New Orleans Pub. Svc. v. City Council, 491 U.S. 350 (1989)

New Orleans Public Service, Inc. v.

Council of the City of New Orleans
No. 88-348

Argued April 25, 1989
Decided June 19, 1989
491 U.S. 350

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

Syllabus

The Federal Energy Regulatory Commission (FERC) allocated the cost of the Grand Gulf 1 nuclear reactor among several jointly owned companies, including petitioner New Orleans Public Service, Inc. (NOPSI), that had agreed to finance the reactor’s construction and operation. NOPSI, which provides retail electrical service to New Orleans, then sought from respondent New Orleans City Council (Council), the local ratemaking body, a rate increase to cover the increase in its wholesale rates resulting from FERC’s allocation of Grand Gulf costs. Although deferring to FERC’s implicit finding that NOPSI’s decision to participate in the Grand Gulf venture was reasonable, the Council determined that the costs incurred thereby should not be completely reimbursed through a rate increase because NOPSI’s management was negligent in failing, after the risks of nuclear power became apparent, to diversify its supply portfolio by selling a portion of its Grand Gulf power. NOPSI filed a petition in state court for review of the Council’s final rate order. In parallel federal proceedings in the District Court, NOPSI sought declaratory and injunctive relief on the ground that the Council’s order was preempted by federal law under Nantahala Power & Light Co. v. Thornburg, 476 U.S. 953, which held that, for purpose of setting intrastate retail rates, a State may not differ from FERC’s allocations of wholesale power by imposing its own judgment of what would be just and reasonable. The District Court concluded that it should abstain from deciding the suit under Burford v. Sun Oil Co., 319 U.S. 315, and Younger v. Harris, 401 U.S. 37. The Court of Appeals affirmed.

Held: The District Court erred in abstaining from exercising jurisdiction. Pp. 358-373.

(a) The Burford abstention doctrine -- under which federal equity courts must decline to interfere with complex state regulatory schemes in cases involving (1) difficult state law questions bearing on policy problems of substantial public import, or (2) efforts to establish a coherent state policy regarding a matter of substantial public concern -- is not applicable. This case does not involve a state law claim, nor even an assertion that NOPSI’s federal claims are in any way entangled in a skein of state law that must be unraveled before the federal case can proceed. Because NOPSI’s facial preemption claim may be resolved without venturing beyond the four corners of the Council’s rate order, federal adjudication of the claim would not unduly intrude into state governmental process or undermine the State’s ability to maintain desired uniformity in the treatment of essentially local problems. Although NOPSI’s alternative claim -- that the rate order’s nominal emphasis on NOPSI’s failure to diversify its power supply was merely a cover for the determination that the original Grand Gulf investment was itself unwise -- cannot be resolved on the face of the order, resolution of that claim does not demand significant familiarity with, and will not disrupt state resolution of, distinctively local facts or policies, since wholesale electricity is not bought and sold within a predominantly local market. Pp. 360-364.

(b) Nor is abstention appropriate under Younger, which held that, absent extraordinary circumstances, traditional equity concerns and principles of comity require federal courts to refrain from enjoining pending state criminal prosecutions. This Court has expanded Younger abstention beyond criminal proceedings, and even beyond proceedings in courts, but never to proceedings that are not "judicial in nature." The Council proceedings at issue here are not judicial in nature, since ratemaking, which establishes a rule for the future, is essentially a legislative act. See, e.g., Prentis v. Atlantic Coast Line Co., 211 U.S. 210, 226-227. Nor can the proceedings in this case be considered a unitary and still-to-be-completed legislative process by virtue of the ongoing state court review proceedings. There is no contention here that the Louisiana courts’ review involves anything other than a judicial act -- that is, the declaration of NOPSI’s rights vis-a-vis the Council on present or past facts under existing law. NOPSI’s preemption claim was therefore ripe for federal review when the Council completed the legislative action by entering its final order. Pp. 364-373.

850 F.2d 1069, reversed and remanded.

SCALIA, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, STEVENS, O’CONNOR, and KENNEDY, JJ., joined, and in Parts I and II-B of which REHNQUIST, C.J., joined. BRENNAN, J., filed a concurring opinion, in which MARSHALL, J., joined, post, p. 373. REHNQUIST, C.J., filed an opinion concurring in part and concurring in the judgment, post, p. 373. BLACKMUN, J., filed an opinion concurring in the judgment, post, p. 374.