 1, 6, 387 U.S. App. D.C. 1 (D.C.

Cir. 2009) (explaining that a "disappointed bidder"

may establish standing by showing that it is "ready,

willing, and able to participate in a new auction

should it prevail"); U.S. Airwaves, Inc. v. FCC, 232

F.3d 227, 232, 344 U.S. App. D.C. 10 (D.C. Cir. 2000)

(identifying standing where a party demonstrated its

willingness to participate "in a future reauction" of

radio-wave spectrum).11

Allco II, by comparison, held that Allco lacked standing for a

claim "seek[ing] solely to invalidate the results of the

challenged procurement and void its competitors' contracts,"

because "[t]o the extent that these claims seek only to

invalidate the results of the prior procurement—and not also to

require the Commissioner to conduct future procurements in

compliance with PURPA—Allco lacks standing because that

requested relief would not redress its injury, i.e., its not being

selected for a Section 6 contract." Allco II, 805 F.3d at 98.

11

28a

2. Merits Analysis

Allco contends that the FPA vests FERC with

exclusive jurisdiction over wholesale sales of

electricity and that any action taken by states

dealing with wholesale sales is preempted unless it

falls within the limited grants of regulatory

authority specified in PURPA. Allco argues that

Connecticut, through its execution of the 2015 RFP,

has exceeded the bounds of this limited grant in

several ways. We find none of Allco's arguments

sufficient to meet the standard set by Rule 12(b)(6),

and therefore we affirm the dismissal of Allco's

preemption claim.

a. "Compulsion" of Contracts Between Non-QFs and

LSEs

First, Allco alleges that the 2015 RFP allows the

DEEP Commissioner to "compel" and "force" utilities

to enter into contracts with specified generators at

specified rates, Allco III Compl. at ¶ 43,12 and argues

The claims that Allco makes in this case are different: its

asserted injury is the allegedly unlawful charging of fees in

RFPs and the exclusion of Allco's smaller facilities from

participation in the 2015 RFP. Its requested remedy is also

different: an injunction invalidating the 2015 RFP and forcing

Connecticut authorities to comply with PURPA in future

solicitations.

12 Defendants

reject this characterization, arguing that the

Commissioner is only empowered under the 2015 RFP to direct

utilities to negotiate at arms-length with winning bidders, and

that the utilities are free to reject the terms offered in the

29a

that "[c]ompelling a wholesale transaction—one that

would not have taken place but for the State's

compulsion—plainly involves the regulation of

wholesale sales and thus falls squarely within the

field that Congress has occupied" in the FPA. Reply

Brief 1-2. Allco asserts that Connecticut only has the

power to compel its utilities to enter into wholesale

interstate energy contracts if it does so within the

bounds of the limited exception defined by Section

210 of PURPA. Allco III Compl. ¶ 45. This exception

is, Allco alleges, restricted to contracts between

utilities and QFs. Id. Because the 2015 RFP is open

to non-QFs, Allco argues that the 2015 RFP cannot

be permitted under the state's PURPA-power

exception. Id. ¶ 45. As a result, Allco claims any

action that the DEEP Commissioner takes under the

2015 RFP to "compel" utilities to contract with nonQF bidders violates the FPA. Allco III Compl. ¶¶ 4145.

Plaintiff fails to provide factual allegations sufficient

to support its contention that the 2015 RFP process

entails the kind of "compulsion" that might sustain a

preemption claim of this sort. See Iqbal, 556 U.S. at

678 ("To survive a motion to dismiss, a complaint

must contain sufficient factual matter, accepted as

true, to 'state a claim to relief that is plausible on its

face.'" (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007))).

Specifically, although the authorizing statutes of the

2015 RFP permit the DEEP Commissioner to

selected proposals. See Allco III App. at 130; Oral Argument

Recording at 16:30-19:45.

30a

"direct" Connecticut utilities to "enter into" contracts

with winning bidders, see 2013 Conn. Pub. Acts 13303; 2015 Conn. Pub. Acts 15-107, the materials

referenced in Allco's Complaints undermine Allco's

contention that such a "direction" amounts to

"compulsion."13 For instance, Connecticut's draft

2015 RFP, appended to the Allco III Complaint, as

well as the final 2015 RFP, appended to the Allco IV

Complaint, provide (a) that "[t]his RFP process,

including any selection of preferred projects, does not

obligate any [utility] to accept any bid," Allco IV.

App. at 72 (emphasis added), cf. Allco III App. at 29,

and (b) that the winning bidders "will enter into

separate contracts with one or more [utilities] at the

discretion of the [utilities]," Allco IV App. at 100, cf.

Allco III App. at 49. See also Allco IV App. at 71

("The [utilities] will be responsible for negotiation

and execution of any final Power Purchase

Agreement."); cf. Allco III App. at 28. This language

makes clear, contrary to Allco's contention, that it is

possible for a winning bidder to fail to reach an

agreement with the utilities, or for an agreement to

be terminated if a party is unable or unwilling to

fulfill its terms—as apparently happened with

Number Nine Wind. See Allco, 2016 U.S. Dist.

LEXIS 109786, 2016 WL 4414774, at *10. Thus,

under these particular circumstances, the fact that

13 For the purpose of a motion to dismiss under Rule 12(b)(6),

"'the complaint is deemed to include any written instrument

attached to it as an exhibit or any statements or documents

incorporated in it by reference." Chambers v. Time Warner,

Inc., 282 F.3d 147, 152 (2d Cir. 2002) (quoting Int'l Audiotext

Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir.

1995) (per curiam)).

31a

the statutes authorize the DEEP Commissioner to

"direct" utilities to "enter into" contracts with

specific bidders is not sufficient to render plausible

Allco's claim that utilities will be "compelled," under

the 2015 RFP, to accept specific bids. We therefore

reject Allco's preemption argument premised on this

theory.

b.

Comparison

Marketing, LLC

to

Hughes

v.

Talen

Energy

Allco argues, however, that Connecticut's RFP

process is "economically identical," Brief of Appellant

53 n.11, to a Maryland regulatory scheme which the

Supreme Court recently determined was preempted

by the FPA in Hughes v. Talen Energy Mktg., LLC,

136 S. Ct. 1288, 194 L. Ed. 2d 414 (2016). We are not

convinced, and find Hughes distinguishable from the

case before us.

Hughes involved capacity auctions administered by

PJM Interconnection (PJM), an RTO that oversees

the electricity grid in all or parts of thirteen mid

Atlantic and Midwestern States, as well as the

District of Columbia. Id. at 1293. "FERC extensively

regulates the structure of the PJM capacity auction

to ensure that it efficiently balances supply and

demand, producing a just and reasonable clearing

price." Id. at 1294. "Exercising this authority, FERC

has approved the PJM capacity auction as the sole

ratesetting mechanism for sales of capacity to PJM,

and has deemed the clearing price per se just and

reasonable." Id. at 1297.

32a

Around 2009, Maryland became concerned that the

PJM capacity auction was failing to encourage

development of enough new in-state electricity

generation capacity. Id. at 1294. Maryland

regulators therefore proposed that FERC revise the

rules of the PJM auction to guarantee new

generators longer-term assurance of a stable

capacity price. Id. After FERC rejected the proposal

on the ground that it would "improperly favor new

generation," Maryland promulgated an order

soliciting proposals from companies for construction

of a new gas-fired power plant. Id. Maryland,

thereupon, accepted the proposal of CPV Maryland,

LLC ("CPV"), and "required" utilities to enter into a

twenty-year "contract for differences" with CPV at a

rate CPV specified in its proposal. Id. "Unlike a

traditional bilateral contract for capacity, the

contract for differences does not transfer ownership

of capacity from CPV to the LSEs. Instead, CPV sells

its capacity on the PJM market, but Maryland's

program guarantees CPV the contract price rather

than the auction clearing price." Id. at 1295.14 The

14 As the Supreme Court explained:

If CPV's capacity clears the PJM capacity auction and the

clearing price falls below the price guaranteed in the

contract for differences, Maryland LSEs pay CPV the

difference between the contract price and the clearing

price. The LSEs then pass the costs of these required

payments along to Maryland consumers in the form of

higher retail prices. If CPV's capacity clears the auction

and the clearing price exceeds the price guaranteed in the

contract for differences, CPV pays the LSEs the difference

between the contract price and the clearing price, and the

LSEs then pass the savings along to consumers in the form

of lower retail prices.

33a

Supreme Court found the scheme to be preempted:

"Maryland—through the contract for differences—

requires CPV to participate in the PJM capacity

auction, but guarantees CPV a rate distinct from the

clearing price for its interstate sales of capacity to

PJM. By adjusting an interstate wholesale rate,

Maryland's program invades FERC's regulatory

turf." Id. at 1297.

In response to Maryland's argument that the

contract for differences "is indistinguishable from

traditional bilateral contracts for capacity," id. at

1299, the Court determined that

the contract at issue here differs from

traditional bilateral contracts in this

significant respect:

The contract for

differences does not transfer ownership of

capacity from one party to another outside

the auction. Instead, the contract for

differences operates within the auction; it

mandates that LSEs and CPV exchange

money based on the cost of CPV's capacity

sales to PJM.

Id. at 1299.

The Court noted, however, that

[o]ur holding is limited: We reject

Maryland's program only because it

disregards an interstate wholesale rate

required by FERC. . . . Nothing in this

Hughes, 136 S. Ct. at 1295.

34a

opinion should be read to foreclose

Maryland

and

other

States

from

encouraging production of new or clean

generation through measures untethered to

a

generator's

wholesale

market

participation. So long as a State does not

condition payment of funds on capacity

clearing the auction, the State's program

would not suffer from the fatal defect that

renders Maryland's program unacceptable.

Id.

There are, we believe, important and telling

distinctions between the Maryland program and

Connecticut's RFPs. While Maryland sought

essentially to override the terms set by the FERCapproved PJM auction, and required transfer of

ownership through the FERC-approved auction,

Connecticut's program does not condition capacity

transfers on any such auction. Connecticut, instead,

transfers ownership of electricity from one party to

another by contract, independent of the auction.

Moreover, the contracts at issue in the case before us

are the kind of traditional bilateral contracts

between utilities and generators that are subject to

FERC review for justness and reasonableness under

Morgan Stanley, 554 U.S. at 547-48. They are, in

other words, precisely what the Hughes court placed

outside its limited holding. See Hughes, 136 S. Ct. at

1299.

Indeed, and significantly, the 2015 RFP requires

that any bilateral contract that results from that

process be subjected to review by FERC for justness

35a

and reasonableness. Allco IV App. at 103 ("Any

FERC-jurisdictional Rate Schedule or Tariff and

Service Agreement agreed upon by an eligible

bidder and the applicable [LSEs] will be filed with

FERC under Section 205 of the Federal Power Act

[codified at 16 U.S.C. § 824(a)]. The FERC must

accept the filing before the Rate Schedule or Tariff

and Service Agreement can become effective.").

Because FERC has the ability to review any bilateral

contracts that arise out of Connecticut's RFPs, we

hold that Connecticut's 2015 RFP—insofar as it

allows the DEEP Commissioner to direct (but not

compel) utilities to enter into agreements (at their

discretion) with generators, including non-QFs—is

not preempted by the FPA.

Allco, in response, points to PPL EnergyPlus, LLC v.

Solomon, 766 F.3d 241 (3d Cir. 2014) ("Solomon"),

cert. denied, 136 S. Ct. 1728, 194 L. Ed. 2d 810

(2016), to argue that the contracts' being subjected to

ex-post FERC review does not defeat Allco's

preemption claim. In Solomon, New Jersey

attempted to encourage the building of new power

plants by enacting a statute that "authorized the

Board of Public Utilities to compel electricity

distribution companies to sign" fifteen-year contracts

with new generators to purchase a predetermined

amount of capacity at a predetermined rate. Id. at

248. The defenders of the statute argued that "if the

[contracts] set capacity prices then the law would not

be preempted because the reasonableness of the

Agreement's rates would be within FERC's exclusive

jurisdiction to review." Id. at 253. The Third Circuit

rejected this argument, determining that it

36a

conflates the inquiry into [the New Jersey

law's] field of regulation with an inquiry

into the reasonableness of the [compelled

contract rates]. Here, whether the

[contracts] pick "just and reasonable"

capacity prices is beside the point. What

matters is that the Agreements have set

capacity prices in the first place.

Id. at 253.

Solomon, however, differs from the case before us

now in at least three important respects. First, the

Third Circuit's reasoning pre-dates the Supreme

Court's decision in Hughes, which now controls.

Second, the plaintiffs in Solomon successfully alleged

that the utilities were "compel[led]" to enter into

capacity contracts on terms chosen by state agencies.

Id. at 248-49. As we stated earlier, Allco failed

plausibly to make such an allegation. Third, the

Third Circuit's finding of field preemption was based

specifically on the fact that New Jersey

"command[ed] generators to sell capacity" into the

FERC-approved interstate auction, and "[i]n return,

New Jersey's statute ensures that the generators

will receive the Standard Offer Capacity Rate for

each quantity of capacity offered at auction and not

solely the auction price they would have otherwise

received." Id. at 252-53. Thus, the New Jersey

scheme, like the Maryland scheme at issue in

Hughes, suffered the "fatal defect" of having the

state "condition payment of funds on capacity

clearing the [FERC-approved interstate] auction."

Hughes, 136 S. Ct. at 1299.

37a

Because we do not think the Connecticut RFP

program outlined in the 2015 RFP and its

authorizing statutes are at odds with Hughes or

inconsistent with Solomon, we reject Allco's

preemption arguments based on these cases.15

c. The Terms of the 2015 RFP, and its Potential

Indirect Effect on Wholesale Prices

Allco also argues that the very structure of the 2015

RFP amounts, in several ways, to a regulation of the

wholesale interstate energy market that is outside

the exception contemplated by PURPA. We find

these arguments unconvincing as well.

Specifically, Allco claims that the 2015 RFP exceeds

the bounds of PURPA insofar as it charges fees not

contemplated by PURPA, excludes bids from Allco's

QFs with less than 20 megawatts of capacity, and

directs utilities to enter into contracts with non-QF

generators. We find, however, that the 2015 RFP

process—as detailed in the 2015 RFP itself and in its

authorizing

statutes—is,

without

more,

a

permissible exercise of the power that the FPA

grants to Connecticut to regulate its LSEs. That is,

we hold that it is permitted, apart from the PURPA

exception.

Solomon. And so we express

no opinion here about whether, if the Connecticut agencies

truly had "compelled" utilities to enter contracts with

generators on specified terms, review by FERC of such bilateral

contracts would be sufficient to defeat any preemption claim.

Allco did not successfully place this proposition before us, and

Defendants have not argued it.

15 We are, of course, not bound by

38a

"[T]he regulation of utilities is one of the most

important of the functions traditionally associated

with the police power of the States." Ark. Elec. Coop.

Corp. v. Ark. Pub. Serv. Comm'n, 461 U.S. 375, 377,

103 S. Ct. 1905, 76 L. Ed. 2d 1 (1983); see New York

v. FERC, 535 U.S. 1, 24, 122 S. Ct. 1012, 152 L. Ed.

2d 47 (2002) ("FERC has recognized that the States

retain significant control over local matters even

when retail transmissions are unbundled."); Entergy

Nuclear Vt. Yankee, LLC v. Shumlin, 733 F.3d 393,

417 (2d Cir. 2013) ("[S]tates have broad powers

under state law to direct the planning and resource

decisions of utilities under their jurisdiction. States

may, for example, order utilities to build renewable

generators themselves, or . . . order utilities to

purchase renewable generation." (quoting S. Cal.

Edison Co., San Diego Gas & Elec. Co., 71 FERC ¶

61,269, at *8 (June 2, 1995) (alteration in original)));

FERC Stats. & Regs., Regs. Preambles, Jan. 1991June 1996, ¶ 31,036, p. 31,3782, n.544, 61 Fed. Reg.

21,540, 21,736 (1996) ("This Final Rule will not

affect or encroach upon state authority in such

traditional areas as the authority over local service

issues, including reliability of local service;

administration of integrated resource planning and

utility buy-side and demand-side decisions, including

[demand-side management]; authority over utility

generation and resource portfolios; and authority to

impose non-bypassable distribution or retail

stranded cost charges."). Accordingly, we believe that

it is settled law that specifying the sizes and types of

generators that may bid into the 2015 RFP, as well

as the charging of fees to bidders, without more, lies

well within the scope of Connecticut's power to

regulate its utilities.

39a

Allco, though, asserts that the contracts that will

arise from the 2015 RFP will increase the supply of

electricity available to Connecticut utilities, that

this will place downward pressure on the "avoided

cost" that Allco's QFs will be able to receive under

Section 210 of PURPA, and that this pressure will

have an effect on wholesale prices, thereby

infringing upon FERC's regulatory authority. This

incidental effect on wholesale prices does not,

however, amount to a regulation of the interstate

wholesale electricity market that infringes on

FERC's jurisdiction. See Hughes, 136 S. Ct. at 1298

("States, of course, may regulate within the domain

Congress assigned to them even when their laws

incidentally affect areas within FERC's domain."); cf.

EPSA, 136 S. Ct. at 776 ("When FERC . . . takes

virtually

any

action

respecting

wholesale

transactions—it has some effect, in either the short

or the long term, on retail rates. That is of no legal

consequence."); Hughes, 136 S. Ct. at 1300 ("[T]he

Federal Power Act, like all collaborative federalism

statutes, envisions a federal-state relationship

marked by interdependence. Pre-emption inquiries

related to such collaborative programs are

particularly delicate. . . . [W]here coordinate state

and federal efforts exist within a complementary

administrative framework, and in the pursuit of

common purposes, the case for federal pre-emption

becomes a less persuasive one." (Sotomayor, J.,

concurring) (internal quotation marks and citations

omitted)).

Thus, Allco has not successfully alleged that the

2015 RFP is likely to produce contracts that violate

the bright line laid out in Hughes: the RFPs do not,

40a

for instance, require bids that are "[]tethered to a

generator's wholesale market participation" or that

"condition[] payment of funds on capacity clearing

the auction." Id. at 1299 (majority opinion).

For all the above reasons, we therefore affirm the

district court's dismissal of Allco's preemption claims

pursuant to Rule 12(b)(6), as well as its denial of

Allco's requests for injunctive relief as moot.

C. Dormant Commerce Clause Claim

The Commerce Clause provides that "Congress shall

have Power . . . [t]o regulate Commerce with foreign

Nations, and among the several States." U.S. Const.

art. I, § 8, cl. 3. In implementing the Commerce

Clause, the Supreme Court "has adhered strictly to

the principle that the right to engage in interstate

commerce is not the gift of a state, and that a state

cannot regulate or restrain it." Hughes v. Alexandria

Scrap Corp., 426 U.S. 794, 808, 96 S. Ct. 2488, 49 L.

Ed. 2d 220 (1976) (internal quotation marks

omitted). It follows from this principle that "the

negative or dormant implication of the Commerce

Clause prohibits state taxation or regulation that

discriminates against or unduly burdens interstate

commerce and thereby impedes free private trade in

the national marketplace." Selevan v. N.Y. Thruway

Auth., 584 F.3d 82, 95 (2d Cir. 2009) ("Selevan I")

(internal quotation marks, brackets, and citations

omitted).

Allco's claim rests on two asserted injuries. First,

Allco contends that Connecticut discriminates

against Allco's Georgia facility because it does not let

41a

that facility's RECs count towards the utilities' RPS

requirements. Second, Allco argues that Connecticut

discriminates against Allco's New York facility

because the RPS program requires producers of

RECs in adjacent control areas to pay transmission

fees in order to sell their RECs to Connecticut

utilities.

Specifically, Allco asserts that Connecticut's RPS

program violates the "dormant" aspect of the

Commerce Clause because it "facially discriminates .

. . [and] has the purpose or the effect of

discriminating" against Allco's facility in Georgia

and its facility in New York, and Allco requests a

declaratory judgment to that effect. Allco III Compl.

at ¶ 64.

1. Standing Analysis

Allco has standing to challenge Connecticut's RPS

program under the dormant Commerce Clause for

reasons analogous to those we have discussed above.

The RPS program's differential treatment of RECs

produced by Allco's Georgia's facility, as well as the

additional fees that Allco's New York facility must

pay, clearly injure Allco, and a finding that the RPS

program violates the dormant Commerce Clause

would give Allco redress.

2. Merits Analysis

"In analyzing a challenged local law under the

dormant Commerce Clause, we first determine

whether it clearly discriminates against interstate

commerce in favor of intrastate commerce, or

whether it

regulates evenhandedly with only

42a

incidental effects on interstate commerce." Town of

Southold v. Town of E. Hampton, 477 F.3d 38, 47 (2d

Cir. 2007).

"We then apply the appropriate level of scrutiny. A

law that clearly discriminates against interstate

commerce in favor of intrastate commerce is

virtually invalid per se and will survive only if it is

'demonstrably justified by a valid factor unrelated to

economic protectionism.'" Id. at 47 (quoting

Wyoming v. Oklahoma, 502 U.S. 437, 454, 112 S. Ct.

789, 117 L. Ed. 2d 1 (1992)). That is, such a law is

valid "only if it 'advances a legitimate local purpose

that cannot be adequately served by reasonable

nondiscriminatory alternatives.'" Dep't of Revenue of

Ky. v. Davis, 553 U.S. 328, 338, 128 S. Ct. 1801, 170

L. Ed. 2d 685 (2008) (quoting Or. Waste Sys., Inc. v.

Dep't of Envtl. Quality of State of Or., 511 U.S. 93,

101, 114 S. Ct. 1345, 128 L. Ed. 2d 13 (1994)).

Where, instead, a state law is nondiscriminatory, but

nonetheless adversely affects interstate commerce

"incidental[ly]," we employ a deferential balancing

test. Pike v. Bruce Church, Inc., 397 U.S. 137, 142,

90 S. Ct. 844, 25 L. Ed. 2d 174 (1970). Such a law

will be sustained unless "the burden imposed on

[interstate] commerce is clearly excessive in relation

to the putative local benefits." Id.; accord N.Y. Pet

Welfare Ass'n, Inc. v. City of N.Y., 850 F.3d 79, 89

(2d Cir. 2017).

We address each of Allco's asserted injuries—both of

which it claims violate the dormant Commerce

Clause—in turn.

43a

a. Alleged Discrimination Against Allco's Georgia

Facility

Insofar as Allco argues that the RPS program

discriminates against Allco's Georgia facility, and

the RECs it produces, Connecticut responds by

saying that: "RECs are inventions of state property

law," Wheelabrator Lisbon, Inc., 531 F.3d at 186,

and because the RECs produced by Allco's Georgia

facility do not meet the legal requirements of

Connecticut's RPS program, see Conn. Gen. Stat. §

16-245a(b), the two types of RECs are different

products. Connecticut's RPS program therefore does

no more than treat different products differently in a

nondiscriminatory fashion.16 As such, Connecticut

asserts, there is no discrimination under the

dormant Commerce Clause. We agree, and therefore

apply the more deferential balancing test under

Pike, concluding that the RPS program passes that

test.

"Conceptually,

discrimination

of

course,

any

notion

assumes

a

comparison

of

of

16 Defendants also argue that because ninety percent of the

RECs used to satisfy the Connecticut RPS come from out-ofstate, i.e., from nearby states, the RPS program's requirements

do not burden interstate commerce. Allco, however, correctly

points out that the dormant Commerce Clause prevents

regional economic balkanization as well as state-by-state

balkanization. See Ne. Bancorp, Inc. v. Bd. of Governors of Fed.

Reserve Sys., 472 U.S. 159, 174, 105 S. Ct. 2545, 86 L. Ed. 2d

112 (1985) ("There can be little dispute that the dormant

Commerce Clause would prohibit a group of States from

establishing a system of regional banking by excluding bank

holding companies from outside the region if Congress had

remained completely silent on the subject.").

44a

substantially similar entities." Gen. Motors Corp. v.

Tracy, 519 U.S. 278, 298-99, 117 S. Ct. 811, 136 L.

Ed. 2d 761 (1997). Thus,

when the allegedly competing entities

provide different products . . . there is a

threshold question whether the companies

are

indeed

similarly

situated

for

constitutional purposes. This is so for the

simple reason that the difference in

products may mean that the different

entities serve different markets, and

would continue to do so even if the

supposedly discriminatory burden were

removed.

Id. at 299.

In Tracy, the Supreme Court considered whether

two allegedly similar products were, nonetheless,

substantially different for the purposes of the

dormant Commerce Clause because they served two

different markets. These were: (1) natural gas that

was sold primarily to small residential customers

and was "bundled with . . . services and protections"

to ensure reliability and stable rates, and (2)

"unbundled" natural gas that was purchased by

large, bulk buyers like General Motors, who typically

did not need the same protections. Id. at 297; see id.

at 301-03.

Ohio imposed a sales tax on in-state sales of goods,

including natural gas, and a parallel use tax on

goods purchased out-of-state for use in Ohio. Id. at

281-83. Ohio, however, exempted from the sales tax

45a

state-regulated natural gas utilities, which had

traditionally served the market of Ohio customers

who, being in a sense "captive," had to purchase

bundled natural gas, and could do so only from the

state-regulated utilities. Id. at 301. As the natural

gas market evolved, however, it became possible for

Ohio consumers to buy "unbundled" natural gas

from independent—often interstate—marketers. Id.

at 283-85. General Motors—and other customers—

began to purchase its gas in this way from

independent non-state-regulated marketers. It was

therefore charged the general use tax. Id. at 285.

General Motors sued the Ohio Tax Commissioner,

arguing that denying a tax exemption to such

independent non-state-regulated marketers violated

the dormant Commerce Clause. Id.

In determining whether this differential treatment

of state-regulated public utilities and independent

marketers violated the dormant Commerce Clause,

the Court first found that the "noncaptive market"—

i.e., the customer base with an appetite for

unbundled natural gas—and the "captive" market

were distinct. Id. at 297-98. The Court found that, as

far as the "captive" market was concerned,

competition would not be served by eliminating a tax

differential between the two types of sellers, because

independent marketers were unlikely to provide the

"bundled" product that residential customers

needed. Id. at 301. In the non-captive market,

however,

the respective sellers of the bundled and

unbundled products apparently do compete

and may compete further. Thus, the

46a

question raised by this case is whether the

opportunities for competition between

marketers and [utilities] in the noncaptive

market requires treating marketers and

utilities as alike for dormant Commerce

Clause purposes. Should we accord

controlling significance to the noncaptive

market in which they compete, or to the

noncompetitive, captive market in which

the local utilities alone operate?

Id. at 303-04.

Although the Court found that there is "no a priori

answer" to this question, it said that "a number of

reasons support a decision to give the greater weight

to the captive market and the local utilities' singular

role in serving it, and hence to treat [independent]

marketers and [utilities] as dissimilar for present

purposes." Id. at 304.

The Court found it particularly relevant that, if the

state-regulated utilities were forced to compete on a

level playing field with interstate marketers, this

would increase competition between the two kinds of

sellers in the noncaptive market, and this, in turn,

would jeopardize the utilities' "ability to continue to

serve the captive market where there is no such

competition." Id. at 307. The Court then said:

[This] conclusion counsels against taking

the step of treating the bundled gas seller

like any other, with the consequent

necessity of uniform taxation of all gas

sales.

47a

Id. at 309.

The continuing importance of the States'

interest in protecting the captive market

from the effects of competition for the

largest customers is underscored by the

common

sense

of

our

traditional

recognition of the need to accommodate

state health and safety regulation in

applying dormant Commerce Clause

principles.

Id. at 306.

Congress, the Court indicated, recognized the States'

power to regulate and protect the provision of

natural gas for their citizens. Id. at 309. The Court

concluded that

Ohio's regulatory response to the needs of

the local natural gas market has resulted

in a noncompetitive bundled gas product

that distinguishes its regulated sellers

from independent marketers to the point

that the enterprises should not be

considered "similarly situated" for purposes

of a claim of facial discrimination under the

Commerce Clause.

Id. at 310. General Motors's argument that the state

discriminated between regulated utilities

unregulated marketers therefore failed. Id.

and

This action likewise addresses state laws that raise

questions regarding the "comparability of taxed or

regulated entities as operators in arguably distinct

48a

markets." Id. at 300. Tracy thus provides the

appropriate framework for determining whether

Connecticut's RPS program "clearly" discriminates

against interstate commerce, and is subject to strict

scrutiny, Southold, 477 F.3d at 47, or whether it

merely has an indirect adverse effect on interstate

commerce, and should be subjected to the more

permissive balancing test under Pike. Tracy also

gives general guidance on whether a program like

Connecticut's should survive dormant Commerce

Clause analysis.

Accordingly, we first ask whether the allegedly

competing entities—Allco's Georgia generator, on the

one hand, and generators located in ISO-NE and

adjacent control areas, on the other—provide

different products, i.e., different RECs. We find that

they do. "RECs are inventions of state property law,"

Wheelabrator Lisbon, Inc., 531 F.3d at 186, and

Connecticut has invented a class of RECs that differs

from Allco's Georgia facility's RECs, see Conn. Gen.

Stat. § 16-245a(b). The two products can, therefore,

be treated as different, even though they—like the

unbundled and bundled gas products in Tracy—also

have some underlying similarities.

Second, we ask whether there is a market that only

one of the two entities serves, and in which

competition would not be increased if the differential

treatment of the two entities were removed. We

answer this question in the affirmative as well.

Connecticut consumers' need for a more diversified

and renewable energy supply, accessible to them

directly through their regional grid or indirectly

49a

through adjacent control areas, would not be served

by RECs produced by Allco's facility in Georgia—

which is unable to transmit its electricity into ISONE. Further, this market's "characteristics"—most

importantly, the boundaries of the electrical grid to

which Connecticut has direct or indirect access—

"appear to be independent of any effect attributable

to the State's" RPS program. Tracy, 519 U.S. at 286.

In other words, the RPS program's definition of

qualifying RECs appears to be a response to, rather

than a cause of, the fact that Connecticut has direct

access only to electricity on the ISO-NE grid, and

indirect access only to electricity imported from

adjacent control areas. Thus, "there is good reason to

assume that any pricing changes that could result

from eliminating the [differential treatment of

Allco's Georgia generator] challenged here would be

inadequate" to serve the goals that Connecticut

properly is pursuing. Id. This suggests that

competition would not be served by treating the

different types of REC producers similarly.

Third, we ask whether there is also a separate

market in which these two types of producers

compete, and in which competition potentially would

be served if Connecticut were prohibited from

treating them disparately. The answer is yes.

Defendants admit that there is a national market for

RECs that does not distinguish between RECs on

the basis of their geographic origin.17 In this market,

17 As

the PURA Defendants explain, "Connecticut's law does

not ban out-of-region RECs. Plaintiff's RECs can be sold to any

Connecticut entity wishing to buy them, at whatever price the

50a

"the respective sellers . . . apparently do compete and

may compete further." Tracy, 519 U.S. at 303.

Eliminating

Connecticut's

RPS

program's

differential treatment "might well intensify

competition . . . for customers in this [national]

market." Id. This, of course, cuts in favor of treating

the products as alike.

Following the Court's analysis in Tracy, we resolve

this dilemma by asking whether the opportunity for

increased competition between REC producers in the

national market necessitates treating RECproducers in Georgia and New England alike for

dormant Commerce Clause purposes, or whether the

needs of Connecticut's local energy market permits

treating the two types of REC producers differently.

That is, should we give "controlling significance" to

the market in which the two types of REC producers

compete, or to the market served only by REC

producers that can connect to Connecticut's power

grid? Id. As in Tracy, we find that "[a]lthough there

is no a priori answer, a number of reasons support a

decision to give greater weight" to the market for

RECs that are produced by generators able to

connect to Connecticut's grid, id. at 304, and hence to

treat those generators and Allco's Georgia generator

as dissimilar for dormant Commerce Clause

purposes.

It is here that the more general language in Tracy

gives us guidance. Just as the Tracy Court

recognized the importance of Ohio's interest in

market will bear. Plaintiff's Georgia RECs could, for example,

be purchased in Connecticut by a company wishing to green its

image." Brief for Appellees Betkoski et al. 55.

51a

protecting the captive natural gas market from the

effects of competition in order to promote public

health and safety, id. at 306-07, so must we here

recognize the importance of Connecticut's interest in

protecting the market for RECs produced within the

ISO-NE or in adjacent areas. Connecticut's RPS

program serves its legitimate interest in promoting

increased production of renewable power generation

in the region, thereby protecting its citizens' health,

safety, and reliable access to power.

These means and ends are well within the scope of

what Congress and FERC have traditionally allowed

the States to do in the realm of energy regulation.

See New York v. FERC, 535 U.S. at 24 ("FERC has

recognized that the States retain significant control

over local matters even when retail transmissions

are unbundled."); Ark. Elec. Co-op. Corp., 461 U.S. at

377 ("[T]he regulation of utilities is one of the most

important of the functions traditionally associated

with the police power of the States."); Entergy

Nuclear, 733 F.3d at 417 ("'[S]tates have broad

powers under state law to direct the planning and

resource decisions of utilities under their

jurisdiction. States may, for example, order utilities

to build renewable generators themselves, or . . .

order utilities to purchase renewable generation.'")

(quoting S. Cal. Edison Co., 71 FERC ¶ 61,269, at *8)

(alteration in original).

Significantly, we note that Connecticut's RPS

program makes geographic distinctions between

RECs only insofar as it piggybacks on top of

geographic lines drawn by ISO-NE and the

NEPOOL-GIS, both of which are supervised by

52a

FERC—not the state of Connecticut. It is FERC that

has created the geographic distinctions on which

Connecticut's program is predicated by organizing

owners of transmission lines into "independent

system operators" (ISOs), such as ISO-NE, and

"regional transmission organizations" (RTOs) in

order "to help manage the grid, ensure system

reliability, and guard against discrimination and the

exercise of market power in the provision of

transmission services." Entergy Nuclear, 733 F.3d at

413.

The NEPOOL, moreover, is governed through a

committee structure expressly approved by FERC.

See N. Eng. Power Pool, 88 FERC ¶ 61079, 61181. It

is through the incorporation of NEPOOL's GIS Rule

2.7(c)—which permits NEPOOL to track RECs

produced in ISO-NE and adjacent control areas—

that Connecticut's RPS program defines the outer

bounds of the geographic region within which

qualifying RECs must be produced. See Conn. Gen.

Stat. § 16-245a.

In other words, it is FERC itself that has instituted a

sort of regionalization of the national electricity

market. And neither FERC nor Congress has given

any indication that this structure is unduly harmful

to interstate commerce. Congress and FERC are

better-situated than the courts to supervise and to

determine the economic wisdom and the health and

safety effects of these geographic boundaries that

Connecticut has incorporated into its RPS program.

It is they that, in this setting, are best suited to

decide which products ought to be treated similarly,

and which should not.

53a

And since, as the Court stated in Tracy, such "health

and safety considerations [may] be weighed in the

process of deciding the threshold question whether

the conditions entailing application of the dormant

Commerce Clause are present," 519 U.S. at 307, we

conclude, analogously to the Court's decision in

Tracy , that Connecticut's regulatory response to the

needs of the local energy market has resulted in a

noncompetitive REC product that is capable of being

produced only by in-region generators, and that this

distinguishes such generators from Allco's Georgia

generator "to the point that the enterprises should

not be considered 'similarly situated' for purposes of

a claim of facial discrimination under the Commerce

Clause." Id. at 310.

Having reached this conclusion, and for the same

reasons discussed above, it is clear that the burden

imposed by Connecticut's RPS program is also not

"clearly excessive in relation to the putative local

benefits," and therefore passes the more permissive

Pike test. Pike, 397 U.S. at 142; see United Haulers

Ass'n v. Oneida Herkimer Solid Waste Mgmt. Auth.,

550 U.S. 330, 346, 127 S. Ct. 1786, 167 L. Ed. 2d 655

(2007) (holding that, under Tracy, a state law did not

discriminate against interstate commerce, and that

the law therefore was "properly analyzed under the

test set forth in Pike"). "We have consistently

recognized the legitimate state pursuit of such

interests as compatible with the Commerce Clause,

which was 'never intended to cut the States off from

legislating on all subjects relating to the health, life,

and safety of their citizens," even if that "legislation

might indirectly affect the commerce of the country.'"

Tracy, 519 U.S. at 306-07 (quoting Huron Portland

54a

Cement Co. v. City of Detroit, 362 U.S. 440, 443-44,

80 S. Ct. 813, 4 L. Ed. 2d 852 (1960)).

Allco's argument that Connecticut's RPS program

discriminates between its Georgia renewable energy

generator

and

in-region

renewable

energy

generators therefore fails, and the district court's

dismissal of this claim must be affirmed.

b. Alleged Discrimination Against Allco's New York

Facility

With respect to Allco's claim that its New York

facility has suffered discrimination because it has

had to pay transmission fees in order for its RECs to

qualify under the RPS program, we determine that

Allco has failed sufficiently to plead that such

charges are anything more than use fees, analogous

to road tolls, which regularly pass constitutional

muster. See, e.g., Nw. Airlines, Inc. v. Cty. of Kent,

510 U.S. 355, 362-63, 114 S. Ct. 855, 127 L. Ed. 2d

183 (1994); Selevan v. N.Y. Thruway Auth., 711 F.3d

253, 261 (2d Cir. 2013) ("Selevan II"). To state a

claim for a violation of the dormant Commerce

Clause in such circumstances, Allco must plead

sufficient facts to "allow[] the court to draw the

reasonable inference," Iqbal, 556 U.S. at 678, that

"the burden imposed on interstate commerce is

clearly excessive in relation to the putative local

benefits." Selevan I, 584 F.3d at 95 (quoting United

Haulers, 550 U.S. at 346).

Among the facts that would be relevant to such a

claim would be the amounts charged to Allco's New

York facility to import its electricity into ISO-NE,

55a

and facts relating to any putative local benefits that

may be derived from such charges. Cf. Selevan I, 584

F.3d at 95. Allco's conclusory allegations do not allow

us to make any inferences of excessive burden. We

therefore affirm the district court's dismissal of

Allco's dormant Commerce Clause claim with respect

to its New York facility.

D. Leave To Amend

Allco finally argues that the district court erred in

dismissing its Complaints without affording it leave

to amend. Allco never sought that opportunity with

respect to the portions of its Complaints discussed

above. "While leave to amend under the Federal

Rules of Civil Procedure is freely granted, no court

can be said to have erred in failing to grant a request

that was not made." Gallop v. Cheney, 642 F.3d 364,

369 (2d Cir. 2011) (internal quotation marks and

citations omitted).

III. CONCLUSION

The district court's judgment is AFFIRMED.

56a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE

SECOND CIRCUIT

______________________________________________

At a Stated Term of the United States Court

of Appeals for the Second Circuit, held at the

Thurgood Marshall United States Courthouse, 40

Foley Square, in the City of New York, on the 28th

day of June, two thousand and seventeen.

Before:

Guido Calabresi,

Reena Raggi,

Gerard E. Lynch,

Circuit Judges.

___________________________________

Allco Finance Limited,

Plaintiff – Appellant,

v.

Robert J. Klee, in his official capacity

as Commissioner of the Connecticut

Department of Energy and

Environmental Protection,

Defendant - Appellee,

Katherine S. Dykes, John W.

Betkoski, III, and Michael Caron, in

their official capacities as

Commissioners of the Connecticut

Public Utilities Regulatory Authority,

JUDGMENT

Docket Nos.

16-2946 (L),

16-2949 (Con)

57a

Defendants - Appellees.

The appeal in the above captioned case from a

judgment of the United States District Court for the

District of Connecticut was argued on the district

court’s record and the parties’ briefs. Upon

consideration thereof,

IT IS HEREBY ORDERED, ADJUDGED and

DECREED that the judgment of the district court is

AFFIRMED.

For The Court:

Catherine O’Hagan Wolfe,

Clerk of Court

58a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE

SECOND CIRCUIT

At a stated term of the United States Court of

Appeals for the Second Circuit, held at the Thurgood

Marshall United States Courthouse, 40 Foley

Square, in the City of New York, on the 17th day of

August, two thousand seventeen,

_____________________________________________

Allco Finance Limited,

Plaintiff - Appellant,

v.

Robert J. Klee, in his official

capacity as Commissioner of the

Connecticut Department of Energy

and Environmental Protection,

Defendant - Appellee,

Katherine S. Dykes, John W.

Betkoski, III, Michael Caron, in

their official capacity as

Commissioner of the Connecticut

Public Utilities Regulatory

Authority,

Defendants - Appellees.

_______________________________

ORDER

Docket No:

16-2946(L)

16-2929(con)

59a

Appellant Allco Finance Limited filed a petition for

panel rehearing, or, in the alternative, for rehearing

en banc. The panel that determined the appeal has

considered the request for panel rehearing, and the

active members of the Court have considered the

request for rehearing en banc.

IT IS HEREBY ORDERED that the petition is

denied.

FOR THE COURT:

Catherine O'Hagan Wolfe, Clerk

60a

APPENDIX D

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT

Civil Action Nos. 3:15-cv-608 (CSH); 3:16-cv-508

(CSH) (related cases with identical parties)

August 18, 2016

ALLCO FINANCE LIMITED,

Plaintiff,

v.

ROBERT KLEE, in his Official Capacity as

Commissioner of the CONNECTICUT

DEPARTMENT OF ENERGY AND

ENVIRONMENTAL PROTECTION, and ARTHUR

HOUSE, JOHN W. BETKOSKI, III and MICHAEL

CARON, in their Official Capacities as

Commissioners of the CONNECTICUT PUBLIC

UTILITIES REGULATORY AUTHORITY,

Defendants

OMNIBUS RULING IN RELATED CASES ON

MOTIONS TO DISMISS COMPLAINTS AND FOR

PRELIMINARY INJUNCTIVE RELIEF

HAIGHT, Senior District Judge:

This ruling concerns two cases, each entitled Allco v.

Klee, et al., which bear docket numbers 3:15-cv-608

and 3:16-cv-508. These two cases, related but not

formally consolidated, center on the State of

Connecticut's implementation of a 2013 state statute

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that empowered the Commissioner of Connecticut's

Department of Energy

and Environmental

Protection to solicit proposals for renewable energy,

select winners of the solicitation, and direct

Connecticut's utilities to enter into wholesale energy

contracts with the chosen winners. Additionally,

3:15-cv-608 also concerns a statute which requires

energy utilities to buy renewable energy credits or

produce renewable energy themselves in order to sell

energy in the State of Connecticut.

Plaintiff Allco Finance Limited ("Allco"), a generator

of renewable electrical energy, has filed two actions

in this Court against Connecticut State industry

regulators. Plaintiff Allco contends in each action

that the state statutory scheme is precluded by or

violates federal energy statutes, and that

Connecticut's implementation of its statute has

damaged plaintiff. In each action, the same

Defendants, who are the Connecticut State

regulators, move to dismiss the complaint. Plaintiff

opposes Defendants' motions to dismiss, and for its

part, moves for preliminary injunctive relief in each

case, which Defendants oppose.

In consequence, these two cases, viewed together,

currently present for the Court's consideration two

motions to dismiss and two motions for preliminary

injunctive relief. The parties and the issues are

largely the same. The motions have been elaborately

briefed by able counsel. The Court heard oral

argument. This Omnibus Ruling decides all four

motions.

I.

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A.

The discovery of fire was a significant event, creating

for mankind warmth against the cold and light in

the darkness. We do not know which man or woman

first noticed that a burning bundle of sticks produced

those useful results of warmth and light, which in

modern times are the products of alternative forms

of energy. Electrical energy is one of these. The

concept of electricity was first deduced by William

Gilbert, a physician in the service of Elizabeth I of

England (1533-1603). In 1752, Benjamin Franklin

demonstrated the practical application of electricity

by flying a kite carrying a key into a lightening

storm. Today, electricity is a principal source of light

and heat for the world and its people.

As the importance of electricity has increased

exponentially in human affairs, politicians and

governments inevitably stepped up regulation of the

generation and marketing of electrical energy. In the

United States, responsibility for the electrical energy

industry is divided between the federal Congress

and the state legislatures. "In the early 20th

century, state and local agencies oversaw nearly all

generation, transmission, and distribution of

electricity." FERC v. Electric Power Supply

Association, 136 S. Ct. 760, 767, 193 L. Ed. 2d 661

(2016) ("EPSA""). When, in 1927, the Supreme Court

held that the Commerce Clause barred the States

from regulating interstate aspects of electricity

transactions, see Public Utils. Comm'n of R.I. v.

Attleboro Steam & Elec. Co., 273 U.S. 83, 89-90, 47

S. Ct. 294, 71 L. Ed. 549 (1927), a void in the federal

regulatory scheme was exposed, which Congress

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filled in 1935 by enacting the Federal Power Act, 16

U.S.C. § 791a et seq. ("FPA" or "the Act"). The Act

fashioned that federal—state division of legislative

regulatory responsibility that underlies and gives

rise to the cases at bar.

Created in 1973, the Federal Energy Regulatory

Commission ("FERC") has exclusive authority to

regulate "the sale of electric energy at wholesale in

interstate commerce." 16 U.S.C. § 824(b)(1). A

wholesale sale is defined as a "sale of electric energy

to any person for resale." 16 U.S.C. § 824(d). "But the

law places beyond FERC's power, and leaves to the

States alone, the regulation of 'any other sale' —

most notably, any retail sale — of electricity."

Hughes v. Talen Energy Marketing, LLC, 136 S. Ct.

1288, 1292, 194 L. Ed. 2d 414 (2016) (quoting EPSA,

136 S.Ct. at 762). "The States' reserved authority

includes control over in-state 'facilities used for the

generation of electrical energy.'" Id. (quoting 16

U.S.C. § 824(b)). "Alongside those grants of power,

however, the Act also limits FERC's regulatory

reach, and thereby maintains a zone of exclusive

state jurisdiction. . . . Accordingly, the Commission

may not regulate either within-state wholesale sales,

or more important here, retail sales of electricity

(i.e., sales directly to users). State utility

commissions continue to oversee those transactions."

EPSA, 136 S.Ct. at 767-768 (citation omitted).

Under the FPA, FERC "has authority to regulate

'the transmission of electric energy in interstate

commerce' and 'the sale of electric energy at

wholesale in interstate commerce.'" Id. at 767

(quoting 16 U.S.C. § 824(b)(1)). The FPA obligates

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FERC "to oversee all prices for those interstate

transactions and all rules and practices affecting

such prices," and further provides that "all rates and

charges made, demanded or received by any public

utility for or in connection with" interstate

transmissions or wholesale sales must be "just and

reasonable." Id. (quoting 16 U.S.C. § 824d(a)). If "any

rate for charge," or "any rule, regulation, practice or

contract affecting such rate [or] charge" falls short of

that standard, FERC "must rectify the problem: It

shall then determine what is 'just and reasonable'

and impose 'the same by order.'" Id. (quoting 16

U.S.C. § 824e(a).

Furthermore, within the electricity market there are

three general categories of actors: generators (or

other entities that buy energy through bilateral

contracts), transmitters, and load serving entities

(LSEs). See Hughes v. Talen Energy Marketing,

LLC, 136 S.Ct. 1288, 1292, 194 L. Ed. 2d 414 (Apr.

29, 2016). Generators include power plants and

other sources of energy production. Id. LSEs

distribute power to the end user. DIVISION OF

ENERGY

MARKET

OVERSIGHT

OFFICE

OF

ENFORCEMENT, FEDERAL ENERGY REGULATORY

COMMISSION, ENERGY PRIMER: A HANDBOOK OF

ENERGY MARKET BASICS, 57-63 (2015) (available at

www.ferc.gov/market-oversidght/guide/enertyprimer.pdf). Transmitters historically were private

entities, but currently are nonprofit "Regional

Transmission

Organizations"

("RTOs")

or

"Independent System Operators" ("ISOs"). Id. There

are seven RTOs in the United States. Id. The New

England ISO ("ISO-NE"), which is of interest in this

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case, operates in New England, including in

Connecticut. Id.

In 1978, Congress enacted the Public Utility

Regulatory Practices Act ("PURPA"). "Technically,

PURPA is one of several amendments to the Federal

Power Act," whose provisions are codified in part in

the FPA, 16 U.S.C. § 824a-3. See Allco Finance

Limited v. Klee, 805 F.3d 89, 91 n. 1 (2015)

(hereinafter "Allco II"). Given that the Federal

Power Act gives FERC "exclusive authority to

regulate sales of electricity at wholesale in interstate

commerce," Allco II, 805 F.3d at 91 (citing 16 U.S.C.

§ 824(b)(1)), "States may not act in this area unless

Congress creates an exception." Id. (citing 16 U.S.C.

§ 824(b)). "PURPA contains one such exception that

permits states to foster electric generation by certain

power production facilities ('qualifying facilities')

that have no more than 80 megawatts of capacity

and use renewable generation technology." Id. at 9192. That particular aspect of the statutory scheme

plays a part in the cases at bar.

This engrafting of PURPA upon the FPA reflects the

fact that FERC's role in ensuring that a public

utility's rates or charges for electricity are just and

reasonable has evolved over the years as the

industry has changed. "Decades ago, state or local

utilities controlled their own power plants,

transmission lines, and delivery systems, operating

as vertically integrated monopolies in confined

geographic areas." EPSA, 136 S.Ct. at 768. Since the

FPA's passage, electricity has increasingly become a

competitive

interstate

business,

in

which

independent power plants abound, and electricity

flows "not through the local power networks of the

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past, but instead through an interconnected 'grid' of

near-nationwide scope." Id. (citation omitted).

In that new world, FERC

often forgoes the cost-based rate-setting

traditionally used to prevent monopolistic

pricing. The Commission instead undertakes to

ensure "just and reasonable" wholesale rates by

enhancing competition — attempting, as we

recently explained, "to break down regulatory

and economic barriers that hinder a free market

in wholesale electricity."

136 S.Ct. at 768 (quoting Morgan Stanley Capital

Group Inc. v. Public Util. Dist. No. 1 of Snohomish

Cty., 554 U.S. 527, 536, 128 S. Ct. 2733, 171 L. Ed.

2d 607 (2008)).

There are two ways in which FERC achieves its

regulatory aims. First, Generators and LSEs can

enter private, bilateral contracts called "Power

Purchase Agreements" (PPAs). See Hughes, 136

S.Ct. at 1292. If these bilateral contracts are made in

good faith and are the result of arms-length

negotiation, then they are presumed reasonable by

FERC. Id. (citing Morgan Stanley, 554 U.S. at 54648). Second, RTOs can buy from and sell to

generators and LSEs through a FERC-approved

auction process. Id. RTOs transmit the energy sold

by generators to LSEs, but also run several markets

under the supervision of FERC, including a sameday auction, a next-day auction, and a capacity

auction. DIVISION OF ENERGY MARKET OVERSIGHT

OFFICE

OF

ENFORCEMENT, FEDERAL ENERGY

REGULATORY COMMISSION, ENERGY PRIMER: A

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HANDBOOK OF ENERGY MARKET BASICS, 57-63 (2015)

(available

at

www.ferc.gov/marketoversidght/guide/enerty-primer.pdf ). The"capacity

auction" is designed to ensure enough generation is

available to meet future power demands. Id. For

ISO-NE, a is conducted by state regulators three

years prior to when the capacity is needed. Id. The

RTOs determine how much capacity will be needed

in three years' time, then generators, and utilities

that have acquired capacity from generators under

bilateral contracts, commit to sell (and the RTOs

commit to purchase) the amount of capacity selected

in the auction for resale to the LSE in three years'

time. Id.

B.

One mechanism FERC employs for that salutary

purpose, the Court noted in EPSA, is to

encourage[] the creation of nonprofit entities to

manage wholesale markets on a regional basis.

Seven such wholesale market operators now

serve areas with roughly two-thirds of the

country's electricity load (an industry term for

the amount of electricity used). Each administers

a portion of the grid, providing generators with

access to transmission lines and ensuring that

the network conducts electricity reliably. And

still more important for present purposes, each

operator conducts a competitive auction to set

wholesale prices for electricity.

These wholesale auctions serve to balance supply

and demand on a continuous basis, producing

prices for electricity that reflect its value at given

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locations and times throughout each day. Such a

real-time mechanism is needed because, unlike

most products, electricity cannot be stored

effectively.

136 S.Ct. at 768.

The Supreme Court filed its opinion in EPSA on

January 28, 2016 and filed Hughes almost three

months later, on April 19, 2016. EPSA upheld an

FERC order which required wholesale electricity

market operators to compensate electricity users, or

demand response providers, at the same rate as

electricity generators, for users' commitment to

reduce their electricity use during peak periods.

Hughes rejected a state commission order directing

state utilities to enter into a contract for differences

with new power companies to incentivize the

construction of the plant. Hughes gives a detailed

explanation of a competitive wholesale auction, of

the sort to which EPSA referred more or less en

passant.

The auction in Hughes was conducted by PJM

Interconnection, a RTO that "oversees the electricity

grid in all or parts of 13 mid-Atlantic and

Midwestern States and the District of Columbia."

136 S.Ct. at 1293. PJM, functioning as an RTO,

predicted regional electricity demand three years

ahead of time, and initiated a capacity auction to

account for the demand. Justice Ginsburg's opinion

in Hughes describes what happened next:

Owners of capacity to produce electricity in three

years' time bid to sell that capacity to PJM [the

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RTO] at proposed rates. PJM accepts bids until it

has purchased enough capacity to satisfy

anticipated demand. All accepted capacity sellers

receive the highest accepted rate, called the

"clearing price." LSEs must purchase, from PJM,

enough electricity to satisfy their assigned share

of overall projected demand.

136 S.Ct. at 1293. Justice Ginsburg said approvingly

that a capacity auction "serves to identify need for

the new generation," is "designed to accommodate

long-term bilateral contracts for capacity," and

"FERC extensively regulates the structure of the

PJM capacity auction to ensure that it efficiently

balances supply and demand, producing a just and

reasonable clearing price." Id. at 1293-1294.

Bilateral contracts, a separate and secondary feature

of the market, are an integral part of the energy

market. These contracts are subject to review by

FERC. See Morgan Stanley Capital Group Inc. v.

Public Utility District No. 1 of Snohomish County,

554 U.S. 527, 128 S. Ct. 2733, 171 L. Ed. 2d 607

(2008) [*13] ("[T]he FPA also permits utilities to set

rates with individual electricity through bilateral

contracts. . . [which] must be filed with the

Commission before they go into effect."). While

generally these contracts are between private

parties, at issue in this case is a Connecticut State

program to solicit proposals for bilateral contracts

with renewable energy generators. In Allco II, the

Second Circuit said of Connecticut's pertinent

statute that it "empowered the Commissioner of

Connecticut's

Department

of

Energy

and

Environmental Protection to solicit proposals for

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renewable energy, select winners of the solicitation,

and direct Connecticut's utilities to enter into

wholesale energy contracts with the chosen

winners." 805 F.3d at 92.1

The cases at bar arise out of Allco's allegations that

the State's implementation of the Connecticut

statutory scheme violated provisions of the FPA and

PURPA.

II.

A.

In 2013, Connecticut enacted Connecticut Public Act

13-303. Section 6 of that Act empowers the

Commissioner of the Connecticut Department of

Energy and Environmental Protection ("DEEP") to

solicit proposals for renewable energy and thereafter

direct the Connecticut Power and Light Company

and United Illuminating, the principal Connecticut

utility companies, to enter into wholesale power

purchase agreements for a term of up to twenty

years, serving up to four percent of Connecticut's

electricity needs. Section 6 provides in pertinent part

1 At

the hearing on the cases at bar, counsel for Connecticut

Commissioner Klee played down his client's power over the

rates that the utilities pay to power generators within the

bilateral contracts. "In fact," counsel said, "at the auctions the

power generators will offer their prices," and the State has

contracts "outside of the auctions to hedge against what

happens in the auctions," at the conclusion of which "we direct

the utilities [*14] to sign. The utilities, in fact, negotiate, and

they don't always sign them. If they don't accept them, we

cannot make them to [sic]. I have no power to drag them into

court and make them sign these things." Oral Argument Tr. 3637.

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that the Commissioner "may . . . solicit proposals . . .

from providers of Class 1 renewable energy sources"

and "if the commissioner finds such proposals to be

in the interest of ratepayers . . . [he or she] may

select proposals from such resources to meet up to

four per cent [*15] of the load distributed by the

state's electric distribution companies." Conn. Public

Act 13-303, Section 6.

In July 2013, the Commissioner solicited proposals

from providers of renewable energy, pursuant to

Section 6 ("the 2013 RFP"). Allco submitted

proposals for five solar projects. The Commissioner

did not select them. Instead, he selected a wind

project located in Maine, Number Nine Wind, and a

different solar project located in Connecticut , Fusion

Solar, and directed the Connecticut utilities to

execute power purchase agreements at fixed

wholesale prices with the entities whose proposals

had been selected.

Disappointed by this result, Allco reacted by suing

the DEEP Commissioner. The complaint, filed on

December 18, 2013, was given docket number 3:13cv-1874 and assigned to District Judge Arterton.

Allco

charged

that

the

Commissioner's

implementation of Section 6 and attendant selection

of energy providers violated federal law. Its theory of

the case was that under the FPA, FERC had

exclusive jurisdiction over wholesale energy prices;

any exceptions to the rule prohibiting states from

setting wholesale prices existed only in PURPA.

Thus, the Commissioner's implementation of Section

6 by means of the 2013 RFP had the effect of fixing

wholesale energy prices, a power reserved to FERC

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under the FPA; the resulting proposals would be

permissible only if they complied with PURPA; and,

Allco contends, they failed to do so.

In an opinion reported at 2014 U.S. Dist. LEXIS

170674, 2014 WL 7004024 (D.Conn. Dec.10, 2014),

Judge Arterton granted the Commissioner's motion

to dismiss Allco's complaint ("Allco I"). She held that

Allco lacked standing, and its claim also failed on the

merits. 2014 U.S. Dist. LEXIS 170674, [WL] at *10.

The Second Circuit affirmed the dismissal of Allco's

complaint, on somewhat different grounds. Allco

Finance Ltd. v. Klee, 805 F.3d 89 (2d Cir. 2015)

("Allco II"). Certiorari does not appear to have been

sought.

The Second Circuit's decision in Allco II seemingly

brought to an end litigation between Allco and the

State Defendants arising out of the 2013 RFP.

However, under the circumstances described infra,

Allco contends that its 2013 FRP claims have been

revived, they are risen, and Allco asserts them again

in Allco IV, as a ground for equitable relief.

B.

The Second Circuit filed its opinion in Allco II on

December 1, 2015. On April 26, 2015, while that

appeal was pending, Allco filed another complaint

[docket number 3:15-cv-608] which was assigned to

the undersigned. I will refer to that case as "Allco

III." Allco is the Plaintiff. The DEEP Commissioner

and the individual Commissioners of the Connecticut

Public Utilities Regulations Authority ("PURA") are

the same Defendants as those in the earlier case

before Judge Arterton, which I will call "the 2013

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RFP case." Allco's complaint in Allco III alleges at §

29 that on February 26, 2015, DEEP issued a draft

request for proposals under Section 6 of the

Connecticut Public Act. The State intends to proceed

in the same manner as it did in connection with the

2013 RFP. I will call this renewed aspect of the

litigation "the 2015 RFP case."

The Allco III complaint further alleges that in the

2015 RFP case, DEEP plans to issue its final request

for proposals "in the spring of 2015 and compel

wholesale energy transactions soon after it

completes its review of proposals." Allco III,

Complaint, ¶ 30. Allco's theory in Allco III with

respect to the 2015 RFP is the same as it was in

Allco I with respect to the 2013 RFP: The actions of

the State DEEP, purportedly in accordance with

Section 6 of the Connecticut statute, violate

provisions of the pertinent federal statutes, the FPA

and PURPA. Allco also moves for a preliminary

injunction in respect of the 2015 RFP. At that time

the Allco III complaint was filed, no claims by Allco

were pending in respect of the 2013 RFP, because

Judge Arterton had dismissed the complaint in Allco

I and Allco's appeal to the Second Circuit was

pending. That landscape changed when on December

1, 2015, the Second Circuit decided Allco II, the

appeal of Allco I. It is necessary to consider that

opinion carefully.

III.

A.

In Allco I, which was assigned to Judge Arterton,

Allco's claims and theories against the State

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Defendants with respect to the 2013 RFP mirror the

claims and theories Allco pleads against the same

Defendants in Allco III with respect to the 2015

RFP. Judge Arterton dismissed Allco's complaint in

Allco I, in an opinion reported at 2014 U.S. Dist.

LEXIS 170674, 2014 WL 7004024 (D.Conn. Dec. 10,

2014). She held that Allco lacked standing in the

case because it had not suffered a legally protected

injury within the zone of interests protected by the

Federal Power Act. Alternatively, Judge Arterton

concluded that Allco's claim failed on the merits

because the State Defendants' "implementation of

Section 6 does not seek to regulate wholesale energy

sales but rather is a permissible regulation of

utilities under the State's jurisdiction." Allco I, 2014

U.S. Dist. LEXIS 170674, 2014 WL 7004024, at *10.

Allco appealed the dismissal of Allco I. The Second

Circuit affirmed that dismissal, albeit on what Chief

Judge Katzmann's opinion characterized as

"alternative grounds." Allco II, 805 F. 3d 89, 91

(2015) ("Allco II"). The Second Circuit held that (1)

PURPA's private right of action foreclosed Allco's

claims under 42 U.S.C. §§ 1983 and 1988 to

vindicate any rights conferred by PURPA; "(2) Allco

failed to exhaust its administrative remedies, a

prerequisite for its equitable action seeking to

vindicate specific rights conferred by PURPA; and

(3) Allco lacks standing to bring a preemption action

seeking solely to void the contracts awarded to" the

successful 2013 RFP bidders. Allco II, 805 F.3d at 91.

The Second Circuit's opinion in Allco II and Judge

Arterton's order of dismissal in Allco I, which Alco II

affirmed, dealt solely with the 2013 RFP. Allco III,

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where the complaint was filed on April 26, 2015, and

is pending before this Court, deals solely with the

2015 RFP. Allco has filed yet another, more recent

case in this Court, which I will call "Allco IV." The

complaint in Allco IV was filed on March 30, 2016. In

Allco IV, Allco continues to attack the validity of the

State's 2015 RFP through its motion for an order to

show cause as to why a preliminary injunction

should not issue, but also revives its challenge to the

2013 RFP in the complaint.

As noted, the complaint in Allco I challenged the

2013 RFP, Judge Arterton dismissed that complaint,

the Second Circuit affirmed the dismissal, and the

Supreme Court was not asked to interfere. One

would have thought that the Allco I controversy over

the 2013 RFP was dead, but Allco purports to lift it

up, like Lazarus, and makes that claim a part of its

complaint in Allco IV. Allco's theory is that events

subsequent to the Second Circuit's opinion in Allco II

have cured Allco's failure to exhaust administrative

remedies, one of the deficiencies noted by the Court

of Appeals in Allco II.

B.

In the Second Circuit's opinion in Allco II, the Court

of Appeals considered two of Allco's requested forms

of relief that are relevant to this Court's analysis of

the cases at bar. First, the Second Circuit dealt with

Allco's request to enjoin the Commissioner from

conducting future procurement that violated the

Federal Power Act or PURPA. Allco's theory behind

its preemption claim relied, as it does here, on

PURPA. Allco claimed that "the only way in which

the Commissioner can issue a Section 6 contract that

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is not preempted by the Federal Power Act is if that

contract

meets

the

requirements

of

the

PURPA exception." Allco II, 805 F.3d. at 96. The

Second Circuit held that Allco could not avoid the

administrative exhaustion requirement of PURPA

by "characterizing an otherwise covered PURPArelated equitable claim as a Supremacy Clause

claim." Id. (citing Niagara Mohawk Power Corp. v.

FERC, 306 F.3d 1264, 1270 (2d Cir. 2000)).

Second, the court analyzed Allco's request to void the

Section 6 contracts already awarded to two power

producers under the 2013 RFP. The court said "[t]o

the extent that these claims seek only to invalidate

the results of the prior procurement . . . Allco lacks

standing because that requested relief does not

redress its injury, i.e., its not being selected for a

Section 6 contract." Allco II, 805 F.3d. at 98.

Furthermore, voiding the contracts awarded to the

two power producers "fail[s] to redress Allco's

injuries, as they do not make it 'likely, as opposed to

merely speculative,' that Allco will eventually

receive a Section 6 contract." Id. (citing Friends of

the Earth, Inc. v. Laidlaw Environmental Services

(TOC), Inc., 528 U.S. 167, 181, 120 S. Ct. 693, 145 L.

Ed. 2d 610 (2000)). This remedy, the court noted,

"would simply deny Allco's competitors a contractual

benefit without redressing Allco's injury—its not

being selected for a Section 6 contract." Allco II, 805

F.3d. at 98.

Notwithstanding these adverse appellate rulings,

Allco purports to find in the Second Circuit's Allco II

opinion significant support for its cause. Allco

acknowledges that the Second Circuit dismissed on

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standing grounds its request to void the Section 6

contracts awarded to two other power producers as

the result of a prior RFP which had been fully

executed and the contracts awarded at the end of

process. Allco distinguishes that circumstance from

its claim in the instant cases that the State

Defendants are proposing to violate PURPA in

connection with future RFP. As to that aspect of the

case, Allco reads Allco II as holding only Allco that

had not exhausted its administrative remedies with

respect to future RFPs' compliance with PURPA.

Allco interprets that particular holding as an implied

decision by the Second Circuit that Allco has

standing, as a qualifying facility under PURPA, to

seek declaratory and injunctive relief against future

contemplated or presently promulgated and

outstanding RFPs, so long as Allco has exhausted

the administrative remedies available to address the

grievances complained of.

This argument has surface appeal, but it does not

penetrate below the surface. True enough, the

Second Circuit dismissed this aspect of the case in

Allco II on the basis that Allco had not exhausted its

administrative remedies; but the Court of Appeals

said nothing about whether Allco would acquire

standing if

it thereafter exhausted those

administrative remedies. The Second Circuit's

opinion added that "[a]s Allco acknowledges, its

'status as a small power producer' under PURPA 'is

relevant to [its] Article III standing and to

explain[ing] why [its] injury is redressable.' [] As

such, any equitable relief relating to future contracts

awarded under Section 6 necessarily implicates

PURPA; otherwise, such relief would provide no path

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by which Allco could eventually obtain a nonpreempted Section 6 contract." Allco II, 805 F.3d at

96. The Second Circuit did make clear that Allco was

not challenging the statute as a "disappointed

bidder" but instead is bringing its case to enforce

PURPA. Id.

C.

Further changes in the circumstances of the case

have occurred since December 1, 2015, when the

Second Circuit filed its amended opinion in Allco II.

Following the Court of Appeals' dismissal of its

complaint. Allco petitioned FERC to initiate

enforcement proceedings pursuant to PURPA

against DEEP and PURA. In a Notice of Intent Not

To Act issued on January 8, 2016 [Doc. 33-1], FERC

advised:

Notice is hereby given that the Commission

declines to initiate an enforcement action under

section 210(h)(2) of PURPA. Our decision not to

initiate an enforcement action means that Allco

may themselves bring an enforcement action

against the Connecticut Commission and DEEP

in the appropriate court.

Defendants submitted this Notice from FERC to the

Court's attention as an attachment to "Defendants'

Third Notice of Additional Authority" [Doc. 33] in

Allco III. That submission is in effect a mini-brief in

which the Defendants undertake to explain the effect

of FERC's declining to bring enforcement actions

against DEEP and PURA upon Allco's right to bring

the instant action. Defendants' accompanying

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submission says of FERC's Notice of Intent Not to

Act:

The Notice demonstrates the statutory procedure

plaintiff Allco failed to follow in an earlier

lawsuit challenging a renewable energy

procurement conducted by DEEP in 2013. See

Allco Fin. Ltd. v. Klee, 805 F.3d 89 (2d Cir. Nov.

6, 2015). Allco's lawsuit arising out of the 2013

procurement was dismissed by the United States

Court of Appeals for the Second circuit for failure

to exhaust administrative remedies. Allco v.

Klee, 805 F.3d at 97. Specifically, Allco failed to

follow 16 U.S.C. § 824a-3(h)(2)(B) which permits

FERC the opportunity [sic] to either initiate

enforcement against the state regulatory

authority, or decline to do so, thereby enabling

Allco to bring suit against the state regulatory

authority in District court. After dismissal by the

Second Circuit Court of Appeals, Allco petitioned

FERC to initiate enforcement proceedings

against DEP and PURA. In the attached Notice

of Intent Not To Act, FERC declined to do so.

Consequently, Allco may now bring action

against the state regulatory authority regarding

the 2013 procurement in District Court,

providing all jurisdictional prerequisites are met.

Count I of the instant case relates to a future

procurement to be conducted by DEEP, and

potential future action by PURA (providing

DEEP finds projects acceptable under the terms

of the RFP and an application is filed at PURA).

The attached Notice demonstrates the statutory

procedure Allco should have followed to bring the

instant action, but failed to pursue.

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Doc. 33 at 1-2.

The Notice, and the accompanying discussion

intended to explain it, are not models of clarity.

FERC's Notice of Intent Not to Act does not identify

the target or subject matter of Allco's "petition for

enforcement." As of January 8, 2016, the date FERC

issued its Notice, two requests for proposals by the

state regulatory authorities were subjects of concern:

the 2013 RFP (which had been distributed to the

industry and fully implemented) and the 2015 RFP

(which was contemplated for the future). The State

Defendants' quoted discussion appears to view

Allco's petition for enforcement as relating solely to

the 2013 RFP. I do not know how else to construe the

Defendants' statement that as the result of FERC's

issuing its Notice of Intent Not to Act, "Allco may

now bring action [sic] against the state regulatory

authority regarding the 2013 procurement in

District

Court,

provided

all

jurisdictional

prerequisites are met" (a qualifying phrase

Defendants do not bother to define). As for the 2015

RFP, which is the subject matter of Allco III,

Defendants say only that FERC's Notice

"demonstrates the statutory procedure Allco should

have followed to bring the instant action, but failed

to pursue." I do not know how to construe that

statement other than as an assertion by Defendants

(or their counsel) that FERC Notice had nothing to

do with the 2015 RFP.

It would seem that Thomas Melone, the CEO of Allco

who is also admitted to the Connecticut Bar and

appears as counsel of record for Allco, has a different

view. On March 30, 2016, Allco filed its complaint in

Allco IV, which asserts claims with respect to both

81a

RFP 2015 and RFP 2013. Allco IV echoes Allco III's

request for a preliminary injunction against the 2015

RFP. On April 27, 2016 the Court heard oral

argument on Allco's motions for preliminary

injunctive relief. During the hearing on the present

motions, Mr. Melone was asked to comment on the

Second Circuit's opinion in Allco II, and said this:

[S]ince the Second Circuit went out of its way to

say what we didn't have standing with regard to,

they were saying that we had standing with

respect to everything else once we went through

the petiition at FERC from a jurisdictional

perspective, which we now have. . . . [W]hat the

Second Circuit did say is that our case — we had

to go to FERC first from a jurisdictional

perspective because that — because we were

trying to enforce PURPA, and trying to enforce

the specific part of PURPA which says that a

state has to implement the FERC's rules, and

what the Second Circuit did say explicitly is that

what thet meant was that the State couldn't act

contrary to the Federal Power Act or PURPA.

So that's why we're here today, because we went

to the FERC, we are prosecuting this case based

on an enforcement action under PURPA, which

the Second Circuit said we had to do it that way,

and that means, I think by definition, we have

statutory standing, as well as a qualifying

facility, regardless of whether we bid into the

RFP.

82a

Oral Argument Tr. 5-7. This colloquy suggests that

in Melone's view, when FERC responded to Allco's

petition for enforcement by issuing its Notice of No

Intent To Act on January 8, 2016, the agency opened

the flood gates (so to speak) to any subsequent

district court action Allco might be advised to bring,

on either RFP or both of them.

IV.

The Defendants' discussion of FERC's Notice of

Intent not to Act, quoted supra, reflects their

agreement that Allco has exhausted the relevant

administrative remedies with respect to the 2013

RFP. That discussion explicitly acknowledges that

Allco may proceed with an action in this Court

"against the state regulatory authority regarding the

2013 procurement." Doc. 33. All parties agree that

FERC's Notice of Intent removes the exhaustion-of

remedies obstacle to proceedings in the district court

which the Second Circuit identified in Allco II, which

was concerned solely with the 2013 RFP.

Whether that earlier exchange between Allco and

FERC, culminating in FERC's Notice of Intent, also

has

the

effect

of

exhausting

Allco's

administrative remedies with respect to the 2015

RFP (as Mr. Melone proclaimed and Defendants

seem to deny) presents a further question. I conclude

that FERC's Notice of Intent Not to Act, issued on

January 8, 2016, exhausted Allco's administrative

remedies with respect to the 2013 RFP and the 2015

RFP, so that RFP Allco is freed of that impediment

to actions in this Court complaining of Defendants'

conduct on both occasions. I base that conclusion on

the Petition for Enforcement Allco dated November

83a

9, 2015, which Allco sent to FERC and FERC

rejected in its responsive Notice of Intent. Allco's

Petition charged the state agencies (DEEP and

PURA) with "improper implementation of PURPA."

Petition at 1.2 The Petition describes two instances

of this perceived misconduct. The first occurred

when "in July 2013 the Commissioner solicited

proposals for renewable energy sources pursuant to

Section 6" and thereafter compelled Connecticut

utilities "to enter into a contract with a generator,"

Allco's bid being among those that "were not

selected." Petition at 4. The Petition then says:

"Recently, the Commission has announced is

intention to conduct another procurement under

Sections 6 and 7," and goes on to complain about the

"new solicitation" on the same grounds. Id. This is

clearly a reference to the 2015 RFP. Allco ended its

Petition with the request that FERC "take action to

enforce PURPA against the Connecticut Agencies to

invalidate and permanently enjoin the Connecticut

Agencies' compulsion of wholesale sales with other

than QFs." Id. at 6.

In that broadly worded demand, Allco was asking

FERC to take remedial enforcement action with

respect to both the 2013 RFP and the 2015 RFP.

That is the only way to read the Petition. Its demand

for relief is prefaced by separate references to and

complaints about, first, the 2013 RFP (fully

implemented) and second, the 2015 RFP

(contemplated). FERC's Notice of Intent must be

2 Unaccountably, counsel for the parties did not include Allco's

Petition to FERC in their submissions on these motions. The

document is accessible on FERC's website.

84a

read to express its decision to decline enforcement

with respect to both RFPs. It follows that Allco has

exhausted its administrative remedies with respect

to both RFPs.3

An additional point on this aspect of the cases must

be made. Defendants accurately observe that FERC

having declined to act on the 2013 RFP, "Allco may

now bring action against the state regulatory

authority regarding the 2013 procurement in

District

Court,

providing

all

jurisdictional

prerequisites are met." Doc. 33 at 2 (emphasis

added). For the reasons stated, Allco has the same

ability to sue concerning the 2015 procurement as it

does concerning the 2013 RFP, and for the same

reason: the intervening exhaustion by Allco of its

administrative remedies. However, contrary to its

professed impression, Allco's burden to satisfy

"jurisdictional prerequisites" for its court actions is

neither affected nor satisfied by FERC's declination

of administrative enforcement. It is perfectly clear

that

conceptually,

a

party

may

exhaust

administrative remedies (as Allco has done), be

disappointed by the result (as Allco surely is), and

then find itself unable to establish subject matter

jurisdiction to pursue its grievances in an Article III

3 That

is the position apparently embraced by Assistant

Attorney General Hollander, who argued the case for the PURA

Defendants during the April 27 hearing: "I went back and

reviewed [*31] and saw that plaintiff had placed both the

Section 7 and the 2015 act before FERC. And so we believe

plaintiff has exhausted. But none of that changes the fact that

we believe that the Court does not have jurisdiction over this

matter because plaintiff lacks standing and plaintiff has failed

to state a claim." Tr. 40.

85a

federal court. Whether administrative remedies have

been exhausted and federal subject matter

jurisdiction exists are different questions. Resolution

of the exhaustion question in a plaintiff's favor does

not ipso facto establish federal jurisdiction over its

underlying claims. Allco briefs and argues these

cases on the apparent theory that, by exhausting the

administrative remedy identified by the Second

Circuit in Allco II, Allco has explicitly or implicitly

satisfied all the standing to sue requirements

imposed by Article III. The Second Circuit made no

such holding in Allco II, there no authority for that

proposition, and I reject it.

In consequence, the Court must consider whether

Allco's actions against the Connecticut regulatory

authorities satisfy all the jurisdictional predicates

for litigation on the merits in this Article III court.

V.

Up to this point, this Ruling describes the history of

Allco's two basic claims against the Defendants: the

first arising out of the 2013 RFP, and the second

arising out of the 2015 RFP. Allco's challenges to

both RFPs were briefed together by counsel and

argued together on April 27, 2016. While decision

was pending, the landscape of the cases changed

once again.

On July 11, 2016, the parties filed in Allco IV a

document with the somewhat misleading caption of

"First Joint Notice of Additional Authority" [Doc.

33]. This submission advises the Court that in a

letter ruling issued on July 6 the Connecticut Public

Utilities Authority "approved two motions that

86a

effectively terminate the Number Nine Wind Farm

LLC power purchase agreement at issue in this

proceeding."

"Number Nine" or "Number Nine Wind," as the

company has come to be called in this litigation, was

one of two companies to which the State DEEP

Commissioner awarded power purchase agreements

at the conclusion of the 2013 RFP procurement

process. Allco submitted a proposal in that process

but was not selected by the Commissioner. Allco's

theory in the cases at bar has been and remains that

Connecticut's state statute procurement process

violates federal law. That theory was first asserted

in Allco I before Judge Arterton, a case confined to

the 2013 RFP, in which Allco sued the present State

Defendants, and Number Nine and the other

successful bidder intervened to protect their

interests. In that case, to quote the Second Circuit,

Allco "sought equitable relief in the form of voiding

the intervenors' contracts and enjoining the

Commissioner from violating the Federal Power Act

and PURPA in any future Section 6 procurement

process." Allco II, 805 F.3d at 91. I have recounted

supra that Judge Arterton dismissed Allco's 2013

RFP action, the Second Circuit affirmed the

dismissal on different grounds, Allco cured its failure

to exhaust administrative remedies that the Second

Circuit held to be a ground for dismissal, and then

revived its 2013 RFP claim as a part of the

complaint in Allco IV.4 In consequence, when counsel

4 Allco

contends that the Second Circuit's ruling on Allco's

exhaustion of administrative remedies impliedly holds that

87a

appeared at the April 27 hearing to argue both cases,

Allco was pressing its initial claim that the power

purchase agreement the Commissioner awarded to

Number Nine was illegal and should be voided ab

initio.

The joint submission of July 11 states that there was

a power purchase agreement between Number Nine

Wind and The Connecticut Light and Power

Company, and another agreement between Number

Nine Wind and United Illuminating Company,

purchase agreements which "result from a

procurement conducted in 2013 by the Department

of Energy and Environment Protection." Doc. 33, pp.

2-3. Those parties to the power purchase

agreements, "moved to terminate the agreements

because Number Nine Wind was unable to meet

certain milestones set forth in the agreements." Id.

To state the case in forensic terms: While Allco's

request that the Court kill the Number Nine power

purchase agreements as a matter of law was

pending, the Number Nine agreements died

unexpectedly of unrelated natural causes.

The effect of this development upon the litigation in

this Court is described by the parties as follows:

The termination of the Number Nine Wind power

purchase agreements renders moot plaintiff's

request to declare those agreements void ab

initio. With the termination of the agreements,

no claims remain as to the 2013 procurement.

there are no other obstacles to Allco's legal action, such as

standing to sue. That contention is rejected in this Ruling.

88a

However, the remainder of plaintiff's claims are

unaffected by the termination of the Number

Nine Wind power purchase agreements,

including the request to declare void ab initio

any agreement that may result from the 2015

request for proposals process.

Doc. 33.

The Court accepts counsel's joint representation that

"no claims remain as to the 2013 procurement."

Accordingly, the balance of this discussion and the

resulting Ruling have to do only with claims and

issues arising out of the 2015 procurement process

initiated by the Defendants, of which the Plaintiff

complains.5

VI.

A.

The first jurisdictional predicate a trial judge must

consider, in deciding whether a particular case can

proceed to the merits, is whether the plaintiff has

standing to sue on its claims in a federal court.

Standing "is the threshold question in every federal

case, determining the power of the court to entertain

the suit." Denney v. Deutsche Bank AG, 443 F.3d

253, 263 (2d Cir. 2006) (quoting Warth v. Seldin, 422

U.S. 490, 498, 95 S. Ct. 2197, 45 L. Ed. 2d 343

(1975)).

5 Given the broad wording of the most recent submission, and

the tenor of the other briefs and arguments, the court infers

that Allco is not presently asserting any claims with respect to

Fusion Solar, the other winner (with Number Nine Wind) in

the 2013 procurement process.

89a

Throughout the litigation in the cases at bar, the

State regulatory defendants have challenged Allco's

standing to assert the several claims in suit.6 A

recent expression of that challenge is found in

Defendants' brief in support of their motion to

dismiss Allco's complaint in Allco IV, a pleading that

attacks the validity of Defendants' actions in

connection with both the 2013 RFP and the 2015

RFP. Docs. 20, 20-1. Defendants' Notice of Motion in

that case states: "The plaintiff lacks standing.

Moreover, the plaintiff has failed to state a claim for

which relief can be granted." Defendants' brief

describes Plaintiff's actions as, inter alia, seeking "a

declaratory ruling that the two state energy

procurement efforts are preempted by the Federal

Power Act," as well as asserting other claims.

Defendants' briefs and arguments engage these

claims on their merits. Defendants begin with the

dismissive contention that "this Court need not

reach the merits of Plaintiff's claims because

Plaintiff lacks standing to bring them." Doc. 20-1 at

2, 10.

The Supreme Court has had numerous occasions to

consider, reflect upon and adjudicate a party's

standing to sue in an Article III federal district

court. Its most recent expressions appear in Spokeo,

Inc. v. Robins, 136 S.Ct. 1540, 194 L. Ed. 2d 635

6 Even if Defendants had not questioned Allco's standing, the

Court would be required to examine the issue sua sponte.

Denney, 443 F.3d at 263 n. 3 (where plaintiff's standing was

not timely challenged in or decided by the district court, "We

are nonetheless required to consider any standing issue, since

it speaks to our jurisdiction over this action." )

(citations [*38] omitted).

90a

(2016), decided on May 16. There, the Court vacated

and remanded a Ninth Circuit decision which had

held that an individual plaintiff, whose incorrect

personal information was disseminated by the

defendant search engine, had suffered a sufficient

injury-in-fact to give him standing to sue the

defendant in the district court.

Justice Alito's decision in Spokeo reiterates the

overarching importance of the standing to sue

doctrine upon the jurisdiction of a federal trial court

to hear a case. His analysis begins with the

observation that under Article III, §§ 1 and 2 of the

Constitution, the "judicial Power of the United

States" "extends only to 'Cases' and 'Controversies.'"

Spokeo, 136 S.Ct. at 1547. Indeed, "no principle is

more important to the judiciary's proper role in our

system of government than the constitutional

limitation of federal-court jurisdiction to actual cases

or controversies." Id. (citation and internal quotation

marks omitted).

"Standing to sue is a doctrine rooted in the

traditional

understanding

of

a

case

or

controversy," whose purpose is "to ensure that

federal courts do not exceed their authority as it has

been traditionally understood," and by its operation

"limits the category of litigants empowered to

maintain a lawsuit in federal court to seek redress

for a legal wrong." Spokeo, 136 S.Ct. at 1547

(citations omitted). In these ways, "the law of Article

III standing serves to prevent the judicial process

from being used to usurp the powers of the political

branches, and confines the federal courts to a

properly judicial role." Id. (citations and internal

91a

quotation marks omitted). Spokeo sums up the

present state of the standing to sue doctrine:

Our cases have established that the irreducible

constitutional minimum of standing consists of

three elements. The plaintiff must have (1)

suffered an injury-in-fact, (2) that is fairly

traceable to the challenged conduct of the

defendant, and (3) that is likely to be redressed

by a favorable decision. The plaintiff, as the

party invoking federal jurisdiction, bears the

burden of establishing these elements. Where, as

here, a case is at the pleading stage, the plaintiff

must clearly allege facts demonstrating each

element.

136 S.Ct. at 1547 (citations, internal quotation

marks and ellipses omitted ).

B.

The evaluation of a federal plaintiff's standing vel

non typically begins with asking whether the

plaintiff has suffered an injury-in-fact, "the first and

foremost of standing's three elements." Spokeo, 136

S.Ct. at 1547 (citation and internal quotation marks

omitted). Justice Alito's opinion continues: "To

establish an injury-in-fact, a plaintiff must show

that he or she suffered an invasion of a legally

protected interest that is concrete and particularized

and actual or imminent, not conjectural or

hypothetical." Id. at 1548 (citation and internal

quotation marks omitted). Spokeo goes on to hold

that the "particularization and concreteness

requirements," are different:

92a

For an injury to be "particularized," it must

affect the plaintiff in a personal and individual

way. . . . Particularzation is necessary to

establish injury-in-fact, but it is not sufficient.

An injury-in-fact must also be "concrete." . . . .

We have made it clear time and again that an

injury-in-fact must be both concrete and

particularized. . . . A "concrete" injury must be "

de facto"; that is, it must actually exist. When we

have used the adjective "concrete," we have

meant to convey the usual meaning of the term

— "real," and not "abstract." . . . . "Concrete" is

not, however, necessarily synonymous with

"tangible." Although tangible injuries are

perhaps easier to recognize, we have confirmed

in many of our previous cases that intangible

injuries can nevertheless be concrete. . . .

Congress' role in identifying and elevating

intangible harms does not mean that a plaintiff

automatically

satisfies

the

injury-in-fact

requirement whenever a statute grants a person

a statutory right and purports to authorize that

person to sue to vindicate that right. Article III

standing requires a concrete injury even in the

context of a statutory violation. . . . This does not

mean, however, that the risk of real harm cannot

satisfy the requirement of concreteness. . . . [T]he

violation of a procedural right granted by statute

can be sufficient in some circumstances to

constitute injury-in-fact. In other words, a

plaintiff in such a case need not allege any

additional harm beyond the one Congress has

identified. . . .

93a

Because the Ninth Circuit failed to fully

appreciate the distinction between concreteness

and particularization, its standing analysis was

incomplete. It did not address the question

framed by our discussion, namely, whether the

particular procedural violations alleged in this

case entail a degree of risk sufficient to meet the

concreteness requirement.

136 S.Ct. at 1548-1550 (citations and some internal

quotation marks omitted).

I have quoted and parsed at some length the

Supreme Court's opinion in Spokeo. For the more

humble pilgrim or wayfarer, the opinion may have

certain Delphic qualities. But the opinion constitutes

the Court's most recent utterances on a core question

in the cases at bar. A trial judge's duty is to discern

and then follow the Supreme Court's meaning.

C.

Allco's theory of injury-in-fact begins with the

federal statutory scheme. The Second Circuit noted

in Allco II that the FPA gives FERC "exclusive

authority to regulate sales of electricity at wholesale

in interstate commerce," and "States may not act in

this area unless Congress creates an exception." 805

F.3d at 91. "PURPA contains one such exception that

permits states to foster electric generation by certain

power production facilities ('qualifying facilities')

that have no more than 80 megawatts of capacity

and use renewable generation technology." Id. (citing

16 U.S.C. § 824a-3) (emphasis added). "A state may

regulate wholesale sales by qualifying facilities . . ."

Id. These provisions are central to the case at bar

94a

because the Allco electricity producers involved are

of sufficiently modest capacity to be "qualifying

facilities" for PURPA purposes.

The gravamen of Allco's complaint, expressed by

counsel at the April 27 hearing, is that in

furtherance of the 2015 RFP, the Defendants "are

about to engage in compelling wholesale electricity

contracts . . . with non-qualifying facilities." Oral

Argument Tr. 3-4. Allco contends that the State

Defendants "are not allowed to do that under federal

law" because "to have an RFP like the one they're

having, they're only allowed to have qualifying

facilities be the bidders," Oral Argument Tr. 3; "The

state has no power to regulate wholesale sales of

electricity except with qualifying facilities." Oral

Argument Tr. 10-11.

In those circumstances, Allco's counsel argued at the

hearing, "we have standing in connection with our

status as a qualifying bidder, not as a bidder or

disappointed bidder." Oral Argument Tr. 4. On the

question of injury-in-fact, this colloquy ensued:

THE COURT: Usually also to engage the subject

matter jurisdiction of a court a plaintiff must

show that he, she or it has suffered some form of

injury which the law recognizes. Here's the 2015

RFP, that round, and Allco has not sought to

participate in that. What is the injury that Allco

complains of in the context of this particular case

sufficient to satisfy that requirement, if it be one?

MR. MELONE: So the first part of that answer is

that for the qualifying facilities that were banned

from participating, if the State is enjoined and

95a

prohibited from going through with the RFP,

then — and is then required to do a compliant

RFP which allows all qualifying facilities, and

only qualifying facilities, to participate, then we

have a path to redress our injury of, one, not

being able to participate, and, two, not being able

to get a contract or even bid for a contract.

Oral Argument Tr. 7-8 (emphasis added).

The several concepts of "injury" referred to in

counsel's emphasized response overlap to some

degree. It necessarily follows that an Allco electricity

producer which is not able to participate in an RFP

procurement process will not be able to bid for or get

a contract awarded as the result of that process. In

addition, an RFP-participating Allco facility has its

contractual prospects reduced if Defendants allow

participation by a producer "too large to be

a qualifying facility under PURPA, so its selection

prevented the selection of at least one of Allco's

projects." Allco II, 805 F.3d at 92.

There seems to be no dispute that the State

Defendants behaved in the manners of which Allco

complains. Paragraph 36 of the complaint in Allco III

and ¶37 of the complaint in Allco IV, read together,

allege that for the 2015 RFP, participation is

restricted to a minimum facility size of twenty

megawatts, which excludes a number of QFs,

including Allco projects in Connecticut, Vermont and

Massachusetts that are under twenty megawatts in

size. Defendants do not deny these allegations. As

for the State soliciting bids from larger, non-PURPA

qualifying facilities, Defendants do not deny having

96a

done so: on the contrary, they proclaim that they

did.7

Allco's prayer for relief in the Allco III demands,

inter alia, that Defendants be barred from issuing

the 2015 RFP in its current form; non-QFs be barred

from participating in the RFP; and any agreements

that may have been executed by Connecticut utilities

pursuant to the RFP be voided ab initio. Mr.

Melone's quoted response at the argument captures

the essence of Allco's claimed injury-in-fact. The

fundamental injury to Allco, in Melone's words, is

"not being able to get a contract," a deprivation

prefaced by not being able to "even bid for a

contract." The question is whether injury of this

nature constitutes "injury-in-fact" of the nature

necessary to create standing.

Counsel for the Commissioner represented at the

hearing that the State regulatory authorities have

been engaged on the 2015 RFP procurement process

for "two years," and "there are fifty bidders who have

already bid in." Oral Argument Tr. 29. Counsel

continued:

7 The

Defendants' theory is that the procurement procedure

implemented in the 2013 RFP and contemplated for the 2015

RFP is conducted pursuant to state law, in a fashion authorized

by federal law, and that PURPA has nothing to do with the

case. The PURA Defendants argue in a brief in Allco III [Doc.

46] at 8: "Connecticut is acting under express rights reserved to

the states under the FPA; PURPA does not apply to the 2015

RFP, and no law requires Connecticut [*46] to conduct

procurements under PURPA." This is a merits issue, which the

Court neither considers nor decides in an analysis of Allco's

standing to sue.

97a

This RFP, in order to get the best and cheapest

bids, the RFP was done in conjunction with the

efforts of Massachusetts and Rhode Island. We

are eighty-one percent of New England's load.

We asked for the best bids to meet this much

larger load in hopes of getting lower prices for

consumers. That was a deliberate — it's been two

years, six governors that have been involved in

this, fifty private bidders, all sorts of bid fees,

and the bid fees are only held firm under the

RFP for a short — certain period of time. . . . So

this is why the states can't really just stop right

now. Any injunction against the State of

Connecticut will halt the Massachusetts projects

and Rhode Island projects because they assume

that all three parties are working together.

That's how much we get the bids low.

Oral Argument Tr. 30.

To the extent that this submission by Defendants'

counsel was intended to demonstrate a balance of

hardships, it goes to a merits issue implicated by

Allco's motion for a preliminary injunction and is not

relevant to this standings analysis, with which

merits issues have nothing to do. "Our threshold

inquiry into standing in no way depends on the

merits of the plaintiff's claim." Whitmore v.

Arkansas, 495 U.S. 149, 155, 110 S. Ct. 1717, 109 L.

Ed. 2d 135 (1990) (citation and internal quotation

marks omitted). However, I consider this account on

the issue of Allco's injury-in-fact vel non because it

describes the competitive world in which Allco

contends it was wrongfully denied to right to

participate.

98a

Spokeo teaches that in order to satisfy standing, an

injury-in-fact must be "actual or imminent, not

conjectural or hypothetical." 136 S.Ct. at 1548

(quoting Lujan v. Defenders of Wildlife, 504 U.S.

555, 560, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992)).

In the case at bar, Allco alleges two separate but

related injuries in connection with the 2015 RFP: its

inability to bid for a contract with a utility company;

and its consequent inability to get such a contract. In

the parlance of the race track, horse racing parlance,

and thinking of Allco's smaller projects as race

horses, Allco complains that its horses were kept out

of the starting gate, and then prevented from

winning the race. In standing to sue parlance, the

first alleged injury is "actual or imminent"; indeed, it

is actual, since at the beginning of the 2015 RFP

procurement process the Defendants' conduct barred

the smaller Allco projects from participating in it.

The second injury — "not being able to get a

contract" — can only be characterized as "conjectural

or hypothetical." This asserted injury assumes,

without any supporting evidence in the record, that

if a barred Allco project had been allowed to

participate in a sizable field of energetic industry

competitors, the Defendants would have awarded

Allco with one of the few contracts resulting from the

process: an undistilled exercise in conjecture and

speculation.

The Second Circuit sounded that note in Allco II,

when it held that Allco lacked standing to challenge

the Defendants' identical implementation of the

2013 RFP:

99a

Allco lacks standing because that requested relief

does not redress its injury, i.e., its not being

selected for a Section 6 contract. Allco contends

that its preemption claim should be permitted

because it can redress its injuries simply by

invalidating the commissioner's prior selections

and voiding the contracts given to Fusion Solar

and Number Nine. But those forms of relief,

standing alone, fail to redress Allco's injuries, as

they do not make it "likely, as opposed to merely

speculative," that Allco will eventually receive a

Section 6 contract.

805 F.3d at 98 (quoting Friends of the Earth, Inc. v.

Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 181,

120 S. Ct. 693, 145 L. Ed. 2d 610 (2000)).

Reverting to the 2015 RFP, Allco alleges that the

Defendants' conduct of the 2015 procurement

process injured Allco in fact because its "qualifying

facilities," as defined by PURPA, were not allowed to

participate in the 2015 RFP by virtue of their small

size. The RFP, as structured by the DEEP

Commissioner, was only for qualifying facilities with

a minimum size of twenty megawatts, and twentysix of Allco's facilities are too small.8

Defendants counter that, because Plaintiff did not

participate in the 2015 RFP, it could not be injured

8 Even though the Court accepts for standing purposes that the

Plaintiff is attempting to enforce PURPA, the Court need not

decide that Plaintiff is correct that the bilateral contracts at

issue in this case cannot be pursued unless with QFs. See, e.g.,

Denney, 443 F.3d at 264 (2d Cir. 2006) ("[A]n injury-in-fact

need not be capable of sustaining a valid cause of action.")

100a

by it. Doc. 45, p. 5, Doc. 46, p. 6. Furthermore,

Defendants argue that even if some of Allco's

properties were not large enough to participate in

the 2015 RFP, there was a separate RFP addressed

to smaller facilities in which those owned by Allco

could have participated. Doc. 45, p. 5-6. Allco

responds that the RFP for smaller facilities would

provide only "a small fraction of what would be

available to Allco's QFs if the 2015 RFP complied

with federal law." Doc. 47, p. 6, n. 9.

I accept that although Allco did not bid into the 2015

RFP, it has demonstrated that it has suffered a

limited and discrete form of injury. That injury

results from Defendants' conduct in barring certain

Allco projects — although not all of them — from

participating in the procurement process. The

present issue is whether that particular injury is

sufficient to satisfy the injury-in-fact element in

evaluating Allco's standing to sue on the claims

asserted and for the relief demanded in these

actions. That further standing analysis appears

infra.

Allco asserts an additional sort of injury-in-fact. Its

contention, raised briefly at during oral argument, is

that the 2015 RFP has had an effect on the avoided

costs of Connecticut utilities that is adverse to Qfs.

Oral Argument Tr. 8. Allco alleges in its complaint

in Alco III:

Plaintiff will suffer injury-in-fact because there is

an increased risk that the Connecticut Utilities

long-term forecasted avoided costs will decrease

by the selection of non-Qualifying Facilities, thus

reducing the revenue that Plaintiff's Qualifying

101a

Facilities would receive under the utilities' must

buy obligation under Section 210 of PURPA.

Doc. 1, ¶ 52. Plaintiff further alleges in its

complaint:

Section 210(a) of PURPA provides all Qualifying

Facilities with a guaranteed federal right to sell

a QF's energy and capacity to electric utilities at

that utilities long-term forecasted avoided costs.

Section 210(f) of PURPA requires States to

implement that guaranteed federal right. Here,

by compelling wholesale transactions with nonQualifying Facilities, the calculation of those

long-term avoided costs will be adversely affected

injuring Allco's Qualifying Facilities' right to sell

at the rate that would have applied but for the

Defendants' unlawful actions.

Doc. 1, ¶ 78. As the Second Circuit explained, "[a]

state may regulate wholesale sales by qualifying

facilities, but those facilities must generally receive a

price for their electricity equal to the buying utility's

'avoided costs'— that is, those costs that the utility

would have otherwise incurred in procuring the

same quantity of energy from another source." Allco

II, 805 F.3d at 92 (citing 18 C.F.R. § 292.304(b)(2);

16 U.S.C. § 824a-3(b)).

In the case at bar, Defendants contend "[t]he utilities

have no cost structure for owned electric generation,

because they are no longer required to serve

customers with a portfolio of owned generation." Doc.

46, p. 7. Defendants assert that avoided costs are no

longer calculated "based upon a number of

contracts." Oral Argument Tr. 41. Defendants note

102a

instead that the current "cost measure is the

wholesale price at the independent system operator

of New England." Id. at p. 42.

This particular issue has not been briefed. I decline

to hold whether or not this theory gives rise an

injury-in-fact to Allco sufficient to satisfy the Article

III standing requirement. I note, without deciding,

that this is a problematic proposition. Even

assuming that avoided costs are affected by Section 6

or Section 7 contracts, the injury would not appear to

be either "concrete" nor "imminent," characteristics

requited by Spokeo and the other cited cases to

constitute an "injury-in-fact" under the rigorous

standing doctrine imposed by Article III.

D.

The other two elements of Article III standing,

traceability and redressability, must also be

considered. Allco must satisfy both of these

elements, as well as that of injury-in-fact.

Traceability is clearly satisfied and requires no

lengthy discussion. The element requires that a

plaintiff's injury-in-fact "is fairly traceable to the

challenged conduct of the defendant." Spokeo, 136

S.Ct. at 1547. Whatever injuries in fact Allco

suffered as a result of the structure and

implementation of the 2015 RFP are directly and

solely traceable to one or another of the Defendants,

who directed that structure and implementation.

Plaintiff does not fare as well with the element of

redressability. In the closely similar circumstances

of Allco II, the Second Circuit said: "To establish

103a

Article III standing, Allco must demonstrate: . . . (3)

redressability, or a non-speculative likelihood that

the injury can be remedied by the requested relief."

805 F.3d at 93. "It must be likely as opposed to

merely speculative, that the injury will be redressed

by a favorable decision." Lujan, 504 U.S. at 561

(citation and internal quotation marks omitted).

In Allco II, where Allco challenged the procurement

process attendant upon the 2013 RFP, the Second

Circuit noted that "Allco asserts as its primary

injury its not being selected for a Section 6 contract."

805 F.3d at 93. Allco had entered the 2013 RFP

bidding, without success. Its complaint included the

request for order "enjoining the Commissioner from

conducting future procurements that violate the

Federal Power Act or PURPA." Id. at 95. The district

court rejected that request. The Second Circuit held

that "we affirm the district court's dismissal of

Allco's claims seeking equitable relief regarding

future

procurements

conducted

by

the

Commissioner. For such relief to redress Allco's

injury, 'it must be likely, as well as merely

speculative', that Allco receive the Section 6 contract

that it seeks." Id. at 96 (citing and quoting Friends of

the Earth, 528 U.S. at 181)). That holding resonates

in the case at bar, where Allco has not entered the

2015 RFP bidding and the relief it seeks centers

upon future procurements. To the extent Allco seeks

by the present action to void any contracts that may

have been entered into under the 2015 process as of

the date of this Ruling, Allco runs into the obstacle

created by the Second Circuit in Allco II with respect

to the 2013 process:

104a

But invalidating the Section 6 contracts awarded

to Fusion Solar and Number Nine would simply

deny Allco's competitors a contractual benefit

without redressing Allco's injury — its not being

selected for a Section 6 contract. Because merely

voiding its competitors' contracts would not

redress Allco's injury, Allco also lacks standing to

seek such equitable relief.

805 F.3d at 98.

Allco argues on these motions that "if the State is

enjoined and prohibited from going through with the

RFP, and is required to issue a compliant RFP which

allows all qualifying facilities, and only qualifying

facilities, to participate, Allco's injuries would be

redressed. Allco's theory is that if this Court enjoins

Defendants from completing the 2015 RFP

procurement process, the State would then "be

required to" do "a compliant RFP" and Allco would

"have a path to redress our injury." Oral Argument

Tr. 51.

The "injury" at the end of the curative path Allco

seeks to travel is its being deprived of a Statedirected contract between Allco and a Connecticut

utility under the Section 6 statutory scheme. That

claimed injury is the raison d'etre of all this

litigation. Allco's theory of recovery depends upon

two layers of conjecture and speculation. First, Allco

conjectures that the DEEP Commissioner will issue

a new and different RFP, fully compliant with

PURPA, which would allow all Qualifying Facilities

(large and small) to bid for contracts. Second. Allco

conjectures that, having joined what appears to be a

105a

large field of electric energy competitors, Allco will

win the competition, be selected and anointed by the

Commissioner, and awarded a contract or contracts

with a utility. That is the prize upon which Allco

fastens its gaze. These gravamen of these actions is

that the Defendants have wrongfully placed that

prize beyond Allco's grasp.

The standing to sue problems are manifest. Allco

seems to expect — certainly it hopes — that the

Court will strike down the 2015 RFP issued by the

Commissioner in such a manner that the ruling will

force the State agency to "do a compliant RFP," a

phrase Mr. Melone used during the argument, by

which he means "compliant with PURPA."9 This

concept raises federalism concerns. There is nothing

in the Connecticut statute that would compel

Defendants to issue a new RFP if this Court

invalidates the present one. The authority of this

federal court to direct Connecticut agencies to

promulgate a revised electricity industry request for

proposals, in place of the present 2015 RFP, is not

readily discernible; and if that authority does not

exist, Allco's injury is not redressable by the Court.

Quite apart from that element, the conjectural and

speculative links in the chain connecting the

Defendants' challenged conduct to the principal

injury Allco alleges it suffered bring me to the

conclusion that, in the totality of circumstances, it

Allco II, the Second Circuit analyzed Allco's comparable

challenge to the 2013 RFP: "But under Allco's theory, the only

way in which it may obtain a Section 6 contract is for the

Commissioner to conduct a PURPA-compliant bidding process

." 805 F.3d at 94.

9 In

106a

cannot be said that the injury is (as it must be)

"actual and imminent,

not conjectural or

hypothetical." Spokeo, 136 S.Ct. at 1548.10

For the foregoing reasons, standing to sue analysis

in the cases at bar presents significant questions

with respect to the elements of injury-in-fact and

redressability. Allco, "as the party invoking federal

jurisdiction, bears the burden of establishing these

elements," and "must clearly allege facts

demonstrating each element." Id. at 1547. The Court

concludes that Allco fails to carry that burden on

both elements. A failure on either one would be

sufficient for decision. Allco lacks standing to assert

the claims and request the relief in question. That

will require dismissal of Count one in the complaints

in Allco III and Allco IV.

This analysis of Allco's jurisdictionally mandated

standing is not altered by Congress's inclusion in the

PURPA statute of a provision which authorizes the

bringing of the action. In Allco II the Second Circuit

said that "PURPA provides a private right of action

to 'qualifying cogenerator[s]' to enforce a state's

obligations under PURPA," citing 16 U.S.C. § 824a-

Allco II, 805 F.3d

at 94 n. 3, when it dismissed in a footnote certain other claims

Allco made in challenging the 2013 RFP procurement

procedure: "The PURPA sales that Allco fears it would make at

a lower price clearly did not occur at the time that the

complaint was filed, as they are future sales. There is also no

indication in the record that these future sales were imminent

when the complaint was filed. As such, this alternative theory

of injury is far too speculative to serve as the basis for an

Article III injury-in-fact."

10 The Second Circuit struck the same note in

107a

3(h)(2)(B). 805 F.3d at 92. The court of appeals noted

Allco's concession in Allco II (which related to the

2013 RFP) that "it does not rely on the private right

of action" under that statutory provision, but went

on to describe its structure anyway. A "qualifying

cogenerator" such as Allco may petition FERC to

enforce a state's requirements to comply with

PURPA. Allco did so. If FERC declines to act (as it

has done in the case at bar), § 824a-3(h)(2)(B)

provides that "the petitioner may bring an action in

the appropriate United States district court to

require such State regulatory authority . . . to

comply with such requirements." The district court

may then "issue such injunctive relief or other relief

as may be ap

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