
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 93-1824                           BRISTOL ENERGY CORPORATION, d/b/a ALEXANDRIA POWER ASSOCIATES,               BIO-ENERGY CORPORATION, BRIDGEWATER POWER COMPANY, L.P.,               HEMPHILL POWER AND LIGHT COMPANY, PINETREE POWER, INC.,                  PINETREE POWER - TAMWORTH, INC., TIMCO, INC., AND                          WHITEFIELD POWER AND LIGHT COMPANY,                               Plaintiffs, Appellants,                                          v.                 STATE OF NEW HAMPSHIRE PUBLIC UTILITIES COMMISSION,                                 Defendant, Appellee.                                 ____________________          No. 93-1835            BRISTOL ENERGY CORPORATION, d/b/a ALEXANDRIA POWER ASSOCIATES,               BIO-ENERGY CORPORATION, BRIDGEWATER POWER COMPANY, L.P.,               HEMPHILL POWER AND LIGHT COMPANY, PINETREE POWER, INC.,                  PINETREE POWER - TAMWORTH, INC., TIMCO, INC., AND                          WHITEFIELD POWER AND LIGHT COMPANY,                               Plaintiffs, Appellants,                                          v.                 STATE OF NEW HAMPSHIRE PUBLIC UTILITIES COMMISSION,                                 Defendant, Appellee,            AMERICAN HYDRO, INC. - PETERBOROUGH AND ENERGY TACTICS, INC.,                               Intervenors, Appellants.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF NEW HAMPSHIRE                   [Hon. Shane Devine, Senior U.S. District Judge]                                       __________________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Stahl, Circuit Judge.                                         _____________                                 ____________________               Bryan K. Gould, with whom Robert A. Olson and Brown, Olson &               ______________            _______________     ______________          Wilson, P.C.  were on  brief for appellants  and Peter  W. Brown,          ____________                                     _______________          Daniel W.  Allegretti, and Brown,  Olson & Wilson, P.C.  on brief          _____________________      ____________________________          for intervenors, appellants.               Harold T. Judd, Senior Assistant Attorney General, with whom               ______________          Jeffrey R. Howard, Attorney General, was on brief for appellee.          _________________               Susan Tomasky,  Jerome M. Feit  and Samuel Soopper  on brief               _____________   ______________      ______________          for Federal Energy Regulatory Commission, amicus curiae.                                  ____________________                                   January 18, 1994                                 ____________________                                                  BOWNES,   Senior   Circuit  Judge.      Plaintiffs-                      BOWNES,   Senior   Circuit  Judge                                _______________________            appellants,  a  group  of  power   producers,  challenge  the            district court's dismissal of their suit to enjoin defendant-            appellee,  New Hampshire  Public Utilities  Commission (PUC),            from  ordering a disclosure  of their business  and financial            data.1   PUC requested the  information for a study conducted            pursuant to section  712 of the federal Energy  Policy Act of            1992,  16 U.S.C.     2621(d)(10).    Plaintiffs  allege  that            federal law  preempts PUC's  inquiries.   The district  court            dismissed the suit  for lack of subject  matter jurisdiction.            Concluding that the case presents a federal question, we find            jurisdiction,  but  affirm the  dismissal  because plaintiffs            failed to state a cognizable claim.                                           I.                                          I.                                      Background                                         Background                                      __________                      Plaintiffs are non-utility power producers known as            "qualifying   small   power    production   facilities"   and            "qualifying  cogeneration  facilities"  (collectively "QFs"),            see 16  U.S.C.    796(17)(C), (18)(B).   QFs  are a  class of            ___            facilities,  defined by their size, fuel use, efficiency, and                                            ____________________            1.  Throughout  this opinion, we use the term "plaintiffs" to            include the plaintiffs-intervenors,  Energy Tactics, Inc. and            American Hydro,  Inc.-Peterborough, as  well as  the original            plaintiffs:     Bristol  Energy   Corp.;  Bio-Energy   Corp.;            Bridgewater  Power Co., L.P.;  Hemphill Power and  Light Co.;            Pinetree Power, Inc.;  Pinetree Power-Tamworth, Inc.;  Timco,            Inc.; and Whitefield Power and Light Company.  The complaints            of these parties are identical in all relevant respects.                                           -3-                                          3            ownership, see FERC v. Mississippi,  456 U.S. 742, 750 & n.11                       ___ ____    ___________            (1982), entitled to special treatment under federal and state            laws  regulating  power producers.    See 16  U.S.C.    824a-                                                  ___            3(e)(1);  18  C.F.R.    292.602(c)(1).    The  Federal Energy            Regulatory   Commission   (FERC)    promulgates   regulations            affecting  QFs.  State utility regulatory commissions such as            PUC implement FERC's  regulations on the purchases  and sales            of power between utilities and QFs.                       In  passing  the  legislation  authorizing  special            rules  for QFs, the Public Utility Regulatory Policies Act of            1978 (PURPA),  Congress viewed QFs  as desirable alternatives            to traditional electric  utility generating facilities.   See                                                                      ___            FERC, 456 U.S. at  750.  At that time, Congress perceived two            ____            impediments to QF development:  [1] the reluctance  of public            utilities  to sell power to  and buy power  from QFs; and [2]            the  financial burdens imposed  on QFs  by state  and federal            laws designed to regulate utilities providing  electricity to            the public.   See  id.  at 750-51.    To overcome  the  first                          ___  ___            impediment,   Congress   mandated    that   FERC   promulgate            regulations, for states to implement, governing  transactions            between  utilities  and  QFs, including  a  requirement  that            utilities purchase electricity  from QFs at a rate  up to the            utility's  avoided cost  (i.e.,  the  utility's  cost  if  it                                      ____            generated  the power  itself, or  purchased  it from  another            source).  See 16 U.S.C.   824a-3(b), -3(d).                        ___                                         -4-                                          4                      To  solve the  second problem,  Congress eased  the            financial burdens  on QFs by  authorizing FERC to  exempt QFs            from certain federal laws, and from state laws or regulations            "respecting  the  rates,  or  respecting  the  financial   or            organizational   regulation,  of   electric  utilities,"   if            necessary  to  encourage QFs.    Id.     824a-3(e).    FERC's                                             ___            exemptions for QFs  are codified at 18 C.F.R.     292.601 and            .602.   Plaintiffs allege  that PUC's business  and financial            disclosure order violates  the regulation exempting QFs  from            state regulation of the finances and organization of electric            utilities.   See  id.    292.602(c)(1)(ii)  (hereinafter  "QF                         ___  ___            exemption").                      On  April 16,  1993, PUC  commenced  proceedings to            perform  a study of wholesale power  supplies required by the            Energy  Policy Act  of 1992,  16 U.S.C.    2621(d)(10).2   In            connection with its study, PUC sent detailed data requests to            eighty  QFs in New  Hampshire, including  plaintiffs, seeking            detailed disclosures offinancial and proprietaryinformation.3                                            ____________________            2.  Congress  passed the Energy Policy  Act in part to foster            greater competition in the wholesale power production market.            See generally H.R. Rep. No. 474(I), 102d Cong., 2d Sess. 138-            ___ _________            40 (1992), reprinted in 1992 U.S.C.C.A.N. 1953, 1961-63.                       _________ __            3.  Plaintiffs characterize these requests as inquiries into:                      [1]  each facility's business form and ownership;                       [2]  plaintiff's  financing  agreements,  including                      the identity of  the lender, and the amount  of the                      loan, its  rate of interest, any required operating                      reserve, and the priority of creditors;                      [3]  plaintiff's retired debt;                                         -5-                                          5                      On June 14, 1993, plaintiffs filed an action in the            United   States  District  Court  for  the  District  of  New            Hampshire,   alleging  that  they   were  exempt  from  PUC's            inquiries, pursuant  to FERC's QF  exemption.  They  sought a            declaratory  judgment and an  injunction to prevent  PUC from            enforcing its disclosure orders.  PUC countered that, because            the QF exemption  does not apply to PUC's  data requests, the            complaint failed to state a  claim upon which relief could be            granted.4                        On July  20,  1993, the  district  court  dismissed            plaintiffs' action sua sponte, stating that it lacked subject                               ___ ______            matter jurisdiction.    In  denying  plaintiffs'  motion  for            reconsideration, the district court ruled:                                              ____________________                      [4]  allocations   of   income,    gains,   losses,                      distributions, credit,  and cash, from  the closing                      of any construction loans through the present;                       [5]  the  form of sales of power, monthly volume of                      electricity generated,  and the  identity of  their                      customers; and                       [6]  each facility's fuel use, including heat rate,                      price paid for fuel, projected fuel use through the                      year  2000,  method  of fuel  transportation,  fuel                      storage  capacity,  and  fuel  use risk  management                      strategies.            PUC's  data requests  also seek  copies  of plaintiffs'  fuel            supply  contracts and a  year-by-year spreadsheet analysis of            financial  operations  from  the  commencement  of  operation            through  the  year  2010.    Joint  Br.  for  Appellants  and                                         ________________________________            I n t e r v e n o r s - A p p e l l a n t s    a t    4 - 5 .            ___________________________________________            4.  PUC did not file  a motion to dismiss under  Fed. R. Civ.            P.  12(b)(6), but  alleged as  a defense  in its  answer that            plaintiffs failed to state a cognizable claim.                                           -6-                                          6                      Assuming arguendo  that this  court could                      exercise  jurisdiction  over  plaintiffs'                      purported preemption claim  at this stage                      in the process, there remain at least two                      problems   with   plaintiffs'   argument.                      First,  defendant's  data  requests  were                      issued pursuant to federal law; i.e., the                      Energy Policy  Act of  1992.   Therefore,                      [FERC's  regulation  exempting  QFs  from                      state regulation] is inapposite. . . .            Bristol Energy Corp. v. New Hampshire Pub. Utils. Comm'n, 827            ____________________    ________________________________            F.  Supp. 81,  83 (D.N.H.  1993).   Plaintiffs appealed.   By            order of  this court dated  August 30, 1993, we  directed the            parties to address the merits, as well as  the jurisdictional            issue.                                         II.                                         II.                                      Discussion                                      Discussion                                      __________            A.  Jurisdiction            A.  Jurisdiction                ____________                      The  district court  ruled that  16  U.S.C.    2633            stripped  it  of  jurisdiction.   That  statute  provides, in            pertinent part:  "Notwithstanding any other provision of law,            no court  of the United  States shall have  jurisdiction over            any action arising  under [16 U.S.C.    2611 - 2634] . . . ."            The authority PUC  cited for issuing its data  requests is 16            U.S.C.    2621(d)(10).   Thus, we would  lack jurisdiction if            this case  were, in fact,  an "action arising  under" section            2621(d)(10).                      According to plaintiffs,  the district court looked            at the wrong  "action" in deciding the  jurisdictional issue.            Although  PUC  sent  out data  requests  pursuant  to section                                         -7-                                          7            2621(d)(10),  plaintiffs  argue  that   this  case  does  not            "aris[e]  under" that section.  Rather, plaintiffs argue that            their  cause of action  implicates principles  of preemption,            relating  to the  QF  exemption  and  the  Supremacy  Clause.            Plaintiffs  maintain  that  this  preemption  claim  triggers            federal question jurisdiction.  We agree.                        "It  is well  established  that  to invoke  federal            question jurisdiction,  a federal  issue must  appear on  the            face of a well pleaded complaint."  Cable Television Ass'n v.                                                ______________________            Finneran, 954 F.2d  91, 94 (2d Cir. 1992);  see also Colonial            ________                                    ___ ____ ________            Penn Group  v. Colonial Deposit  Co., 834 F.2d 229,  233 (1st            __________     _____________________            Cir. 1987).  Here, plaintiffs allege that FERC's QF exemption            under PURPA preempts PUC's authority under state law to order            QFs   to  disclose   business   and  financial   information.            Plaintiffs  seek  an  injunction, as  well  as  a declaratory            judgment,  to prevent the enforcement of PUC's data requests.            This case is thus aligned with Shaw v. Delta Air Lines, Inc.,                                           ____    _____________________            463 U.S. 85 (1983), in which the Supreme Court noted:                      It is beyond  dispute that federal courts                      have  jurisdiction over  suits to  enjoin                      state  officials  from  interfering  with                      federal rights.  See Ex parte  Young, 209                                           _______________                      U.S. 123, 160-62 (1908).  A plaintiff who                      seeks   injunctive   relief   from  state                      regulation,  on  the   ground  that  such                      regulation  is  pre-empted by  a  federal                      statute which, by virtue of the Supremacy                      Clause of the Constitution, must prevail,                      thus  presents a  federal question  which                      the  federal  courts   have  jurisdiction                      under 28 U.S.C.   1331 to resolve.                                         -8-                                          8            Shaw, 463 U.S. at 96 n.14; see also Playboy Enters. v. Public            ____                       ___ ____ _______________    ______            Serv. Comm'n, 906  F.2d 25, 31 (1st Cir.),  cert. denied, 458            ____________                                _____ ______            U.S. 959 (1990).                        We have  considered--and we  reject--PUC's argument            that   16  U.S.C.     824a-3(g)  divests  federal  courts  of            jurisdiction.   Section  824a-3(g) places  limits  on federal            jurisdiction in  proceedings involving rules  implementing 16            U.S.C.     824a-3(a) and  -3(f), rules not  at issue  in this            case.5    See id.     824a-3(g).   The  record  in this  case                      ___ ___            confirms what PUC's counsel conceded at oral argument:  PUC's            data requests were  issued pursuant to both state  law and 16            U.S.C.   2621(d)(10),  not under the  rules cited in  section            824a-3(g).   We conclude  that federal question  jurisdiction            exists in this case, as  in Shaw, because plaintiffs allege a                                        ____            preemption  claim and  seek to  enjoin  state officials  from            interfering with a federal right, i.e., the QF exemption.                                                  ____            B.  Merits            B.  Merits                ______                      Plaintiffs have alleged  that they are  entitled to            declaratory  and injunctive  relief because  PUC's  action is            preempted  by federal  law.  The  federal law  that allegedly            preempts  PUC's  inquiries   is  the  QF  exemption.     That            regulation  provides  in  pertinent  part:   "Any  qualifying                                            ____________________            5.  Section 824a-3(a)  and -3(f)  rules concern, inter  alia,                                                             _____  ____            the purchases and  sales of power between  electric utilities            and QFs.  See 16 U.S.C.    824a-3(a), -3(f).                      ___                                         -9-                                          9            facility shall be exempted . . . from State law or regulation            respecting  .  .   .  [t]he   financial  and   organizational            regulation   of   electric   utilities."      18   C.F.R.                292.602(c)(1)(ii).  We  consider, seriatim, two issues:   [1]                                              ________            whether PUC's one-time  inquiry of QFs to  gather information            for  a study mandated by  16 U.S.C.   2621(d)(10) constitutes            state  "regulation respecting  .  .  .  [t]he  financial  and            organizational  regulation of  electric  utilities"; and  [2]            whether  Congress  intended  state agencies  such  as  PUC to            request information from  QFs to complete the  study mandated            by 16 U.S.C.   2621(d)(10).            1.  Are QFs Exempt from PUC's Inquiries?            1.  Are QFs Exempt from PUC's Inquiries?                ____________________________________                      FERC, as an amicus in this case, argues that the QF            exemption does  not preempt  PUC's inquiries  because PUC  is            seeking  information on  a  one-time  basis,  to  complete  a            federally  mandated study of  wholesale power supplies.   See                                                                      ___            section 712  of the Energy  Policy Act of  1992, 16  U.S.C.              2621(d)(10).  According to FERC, such a limited collection of            information   for  a   federally  mandated  study   does  not            contravene the letter or the  spirit of the QF exemption from            state  "regulation  respecting  .  .  .  the  financ[es]  and            organization[]" of QFs.  We agree.                      FERC  promulgated  the  QF  exemption  pursuant  to            Congress's  mandate   that   QFs  be   exempted  from   state            regulations  on  the  rates,  finances,  and  organization of                                         -10-                                          10            electric utilities, if FERC found such an exemption necessary            to  encourage QF  power production.   See  16 U.S.C.    824a-                                                  ___            3(e)(1).   FERC takes the position that  its exemption allows            QFs  to avoid "utility-type" regulation, 45 Fed. Reg. 12,214,            12,232  (Feb. 25, 1980)  (preamble to final  rule), including            state  control  of  electricity   rates  and  the   finances,            capitalization, and organization of electric utilities.                        PUC's  inquiries are  not  preempted  by FERC's  QF            exemption.  We  do not dispute that PUC  is seeking financial            and organizational information  from plaintiffs.  And  we can            visualize circumstances  in which a  state agency's  standing            order  requiring  periodic disclosures  of  financial records            might  be   part-and-parcel  of  the  control  over  electric            utilities from which QFs are exempt.  See generally 18 C.F.R.                                                  ___ _________              292.601(c)  (exempting QFs  from, inter  alia, 16 U.S.C.                                                   _____  ____            825(b)  (authorizing FERC to  have access  "at all  times" to            accounts,  records, and memoranda  of public  utilities)); 44            Fed. Reg. 38,863,  38,865 (July 3,  1979) (FERC Staff  Paper)            (noting that  FERC could  exempt QFs  from "requirements  for            filing voluminous  reports  concerning  operating,  cost  and            revenue data").                        But  PUC did not assert such plenary authority over            QFs when it issued the document requests.  In fact, PUC cited            only  its  authority under  state  law and  the  necessity of            completing  the evaluation  mandated by  section  712 of  the                                         -11-                                          11            Energy Policy  Act,  16 U.S.C.     2621(d)(10).   The  record            suggests that PUC's inquiries seek information related to the            factors  enumerated in 16  U.S.C.   2621(d)(10)--assuming QFs            are  proper sources  of  such information.    Because PUC  is            gathering  data on  a  one-time basis  to  perform the  study            mandated  by the Energy Policy  Act, 16 U.S.C.   2621(d)(10),            the QF exemption  is not a sound foundation  for a preemption            claim.  Such an inquiry  is not utility-type regulation.  Nor            does the record suggest that the information will be used for            utility-type regulation.            2.  Did Congress Intend QFs To Be Included in the Study?            2.  Did Congress Intend QFs To Be Included in the Study?                ____________________________________________________                      Plaintiffs argue that  Congress did not  intend QFs            to be included in  the Energy Policy Act  study.  The  Energy            Policy  Act requires that  certain state agencies  perform "a            general  evaluation" of  four factors  relating to  wholesale            power supplies:  [1] the impact of  long-term wholesale power            purchases on  a utility's cost  of capital and  retail rates;            [2] the effect of the debt-laden capital structure of "exempt            wholesale  generators" on  utilities and on  reliability; [3]            the  propriety of  advance approval  for  long-term wholesale            power purchase contracts; and [4] the need for assurances  of            fuel supply  adequacy in  long-term wholesale  power purchase            contracts.6   See 16  U.S.C.   2621(d)(10)(A);  see generally                          ___                               ___ _________                                            ____________________            6.  Section 2621(d)(10) provides, in pertinent part:                      (A)  To   the   extent   that   a   State                      regulatory authority  requires or  allows                                         -12-                                          12            Jeffrey D. Watkiss & Douglas  W. Smith, The Energy Policy Act                                                    _____________________            of 1992--A Watershed  for Competition in the  Wholesale Power            _____________________________________________________________            Market,  10 Yale J. on Reg. 447,  475 & n.130 (1993).  PUC is            ______            included in the  class of state agencies  required to perform            this study; that is, those requiring or allowing utilities to            purchase long-term wholesale power supplies.  See 16 U.S.C.                                                            ___                                            ____________________                      electric  utilities  for   which  it  has                      ratemaking  authority  to   consider  the                      purchase  of  long-term  wholesale  power                      supplies as  a means of  meeting electric                      demand,  such authority  shall perform  a                      general evaluation of:                        (i)  the  potential   for  increases   or                      decreases  in  the costs  of  capital for                      such   utilities,   and   any   resulting                      increases  or  decreases  in  the  retail                      rates  paid by  electric consumers,  that                      may  result from  purchases of  long-term                      wholesale power  supplies in lieu  of the                      construction of new generation facilities                      by such utilities;                      (ii) whether the use  by exempt wholesale                      generators .  . .  of capital  structures                      which   employ   proportionally   greater                      amounts   of   debt  than   the   capital                      structures  of  such  utilities threatens                      reliability   or   provides   an   unfair                      advantage for exempt wholesale generators                      over such utilities;                      (iii) whether to implement procedures for                      the  advance approval  or disapproval  of                      the  purchase of  a particular  long-term                      wholesale power supply; and                       (iv) whether  to require  as a  condition                      for the approval of the purchase of power                      that  there be  reasonable assurances  of                      fuel supply adequacy.            16 U.S.C.   2621(d)(10).  A state agency need not perform the            evaluation  or implement any  procedures suggested by  it, if            such  action  would   be  inconsistent  with  state   law  or            inappropriate under PURPA.   See 16 U.S.C.   2621(a), (c)(1);                                         ___            FERC,  456  U.S. at  764-70.    PUC has  decided  that it  is            ____            required to perform the study.                                          -13-                                          13            2621(d)(10)(A).    The  statute  provides  that  states  must            "consider and make  a determination concerning whether  . . .            to implement the[se]  standards" by October 24, 1993.   Id.                                                                      ___            2621(d)(10)(E).                          Plaintiffs maintain  that  the  Energy  Policy  Act            study   concerns  only  a  new  class  of  non-utility  power            producers  called  "exempt   wholesale  generators"  (EWGs).7            Plaintiffs  also  contend  that   the  only  power  producers            intended by Congress  to be  subject to  PUC's inquiries  are            EWGs, electric utilities, and certain affiliates of EWGs.                        The central  issue  is  whether  Congress  intended            state  agencies to  make inquiries of  QFs to  complete their            evaluation of  wholesale power  supplies.  Considering  first            the language  of the statute  to be  construed, see  American                                                            ___  ________            Tobacco Co.  v. Patterson,  456 U.S. 63,  68 (1982),  we note            ___________     _________            that Congress mandated that agencies,  including PUC, perform            "a  general evaluation" of  the enumerated factors respecting            wholesale power supplies.     Although the  statute makes  no            mention  of QFs,  the use  of  the term  "general evaluation"            suggests that the scope of the study is intended to be broad.            Only  the second factor--the impact of debt-laden EWG capital            structures on utilities and on reliability--explicitly refers                                            ____________________            7.  EWGs  are  so   called  because  they  are   entitled  to            exemptions   from   certain  federal   utility   regulations,            including ownership and capitalization restrictions under the            Public Utility Holding Company Act and the Federal Power Act.            See generally Watkiss & Smith, supra, at 465 n.74, 467.            ___ _________                  _____                                         -14-                                          14            to  EWGs; the  remaining three  factors  refer to  "long-term            wholesale power purchases."  It is undisputed that plaintiffs            supply  power at  wholesale  to  electric  utilities  in  New            Hampshire under  long-term contracts, and  that QFs  entering            the market in the future could enter into long-term contracts            with utilities in  the state.  The language  and structure of            the statute  indicate  that Congress  intended  QFs to  be  a            source of information.                      Common sense reinforces this  conclusion.  Congress            clearly intended the "general evaluation" of  wholesale power            supply issues to be meaningful and comprehensive,  especially            because  the  Energy  Policy  Act  is  designed  to  increase            competition  in the wholesale  power production market.   See                                                                      ___            generally H.R. Rep.  No. 474(I), supra, at  138-40, reprinted            _________                        _____              _________            in  1992 U.S.C.C.A.N. at 1961-63;  Watkiss & Smith, supra, at            __                                                  _____            449.  Nurtured by FERC's regulations and by PURPA since 1978,            QFs have become an important source of power for utilities to            purchase  at  wholesale.   For example,  there were  at least            eighty QFs operating in New  Hampshire in the spring of 1993.            EWGs, in  contrast to  QFs, are a  new category  of wholesale            power producer, created  by the Energy Policy Act of 1992.  A            company can become an EWG  only by filing an application with            FERC.  See 15 U.S.C.   79z-5a(a)(1).  Accordingly, there were                   ___            no  EWGs in  existence when  Congress  enacted the  provision            requiring states to study wholesale power supply  issues.  We                                         -15-                                          15            are led inexorably  to the conclusion that  Congress intended            state  agencies to  gather data  from QFs,  because they  are            significant  existing sources of wholesale power, in order to            assess the present power situation  and to predict the impact            of new entrants into the wholesale power market.                      At  oral  argument, counsel  for  plaintiffs stated            that state  agencies could acquire information  regarding QFs            from  third-party sources.   This  point does not  affect our            determination that Congress intended states to make inquiries            of QFs, so that the general evaluation of long-term wholesale            power   purchases  would  be   meaningful.    No   source  of            information  on  QFs would  be  as authoritative  as  the QFs            themselves.  If Congress  intended information regarding  QFs            to be  part of the  Energy Policy  Act "general  evaluation,"            presumably Congress intended  that QFs would be the source of            this information.                       Plaintiffs'  next argument is  that section  714 of            the  Energy  Policy  Act, 16  U.S.C.     824(g)(1), manifests            Congress's  intent that states cannot subject QFs to business            and  financial inquiries.    Section  714  provides,  "[u]pon            written order  of a State commission, a  State commission may            examine  the  books,   accounts,  memoranda,  contracts,  and            records of" electric utilities, EWGs, and affiliates of EWGs.            16 U.S.C.   824(g)(1).  Because Congress enacted both section            714 and the provision mandating the study  of wholesale power                                         -16-                                          16            supplies under the  Energy Policy Act, plaintiffs  argue that            section  714 limits  the scope  of  the "general  evaluation"            required  by 16 U.S.C.    2621(d)(10) to  electric utilities,            EWGs, and their affiliates.                       Plaintiffs' argument  elevates a rule  of statutory            construction--that  two  provisions of  the  same legislation            must be read together--above a  full and sensible reading  of            the  statutes at issue.   Section 714  specifically provides:            "Nothing in this section shall-- (A) preempt applicable State            law  concerning   the   provision  of   records   and   other            information; or (B) in any way limit rights to obtain records            and  other  information  under  Federal  law,  contracts,  or            otherwise."  16  U.S.C.   824(g)(4).   That provision negates            plaintiffs'  attempt  to  use the  facilities  enumerated  in            section  714  as   an  exclusive  list  of   power  producers            susceptible  to  state  data  requests  pursuant  to  section            2621(d)(10).                      Furthermore,  there  is   an  obvious  reason   why            Congress would have omitted QFs from section 714, while still            intending that QFs  respond to inquiries pursuant  to section            2621(d)(10):    section  714  is  an  unrestricted  grant  of            authority.   The  statute provides  that a  state agency  may            examine  the  records   of  electric  utilities,  EWGs,   and            affiliates of EWGs,  "if such examination is required for the            effective  discharge"   of  the   agency's  "responsibilities                                         -17-                                          17            affecting  the provision of  electric service."   16 U.S.C.              824(g)(1).  The statute does not mention section 2621(d)(10),            let  alone limit  the exercise  of  this document  inspection            authority to gathering information for an evaluation of long-            term wholesale power supply purchases.  If QFs were among the            power producers listed  in section 714,  a court could  infer            Congress's intent  to repeal partially FERC's  QF exemptions,            so  that QFs  would  be proper  subjects  of any  information            requests  by state agencies.   See Natural  Resources Defense                                           ___ __________________________            Council  v. Environmental Protection  Agency, 824  F.2d 1258,            _______     ________________________________            1278 (1st Cir.  1987) (more recent, more  specific enactments            prevail  over  prior,  more generalized  law);  1A  Norman J.            Singer, Sutherland on Stats.    23.14, at 372 (5th ed. 1993).                    ____________________            Excluding  QFs  from  section 714  preserves  the  general QF            exemption  from state  laws  and  regulations respecting  the            finances and organization of electric utilities.                      Finally, plaintiffs argue that allowing PUC to make            inquiries  into the  finances  and  organization  of  QFs  is            tantamount  to finding an implied repeal of the QF exemption.            Our holding does  not cut that broadly.  We hold that PUC may            make  inquiries of  QFs on  a  one-time basis  because it  is            acting to  complete a  study mandated by  federal law.   Such            regulatory  action  is   not  a  state  "law   or  regulation            respecting   .  .  .   [t]he  financial   and  organizational            regulation    of   electric    utilities,"   18    C.F.R.                                             -18-                                          18            292.602(c)(1)(ii).   Our  decision  does  not  alter  the  QF            exemption.                      In  light of the  foregoing, we  reject plaintiffs'            preemption  claim.   Even  accepting all  plaintiffs' factual            allegations as true, we find no basis on which plaintiffs may            proceed.  This case is  thus properly dismissed under Fed. R.            Civ. P. 12(b)(6) for failure to state a cognizable claim.                        We recognize that  the district court did  not rely            on this ground  for dismissing this case.   We note, however,            that PUC affirmatively  pleaded that the complaint  failed to            state a claim.  Moreover, the district court stated that even            if it  had subject matter jurisdiction, there  would still be            "problems with plaintiffs' argument,"  Bristol Energy, 827 F.                                                   ______________            Supp. at 83, and we ordered the parties to address the merits            on appeal.   Even  assuming the district  court did  not deem            that reason dispositive, we may affirm the  court's ruling on            any theory supported by the record.  See Willhauck v. Halpin,                                                 ___ _________    ______            953 F.2d 689, 704 (1st Cir. 1991).  We do so here.8                       We   conclude  in   this   case  that   plaintiffs'            allegations   provide   a   basis   for   federal    question            jurisdiction, but we  find that their preemption  claim lacks                                            ____________________            8.  We also note that an  appellate court may dismiss a claim            sua   sponte  on  Rule   12(b)(6)  grounds  when,   taking  a            ___   ______            plaintiff's  factual  allegations   as  true,   there  is   a            dispositive   issue  of   law.     See   Gregory  v.   United                                               ___   _______       ______            States/United  States Bankruptcy Court,  942 F.2d  1498, 1500            ______________________________________            (10th Cir. 1991), cert. denied, 112 S. Ct. 2276 (1992).                              _____ ______                                         -19-                                          19            merit.    The district  court's  dismissal  of  this case  is            therefore                      Affirmed.                                Affirmed.                      _________                                         -20-                                          20
