Case: 17-17531, 04/02/2018, ID: 10821327, DktEntry: 13-1, Page 1 of 111 IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT WINDING CREEK SOLAR LLC, Case No. 17-17531 Plaintiff-Appellant, On Appeal from the United States v. District Court for the Northern District of California CARLA PETERMAN; MARTHA No. 3:13-cv-04934-JD GUZMAN ACEVES; LIANE Hon. James Donato RANDOLPH; CLIFFORD RECHTSCHAFFEN; MICHAEL PICKER, in their official capacities as Commissioners of the California Public Utilities Commission, Defendants-Appellees. Case No. 17-17532 WINDING CREEK SOLAR LLC, On Appeal from the United States Plaintiff-Appellee, District Court for the Northern District v. of California No. 3:13-cv-04934-JD CARLA PETERMAN; MARTHA Hon. James Donato GUZMAN ACEVES; LIANE RANDOLPH; CLIFFORD RECHTSCHAFFEN; MICHAEL PICKER, in their official capacities as Commissioners of the California Public Utilities Commission, Defendants-Appellants. APPELLANT’S FIRST BRIEF ON CROSS-APPEAL Thomas Melone ALLCO RENEWABLE ENERGY LTD. 1740 Broadway, 15th Floor New York, NY 10019 Telephone: (212) 681-1120 Email: [email protected] Attorneys for Appellant WINDING CREEK SOLAR LLC Case: 17-17531, 04/02/2018, ID: 10821327, DktEntry: 13-1, Page 2 of 111 CORPORATE DISCLOSURE STATEMENT Winding Creek Solar LLC is 100% owned by Allco Finance Limited, which is a privately held company in the business of developing solar energy projects. Allco Finance Limited has no parent companies, and no publicly held company owns 10 percent or more of its stock. /s/ Thomas Melone i Case: 17-17531, 04/02/2018, ID: 10821327, DktEntry: 13-1, Page 3 of 111 TABLE OF CONTENTS CORPORATE DISCLOSURE STATEMENT .................................................... i TABLE OF AUTHORITIES ............................................................................. iv TABLE OF ACRONYMS .............................................................................. vii INTRODUCTION .............................................................................................. 1 JURISDICTIONAL STATEMENT .................................................................... 3 STATUTORY AND REGULATORY AUTHORITIES .................................... 4 STATEMENT OF ISSUES ................................................................................ 4 STATEMENT OF THE CASE ........................................................................... 5 A. The Parties ..................................................................................................... 5 B. Federal Statutory and Regulatory Background ............................................. 5 C. State Implementation of PURPA ................................................................ 10 D. PURPA’s Enforcement Mechanisms .......................................................... 11 E. California’s Implementation of PURPA and the Re-MAT Program.......... 12 1. California’s Implementation of PURPA ..................................................... 12 2. The Re-MAT Program ................................................................................ 15 a. The Queue ............................................................................................... 16 b. Quantity Caps .......................................................................................... 16 c. Re-MAT Pricing ...................................................................................... 18 F. Winding Creek’s Participation in the Re-MAT .......................................... 20 G. PURPA’s Key Role In Reducing Greenhouse Gas Emissions ................... 21 H. Proceedings Below ...................................................................................... 23 SUMMARY OF ARGUMENT ............................................................................... 24 ARGUMENT ........................................................................................................... 25 I. Standard Of Review .................................................................................. 25 II. The District Court Correctly Invalidated the Caps and Pricing Adjustments of the Re-MAT ..................................................................... 26 A. The District Court Correctly Concluded That The Re-MAT Caps Flatly Violate PURPA’s Must-Take Obligation .......................... 26 B. The District Court Correctly Concluded That Pricing ii Case: 17-17531, 04/02/2018, ID: 10821327, DktEntry: 13-1, Page 4 of 111 Adjustments Under Re-MAT Are Not Based On A Utility’s “Avoided Costs” And Thus Are Void .................................................. 29 1. Avoided Costs For Purposes Of 18 C.F.R. §292.304(d)(2) Are The Costs A Utility Would Incur For Purchasing Energy And Capacity From A Non-QF Source ............................................ 29 2. The Re-MAT Pricing Adjustment Bears No Relation To Avoided Costs ................................................................................. 32 C. The District Court Correctly Held That The Standard Contract Program Does Not Comply With 18 C.F.R. §292.304(d)(2)(ii)) ......... 39 III. The District Court Has The Authority To Order, And Should Have Ordered, That Winding Creek Be Placed In The Position It Would Have Been In “But For” The Unlawful Re-MAT Bi-Monthly Cap ........... 50 A. The District Court Has The Power To Order Relief To Eliminate The Ongoing Irreparable Harm To Winding Creek .............................. 51 B. The District Court’s Justification For Failing To Exercise Its Remedial Powers Do Not Withstand Scrutiny ...................................... 55 CONCLUSION ................................................................................................ 59 STATEMENT OF RELATED CASES CERTIFICATE OF COMPLIANCE ADDENDUM iii Case: 17-17531, 04/02/2018, ID: 10821327, DktEntry: 13-1, Page 5 of 111 TABLE OF AUTHORITIES CASES Allco Renewable Energy Ltd., v. MA Elec. Co., 875 F.3d 64 (1st Cir. 2017) ..................................................................... 50, 58, 59 Am. Paper Inst., Inc. v. Am. Elec. Power Serv. Corp., 461 U.S. 402 (1983)... .................................................................... .7, 8, 10, 32, 38 BCPeabody Constr. Servs., Inc. v. United States, 112 Fed. Cl. 502 (2013) ........... 53 City of Redding v. FERC, 693 F.3d 828 (9th Cir. 2012) ........................................ 11 Delta Data Sys. Corp. v. Webster, 744 F.2d 197 (D.C. Cir. 1984) .................. 52, 53 FERC v. Mississippi, 456 U.S. 742 (1982) ............................................................... 6 Husain v. Olympic Airways, 316 F.3d 829 (9th Cir. 2002) aff’d 540 U.S. 644 (2004) .................................................................................. 25 Indep. Energy Prods. Ass’n v. Cal. Pub. Utils. Comm’n, 36 F.3d 848 (9th Cir. 1994) ................................................ 12, 13, 15, 32, 33, 38 Juliana v. United States, 217 F. Supp. 1224 (D. Ore. 2016) ................................... 54 Leboeuf v. Abraham, 347 F.3d 315 (D.C. Cir. 2004) ....................................... 52, 53 Mid. Atl. Storage Sys. v. City of Milton, 903 F. Supp. 995 (S.D. W. Va. 1995) .................................................................................................................. 53 Nat'l Mall Tours of Wash., Inc. v. United States DOI, 862 F.3d 35 (D.C. Cir. 2017) ................................................................................................................. 52 Portland General Elec. Co. v. FERC, 854 F.3d 692 (D.C. Cir. 2017) ............. 57, 58 Semancik v. United Mine Workers, 466 F.2d 144 (3d Cir. 1972) .......................... 54 Solutions for Utilities, Inc v. Cal. Pub. Util. Comm’n, No. CV 11-04975, 2016 U.S. Dist. LEXIS 17998, 2016 WL 7613906 (C.D. Cal. 2016) ............... 58 Szajer v. City of Los Angeles, 632 F.3d 607 (9th Cir. 2011) .................................. 25 Ulstein Maritime, Ltd. v. United States, 833 F.2d 1052 (1st Cir. 1987) ................. 53 Wheelabrator Lisbon, Inc. v. Conn. DPUC, 53 F.3d 183 (2d Cir. 2008) ............... 10 STATUTES Public Utility Regulatory Policies Act, Pub. L. No. 95-617, 92 Stat. 3117 ............. 1 16 U.S.C. §791a ......................................................................................................... 3 16 U.S.C. §796(17)(C) (FPA Section 3(17)(C)) ........................................................ 1 16 U.S.C. §824d (FPA Section 205) ........................................................................ 10 iv Case: 17-17531, 04/02/2018, ID: 10821327, DktEntry: 13-1, Page 6 of 111 16 U.S.C. §824e (FPA Section 206) ........................................................................ 10 16 U.S.C. §824a-3 (PURPA Section 210) ............................................................. 5, 6 16 U.S.C. §824a-3(a) (PURPA Section 210(a)) ............................................ 7, 10, 12 16 U.S.C. §824a-3(b) (PURPA Section 210(b)) ................................................. 7, 30 16 U.S.C. §824a-3(f)(1) (PURPA Section 210(f)) ............................................ 10, 11 16 U.S.C. §824a-3(g) (PURPA Section 210(g)) .................................... 11, 55, 56, 58 16 U.S.C. §824a-3(h) (PURPA Section 210(h)) .......................................... 11, 55, 56 16 U.S.C. §824a-3(h)(2) (PURPA Section 210(h)(2)) ........................................ 3, 57 16 U.S.C. §824a-3(h)(2)(A) (PURPA Section 210(h)(2)(A)) ....................... 3, 11, 58 16 U.S.C. §824a-3(h)(2)(B) (PURPA Section 210(h)(2)(B)) .............. 2,3,