Alliance Pipeline L.P. v. 4.360 Acres of Land

• Decision Date: 25 April 2014
• Docket Number: No. 13–1003.,13–1003.
• Citation: 746 F.3d 362
• Parties: ALLIANCE PIPELINE L.P., Plaintiff–Appellee v. 4.360 ACRES OF LAND, MORE OR LESS, IN the S/2 OF SECTION 29, TOWNSHIP 163 NORTH, RANGE 85 WEST, RENVILLE COUNTY, NORTH DAKOTA; 4.675 Acres of Land, More or Less, in the SE/4 of Section 30, Township 163 North, Range 85 West, Renville County, North Dakota; Leonard Smith; Ione Smith, Defendants–Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

746 F.3d 362

ALLIANCE PIPELINE L.P., Plaintiff–Appellee

v.4.360 ACRES OF LAND, MORE OR LESS, IN the S/2 OF SECTION 29, TOWNSHIP 163 NORTH, RANGE 85 WEST, RENVILLE COUNTY, NORTH DAKOTA; 4.675 Acres of Land, More or Less, in the SE/4 of Section 30, Township 163 North, Range 85 West, Renville County, North Dakota; Leonard Smith; Ione Smith, Defendants–Appellants.

No. 13–1003.

United States Court of Appeals,

Eighth Circuit.

Submitted: Dec. 17, 2013.

Filed: March 24, 2014.

Rehearing and Rehearing En Banc Denied April 25, 2014.

Limited on Preemption Grounds

NDCC 32–15–06.1, 32–15–22

Limitation Recognized

15 U.S.C.A. § 717f(h)

Robert S. Rau, Minot, ND, argued, for appellants.

Michael David Schoepf, Bismarck, ND, argued, Bismarck, ND (Lawrence Bender, on the brief), for appellee.

Before WOLLMAN, LOKEN, and KELLY, Circuit Judges.

WOLLMAN, Circuit Judge.

Leonard and Ione Smith (the Smiths) appeal from a district court ¹ order condemning portions of their property for the construction of a natural gas pipeline owned and operated by Alliance Pipeline, L.P. (Alliance), and granting Alliance immediate use and possession of the condemned land. Alliance brought the condemnation action against the Smiths' property after obtaining a certificate from the Federal Energy Regulatory Commission (FERC) authorizing Alliance to condemn land along the route of its proposed pipeline. The Smiths assert that Alliance's certificate is ineffective against them because Alliance failed to provide the Smiths with notice of its application for the certificate and because FERC failed to consider relevant state law in granting the certificate. The Smiths also assert that Alliance's condemnation action runs afoul of state and federal procedural law. We affirm.

I.

Alliance operates an approximately 2300–mile network of oil and natural gas pipelines in the United States and Canada. In 2011, Alliance began plans to construct a 79–mile–long underground pipeline from a natural gas processing plant near Tioga, North Dakota, to an interconnection with Alliance's main pipeline near Sherwood, North Dakota. There was at that time (and there continues to be) an oil boom in North Dakota, and occasionally oil prospectors would find reservoirs containing both petroleum and natural gas. The oil companies, having no pipeline capacity to ship the gas to major markets, would burn the gas at the source—a practice called “flaring.” Alliance sought to take advantage of this market inefficiency by shipping the otherwise wasted gas east to Chicago.

Anyone who wishes to construct a natural gas pipeline in the United States must first obtain a certificate of public convenience and necessity from FERC, the federal agency responsible for supervising and coordinating the production of energy in the United States. See15 U.S.C. § 717f(c)-(e). Such a certificate also gives the recipient the authority to condemn land along the route of its pipeline under the power of eminent domain. See15 U.S.C. § 717f(h). Alliance applied to FERC for a certificate of public convenience and necessity on January 25, 2012. FERC published notice of Alliance's application in the Federal Register on February 7, 2012.

The Smiths are an elderly couple who own a farm near Sherwood, North Dakota. The route of Alliance's proposed pipeline crossed the Smiths' property. Sometime in February 2012, Alliance representatives visited the Smiths' farm to ask the Smiths if Alliance could purchase an easement across their land. Because the Smiths were in poor health, Alliance representatives met with Guy Solemsaas, the son of Ione and stepson of Leonard, who lives next to the Smiths and helps tend the Smiths' farm. Solemsaas told Alliance that neither he nor the Smiths were interested in negotiating the sale of an easement across the Smiths' land.

On April 13, 2012, Alliance representatives visited the Smiths again, this time to serve them with a state-court summons and petition to enter and survey their property. Alliance asserted that it needed access to the Smiths' property to complete various field surveys required as part of its FERC application. The state court granted Alliance's petition on May 15, 2012.

On September 20, 2012, FERC granted Alliance a certificate of public convenience and necessity, and on October 16, 2012, Alliance brought a condemnation action against two parcels of land owned by the Smiths. Alliance moved for summary judgment and for immediate use and possession of the Smiths' land. The district court granted both motions. See D. Ct. Order of Nov. 26, 2012.

II.

We review the district court's grant of summary judgment de novo, viewing the evidence in the light most favorable to the nonmoving party. Hill v. Walker, 737 F.3d 1209, 1216 (8th Cir.2013). Summary judgment is appropriate when there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In challenging the district court's grant of summary judgment to Alliance, the Smiths attack both Alliance's FERC certificate and the procedural propriety of Alliance's subsequent condemnation action. We address each challenge in turn.

A.

We begin with the Smiths' challenge to the FERC certificate, which is twofold. First, the Smiths assert that Alliance failed to provide them notice of its FERC application as required by both the Due Process Clause of the Fifth Amendment and FERC's own landowner notice requirements, set forth in 18 C.F.R. § 157.6(d). Second, the Smiths assert that FERC failed to consider state criteria for the siting of pipelines in approving Alliance's application. These criteria are set forth in North Dakota Administrative Code (NDAC) § 69–06–08–01.

We conclude that we lack jurisdiction to consider the Smiths' statutory challenges (in other words, the challenges based on 18 C.F.R. § 157.6(d) and NDAC § 69–06–08–01).

When Congress prescribes specific procedures for the review of an administrative order, courts outside the statutory review framework are precluded from hearing challenges to that order. See City of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 336, 78 S.Ct. 1209, 2 L.Ed.2d 1345 (1958). Section 19 of the Natural Gas Act, 15 U.S.C. § 717r(a)–(b), sets forth specific procedures for challenging a FERC order:

(a) Any person, state, municipality, or State commission aggrieved by an order issued by the Commission in a proceeding under this chapter to which such person, State, municipality, or State commission is a party may apply for a rehearing within thirty days after the issuance of such order.... No proceeding to review any order of the Commission shall be brought by any person unless such person shall have made application to the Commission for a rehearing thereon....

(b) Any party to a proceeding under this chapter aggrieved by an order issued by the Commission in such proceeding may obtain a review of such order in the court of appeals of the United States ... by filing in such court, within sixty days after the order of the Commission upon the application for rehearing, a written petition praying that the order of the Commission be modified or set aside in whole or in part.... Upon the filing of such petition such court shall have jurisdiction, which upon the filing of the record with it shall be exclusive, to affirm, modify, or set aside such order in whole or in part.

Section 19 thus requires that any challenge to a FERC order first be brought before FERC itself in a petition for rehearing within thirty days of the order's issuance. If, after rehearing, a party aggrieved by the order remains unsatisfied, that party may seek further review by appealing directly to a United States court of appeals within sixty days of FERC's decision on rehearing.

“As the statutory language plainly states, the special judicial review provisions of § 19 are exclusive.” Williams Natural Gas Co. v. City of Oklahoma City, 890 F.2d 255, 261 (10th Cir.1989). By collaterally attacking the FERC order in this condemnation proceeding, the Smiths seek to circumvent this exclusive review scheme.

We need not determine whether § 19 would permit us to exercise jurisdiction over the Smiths' claim that Alliance denied them due process of law by failing to provide them with advance notice of its FERC application. Assuming that such notice is constitutionally required, we conclude that the Smiths received notice “reasonably calculated ... to apprise” them of Alliance's FERC application. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). In February 2012, Alliance visited the Smiths' farm to negotiate the purchase of an easement across the Smiths' land for the construction of its pipeline. On April 13, 2012, Alliance filed a state court action to enter and survey the Smiths' property for purposes of its FERC application. And on October 16, 2012, Alliance brought this condemnation action against the Smiths' property. All three of these events occurred before the expiration of the thirty-day rehearing period provided by § 19, and all three occurred after or around the time FERC published notice of Alliance's application in the Federal Register. Perhaps the Smiths, as an elderly couple in rural North Dakota, should not be charged with notice of the Federal Register. But their counsel in the state-court proceeding to enter and survey their land (who also represents the Smiths in this proceeding) can claim no such lack of notice. Taken together, these events gave the Smiths reasonable notice that Alliance was applying to FERC for the right to condemn the Smiths' land.

B.

The Smiths' challenges to Alliance's FERC certificate now aside, we turn next to the Smiths' allegation that Alliance violated several state procedural rules in bringing this condemnation action. The Smiths refer us specifically to North Dakota Century Code (NDCC) § 32–15–06(1), which imposes a duty upon the condemnor to negotiate with a condemnee prior to bringing...