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Public Utility District No. 1 of Snohomish County, Washington v. Federal Energy Regulation Commission

June 30, 2003


The opinion of the court was delivered by: Reggie B. Walton United States District Judge


This matter comes before the Court on plaintiff Public Utility District No. 1 of Snohomish County, Washington's ("Public Utility") Motion for Temporary and Preliminary Injunctive Relief and Expedited Discovery ("Pl.'s Mot."), and defendant Federal Energy Regulatory Commission's ("FERC") opposition thereto. Currently pending before the FERC is a complaint filed by the plaintiff pursuant to section 206 of the Federal Power Act, 16 U.S.C. § 824e, challenging a contract it entered into with Morgan Stanley Capital Group Inc. ("Morgan Stanley"), which was executed during the 2000-2001 energy crisis that the plaintiff asserts "contain[s] grossly one-sided terms, conditions, and price[s] that arose because of the severe dysfunction of the Western electric markets occurring at that time." See Pl.'s Mot., Memorandum in Support of Motion for Temporary and Preliminary Injunctive Relief and Expedited Discovery ("Pl.'s Mem.") at 3. On December 19, 2002, following evidentiary hearings before a FERC administrative law judge ("ALJ"), the ALJ determined that the plaintiff's complaint, along with several other similar complaints that had been filed as a result of contracts executed in California, Washington, and Nevada during this same energy crisis, should be dismissed and that these long-term energy contracts should be enforced. See Memorandum of Points and Authorities in Opposition to Motion of Public Utility District No. 1 of Snohomish County, Washington for Temporary and Permanent Injunctive Relief and Expedited Discovery ("Defs.' Mem.") at 3 (citing Nevada Power Co., et al., v. Enron Power Marketing, Inc., et al., 101 FERC ¶ 63,031 (2002)). Plaintiff Public Utility, along with several of the other parties who had also initiated contract abrogation cases with the FERC, appealed the ALJ's decision to the FERC. On March 26, 2003, while the appeal before the FERC was pending, the FERC conducted an open meeting to discuss its staff's Final Report on Price Manipulation in Western Markets, at which time the contract abrogation cases were also discussed by all three FERC commissioners. Following this open meeting and a subsequent press conference, two of the three commissioners who currently hold positions on the FERC, Chairman Patrick Henry Wood III and Commissioner Nora Mead Brownell, allegedly participated in a private telephone conference in which the energy contracts that are the subject of the abrogation cases were discussed with approximately twenty representatives of the energy market, financial institutions, investment houses, and investor rating services. One of the participants in this telephone conference was Morgan Stanley, which according to the plaintiff, has a "direct pecuniary interest not only in the complaint case filed by [Public Utility], but in a number of similar complaint cases filed at FERC by other parties." Pl.'s Mem. at 4. The plaintiff asserts that this telephone conference violated the Sunshine Act, 5 U.S.C. § 552b (2000), and it seeks "temporary and preliminary injunctive relief enjoining future violations of the Sunshine Act by FERC, [and the disqualification of] Chairman Wood and Commissioner Brownell... from further consideration of all cases illegally discussed at the March 26, 2003 Secret Teleconference..." Id. at 52-53.

I. The FERC Proceedings

A brief recitation of the proceedings before the FERC in this matter is a necessary predicate to addressing the merits of the plaintiff's request. On April 7, 2003, after becoming aware of the alleged private telephone conference, the plaintiff filed a motion with the FERC requesting that it disclose all communications made during this telephone conference. In response, the FERC published on its website a "Revised Summary of events relating to the FERC conference call with the investment community on 3/26/03 re Nevada Power Co. & Sierra Pacific Power Co. v. Enron Power Marketing, Inc, El Paso Merchant Energy, et al under EL02-28 et al" and a list of financial analysts invited to participate in this conference call. Id. at 6. On April 21, 2003, the plaintiff filed a Motion for Recusal with the FERC requesting that Chairman Wood and Commissioner Brownell withdraw from further consideration of the plaintiff's complaint, asserting that the two commissioners had prejudged the matter. Id. at 6-7. On April 23, 2003, the FERC issued an Order on Motion for Disclosure and Recusal denying the plaintiff's request for disqualification, but granting the request for disclosure of the transcript of the press conference and a summary of the telephonic conference, as there was no transcript of the telephone conference made by the FERC. Id. at 7; see Pl.'s Mot., Exhibit ("Ex.") 9. The plaintiff subsequently filed a petition with the FERC for a rehearing, a motion requesting that the FERC stay action in the underlying proceeding until this Court could consider the alleged Sunshine Act violation, and a request for the FERC to act on an expedited basis to prevent future taint and preserve potential documents. Pl.'s Mem. at 7. All of these motions are apparently still pending before the FERC. Id.

On June 18, 2003, the plaintiff became aware that the FERC would address the energy contract abrogation cases at its meeting that was scheduled for June 25, 2003, id., at which time the FERC was also expected to issue its final ruling on the plaintiff's complaint. The plaintiff has now filed an action in this Court, wherein it is seeking, among other things, to have this Court enjoin Chairman Wood and Commissioner Brownell from further participation in its case that is pending before the FERC.

II. Standard of Review

It is well understood that in considering the plaintiff's motion for a preliminary injunction, this Court must weigh the following four factors:"(1) whether the plaintiff has a substantial likelihood of success on the merits; (2) whether the plaintiff would suffer irreparable injury were an injunction not granted; (3) whether an injunction would substantially injure other interested parties; and (4) whether the grant of an injunction would further the public interest." Al-Fayed v. CIA, 254 F.3d 300, 303 (D.C. Cir. 2001); Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1066 (D.C. Cir. 1998); CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C. Cir. 1995). The Court must balance the moving party's claims against the position of the non-movant in each of these four areas and may issue an injunction if one factor is particularly strong, even though the remaining criteria are weak. CityFed, 58 F.3d at 747 (holding that an injunction may be proper"where there is a particularly strong likelihood of success on the merits even if there is a relatively slight showing of irreparable injury."); Health Ins. Assoc. of Am. v. Novelli, 211 F. Supp. 2d 23, 28 (D.D.C. 2002) (Walton, J.).

However, despite this balancing approach, the District of Columbia Circuit has made it clear that"some injury" must be shown by the moving party. CityFed, 58 F.3d at 747 (citing Sea Containers Ltd. v. Stena AB, 890 F.2d 1205, 1210-11 (D.C. Cir. 1989) (affirming district court's denial of preliminary injunction where moving party may have been'likely to succeed' but failed to show irreparable harm)). Thus, the failure to make a showing of irreparable harm is alone sufficient reason to deny a motion for a preliminary injunction, id., as"[t]he basis of injunctive relief in the federal courts has always been irreparable harm[,]" id. (quoting Sampson v. Murray, 415 U.S. 61, 88 (1974) (quoting Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506 (1959))).

III. Legal Analysis

(A) Can this Court Disqualify Chairman Wood and Commissioner Brownell from Considering the Plaintiff's FERC Complaint?

As this Court discussed above, the plaintiff's claims before the FERC arise under 16 U.S.C. § 824e. Section 825l(b) of Title 16 provides that"[a]ny party to a proceeding under this chapter[, i.e., Federal Regulation and Development of Power,] aggrieved by an order issued by the Commission [,i.e., the FERC,] in such proceeding may obtain a review of such order in the UNITED STATES COURT OF APPEALS for any circuit... or in the United States Court of Appeals for the District of Columbia..." 16 U.S.C. § 825l(b) (emphasis added). As indicated above, the essence of the relief the plaintiff is seeking from this Court is the review of the FERC's April 23, 2003 Order denying the plaintiff's request that Chairman Wood and Commissioner Brownell recuse themselves from further consideration of the plaintiff's case. The plaintiff's recusal motion that was filed before the FERC was predicated on alleged violations by the two commissioners of 5 U.S.C. § 557(d) and FERC's own regulations,18 C.F.R. § 385.2201, which prohibits ex parte communications in any on-the-record proceeding between a person outside of the FERC and a decisional employee of the FERC, and the"prejudgment" of the plaintiff's FERC complaint. See Pl.'s Mot., Ex. 9 (FERC Order denying plaintiff's recusal request"alleging both ex parte and prejudgment violations."); Pl.'s Mem. at 6 ("Snohomish [County, Washington] on April 21, 2003 filed a Motion for Recusal requesting that Chairman Wood and Commissioner Brownell withdraw from further consideration of its Complaint proceeding because of the illegal communications that occurred during the Secret Teleconference, especially in light of what one news outlet reported was Commissioner Brownell's'point-blank' revelation that she and Chairman Wood had prejudged a still pending matter.").

In City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320 (1958), the Supreme Court stated that:

[t]his statute [16 U.S.C. § 825l] is written in simple words of plain meaning and leaves no room to doubt the congressional purpose and intent. It can hardly be doubted that Congress, acting within its constitutional powers, may prescribe the procedures and conditions under which, and the courts in which, judicial review of administrative orders may be had. So acting, Congress in [16 U.S.C. § 825l] prescribed the specific, complete and exclusive mode for judicial review of the Commission's orders.

Id. at 335-36 (citations omitted). While the plaintiff asserts that this Court can provide the relief of recusal under the authority of the Sunshine Act, the Court cannot agree. The Supreme Court's opinion in City of Tacoma made clear that "judicial review of the Commission's order, [and] all objections to the order... must be made in the Court of Appeals or not at all. For Congress, acting within its powers, has declared that the Court of Appeals shall have 'exclusive jurisdiction' to review such orders..." Id. at 336 (emphasis added). Thus, while the plaintiff seeks to have this Court review the FERC's order denying recusal, the plaintiff is unable to use the jurisdiction granted to this Court pursuant to the Sunshine Act as the predicate for this Court to exercise jurisdiction in an area where Congress has vested exclusive jurisdiction in the Court of Appeals. See, e.g., Indiana & Michigan Elec. Co. v. Fed. Power Comm'n, 224 F. Supp. 166 (N.D. Ind. 1963) (holding that where the Commission had denied a request for subpoenas, the remedy was not to seek a writ of mandamus from the district court, ...

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