Justia Utilities Law Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Louisville Gas & Electric Co. v. Federal Energy Regulatory Commission
The companies (Louisville) own and operate electric generation, transmission, and distribution facilities in Kentucky and Virginia; about 20 years ago, they joined MISO, which operates across 15 states (including Kentucky). Customers pay a single rate for access to transmission lines throughout the MISO service territory even if those lines are owned by multiple utilities. The Federal Energy Regulatory Commission approved a merger between the companies.The Commission later approved Louisville's withdrawal from MISO, requiring Louisville to provide its wholesale customers protections like those they enjoyed through MISO so that a transmission of energy from a within-MISO generator to the customer’s facilities would incur only one charge. Once Louisville withdrew, its wholesale customers could face two charges (pancaking): one from MISO for the trip from the power plant to the MISO/Louisville border, then another from Louisville for the trip to the final destination. Louisville contracted with its wholesale customers accordingly, including Owensboro’s municipally-owned utility. To secure backup service in case its coal-fired plant suffered outages, Owensboro bought reservations of transmission rights from MISO and another within-MISO generator and asked Louisville to absorb the costs, citing Louisville’s promise to “shield” wholesale customers from pancaking of transmission charges for certain transactions in which they purchased electricity from a within-MISO source for delivery in Louisville’s territory. Louisville refused,Owensboro brought a complaint before the Commission, 16 U.S.C. 825e. The Commission agreed that the contract required Louisville to absorb all the costs. The Sixth Circuit vacated. In "a straightforward case of contract interpretation," the Commission did not address the operative text but treated the matter as an invitation to make complex policy choices. View "Louisville Gas & Electric Co. v. Federal Energy Regulatory Commission" on Justia Law
Hurt v. Commerce Energy, Inc.
Plaintiffs were employed by Just Energy, a group of affiliated energy supply companies, as door-to-door solicitors. Just Energy paid them exclusively on a commission basis. Plaintiffs signed independent contractor agreements with confidentiality, non-disparagement, non-exclusive, and non-compete clauses; used a verbatim script with customers; were typically required to attend daily meetings; and were driven to the field in teams led by supervisors. Any work breaks were controlled by supervisors. Some Plaintiffs testified they were required to work on specific days and hours. They had to adhere to a dress code, wearing a shirt that prominently displays the company’s name. Just Energy could reject any customer’s application and commissions would not be paid. Of the 3,840 Plaintiffs with compensation data available, 214 made no money; 69% of the individuals made under $1,000 in total compensation.Plaintiffs sued, alleging that Just Energy misclassified them as outside salespeople in order to qualify for an exemption from the Fair Labor Standards Act (FLSA) and the Ohio Minimum Fair Wage Standards Act (OMFWSA). The court granted conditional class certification and instructed the jury “to consider the extent to which the employee has the authority to bind the company” and whether “the employer retains and/or exercises discretion to accept or reject any transactions for reasons that are unrelated to regulatory requirements.”The jury found Just Energy liable for minimum wage and overtime pay under the FLSA and the OMFWSA. The Sixth Circuit affirmed, noting that Just Energy retained discretion to reject the sale. Plaintiffs did not benefit from minimal supervision; their jobs did not comport with the purpose of the outside sales exemption. The court upheld the admission of compensation evidence and the jury instruction. View "Hurt v. Commerce Energy, Inc." on Justia Law
In re: FirstEnergy Solutions Corp.
FES distributes electricity, buying it from its fossil-fuel and nuclear electricity-generating subsidiaries. FES and a subsidiary filed Chapter 11 bankruptcy. The bankruptcy court enjoined the Federal Energy Regulatory Commission (FERC) from interfering with its plan to reject certain electricity-purchase contracts that FERC had previously approved under the Federal Power Act, 16 U.S.C. 791a or the Public Utilities Regulatory Policies Act, 16 U.S.C. 2601, applying the ordinary business-judgment rule and finding that the contracts were financially burdensome to FES. The counterparties were rendered unsecured creditors to the bankruptcy estate. The Sixth Circuit agreed that the bankruptcy court has jurisdiction to decide whether FES may reject the contracts, but held that the injunction was overly broad (beyond its jurisdiction) and that its standard for deciding rejection was too limited. The public necessity of available and functional bankruptcy relief is generally superior to the necessity of FERC’s having complete or exclusive authority to regulate energy contracts and markets. The bankruptcy court exceeded its authority by enjoining FERC from “initiating or continuing any proceeding” or “interfer[ing] with [its] exclusive jurisdiction,” given that it did not have exclusive jurisdiction. On remand, the bankruptcy court must reconsider and decide the impact of the rejection of these contracts on the public interest—including the consequential impact on consumers and any tangential contract provisions concerning such things as decommissioning, environmental management, and future pension obligations—to ensure that the “equities balance in favor of rejecting the contracts.” View "In re: FirstEnergy Solutions Corp." on Justia Law
Kentucky Waterways Alliance v. Kentucky Utilities Co.
Kentucky Utilities (KU) burns coal to produce energy, then stores the leftover coal ash in two man-made ponds. Environmental groups contend that the chemicals in the coal ash are contaminating the surrounding groundwater, which in turn contaminates a nearby lake, in violation of the Clean Water Act (CWA), 33 U.S.C. 1251(a), and the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6902(a). The Sixth Circuit affirmed, in part, the dismissal of their suit. The CWA does not extend liability to pollution that reaches surface waters via groundwater. A “point source,” of pollution under the CWA is a “discernible, confined and discrete conveyance.” Groundwater is not a point source. RCRA does, however govern this conduct, and the plaintiffs have met the statutory rigors needed to bring such a claim. They have alleged (and supported) an imminent and substantial threat to the environment; they have provided the EPA and Kentucky ninety days to respond to those allegations, and neither the EPA nor Kentucky has filed one of the three types of actions that would preclude the citizen groups from proceeding with their federal lawsuit, so the district court had jurisdiction. View "Kentucky Waterways Alliance v. Kentucky Utilities Co." on Justia Law
Boler v. Earley
Flint, which previously obtained water from DWSD, decided to join the Karegnondi Water Authority (KWA). The DWSD contract terminated in 2014. Because KWA would take years to construct, Flint chose the Flint River as an interim source. A 2011 Report had determined that river water would need to be treated to meet safety regulations; the cost of treatment was less than continuing with DWSD. Genesee County also decided to switch to KWA but continued to purchase DWSD water during construction. Flint did not upgrade its treatment plants or provide additional safety measures before switching. Residents immediately complained that the water “smelled rotten, looked foul, and tasted terrible.” Tests detected coliform and E. coli bacteria; the water was linked to Legionnaire’s disease. General Motors discontinued its water service, which was corroding its parts. Eventually, the city issued a notice that the drinking water violated standards, but was safe to drink. Subsequent testing indicated high levels of lead and trihalomethane that did not exceed the Safe Drinking Water Act (SDWA) Lead and Copper Rule’s “action level.” The tests indicated that corrosion control treatment was needed to counteract lead levels. The City Council voted to reconnect with DWSD; the vote was overruled by the state-appointed Emergency Manager. The EPA warned of high lead levels; officials distributed filters. Genesee County declared a public health emergency in Flint, advising residents not to drink the water. The Emergency Manager ordered reconnection to DWSD but the supply pipes' protective coating had been damaged by River water. Flint remains in a state of emergency but residents have been billed continuously for water. The Michigan Civil Rights Commission determined that the response to the crisis was “the result of systemic racism.” The Sixth Circuit reversed dismissal, as preempted by SDWA, of cases under 42 U.S.C. 1983. SDWA has no textual preemption of section 1983 claims and SDWA’s remedial scheme does not demonstrate such an intention. The rights and protections found in the constitutional claims diverge from those provided by SDWA. The court affirmed dismissal of claims against state defendants as barred by the Eleventh Amendment. View "Boler v. Earley" on Justia Law
Montgomery County. v. Federal Communications Commission
Over the last 10 years, the Federal Communications Commission has established rules governing how local governments may regulate cable companies. In 2007, the FCC barred franchising authorities from imposing unreasonable demands on franchise applicants or requiring new cable operators to provide non-cable services. The FCC also read narrowly the phrase “requirements or charges incidental to the awarding . . . of [a] franchise” (47 U.S.C. 542(g)(2)(D)), with the effect of limiting the monetary fees that local franchising authorities can collect. A petition for review was denied. Meanwhile, the FCC sought comment on expanding the application of the First Order’s rules—which applied only to new applicants for a cable franchise—to incumbent providers. In its Second Order, the FCC expanded the First Order’s application as proposed. Local franchising authorities again objected. The FCC finally rejected objections after seven years; the FCC clarified that the Second Order applied to only local (rather than state) franchising processes and published a “Supplemental Final Regulatory Flexibility Act Analysis.” Local governments sought review, arguing that the FCC misinterpreted the Communications Act, and failed to explain the bases for its decisions. The Sixth Circuit granted the petition in part; while “franchise fee” (section 542(g)(1)) can include noncash exactions, the orders were arbitrary to the extent they treat “in-kind” cable-related exactions as “franchise fees” under section 541(g)(1). The FCC’s orders offer no valid basis for its application of the mixed-use rule to bar local franchising authorities from regulating the provision of non-telecommunications services by incumbent cable providers. View "Montgomery County. v. Federal Communications Commission" on Justia Law
MISO Transmission Owners v. Federal Energy Regulatory Commission
MISO, a nonprofit association of utilities, manages electrical transmission facilities for its members. Beginning in 2006, the Federal Energy Regulatory Commission (FERC) approved changes to MISO’s Tariff that enabled it to authorize network expansion projects and divide the costs among the member utilities. Duke and American own Ohio and Kentucky utilities. In July 2009, American gave notice that it planned to withdraw from MISO. Duke followed suit in May 2010. Under the Tariff, a utility cannot withdraw from MISO any earlier than the last day of the year following the year it gives notice. Two months after Duke announced its intention to withdraw, MISO proposed a new category of more expensive expansion projects. FERC approved this revision to the Tariff. In August 2010, MISO authorized the first Multi-Value Project. In December 2011, weeks before Duke’s scheduled departure, MISO approved 16 projects, to cost billions of dollars. MISO proposed amending the Tariff, so that ex-members could be charged for the costs of Multi-Value Projects approved before their departure. FERC approved that revision prospectively, holding that the revision imposed new obligations on withdrawing members and could not apply to Duke and American to charge them for the Multi-Value Projects. Other MISO Transmission Owners appealed, claiming that FERC departed from the reasoning of its prior orders. The Sixth Circuit denied a petition for review, stating that there is no presumption that costs for the Multi-Value Projects should be allocated up front. View "MISO Transmission Owners v. Federal Energy Regulatory Commission" on Justia Law