On June 17, 2016, FERC declined to exercise primary jurisdiction over an interconnection dispute between Cottonwood Wind Project, LLC (“Cottonwood”) and Nebraska Public Power District (“NPPD”) because FERC determined that the controversy centered on the parties’ actions and that resolution of the case would only affect the parties to the specific agreement at issue. Specifically, FERC explained that the dispute over the interconnection agreement, which was based on FERC’s pro forma Large Generator Interconnection Agreement (“LGIA”), was a contractual dispute that failed to satisfy the factors set out in FERC’s “Arkla” test. As a result, FERC’s order dismissed the complaint brought by Cottonwood against the NPPD, which alleged that certain pre-construction authorizations were required under the parties’ LGIA. FERC’s refusal to assume jurisdiction over the dispute likely means a court will have to resolve the case.
In Arkansas Louisiana Gas Co. v. Hall, commonly referred to as “Arkla,” FERC articulated a three-part test for asserting primary jurisdiction over contractual disputes. The Arkla test includes the following three factors: (1) whether FERC possess some special expertise which makes the case particularly appropriate for a FERC decision; (2) whether there is a need for uniformity of interpretation of the type of question raised in the dispute; and (3) whether the case is important in relation to the regulatory responsibilities of FERC.
Cottonwood filed a complaint against NPPD alleging that NPPD breached the LGIA with Cottonwood. According to Cottonwood, the LGIA contained terms requiring NPPD to obtain certain governmental approvals and authorization from Cottonwood before constructing certain interconnection upgrades. However, in its complaint, Cottonwood alleged that: (1) NPPD proceeded with the construction of certain upgrades before obtaining the requisite government approvals, and (2) NPPD did not obtain Cottonwood’s authorization before beginning construction. NPPD filed a motion to dismiss and claimed that Cottonwood’s complaint did not meet the three requirements of FERC’s Arkla test.
In granting NPPD’s motion to dismiss, FERC reasoned that Cottonwood had failed to satisfy any of the three Arkla factors and, therefore, dismissed the complaint and declined to exercise primary jurisdiction over the LGIA dispute. Regarding the first element of the Arkla test, FERC concluded that no special or technical expertise was necessary to determine whether NPPD needed prior authorization under the LGIA before proceeding with construction. Instead, FERC noted that the dispute hinged on a review of the parties’ course of conduct and communications, rather than any matters requiring FERC’s special expertise. Turning to the second Arkla factor, FERC determined that there was no need for uniformity of interpretation because the dispute involved questions arising under the Cottonwood LGIA, meaning the outcome of the case would not impact FERC’s pro forma LGIA or other parties not involved in the instant dispute. Finally, in considering the third Arkla factor, FERC held that the dispute did not involve policy questions affecting FERC’s regulatory responsibilities, but rather, involved the parties’ course of conduct and communications between them.
A copy of FERC’s order can be found here.