Articles Posted in Utilities Law

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Flint, which previously obtained water from DWSD, decided to join the Karegnondi Water Authority (KWA). The DWSD contract terminated in 2014. Because KWA would take years to construct, Flint chose the Flint River as an interim source. A 2011 Report had determined that river water would need to be treated to meet safety regulations; the cost of treatment was less than continuing with DWSD. Genesee County also decided to switch to KWA but continued to purchase DWSD water during construction. Flint did not upgrade its treatment plants or provide additional safety measures before switching. Residents immediately complained that the water “smelled rotten, looked foul, and tasted terrible.” Tests detected coliform and E. coli bacteria; the water was linked to Legionnaire’s disease. General Motors discontinued its water service, which was corroding its parts. Eventually, the city issued a notice that the drinking water violated standards, but was safe to drink. Subsequent testing indicated high levels of lead and trihalomethane that did not exceed the Safe Drinking Water Act (SDWA) Lead and Copper Rule’s “action level.” The tests indicated that corrosion control treatment was needed to counteract lead levels. The City Council voted to reconnect with DWSD; the vote was overruled by the state-appointed Emergency Manager. The EPA warned of high lead levels; officials distributed filters. Genesee County declared a public health emergency in Flint, advising residents not to drink the water. The Emergency Manager ordered reconnection to DWSD but the supply pipes' protective coating had been damaged by River water. Flint remains in a state of emergency but residents have been billed continuously for water. The Michigan Civil Rights Commission determined that the response to the crisis was “the result of systemic racism.” The Sixth Circuit reversed dismissal, as preempted by SDWA, of cases under 42 U.S.C. 1983. SDWA has no textual preemption of section 1983 claims and SDWA’s remedial scheme does not demonstrate such an intention. The rights and protections found in the constitutional claims diverge from those provided by SDWA. The court affirmed dismissal of claims against state defendants as barred by the Eleventh Amendment. View "Boler v. Earley" on Justia Law

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Over the last 10 years, the Federal Communications Commission has established rules governing how local governments may regulate cable companies. In 2007, the FCC barred franchising authorities from imposing unreasonable demands on franchise applicants or requiring new cable operators to provide non-cable services. The FCC also read narrowly the phrase “requirements or charges incidental to the awarding . . . of [a] franchise” (47 U.S.C. 542(g)(2)(D)), with the effect of limiting the monetary fees that local franchising authorities can collect. A petition for review was denied. Meanwhile, the FCC sought comment on expanding the application of the First Order’s rules—which applied only to new applicants for a cable franchise—to incumbent providers. In its Second Order, the FCC expanded the First Order’s application as proposed. Local franchising authorities again objected. The FCC finally rejected objections after seven years; the FCC clarified that the Second Order applied to only local (rather than state) franchising processes and published a “Supplemental Final Regulatory Flexibility Act Analysis.” Local governments sought review, arguing that the FCC misinterpreted the Communications Act, and failed to explain the bases for its decisions. The Sixth Circuit granted the petition in part; while “franchise fee” (section 542(g)(1)) can include noncash exactions, the orders were arbitrary to the extent they treat “in-kind” cable-related exactions as “franchise fees” under section 541(g)(1). The FCC’s orders offer no valid basis for its application of the mixed-use rule to bar local franchising authorities from regulating the provision of non-telecommunications services by incumbent cable providers. View "Montgomery County. v. Federal Communications Commission" on Justia Law

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MISO, a nonprofit association of utilities, manages electrical transmission facilities for its members. Beginning in 2006, the Federal Energy Regulatory Commission (FERC) approved changes to MISO’s Tariff that enabled it to authorize network expansion projects and divide the costs among the member utilities. Duke and American own Ohio and Kentucky utilities. In July 2009, American gave notice that it planned to withdraw from MISO. Duke followed suit in May 2010. Under the Tariff, a utility cannot withdraw from MISO any earlier than the last day of the year following the year it gives notice. Two months after Duke announced its intention to withdraw, MISO proposed a new category of more expensive expansion projects. FERC approved this revision to the Tariff. In August 2010, MISO authorized the first Multi-Value Project. In December 2011, weeks before Duke’s scheduled departure, MISO approved 16 projects, to cost billions of dollars. MISO proposed amending the Tariff, so that ex-members could be charged for the costs of Multi-Value Projects approved before their departure. FERC approved that revision prospectively, holding that the revision imposed new obligations on withdrawing members and could not apply to Duke and American to charge them for the Multi-Value Projects. Other MISO Transmission Owners appealed, claiming that FERC departed from the reasoning of its prior orders. The Sixth Circuit denied a petition for review, stating that there is no presumption that costs for the Multi-Value Projects should be allocated up front. View "MISO Transmission Owners v. Federal Energy Regulatory Commission" on Justia Law

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DTE's Monroe plaint is the largest coal-fired power plant in Michigan; in 2010, DTE undertook a $65 million overhaul. The day before construction began, DTE submitted notice to the Michigan Department of Environmental Quality stating that DTE predicted an increase in post-construction emissions 100 times greater than the minimum necessary to constitute a “major modification” and require a preconstruction permit. DTE characterized the projects as routine maintenance,exempt from New Source Review (NSR) under the Clean Air Act, 42 U.S.C. 7475, 7503, and stated that it had excluded the entire predicted emissions increase from its projections of post-construction emissions based on “demand growth.” DTE began construction without an NSR permit. The EPA filed suit. In 2013, the Sixth Circuit held that a utility seeking to modify a source of air pollutants must “make a preconstruction projection of whether and to what extent emissions from the source will increase following construction,” which “determines whether the project constitutes a ‘major modification’ and thus requires a permit.” On remand, the district court again entered summary judgment for DTE, concluding that the EPA had to accept DTE’s projections at face value. The Sixth Circuit reversed. DTE was not required to secure the EPA’s approval of the projections, or the project, before construction, but in proceeding without a permit, DTE acted at its own risk. The EPA can challenge DTE’s preconstruction projections and there are genuine disputes of material fact that preclude summary judgment regarding compliance with NSR’s preconstruction requirements. The court noted that construction is complete and that actual post-construction emissions are irrelevant o whether DTE’s preconstruction projections complied with the regulations. View "United States v. DTE Energy Co." on Justia Law

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In 2013, the City of Detroit filed for chapter 9 bankruptcy protection, facing problems “run[ning] wide and deep”—including the affordable provision of basic utilities. In 2014, plaintiffs, customers, and the purported representatives of customers, of the Detroit Water and Sewerage Department (DWSD), filed an adversary proceeding, based on DWSD’s termination of water service to thousands of residential customers. Citing 42 U.S.C. 1983 and the Supreme Court holding in Monell v. Department of Social Services, plaintiffs sought injunctive relief. The Sixth Circuit affirmed dismissal. Section 904 of the Bankruptcy Code explicitly prohibits this relief. Whether grounded in state law or federal constitutional law, a bankruptcy court order requiring DWSD to provide water service at a specific price, or refrain from terminating service would interfere with the City’s “political [and] governmental powers,” its “property [and] revenues,” and its “use [and] enjoyment of . . . income-producing property,” 11 U.S.C. 904. Plaintiffs’ due process and equal protection claims were inadequately pled. View "Lyda v. City of Detroit" on Justia Law

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Columbia stores natural gas in Medina Field, a naturally-occurring system of porous underground rock, pumping gas into the Field during summer, during low demand, and withdrawing it during winter. Medina is among 14 Ohio gas storage fields used by Columbia. Columbia received a federal Certificate of Public Convenience and Necessity, 15 U.S.C. 717f, and was required to compensate those who own part of the Field by contractual agreement or eminent domain. The owners allege that Columbia stored gas for an indeterminate time without offering compensation and then offered $250 per lot. Each Medina owner rejected this offer. Columbia did not bring eminent domain proceedings. Other Ohio landowners accused Columbia of similar behavior and filed the Wilson class action in the Southern District of Ohio, including the Medina owners within the putative class. The Medina owners filed suit in the Northern District. Both actions claim trespass and unjust enrichment under Ohio law, and inverse condemnation under the Natural Gas Act. The Wilson suit also seeks damages for “native” natural gas Columbia takes when it withdraws its own gas. Columbia filed a counterclaim in Wilson, seeking to exercise eminent domain over every member of the putative class and join the Medina owners. The Northern District applied the first-to-file rule and dismissed. The Sixth Circuit reversed. The rule does apply, but dismissal was an abuse of discretion given jurisdictional and procedural hurdles to having the Medina claims heard in Wilson. View "Baatz v. Columbia Gas Transmission, LLC" on Justia Law

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Trumbull County has provided sewer service to General Motors’ Lordstown Assembly Plant since 1964. In the mid-2000s, the County borrowed $3.4 million from the U.S. Department of Agriculture to maintain and improve its sewer lines. That loan obligation triggered the protections of 7 U.S.C. 1926(b), under which sewer providers that owe money to the Department are protected from competition with other sewer providers. The County claims that the Village of Lordstown violated section 1926(b) when the Village built sewer lines that could one day serve GM’s Plant. The district court granted the defendants summary judgment, holding on the merits that the Village’s mere construction of sewer lines did not curtail or limit the County’s service. The Sixth Circuit vacated, reaching the same result on grounds of lack of standing. While the County still owes a balance, section 1926(b) affords it a legally protected interest in freedom from competition, but it has shown not any actual or imminent invasion of that interest. Sewer lines can last for decades, so the mere fact of their construction does not show that the Village intends to compete with the County anytime soon. View "Trumbull Cnty. Bd. of Comm'rs v. Village of Lordstown" on Justia Law

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TracFone provides prepaid wireless phone service primarily through third-party retailers. The Commercial Mobile Radio Service Emergency Telecommunications Board, created by the Kentucky General Assembly to develop an emergency 911 system for wireless customers, sued to collect unpaid fees from TracFone. KRS § 65.7635 requires wireless providers to collect a fee from their customers and remit the money to the CRMS for the cost of maintaining the 911 system. The district court ruled in favor of the Board with respect to the interpretation of the statute but declined to award prejudgment interest on TracFone’s unpaid fees. The Sixth Circuit affirmed, rejecting an argument concerning ambiguity in the statute. TracFone was required to remit fees from the effective date of the statute, regardless of what method it chose. View "KY Commercial Mobile Radio Serv. Emergency Telecommunications Bd. v. Tracfone Wireless, Inc." on Justia Law

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AT&T and Intrado, rival telecommunications carriers, submitted to an arbitration conducted by the Public Utilities Commission of Ohio to determine how to interconnect their networks to service 9-1-1 calls. AT&T insisted that all points of interconnection be on its network, relying on the Telecommunications Act of 1996, 47 U.S.C 251(c), a provision only applicable to incumbent carriers like AT&T. The Commission rejected this request, relied on the general provisions of Section 251(a), and ordered the carriers to establish interconnection points on both AT&T’s and Intrado’s networks. The district court and Sixth Circuit affirmed, rejecting an argument that the Commission exceeded its arbitral authority by applying Section 251(a) because Intrado had petitioned for interconnection only under Section 251(c). The Commission properly interpreted an incumbent carrier’s interconnection duties under the Act. View "OH Bell Tel. Co. v. Pub. Utils Comm'n of OH" on Justia Law

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The Clean Air Act New Source Review program forbids construction of new pollution sources without a permit, 42 U.S.C. 7475. Operators of major pollutant-emitting sources who plan construction must make a preconstruction projection of the increase in emissions following construction, to determine whether the project constitutes a “major modification,” requiring a permit. DTE planned on replacing 2,000 square feet of tubing, the economizer, and large sections of reheater piping; installing a new nine-ton device that provides voltage that creates the electromagnetic field needed for the rotor to produce electricity; and refurbishing boiler feedwater pumps at its power plant. The project required 83 days and $65 million. DTE performed required calculations and projected an emissions increase of 3,701 tons per year of sulfur dioxide and 4,096 tons per year of nitrogen oxides. Under the regulations, an increase of 40 tons per year of either substance is significant. DTE determined that the increase fell under the demand growth exclusion. The Michigan Department of Environmental Quality took no action and construction began. The U.S. EPA filed notice of violation. The district court granted DTE summary judgment. The Sixth Circuit reversed. While the regulations allow operators to undertake projects without having EPA second-guess their projections, EPA is not categorically prevented from challenging blatant violations until after modifications are made. View "United States v. DTE Energy Co." on Justia Law