City & Cnty. of S.F. v. U.S. Dep't of Transp.

• Decision Date: 30 July 2015
• Docket Number: No. 13–15855.,13–15855.
• Citation: 796 F.3d 993
• Parties: CITY AND COUNTY OF SAN FRANCISCO, Plaintiff–Appellant, v. U.S. DEPARTMENT OF TRANSPORTATION; Anthony Foxx, in his official capacity as Secretary, Department of Transportation; Pipeline & Hazardous Materials Safety Administration ; Marie Therese Dominguez, in her official capacity as Deputy Administrator of Pipeline & Hazardous Materials Safety Administration, Defendants–Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

796 F.3d 993

CITY AND COUNTY OF SAN FRANCISCO, Plaintiff–Appellant

v.U.S. DEPARTMENT OF TRANSPORTATION; Anthony Foxx, in his official capacity as Secretary, Department of Transportation; Pipeline & Hazardous Materials Safety Administration ; Marie Therese Dominguez, in her official capacity as Deputy Administrator of Pipeline & Hazardous Materials Safety Administration, Defendants–Appellees.

No. 13–15855.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 13, 2015.

Filed July 30, 2015.

Christine Van Aken (argued), Kristine A. Poplawski, Owen J. Clements, and Dennis J. Herrera, City Attorney's Office for the City and County of San Francisco, San Francisco, CA, for Plaintiff–Appellant.

Patrick G. Nemeroff (argued), Mark B. Stern, André Birotte, Jr., and Stuart F. Delery, United States Department of Justice, Washington, D.C., for Defendants–Appellees.

Glenn Vanzura and Lee A. Linderman, Irell & Manella LLP, Los Angeles, CA, for Amicus Curiae Pipeline Safety Trust.

Appeal from the United States District Court for the Northern District of California, Richard Seeborg, District Judge, Presiding. D.C. No. 3:12–cv–00711–RS.

Before: SIDNEY R. THOMAS, Chief Judge, JOHN B. OWENS, Circuit Judge, and ANTHONY J. BATTAGLIA,^* District Judge.

OPINION

THOMAS, Chief Judge:

On September 9, 2010, a natural gas transmission pipeline owned and operated by Pacific Gas & Electric Company (“PG & E”) ruptured in San Bruno, California. The ensuing explosion and fire killed eight people, injured dozens more, and caused widespread damage to property. Fearing a recurrence, the City and County of San Francisco (“San Francisco”) filed suit against the Secretary of Transportation (“Secretary”) and the Pipeline and Hazardous Materials Safety Administration (“the Agency”), alleging that the Agency failed to comply with the Natural Gas Pipeline Safety Act of 1968, 49 U.S.C. § 60101 et seq. (“Pipeline Safety Act”).

Under the Pipeline Safety Act, the Agency promulgates minimum federal safety standards for natural gas pipelines and pipeline facilities. The California Public Utility Commission (“CPUC”) has assumed jurisdiction to regulate and enforce the Pipeline Safety Act's requirements as to intrastate pipelines within California. San Francisco alleges that the Agency violated the Pipeline Safety Act when it approved the CPUC's certification that its regulatory activities meet the minimum federal standards set by the Agency, and when it disbursed funding to the CPUC to support monitoring and enforcement of intrastate pipelines in California.

The issue in this case is whether San Francisco's claims may proceed, either under the Administrative Procedure Act (“APA”) or under the Pipeline Safety Act's citizen suit provision. We conclude that they may not.

I

The soil beneath our feet is crisscrossed with natural gas pipelines. There are 2.5 million miles of natural gas and hazardous liquid pipelines throughout the United States, including 100,000 natural gas pipelines in California. We rely on these pipelines to supply our critical energy needs, but they also pose public safety risks. Pipelines transport highly flammable, often highly pressurized, natural gas to urban areas through many aging pipelines originally designed for use in lower population density regions.

Although interstate pipelines have been subject to federal regulation since 1938, states retained exclusive jurisdiction over regulation of pipelines wholly within their borders until 1968. In that year, Congress enacted the Pipeline Safety Act, which empowered the Secretary to promulgate minimum federal safety standards for all natural gas pipelines and facilities. Since its creation in 2004, the Agency has administered the Pipeline Safety Act pursuant to delegation by the Secretary.

Intrastate pipeline regulation remains distinct from that of interstate pipelines. Although states may not directly regulate or impose additional or more stringent safety standards on interstate pipelines, 49 U.S.C. § 60104(c), the Pipeline Safety Act provides a strong role for state involvement in intrastate pipeline regulation. If a state certifies that it has adopted the minimum federal safety standards and is enforcing those standards, the state assumes exclusive regulatory jurisdiction over most intrastate pipelines within its borders. See id. § 60105(a)-(b). A state that has done so may choose to impose additional or more stringent requirements on intrastate pipelines so long as they continue to meet the minimum federal safety standards established by the Agency. Id. § 60104(c).

Unlike similar statutes that require more active federal intervention, such as the Clean Air Act, the cooperative federalism scheme established by the Pipeline Safety Act contains only two short subsections describing the Secretary's authority to monitor state safety programs and reject a certification. They are contained at the end of § 60105, which lays out the process for states assuming jurisdiction over intrastate pipelines:

(e) Monitoring. —The Secretary may monitor a safety program established under this section to ensure that the program complies with the certification. A State authority shall cooperate with the Secretary under this subsection.

(f) Rejections of certification. —If after receiving a certification the Secretary decides the State authority is not enforcing satisfactorily compliance with applicable safety standards prescribed under this chapter, the Secretary may reject the certification, assert United States Government jurisdiction, or take other appropriate action to achieve adequate enforcement. The Secretary shall give the authority notice and an opportunity for a hearing before taking final action under this subsection. When notice is given, the burden of proof is on the authority to demonstrate that it is enforcing satisfactorily compliance with the prescribed standards.

Id. § 60105(e)-(f).

The Pipeline Safety Act also provides for federal funding to states that assume jurisdiction under § 60105 up to 80% of the costs reasonably required to carry out the safety program. Id. § 60107(a). The Secretary's authority to provide funding is restricted to cases where the state ensures the Secretary that it will provide the remaining costs of a safety program. Id. § 60107(b).

In addition, the Agency may withhold any part of a payment when it decides that the authority is not carrying out satisfactorily a safety program. Id. The Agency determines the percentage (up to the allowable ceiling of 80%) of funding it will provide to states by combining two equally weighted metrics: (1) a score assigned to that state's annual progress report which must be submitted after certification; and (2) a score resulting from an annual program evaluation undertaken by the Agency. 49 C.F.R. § 198.13(b). These scores reflect an assessment of the state's policies and procedures, its inspection practices and capacity, overall enforcement activity, and other indicia of program performance. Id. § 198.13(c).

California has participated in this cooperative federalism scheme for decades. The CPUC has assumed responsibility for regulating and enforcing a pipeline safety program for intrastate pipelines and pipeline facilities pursuant to certification under the Pipeline Safety Act. See Cal. Pub. Util.Code § 955(b). In 2011, the CPUC received 71% funding from the Agency as a result of the aggregate scoring system.

II

This litigation arose in response to the disastrous 2010 natural gas pipeline failure and resulting explosion in San Bruno, a fatal explosion in 2008 in Rancho Cordova, and a 2011 accident in Cupertino that caused significant property damage. PG & E owned and operated all three pipelines involved in the incidents. The National Transportation and Safety Board (“NTSB”) determined the probable cause of the San Bruno explosion to be “inadequate quality assurance and quality control in 1956” (when the pipeline was relocated) and an “inadequate pipeline integrity management program.” Nat'l Transp. Safety Bd., NTSB/PAR–11/01, Pacific Gas and Electric Company Natural Gas Transmission Popeline Rupture and Fire, San Bruno, California, Sept. 9, 2010, at xii (2011), available at http://ntsb.gov/investigations/AccidentReports/Pages/PAR1101.aspx. The NTSB report also cited regulatory provisions exempting the ruptured pipeline from pressure testing requirements, the CPUC's failure to detect PG & E's inadequate safety program, and PG & E's “flawed emergency response procedures and delay” as contributory factors. Id. NTSB's chairman, joined by two other members, wrote a concurrence observing that PG & E exploited weaknesses in a lax system of oversight and that “regulators ... placed a blind trust in the companies that they were charged with overseeing—to the detriment of public safety.” Id. at 135.

Citing the “substantial and unnecessary risk” posed to its citizens' lives and property by allegedly inadequate monitoring and regulation, San Francisco sued the Agency and the United States Department of Transportation. Invoking the Pipeline Safety Act's citizen suit provision, San Francisco sought declaratory and injunctive relief to compel the Agency to comply with its duties under the Pipeline Safety Act.

After holding that San Francisco met constitutional standing requirements to bring a claim, the district court dismissed the suit with leave to amend because the claim was not cognizable under the Pipeline Safety Act's citizen suit provision. The court explained that “while § 60121 would authorize a suit against government entities to the extent they engage in activities regulated by the [Pipeline Safety Act]—such as constructing or operating pipelines—it is not an appropriate vehicle for seeking mandamus relief regarding defendants' performance of their regulatory obligations.”

San Francisco amended its complaint to include claims under the APA, arguing that the Agency's approval of the CPUC's certification was arbitrary and capricious in violation...