BOSTON – Plaintiffs in the latest Cape Wind-related lawsuit to find its way into a federal courtroom faced an uphill battle Tuesday.
“Having read the briefs carefully I start and almost end with the 11th Amendment,” U.S. District Judge Richard Stearns said at a hearing on a motion to dismiss the challenge of a state-approved contract between the offshore wind energy developer and NStar.
Stearns said he doubted the plaintiffs – which include several Cape Cod businesses, individuals, the Alliance to Protect Nantucket Sound and the town of Barnstable – could get past the constitutional amendment which generally gives states immunity from being sued.
The lawsuit filed in January by Cape Wind’s opponents claims that the approval by state regulators of the contract to sell power from the project to NStar, which delivers power to Cape Cod, Martha’s Vineyard and other parts of the state, violated two clauses of the U.S. Constitution: the Commerce Clause and the Supremacy Clause.
“First, it constituted illegal discrimination in favor of an instate business, in violation of the dormant Commerce Clause of the U.S. Constitution,” lawyers for the plaintiffs wrote in the complaint. “Second, it constituted illegal regulation of wholesale electricity sales, in violation of the Federal Power Act and the Supremacy Clause of the U.S. Constitution.”
State regulators used their power to approve a proposed merger between NStar and Northeast Utilities as leverage to force the utility to agree to the terms of the contract with Cape Wind, the plaintiffs’ lawyers argued in briefs and during Tuesday’s hearing at the John Joseph Moakley United States Courthouse in Boston.
But Stearns questioned whether the state was capable of forcing NStar to agree to the contract.
He also wondered aloud repeatedly during the hearing where the state’s actions tread on federal jurisdiction under the Supremacy Clause since the Federal Energy Regulatory Commission must still approve the wholesale pricing in the contract and also whether the plaintiffs had standing in the Commerce Clause argument.
Massachusetts Assistant Attorney General Timothy Casey, not surprisingly, took up Stearns’ reasoning in his argument defending officials from the state Department of Public Utilities and state Department of Energy Resources.
The only exception to a state’s sovereign immunity is when a future violation of federal law is contemplated, Casey said.
The approval of the Cape Wind NStar contract is a historical fact and not a future action, he said, echoing Stearns’ opening comments.
The Supremacy Clause argument fails because the contract itself provides that Cape Wind will seek the required approval for its wholesale rates from FERC later and the federal agency has already found that a similar contract between Cape Wind and National Grid had not encroached on its jurisdiction, Casey said.
The state addressed its traditional role of approving retail rates while FERC retains its power to approve wholesale rates, he said.
And the plaintiffs role as consumers doesn’t give them standing under the Commerce Clause, Casey said.
Matthew Price, who represented all of the plaintiffs except the town of Barnstable, countered that the contract represented an ongoing violation of law for its 15-year-life, using the analogy of a state employee who is fired for his political views.
“It’s not a purely historical act in that the contract will continue to exist for the next 15 years,” Price said.
On the question of state versus federal jurisdiction, Price argued that all the plaintiffs need to prove is that the state had caused a wholesale price to be set by its actions.
“NStar did not want to enter into this contract and refused tooth and nail for years to do so,” he said.
The case was different from the finding with National Grid because that utility had not been forced into the contract, Price said.
“When Congress has reserved this field exclusively for the federal government, any state action within it is preempted,” he said.
The state may have negotiated what it wanted out of the contract but it isn’t clear that it forced NStar to agree to it, Stearns said.
“Why isn’t NStar standing with you?” Stearns said about NStar’s lawyer sitting with Casey and Cape Wind lawyer David Rosenzweig. NStar was named as a defendant in the lawsuit.
“That’s a question for NStar,” Price said. “Maybe they don’t care because they’re not the ones bearing the cost.”
The clear pass through of the project’s above-market cost to consumers is why the plaintiffs are able to claim harm under the alleged violation of the Commerce Clause, Price said.
The Department of Energy Resources was a party to the DPU contract review but had no ability to force NStar to accept the contract’s terms, Rosenzweig said.
“You can’t have coercion when you don’t have actual authority,” he said.
The Cape Wind contract was only one of a dozen aspects of the merger that the department negotiated with NStar, Rosenzweig said.
And DPU, which had the authority to approve the contract, had no role in those negotiations, he said.
NStar was under pressure to close the merger with Northeast Utilities and the energy resources department’s support was clearly important in that effort, Price said.
Stearns, however, continued to balk at the idea that any pressure on NStar was unlawful.
“I’m not speaking as an environmentalist because I’m not one and it’s not my job as a judge,” he said.
Stearns said, while it was too important a matter to decide immediately, he expected to have a decision on the motions to dismiss within the next few days.
The case is the latest in a long line of legal challenges to the 130-turbine wind farm in Nantucket Sound.
Alliance president Audra Parker said her organization is awaiting final action on those matters and considering future appeals.
Cape Wind officials declined to comment after Tuesday’s hearing.
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