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ALLEGHENY ELEC. COOP. v. POWER AUTH. OF NEW YORK

March 27, 1986.

ALLEGHENY ELECTRIC COOPERATIVE, INC., Plaintiff,
v.
POWER AUTHORITY OF the STATE OF NEW YORK, Defendant.



The opinion of the court was delivered by: CANNELLA

MEMORANDUM AND ORDER

CANNELLA, District Judge:

Defendant Power Authority of the State of New York's ["PASNY's"] motion to dismiss the complaint is granted. Fed.R.Civ.P. 12(b)(1).

 FACTS

 Plaintiff Allegheny Electric Cooperative, Inc. ["Allegheny"] is a nonprofit corporation that purchases or generates and then redistributes electrical power to distribution cooperatives in Pennsylvania. It is also the designated bargaining agent for Pennsylvania public power systems in their dealings with PASNY concerning the distribution of power from PASNY's Niagara Falls project. Defendant is a New York State agency that is involved in the generation, sale and transmission of electric power and energy.

 On January 30, 1958, the Federal Power Commission issued a license to PASNY for the Niagara Project No. 2216 ["Niagara Project"]. The marketing of power from this project is governed by the Niagara Redevelopment Act ["NRA"], 16 U.S.C. § 836, pursuant to which PASNY is required to allocate an amount of "preference power" equal to 50% of the project power to "public bodies and nonprofit cooperatives within economic transmission distance." 16 U.S.C. § 836(b)(1). Additionally, the NRA requires that PASNY provide up to 20% of this preference power to similar entities in neighboring states. 16 U.S.C. § 836(b)(2). *fn1"

 Allegheny brings this claim pursuant to the NRA, as well as the Federal Power Act ["FPA"], 16 U.S.C. § 791a, 825p, and general federal jurisdictional statutes, 28 U.S.C. §§ 1651, 1337. It claims that the most recent contracts allocating power among the various "neighboring states" are based upon erroneous determinations. A brief chronology of events is helpful in understanding the nature of plaintiff's complaint.

 In a series of five-year contracts beginning in 1966, Pennsylvania received an allocation of 86 megawatts of "firm" power and 21 megawatts of "peaking" power from the Niagara project. As the oil crisis inflated energy prices in the 1970s, the inexpensive hydroelectric power provided by the Niagara project became more sought after. See Power Authority v. F.E.R.C., 743 F.2d 93, 100 (2d Cir.1984) (detailing history of NRA). In 1980 Massachusetts, Connecticut, Ohio and Vermont all filed complaints with the Federal Energy Regulatory Commission ["FERC"], seeking greater allocations of the Niagara power. The administrative review procedure moved at a snail's pace so that FERC did not issue its opinion until March 27, 1985, three months before the 1980-1985 contracts were to expire. See Municipal Wholesale Elec. Co. v. Power Authority, 30 FERC P61,323 (Mar. 27, 1985) ["Opinion No. 229"]. Meanwhile negotiations for the 1985-1990 contracts had proceeded and on the same date PASNY submitted to Governor Mario Cuomo of New York State the proposed contracts for the new term. The allocation for Pennsylvania under these proposed calculations would have remained essentially the same as in previous years. On approximately June 27, 1985, Allegheny received notice that PASNY had recalculated the contracts to conform with FERC's Opinion No. 229 and designated an interim allocation for Pennsylvania of 26.6 megawatts of "firm" power and 5.6 megawatts of "peaking" power -- an amount significantly less than that previously allocated to the state. This interim allocation took effect on July 1, 1985.

 On June 29, 1985 Allegheny sought a temporary restraining order before Judge Mary J. Lowe of this district, who was then sitting in Part I. She denied the motion on the grounds that there was no irreparable harm and appeared to be no jurisdiction. Plaintiff then filed this complaint, identical to that attached to the motion before Judge Lowe.

 Shortly thereafter FERC issued an opinion upon reconsideration, Massachusetts Municipal Wholesale Elec. Co. v. Power Authority, 32 FERC P61,194 (July 30, 1985) ["Opinion 229A"]. FERC essentially reaffirmed its prior opinion, clarifying one section not relevant to this action. On August 1, 1985, Allegheny filed a petition for review of the FERC decision in the United States Court of Appeals for the District of Columbia Circuit.

 Allegheny claims in the instant action that in calculating the 1985-1990 contracts, PASNY overestimated the number of customers in Ohio and Vermont who are served by preference entities that have "the capability of receiving power" from the Niagara project. Specifically, Allegheny alleges that the Ohio interim allocation wrongly included about 200,000 customers of municipal systems who cannot receive Niagara power because no transmissions arrangements have been made and another 200,000 who would incur substantial economic penalties under their existing power supply contracts if they took power from PASNY.

 Additionally, Allegheny alleges that 175,000 of the 225,000 Vermont customers actually receive power from privately owned utility companies. In Opinion 229, FERC specifically disqualified the Vermont Department of Public Service ["DPS"] from eligibility to receive Niagara preference power to the extent that it sold its preference power to private utilities. FERC based its ruling on its conclusion that the NRA required a "public body capable of receiving preference power" to distribute that power directly to consumers rather than through private utility companies. On April 23, 1985, however, between the issuance of Opinions 229 and 229A, the Vermont legislature passed a bill that authorizes the DPS to distribute Niagara preference power directly to the consumers. See Vt.Stat.Ann. tit. 30, § 212a. *fn2" FERC declined to rule upon this new arrangement in Opinion 229A. Instead, it stated that it would "leave it to PASNY in the first instance to determine the legality of such arrangements. We will exercise our responsibilities to resolve any disputes as they arise through the complaint process." Opinion 229A, 32 FERC at P61,451 n. 12. Accordingly, FERC has not ruled upon the current interim allocations. Plaintiff now argues that the new Vermont scheme is still a "sham" operation such that much of the preference power it receives is still going through private utilities. *fn3" Plaintiff seeks an injunction against implementation of the interim allocations to the extent that Ohio and Vermont receive more power than that actually distributed to eligible consumers.

 DISCUSSION

 Defendant moves for dismissal on the ground that FERC has exclusive jurisdiction over disputes arising out of the allocation of power to neighboring states. Plaintiff contends that the federal court has concurrent jurisdiction and the case presents only a question of law, which can be decided by the federal court without recourse to any specialized knowledge of an administrative agency. It also relies upon the enforcement ...


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