ANR Pipeline Co. v. Iowa State Commerce Com'n

• Decision Date: 23 October 1987
• Docket Number: 86-2235,Nos. 86-2200,s. 86-2200
• Citation: 828 F.2d 465
• Parties: ANR PIPELINE COMPANY, Appellee, v. IOWA STATE COMMERCE COMMISSION, Andrew Varley, individually and in his official capacity as Commissioner, Christine Hansen, individually and in her official capacity as Commissioner, Paul Franzenburg, individually and in his official capacity as Commissioner, Appellants. Office of Consumer Advocate. ANR PIPELINE COMPANY, Appellee, v. IOWA STATE COMMERCE COMMISSION, Andrew Varley, individually and in his official capacity as Commissioner, Christine Hansen, individually and in her official capacity as Commissioner, Paul Franzenburg, individually and in his official capacity as Commissioner, Office of Consumer Advocate, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 465

828 F.2d 465

56 USLW 2171

ANR PIPELINE COMPANY, Appellee, v. IOWA STATE COMMERCE COMMISSION, Andrew Varley, individually and in his official capacity as Commissioner, Christine

Hansen, individually and in her official capacity as

Commissioner, Paul Franzenburg, individually and in his

official capacity as Commissioner, Appellants.

Office of Consumer Advocate.

ANR PIPELINE COMPANY, Appellee, v. IOWA STATE COMMERCE COMMISSION, Andrew Varley, individually and in his official capacity as Commissioner, Christine

Hansen, individually and in her official capacity as

Commissioner, Paul Franzenburg, individually and in his

official capacity as Commissioner, Office of Consumer

Advocate, Appellant.

Nos. 86-2200, 86-2235.

United States Court of Appeals Eighth Circuit.

Submitted May 11, 1987.

Decided Sept. 8, 1987.

Rehearing and Rehearing En Banc Denied Oct. 23, 1987.

Patrick J. Nugent, Des Moines, Iowa, for Iowa State Commerce Commission, et al.

Ronald C. Polle, Des Moines, Iowa, for Office of Consumer Advocate.

Richard A. Davidson, Davenport, Iowa, for appellee.

Before HEANEY, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and BOWMAN, Circuit Judge.

BOWMAN, Circuit Judge.

This case requires us to decide whether, and to what extent, the Natural Gas Pipeline Safety Act (NGPSA), 49 U.S.C. Secs. 1671-1686, preempts an Iowa statute designed to regulate the construction and operation of pipelines transporting natural gas in and through the state. Plaintiff ANR Pipeline Company (ANR) raises a challenge under the Supremacy Clause ¹ to the application of Iowa Code Chapter 479 to an ANR interstate gas pipeline located in Henry County, Iowa. ² The District Court held that, with few exceptions, the NGPSA and the Natural Gas Act of 1938 (NGA), 15 U.S.C. Secs. 717-717z, preempted the provisions of the Iowa law. We affirm.

I.

Under Iowa Code Chapter 479 and the accompanying regulations, the Iowa State Commerce Commission (the Commission) administers an extensive hearing, inspection, and permit program for pipelines and other gas transmission and storage facilities. The statute gives the Commission the authority to supervise both intrastate and interstate transportation of natural gas by pipeline, and is designed "to protect the safety and welfare of the public...." Iowa Code Ann. Sec. 479.1 (West Supp.1987). The statute requires pipeline companies to submit detailed plans regarding the proposed construction of underground pipelines, id. at Secs. 479.5-.6; to undergo a public notice and evidentiary hearing procedure id. at Secs. 479.7-.11; to apply for and obtain a permit before beginning construction, id. at Sec. 479.5; to preserve topsoil, drainage structures, and underground improvements in burying pipelines, id. at Sec. 479.29; and to submit to an inspection program designed to insure compliance with the statute and its regulations, id. at Sec. 479.4. Permits issued under the statute are subject to "such terms, conditions and restrictions as to safety requirements and as to location and route as may be determined by [the Commission] to be just and proper." Id. at Sec. 479.12. The statute empowers the Commission to bring actions in Iowa courts to enforce compliance with the conditions of permits, id. at Sec. 479.28, and to assess fines of up to $1000 per day for each violation of the statute's provisions, id. at Sec. 479.31. The statute also provides for the resolution of damages claims resulting from the construction and operation of a pipeline, and requires that companies have in place the procedures and the financial capacity to settle and pay such claims. Id. at Secs. 479.26, .41-.46.

Regulations issued by the Commission under its statutory authority, id. at Sec. 479.17, provide more detailed standards to be employed in the permit application process, in pipeline construction and operation, and in the adjudication of damages claims. Iowa Admin.Code r. 250-9.1 et seq., 250-10.1 et seq. (1983). Most significantly for purposes of this appeal, the Commission has adopted as its own regulations the construction, operation, maintenance, and safety standards promulgated by the U.S. Department of Transportation under the NGPSA. Id. at 250-10.12-.13 (1983).

Under the NGA, pipeline companies proposing to construct an interstate pipeline must obtain a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission (FERC) authorizing the construction and operation of the pipeline. 15 U.S.C. Sec. 717f(c)(1)(A). Although the certification process usually entails a notice and adjudicative hearing, the statute authorizes FERC in an "emergency" to issue a temporary certificate without such notice and hearing, in order to provide immediate service to particular customers. Id. at Sec. 717f(c)(1)(B).

Under the NGPSA, the Secretary of Transportation is required to establish comprehensive safety standards for all pipeline facilities, and to administer an inspection program designed to insure industry compliance with the applicable safety standards. 49 U.S.C. Secs. 1672, 1677, 1680-81. The NGPSA also requires pipeline companies to certify to FERC in any certification proceeding under the NGA that they "will design, install, inspect, test, construct, operate, replace, and maintain" the facilities they propose to construct in accordance with the applicable safety standards of the NGPSA. Id. at Sec. 1676. This certification of compliance with the NGPSA standards is binding on FERC for purposes of the NGA certification process, "unless the relevant enforcement agency ³ has timely advised [FERC] in writing that the applicant has violated safety standards established pursuant to" the NGPSA. Id.

Under its Sec. 717f "emergency" authority, FERC issued a temporary certificate to ANR on August 14, 1984, to allow the company to build a 2.6 mile section of four-inch diameter pipeline in Henry County, Iowa. Appendix of Record Exhibits (App.) at 144. The pipeline was necessary to supply gas to a local pipeline company for service to a corn-drying operation needing the gas in time for the 1984 fall harvest. Although both pipeline companies previously had applied for permits under Iowa Chapter 479, ANR began construction on August 14, without having received the Iowa permit. App. at 76-78.

On August 24, 1984, the Commission held a hearing on the Chapter 479 applications, and approved each of them. App. at 52-57. However, the Commission's Hearing Examiner expressed displeasure that ANR had begun construction before obtaining a permit, and, in a later ruling, recommended that the Office of Consumer Advocate make a determination whether to recommend the imposition of civil penalties against ANR under Iowa Code Sec. 479.31. District Court Order (Order) at 2. The Office of Consumer Advocate did recommend civil penalties, and, after an evidentiary hearing, the Commission imposed the maximum fine of $1,000 per day against ANR for each of the ten days during which it proceeded with construction of the pipeline without an Iowa permit. App. at 93-106. ANR raised its preemption arguments in the evidentiary hearing on the fine, but the Commission rejected them. App. at 101-03. ANR then filed this action in federal court seeking declaratory and injunctive relief from the imposition of the Chapter 479 fines. The District Court held that the Iowa law was in most respects preempted by federal law, and ruled that ANR was entitled to injunctive relief. The Commission and the Office of Consumer Advocate appeal.

II.

The case is governed by familiar principles of federal preemption:

Under the Supremacy Clause, federal law may supersede state law in several different ways. First, when acting within constitutional limits, Congress is empowered to pre-empt state law by so stating in express terms. In the absence of express pre-emptive language, Congress' intent to pre-empt all state law in a particular area may be inferred where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress "left no room" for supplementary state regulation. Pre-emption of a whole field also will be inferred where the field is one in which "the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject."

Even where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law. Such a conflict arises when "compliance with both federal and state regulation is a physical impossibility," or when state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 105 S.Ct. 2371, 2375, 85 L.Ed.2d 714 (1985) (citations omitted).

In the NGPSA, Congress expressly has preempted state regulation of safety in connection with interstate gas pipelines. Although the NGPSA permits the states to "adopt additional or more stringent safety standards for intrastate pipeline transportation if such standards are compatible with the Federal minimum standards," the same section provides that "[n]o State agency may adopt or continue in force any such standards applicable to interstate transmission facilities...." 49 U.S.C. Sec. 1672(a)(1) (emphasis added).

In addition to this express statutory language, the legislative history of the NGPSA contains a number of similar expressions of Congress's intent to preempt state safety regulation with respect to interstate pipelines. The House report on the bill specifically addresses the argument that because the states have a strong police power interest in the regulation of utilities, see Arkansas Electric Cooperative Corp. v. Arkansas Public Service Commission, 461 U.S. 375, 377, 103 S.Ct. 1905, 1908, 76 L.Ed.2d 1 (1983), state and local regulation of pipeline safety is warranted The...