People Ex Rel. Brown v. Powerex Corp.

After the collapse of Enron Corporation, the Attorney General concluded wholesale energy companies, including Powerex Corporation, had engaged in schemes damaging California energy consumers. He sued Powerex, alleging violations of the unfair competition law (Bus. & Prof. Code, § 17200 et seq.; UCL) and the California Commodity Law of 1990 (Corp. Code, § 29500 et seq.; CCL) seeking damages, penalties and injunctive relief.

The trial court sustained Powerex’s demurrer without leave to amend on the ground the claims were barred by the Federal Power Act (16 U.S.C.A. § 791a et seq.; FPA), which grants the Federal Energy Regulatory Commission (FERC) exclusive jurisdiction over the wholesale energy market.

Several Ninth Circuit decisions arising out of the energy crisis have concluded that claims similar to the Attorney General’s are barred by the FPA, specifically by implied preemption (field and conflict preemption), and by the filed rate doctrine. Field preemption exists when a federal scheme is comprehensive, leaving no room for state regulation; conflict preemption exists when state regulation would conflict with federal regulation; the filed rate doctrine bars claims…