IN the UNITED STATES COURT of APPEALS for the THIRD CIRCUIT Nos
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IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT Nos. 13-4330, 13-4394 & 13-4501 (consolidated) PPL ENERGYPLUS, LLC, et al., v. LEE A. SOLOMON, in his official capacity as President of the New Jersey Board of Public Utilities, et al. v. CPV POWER DEVELOPMENT, INC.; HESS NEWARK, LLC CPV POWER DEVELOPMENT, INC., Appellant in No. 13-4330 HESS NEWARK, LLC, Appellant in No. 13-4394 LEE A. SOLOMON, et al., Appellants in No. 13-4501 Appeal from Judgment of the U.S. District Court for the District of New Jersey, No. 3:11-cv-00745-PGS (Hon. Peter G. Sheridan) OPENING BRIEF FOR CPV POWER DEVELOPMENT, INC. Larry F. Eisenstat Clifton S. Elgarten Richard Lehfeldt Jennifer N. Waters CROWELL & MORING LLP 1001 Pennsylvania Avenue, N.W. Washington, DC 20004 Tel: (202) 624-2500 Fax: (202) 628-5116 Counsel for Intervenor-Appellant CPV Power Development, Inc. TABLE OF CONTENTS Page TABLE OF AUTHORITIES ................................................................................... iv JURISDICTIONAL STATEMENT ..........................................................................1 ISSUES PRESENTED...............................................................................................1 STATEMENT OF RELATED CASES.....................................................................2 STATEMENT OF THE CASE..................................................................................2 STATEMENT OF FACTS ........................................................................................5 A. Historical Background...........................................................................5 B. Faced With Serious Concerns About Future Availability, Reliability And Long-Term Affordability Of Electric Power, New Jersey Enacted The LCAPP Act To Encourage Construction Of New, Efficient Electric Generation Facilities. ...........7 C. Standard Offer Capacity Agreements ...................................................9 D. FERC’s Role Under The Federal Power Act ......................................10 E. FERC And PJM Took Steps To Ensure That The LCAPP Act Would Not Interfere With The PJM Auctions Or Otherwise Undermine Either The PJM Capacity Market Or State Authority. ............................................................................................13 F. The District Court Decision ................................................................15 STANDARD OF REVIEW .....................................................................................16 SUMMARY OF ARGUMENT ...............................................................................16 ARGUMENT ...........................................................................................................20 I. THE LCAPP ACT DOES NOT INVADE ANY FEDERALLY OCCUPIED FIELD.......................................................................................22 i A. Congress Expressly Preserved The States’ Longstanding Responsibility To Ensure And Support Construction Of Power Plants And To Regulate Retail Electricity Rates. ...............................23 1. The FPA Divides Authority Between The States And FERC, Expressly Preserving State Power. ...............................23 2. Congress And FERC Have Consistently Preserved State Authority Over Both Generation And Retail Rates..................25 B. Because New Jersey Acted Squarely Within Its Jurisdiction In Seeking To Encourage New Power Plant Construction, Backed By The Ratepayers, Any Indirect Effect On FERC Initiatives Does Not Give Rise To Preemption....................................................28 1. Under The FPA, A State Does Not Enter A Federal Field If Its Enactments, Exercising Its Traditional Authority, Merely Affect FERC Initiatives................................................28 2. New Jersey Acted Well Within Its Jurisdiction Over The Supply Of Generation Capacity................................................31 C. The LCAPP Act Does Not Permit New Jersey To Operate Within FERC’s Jurisdiction. ...............................................................33 1. FERC’s Supervision Of The RPM Auction Does Not Displace State Efforts To Encourage The Building Of New Power Plants.....................................................................33 2. New Jersey Did Not Set Prices For The Wholesale Purchase Or Sale Of Capacity...................................................36 II. THE LCAPP ACT OBSTRUCTS NO FEDERAL PURPOSE OR PROGRAM....................................................................................................46 A. Under The FPA, A Claim That The LCAPP Act Is Conflict- Preempted Because It Stands As An Obstacle To A Federal Program Faces Formidable Hurdles....................................................47 B. FERC’s Views And Actions Leave No Basis For Suggesting A Conflict................................................................................................49 ii 1. FERC Has Plainly And Repeatedly Stated That Neither Its Approval Of PJM’s Capacity Market Nor The Design Or Purpose Of Such Market Displaces States’ Traditional Authority Over Resource Adequacy.........................................51 2. FERC Approved New Market Rules So As To Avoid Any Conflict With The LCAPP Act And Pronounced Itself Satisfied With The Results. .............................................52 C. The District Court Found Conflict Where None Exists......................54 CONCLUSION........................................................................................................56 iii TABLE OF AUTHORITIES Cases Page(s) Altria Grp., Inc. v. Good, 555 U.S. 70 (2008)..............................................................................................22 Ark. Elec. Coop. Corp. v. Ark. Pub. Serv. Comm’n, 461 U.S. 375 (1983)......................................................................................43, 44 Ark. La. Gas Co. v. Hall, 453 U.S. 571 (1981)......................................................................................23, 42 Chamber of Commerce of the U.S. v. Whiting, 131 S. Ct. 1968 (2011)............................................................................41, 49, 50 Cipollone v. Liggett Grp., Inc., 789 F.2d 181 (3d Cir. 1986) .........................................................................48, 51 City of Arlington, Tex. v. F.C.C., 133 S. Ct. 1863 (2013)........................................................................................50 Conn. Dep’t of Pub. Util. Control v. FERC, 569 F.3d 477 (D.C. Cir. 2009).....................................................................passim Conn. Light & Power Co. v. Fed. Power Comm’n, 324 U.S. 515 (1945)......................................................................................25, 44 Elassaad v. Independence Air, Inc., 613 F.3d 119 (3d Cir. 2010) ...............................................................................16 Exxon Corp. v. Governor of Md., 437 U.S. 117 (1978)............................................................................................44 Farina v. Nokia, Inc., 625 F.3d 97 (3d Cir. 2010) .................................................................................22 Fed. Power Comm'n v. S. Cal. Edison Co., 376 U.S. 205 (1964)............................................................................................23 Fellner v. Tri-Union Seafoods, LLC, 539 F.3d 237 (3d Cir. 2008) .........................................................................44, 45 iv FERC v. Mississippi, 456 U.S. 742 (1982)............................................................................................26 Freightliner v. Myrick, 514 U.S. 280 (1995)............................................................................................44 Gade v. Nat’l Solid Wastes Mgm’t Ass’n, 505 U.S. 88 (1992)........................................................................................20, 21 Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S. 707 (1985)............................................................................................48 Holk v. Snapple Beverage Corp., 575 F.3d 329 (3d Cir. 2009) .........................................................................22, 36 Ky. W. Va. Gas Co. v. Pa. Pub. Util. Comm’n, 837 F.2d 600 (3d Cir. 1988) ...............................................................................43 Lindsey v. Caterpillar, Inc., 480 F.3d 202 (3d Cir. 2007) .........................................................................22, 49 Mabey Bridge & Shore, Inc. v. Schoch, 666 F.3d 862 (3d Cir. 2012) ...............................................................................16 MD Mall Assocs., LLC v. CSX Transp., Inc., 715 F.3d 479 (3d Cir. 2013) ...............................................................................48 Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996)......................................................................................21, 48 Miss. Power & Light Co. v. Mississippi ex rel. Moore, 487 U.S. 354 (1988)..........................................................................37, 42, 43, 50 Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953 (1986)............................................................................................43 NE Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333 (3d Cir. 2001) ...................................................................21, 45, 51 New York v. FERC, 535 U.S. 1 (2002).........................................................................................passim NRG Power Mktg., LLC v. Me. Pub.