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In re FirstEnergy Solutions Corp.

United States Court of Appeals, Sixth Circuit

December 12, 2019

In re: FirstEnergy Solutions Corp., et al. Debtors.
v.
FirstEnergy Solutions Corp.; FirstEnergy Generation, LLC; Official Committee of Unsecured Creditors; Ad Hoc Noteholders Group; Pass-Through Certificateholders, Appellees. Federal Energy Regulatory Commission (18-3787); Ohio Valley Electric Corporation (18-3788 & 18-4095); Duke Energy Ohio, Inc. (18-4097); Office of The Ohio Consumers' Counsel (18-4107); Maryland Solar Holdings, Inc. (18-4110), Appellants,

          Argued: June 26, 2019

          Appeal from the United States Bankruptcy Court for the Northern District of Ohio at Akron. Nos. 5:18-bk-50757; 5:18-ap-05021-Alan M. Koschik, Judge.

         ARGUED:

          Joseph F. Busa, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant Federal Energy Regulatory Commission.

          Erin E. Murphy, KIRKLAND & ELLIS LLP, Washington, D.C., for Appellant Ohio Valley Electric Corporation.

          David A. Beck, CARPENTER LIPPS & LELAND LLP, Columbus, Ohio, for Appellant Office of the Ohio Consumers' Counsel.

          Gary M. Kaplan, FARELLA BRAUN MARTEL LLP, San Francisco, California, for Appellant Maryland Solar Holdings, Inc. Pratik A. Shah, AKIN GUMP STRAUSS HAUER & FELD LLP, Washington, D.C., for Appellees.

         ON BRIEF:

          Joseph F. Busa, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellant Federal Energy Regulatory Commission.

          Erin E. Murphy, Subash S. Iyer, Kasdin M. Mitchell, KIRKLAND & ELLIS LLP, Washington, D.C., Mark McKane, P.C., KIRKLAND & ELLIS LLP, San Francisco, California, for Appellant Ohio Valley Electric Corporation.

          Matthew A. Fitzgerald, MCGUIREWOODS LLP, Richmond, Virginia, John H. Thompson, MCGUIREWOODS LLP, Washington, D.C., Aaron G. McCollough, MCGUIREWOODS LLP, Chicago, Illinois, for Appellant Duke Energy Ohio, Inc. David A. Beck, Michael N. Beekhuizen, CARPENTER LIPPS & LELAND LLP, Columbus, Ohio, Candice Kline CARPENTER LIPPS & LELAND LLP, Chicago, Illinois, for Appellant Office of the Ohio Consumers' Counsel.

          Pratik A. Shah, Z.W. Julius Chen, Lide E. Paterno, AKIN GUMP STRAUSS HAUER & FELD LLP, Washington, D.C., John C. Fairweather, Lisa S. DelGrosso, BROUSE MCDOWELL, LPA, Akron, Ohio, David M. Zensky, Brian T. Carney, AKIN GUMP STRAUSS HAUER & FELD LLP, New York, New York, Gary Svirsky, Janine Panchok-Berry, O'MELVENY & MYERS LLP, New York, New York, Michael J. Kaczka, MCDONALD HOPKINS LLC, Cleveland, Ohio, Andrew Parlen, LATHAM & WATKINS LLP, New York, New York, Amy Caton, Paul Bradley O'Neill, Joseph A. Shifer, KRAMER LEVIN NAFTALIS & FRANKEL LLP, New York, New York, Aaron Renenger, Erin Elizabeth Dexter, MILBANK LLP, Washington, D.C., Alexander B. Lees, MILBANK LLP, New York, New York, Rocco I. Debitetto, Christopher B. Wick, HAHN LOESER & PARKS LLP, Cleveland, Ohio, for Appellees.

          Howard A. Learner, ENVIRONMENTAL LAW & POLICY CENTER, Chicago, Illinois, Donald B. Verrilli Jr., MUNGER, TOLLES & OLSON LLP, Washington, D.C., for Amici Curiae.

          Before: BATCHELDER, GRIFFIN, and DONALD, Circuit Judges.

          OPINION

          ALICE M.BATCHELDER, CIRCUIT JUDGE.

         FirstEnergy Solutions Corp. (FES) and a subsidiary filed Chapter 11 bankruptcy and initiated an adversary proceeding to enjoin the Federal Energy Regulatory Commission (FERC) from interfering with its plan to reject certain electricity-purchase contracts that FERC had previously approved under the authority of the Federal Power Act (FPA), 16 U.S.C. § 791a, et seq., and/or the Public Utilities Regulatory Policies Act (PURPA), 16 U.S.C. § 2601, et seq. FERC opposed the action. Several other parties intervened to oppose the action as well, including three counterparties to those contracts (Ohio Valley Electric Corp. (OVEC), Duke Energy, and Maryland Solar Holdings Inc.) and the Ohio Consumers' Counsel.

         The bankruptcy court decided that it had exclusive and unlimited jurisdiction, while FERC had no jurisdiction, and enjoined FERC from taking any action relating to the contracts. The bankruptcy court then applied the ordinary business-judgment rule and found that the contracts were financially burdensome to FES, so it permitted FES to reject them, rendering the contracts "breached" and the counterparties unsecured creditors to the bankruptcy estate. Each of the opponents appealed and sought leave to appeal directly to the Sixth Circuit, which we granted. We consolidated the appeals, which arise from both the injunction and contract-rejection orders.

         The questions here concern the status of these federal-agency-endorsed contracts in bankruptcy proceedings, the nature and extent of jurisdiction as between the bankruptcy court and the federal agency (FERC), and the proper standard for deciding a Chapter 11 debtor's request to reject such contracts. We conclude that the bankruptcy court has jurisdiction to decide whether FES may reject the contracts, but that its injunction of FERC in this case was overly broad (beyond its jurisdiction), and its standard for deciding rejection was too limited. Therefore, we AFFIRM in part, REVERSE in part, and REMAND to the bankruptcy court for further consideration.

         I.

         FES distributes electricity, buying it from its fossil-fuel and nuclear electricity-generating subsidiaries and selling it to retail clients, corporate affiliates, and in the PJM[1] spot market. FES has 1.3 million customers in six states and a total capacity of 10, 000 megawatts (MW).

         Since at least 2003, regulations have required FES to buy a certain amount of "renewable energy credits" (RECs). But back in 2003, and until at least 2011, three things were very different than they are now: (1) FES's retail electricity sales were much greater, so its REC requirements were correspondingly greater; (2) the supply of RECs was more limited, so FES was compelled to enter long-term contracts to get enough RECs at an agreeable price; and (3) electricity prices were much higher and were expected to remain high. To ensure a long-term supply of RECs, FES signed eight power purchase agreements (PPAs), totaling 500 MW of gross capacity (though an effective capacity of only 75 MW because renewable energy capacity is more intermittent[2]). Under these PPAs, FES purchased the RECs (and the power, capacity, and ancillary services) from wind- and solar-based generating facilities, such as Duke and Maryland Solar. Also, FES signed three of the PPAs (93 MW of energy) to satisfy a subsidiary's consent decree with the United States Environmental Protection Agency (USEPA).[3]

         In recent years, however, the government has relaxed the REC requirements; there is an abundance of RECs available for purchase; and energy and capacity prices are much lower. These market changes rendered the PPAs financially burdensome to FES, which is in the process of selling (or has sold) its entire retail business and has no commercial or regulatory need for the RECs from these PPAs-it estimates that it is losing $46 million per year on these PPAs.[4]

         Several years ago, FES also entered into a multi-party intercompany power purchase agreement (referred to in this case as "ICPA," for "inter-company power agreement") with 12 other companies, including Duke, in which each participant agreed to a proportionate stake in the electricity production from and management, maintenance, and ultimate decommissioning of OVEC's fossil-fuel-based electricity generating plants. As with the PPAs, FES no longer needs the electricity from this contract and these prices are very high. FES's stake is 4.85%, under which FES expects to lose approximately $268 million over the remaining term (i.e., until 2040).[5]

         In March 2018, FES filed for bankruptcy under Chapter 11 and immediately (the next day) filed an adversary complaint against FERC, seeking (1) a declaratory judgment that the bankruptcy court's jurisdiction is superior to FERC's and (2) injunctions prohibiting FERC from interfering with its intended rejection of the ICPA and the PPAs (i.e., forbidding FERC from ordering it to continue to perform under those contracts) and prohibiting FERC from even conducting any proceedings concerning those contracts (i.e., preventing FERC's regulatory mandated hearings about them). FES argued that this was just a piece of its overall bankruptcy restructuring[6] and it was necessary for it to reject these contracts to implement a successful reorganization; but, if FERC prevented (or even delayed) that rejection, then FES could not overcome the ongoing expense of the contracts.

         FES emphasized that its problem with these contracts was not just the prices of the electricity and RECs. Rather, FES has no need (or use) for the electricity, the RECs, or the standby capacity from these contracts. FES's retail electricity sales dictate its regulation-based need for RECs, but it is now selling less than half of the retail electricity it sold in 2013 and is trying to leave (or has left) the retail business entirely. Even if it were not leaving this business, FES has enough surplus RECs in inventory to cover its retail business for years. FES explained that none of FES's customers-or any consumer-would lose electricity without the ICPA or the PPAs. In 2017, the total electricity bought under these contracts was just 0.2% of the PJM market (i.e., 1.9 of 767 terawatt hours, TWh). And FES insisted that the contract counterparties could easily sell their electricity to other wholesale purchasers or into the PJM regional wholesale electric markets.

         Four interested parties (OVEC, Duke, Maryland Solar, and OCC) intervened and joined FERC in arguing against the requested declaratory judgment (i.e., against the bankruptcy court's having exclusive jurisdiction) and against the injunctions (i.e., against the claim that the automatic stay provision or the bankruptcy court's power to protect its orders justified the injunction). They argued that the FPA gave FERC exclusive jurisdiction over energy contracts; that once a contract has been filed with FERC, the "filed-rate doctrine" holds that FERC and only FERC can modify or abrogate that contract; and that the "Mobile-Sierra doctrine" holds that FERC may only do so if it finds that the contract is not just and reasonable, in that it seriously harms the public interest. Therefore, they argued, FERC has exclusive jurisdiction to determine whether the contracts could be abrogated; or, alternatively, concurrent jurisdiction to determine the public-interest aspect of FES's intended rejection. They argued that Chapter 11's automatic stay provision did not apply because FERC's authority over these filed contracts fell within the "regulatory powers" exception, nor could the bankruptcy court overcome FERC's congressionally granted authority to regulate such filed contracts and the parties to these contracts. Basically, if these appellants had their way, FERC would hold a hearing to determine whether rejection of the contracts would harm the public interest and, if so, FERC would either-under an exclusive-jurisdiction theory-forbid the rejection (i.e., compel FES to continue to perform the contracts), or-under a concurrent-jurisdiction theory-provide the bankruptcy court with a statutory-based reason to deny the rejection (i.e., compel FES to assume the contracts in bankruptcy). Of course, if FERC were to determine that rejecting the contracts did not seriously harm the public interest, then, presumably, it would cede the decision to the bankruptcy court.[7] FES says that, because time is money, it can neither wait for FERC to conduct such a hearing (and issue a decision) nor risk a FERC order disallowing rejection (and then wait to conclude an appeal of such a FERC decision).

         The bankruptcy court acted immediately, issuing a temporary restraining order while it pondered the motions. At a hearing on May 11, 2018, the court recognized that OVEC had already (prior to FES's bankruptcy filing[8]) moved FERC to assert its jurisdiction over the contracts (as superior to the bankruptcy court's jurisdiction), confirm the contracts, and order FES to continue performing. The bankruptcy court found that, while OVEC's request "may incidentally serve the public interest," it would more substantially adjudicate private rights of the counterparties so as to "result in a pecuniary advantage to [them] vis-à-vis other creditors . . . contrary to the Bankruptcy Code's priorities," and that was "the obvious and dominant purpose of the FERC proceeding."[9] The court concluded that the automatic stay, 11 U.S.C. § 362(a), stopped "the FERC proceeding an[d] the commencement of any similar proceeding before FERC, notwithstanding the [regulatory] powers exception to the automatic stay in [] § 362(b)(4)," and that § 105(a) alternatively authorized it to impose the same injunction. The bankruptcy court enjoined FERC from:

(1)"initiating or continuing any proceeding, "
(2)"issuing any order, to require or coerce [FES] to continue performing [the contracts] or limiting [FES] to seeking abrogation . . . under the [FPA]," or
(3)"interfer[ing] with th[e] [bankruptcy] [c]ourt's exclusive jurisdiction."

         Given the breadth of this injunction, FERC did nothing further.

         On May 18, 2018, the bankruptcy court issued a lengthy opinion in support of that order. In re FirstEnergy, No. 18-50757, 2018 WL 2315916 (Bankr.N.D.Ohio. May 18, 2018). The court cited Chao v. Hospital Staffing Services, Inc., 270 F.3d 374 (6th Cir. 2001), as "controlling authority governing the interpretation of the . . . regulatory power exception to the automatic stay in the Sixth Circuit," FirstEnergy, 2018 WL 2315916, at *8, and applied its own construction of Chao to hold that the exception does not apply "to the FERC Proceeding or any proceeding similar to [it]," id. at *6, based on analysis under the "public policy test," id. at *9-11. The court was emphatic in enjoining FERC from doing anything-even holding any hearing-by claiming that it was saving FERC and the parties from "a fool's errand because any order [FERC] might issue" from such a proceeding would necessarily be "void ab initio," id. at *11. The court also gave itself "the power to enjoin FERC under Section 105 even if the automatic stay did not apply, . . . to avoid the cost and delay of unnecessary proceedings that would ultimately be held void." Id.

         The court relied on In re Mirant Corporation, 378 F.3d 511, 523 (5th Cir. 2004) (announcing that "a bankruptcy court can clearly grant injunctive relief to prohibit FERC from negating [a debtor's] rejection [of a filed contract] by requiring continued performance at the pre-rejection filed rate"), to support the § 105(a) authority for its injunction. Id. at *11-13. The court established that Mirant is the only circuit court case that is even close to being on point and emphasized that "in the fourteen years since Mirant was decided by the Fifth Circuit, Congress has not provided any exception to [a bankruptcy court's] rejection of regulated power contracts pursuant to Section 365(a)." Id. at *14. But the court did not adopt all of Mirant-it took the parts that gave it more power (i.e., authority to enjoin FERC) and ignored or rejected the parts that did not (i.e., limits on its ability to enjoin FERC, the careful tailoring of that injunction, the higher public-interest standard for rejecting contracts, etc.). The court also expressly rejected the only federal court case that disagreed with Mirant, namely, In re Calpine Corp., 337 B.R. 27 (S.D.N.Y. 2006) (holding that the rejection of a filed contract was a collateral attack on the filed rate and thus within FERC's exclusive jurisdiction, not the jurisdiction of the bankruptcy court).

         Ultimately, the bankruptcy court decided that the injunction was necessary here because:

If FERC were not stayed or enjoined from issuing such an order [to perform the contracts] and [if it] did issue such an order, and [if] the result actually w[ere] that this [c]ourt lost effective jurisdiction over [rejection of these contracts] . . ., there would be no practical way to repair the damage inflicted by the mere fact of making the debtor litigate post-petition performance obligations in multiple forums, defeating a central goal of the Bankruptcy Code of providing an efficient and centralized forum for the reorganization of debtor-creditor relations.
. . .
FERC will not be harmed by . . . [an] injunction, because this [c]ourt is asserting no authority to modify a filed rate in derogation of FERC's exclusive jurisdiction over such matters. Rather, the [] injunction will prevent a lengthy proceeding that is likely to be void ab initio, and instead permit [FES] and [] creditors to focus on the bankruptcy case that will vindicate the [] contracts at issue and their filed rate by allowing damage claims pursuant to those contracts and rates.
With respect to [the contracts'] counterparties, the prospect that [FES] might reject executory contracts that the Bankruptcy Code [presumably] allows them to reject cannot be a cognizable 'substantial harm,' particularly when the Rejection Motions are not yet being heard on their merits. Moreover, those parties are entitled to due process in this [c]ourt and in [FES's] bankruptcy cases. The[] [counterparties] will be entitled to allowed claims based on applicable non-bankruptcy law for breach of contract damages resulting from the rejection of their contracts. The financial disappointment derived from the fact that their claims may not be paid in full . . . will be fairly shared with all other unsecured creditors[.]

FirstEnergy, 2018 WL 2315916 at *19. That is, according to the bankruptcy court, it had to seize complete authority and enjoin FERC from any actions whatsoever, or else FERC and the Federal Power Act might interfere with bankruptcy reorganization, which could cause the debtor (FES) some financial hardship; and, it does not matter that FERC has a congressional mandate, that OCC is a public-interest group not a counterparty, or that the counterparties sought enforcement of these as filed rates regardless of any contract status. The bankruptcy court presupposed three contested things: that it has exclusive jurisdiction, that these are ordinary contracts (not de jure regulations via the FPA and the filed-rate doctrine), and that the public interest-which is otherwise paramount in the world of electricity contracts-is irrelevant or insignificant in a bankruptcy reorganization. The court also ignored the fact that its depiction of the foreseeable harm depends on a series of speculations, which could easily be flipped to apply the other way (i.e., that granting FERC exclusive jurisdiction and deciding the claims there would be equally final and effective, but merely flip the appellants).[10]

         Having taken exclusive jurisdiction-and enjoined FERC from even so much as holding a hearing, collecting information, or opining on the public interest-the bankruptcy court turned its attention to the dispute over the proper legal standard for deciding whether FES could reject the contracts. FES argued for application of the ordinary business-judgment rule, which allows a debtor to reject any executory contract that is "financially burdensome" to the debtor's estate such that it would inhibit the debtor's Chapter 11 reorganization. The counterparties (FERC did not participate at this stage on this issue) argued for a "heightened standard," such as the one the Supreme Court first crafted in NLRB v. Bildisco & Bildisco, 465 U.S. 513, 523-26 (1984), which the Fifth Circuit, in Mirant, 378 F.3d at 525, adjusted to fit to energy contracts by requiring that, in addition to the business-judgment rule, the bankruptcy court would further "carefully scrutinize the impact of rejection upon the public interest" and authorize the rejection only if the debtor can show "that, after careful scrutiny, the equities balance in favor of rejecting that power contract."

         Here, the bankruptcy court announced that it would apply only the business-judgment standard and "reject[] any legal standard . . . that would require [it] to consider anything other than whether rejection is consistent with [FES's] sound business judgment," meaning that it would "not consider any public interest principles potentially implicated by the Federal Power Act and/or any alleged harm that rejection could cause [FES's] contract counterparties or consumers." The court did not give any reason or explanation for this proclamation.

         On August 9 and 17, 2018, in separate orders concerning separate adversarial parties, the court accepted the counterparties' stipulations that FES had factually satisfied the ordinary business-judgment standard-i.e., that the contracts were financially burdensome to FES- whereupon the court authorized FES to reject the contracts. The court expressly refused to reconsider the effect on the contracts of FERC's authority, the FPA, or the filed-rate doctrine, or to take the public interest into account in any way. At the parties' request, the court designated the order as final for purposes of immediate appeal.

         II.

         This appeal presents questions of law we review de novo. In re Dow Corning Corp., 456 F.3d 668, 675 (6th Cir. 2006). There are no disputed facts; all relevant facts were stipulated.

         But, before we proceed, there are some things about this case that bear recognizing or keeping in mind. First, this is not a liquidation, this is a debtor-in-possession restructuring. If this were liquidation, neither FERC nor anyone else could compel the defunct debtor to keep performing the contracts or prevent the debtor from breaching the contracts by non-performance-hence, an analogy to liquidation does not help. Similarly, an analogy to breach of contract outside of bankruptcy is also inapt inasmuch as Supreme Court caselaw, see infra, gives FERC authority to compel specific performance of an unprofitable or even illegal contract. As a Chapter 11 restructuring, however, FES (acting as the bankruptcy trustee) can "assume" or "reject" any executory contract, so-proceeding arguendo as if these are ordinary executory contracts-the question is whether and on what basis FES can reject them, or whether FERC can compel FES to assume them in Chapter 11 despite their inhibiting the viability of bankruptcy reorganization.

         Second, there may be more to FES's obligations under these contracts, particularly the ICPA, than just the purchase of electricity, such as FES's proportionate contributions towards eventual facilities' decommissioning, environmental monitoring-compliance-and-cleanup, and long-term retiree benefits. If so, the bankruptcy court disregarded these aspects of the contracts when deciding that FERC's interest (and an anticipated FERC ruling to compel performance) was an overwhelmingly private benefit to the contract counterparties, and not a public interest.

         Third, these are contracts for a very small quantity of electricity in relation to FES's total electricity capacity (0.75%) or the overall PJM electricity market (0.04%). Viewed in that light, the public interest in the fulfilment of these contracts might be correspondingly small. According to FES-and this is unrefuted-no consumers will suffer any electricity shortage and the counterparties will easily sell their electricity into the market at minimal or no financial loss. But the bankruptcy court's ruling is not limited to or dependent on such facts; it would apply in every case, even on facts that involve, for example, 100% of the capacity of a single-source energy distributor.

         That is, suppose an energy distributor has a single (filed rate) energy-purchase contract and it is losing money, with a forecast that it will eventually go defunct. That distributor wants to cancel that contract and sign a new and better (profitable) contract with a different energy generator, leaving the old (non-competitive) generator and the unprofitable contract behind. Under the FPA, the distributor would have to convince FERC that the old contract seriously harms the public interest-taking into account not just its own financial difficulties, but the effect on the counterparty generator, consumers and competitors, and area-wide electricity capacity and markets-so as to persuade FERC to revise (or abrogate) the old contract. That is the approach Congress intended when it enacted the FPA and put FERC in charge of the decision. But, according to this bankruptcy court, the distributor could circumvent all of that by filing Chapter 11 and rejecting the contract solely because it is uneconomical, even if that action would force the counterparty generator itself into liquidation (hypothetically leaving its other customers without electricity, and leaving the government to cover decommissioning, cleanup, pension obligations, etc.), disrupt area-wide energy markets or the otherwise-regulated competitive balance in them, or perhaps leave some consumers without electricity. That would appear to be a problem. Cf. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 580 (1981) ("It would surely be inconsistent with [the FPA's] congressional purpose to permit a [bankruptcy] court to do through a breach-of-contract action what [FERC] itself may not do.").

         In short, there are legitimate and significant competing concerns here that require careful consideration, given that our holding must both resolve this appeal under this unique set of facts and set out a broader rule that will govern or guide future cases with different facts. The bankruptcy court did not limit its ruling to the present facts, or even acknowledge them, and it expressly refused to consider any concerns other than its own concerns about the bankruptcy.

         A.

         The appellants argue that these are not ordinary "contracts." Rather, the act of filing them with FERC transforms them, meaning they are no longer "contracts" but have effectively become federal regulations. Accordingly, FES cannot "reject" them in bankruptcy because "rejection," as a concept, applies only to contracts, which these are not. Instead, to properly- legally-change its obligations under these de jure regulations (i.e., "filed contracts"), FES must persuade FERC to revise (or abrogate) them pursuant to the FPA and the controlling legal doctrines. Put another way, the appellants argue that the bankruptcy court erred and exceeded its authority by putatively permitting FES to "reject" federal regulations via bankruptcy.

         The "filed-rate doctrine," as applied in the FPA, holds that FERC has plenary and exclusive jurisdiction over wholesale power rates, terms, and conditions of service for any such rate filed with FERC. Miss. Power & Light Co. v. Miss. ex rel. Moore, 487 U.S. 354, 371-72 (1988). This is not limited to only "rates," but includes all contractual provisions, methodologies, restrictions, or any quantity or price terms. Id. Moreover, the filed-rate doctrine fully applies to energy contracts between private parties when those contracts are filed with and approved by FERC.

         To that end, the Mobile-Sierra doctrine holds that the rate set out in a freely negotiated contract presumptively meets the "just and reasonable" requirement imposed by FPA statute unless FERC concludes that the result will "seriously harm the public interest." NRG Power Mktg., LLC v. Maine Pub. Util. Comm'n, 558 U.S. 165, 167 (2010) (quotation marks omitted); Morgan Stanley Capital Grp. Inc. v. Pub. Util. Dist. No. 1, 554 U.S. 527, 530 (2008). Thus, FERC can only revise (or abrogate) a filed contract upon finding that it seriously harms the public interest.

         The appellants' theory proceeds based on several cases that construe these doctrines to mean that, once "filed," these energy contracts-though they were freely and independently negotiated and entered into between private parties-effectively become de jure federal regulation (or statute), with FERC as the enforcing body. Despite acknowledging this case law, the bankruptcy court still treated the ICPA and PPAs as mere ordinary contracts, not as de jure regulations.

         The Supreme Court has held that FERC may compel a party to continue to perform even a money-losing contract. See Fed. Power Comm'n v. Sierra Pac. Power Co., 350 U.S. 348, 355 (1956) ("[I]t is clear that a contract may not be said to be either 'unjust' or 'unreasonable' simply because it is unprofitable to the public utility."). And the Court has held that FERC may compel a party to perform the terms of a filed contract even after the underlying contract itself has been nullified as illegal in violation of anti-trust laws. See Pennsylvania Water & Power Co. v. Fed. Power Comm'n, 343 U.S. 414, 422 (1952) ("The duty [to perform] springs from the Commission's authority, not from the law of private contracts."). Therefore, the Supreme Court has, in some circumstances, treated such filed contracts as other than ordinary contracts.

         And, from this treatment, courts have opined that, once the contract is filed with FERC, "it is to be treated as though it were a statute, binding upon the seller and the purchaser alike." Nw. Pub. Serv. Co. v. Montana-Dakota Utils. Co., 181 F.2d 19, 22-23 (8th Cir. 1950), aff'd, 341 U.S. 246 (1951) (citing, among others, Texas & Pac. Ry. Co. v. Cisco Oil Mill, 204 U.S. 449 (1907)). The point of Montana-Dakota was that the district court had no authority to decide for itself whether rates were "just and reasonable," even though the rates originated in contract, because the FPA gave that authority exclusively to the Commission (predecessor to FERC). Id.

         In Boston Edison Co. v. FERC, 856 F.2d 361, 372 (1st Cir. 1988), the court quoted Montana-Dakota (the contract "is to be treated as though it were a statute") and explained that its intent was to promote stability between energy suppliers and customers, i.e., "to keep the litigious world outside the ...


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