Baltimore Gas & Electric Co. v. Fed. Energy Reg. Comm'n, 00-1031

• Citation: 252 F.3d 456,346 U.S.App. D.C. 265
• Decision Date: 15 June 2001
• Docket Number: No. 00-1031,00-1031
• Parties: (D.C. Cir. 2001) Baltimore Gas and Electric Company, Petitioner v. Federal Energy Regulatory Commission, Respondent Columbia Gas Transmission Corporation, et al., Intervenors Consolidated with 00-1034, 00-1035, 00-1041, 00-1051, 00-1052
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 456

252 F.3d 456 (D.C. Cir. 2001)

Baltimore Gas and Electric Company, Petitioner v. Federal Energy Regulatory Commission, Respondent

Columbia Gas Transmission Corporation, et al., Intervenors

No. 00-1031 Consolidated with 00-1034, 00-1035, 00-1041, 00-1051, 00-1052

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 4, 2001

Decided June 15, 2001

On Petitions for Review of Orders of the Federal Energy Regulatory Commission

Peter C. Lesch argued the cause for petitioners. With him on the briefs were Jennifer N. Waters, Stanley W. Balis,

John F. Harrington, Kevin J. McKeon, John K. Keane, Jr. and Paul S. Buckley. Jeffrey A. Gollomp and Lillian S. Harris entered appearances.

Beth G. Pacella, Attorney, Federal Energy Regulatory Commission, argued the cause for respondent. With her on the brief was Dennis Lane, Solicitor.

Marilyn L. Doria, Sanford M. Saunders, Jr., Stephen R. Melton and Kurt L. Krieger were on the brief for intervenors Columbia Gulf Transmission Corporation and Columbia Gulf Transmission Company. Robin M. Nuschler entered an appearance.

Before: Edwards, Chief Judge, Sentelle and Randolph, Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge:

Baltimore Gas & Electric and several other petitioners (collectively "BG&E") challenge the Federal Energy Regulatory Commission's ("FERC") agreement to settle an enforcement action against Columbia Gas Transmission and Columbia Gulf Transmission (collectively "Columbia"), two natural-gas vendors. The Commission initially had alleged that Columbia violated the Natural Gas Act, ("NGA"), 15 U.S.C. 717 et seq., by engaging in unauthorized service abandonment. Because FERC's decision to settle is committed to the agency's nonreviewable discretion under Heckler v. Chaney, 470 U.S. 821 (1985), we conclude that we lack jurisdiction to hear petitioners' claim.

I. BACKGROUND

The NGA requires all vendors of natural gas in interstate commerce to obtain from FERC a certificate authorizing service at specified "certificated" levels. 15 U.S.C. 717f(c). Having obtained such authority, a natural-gas vendor must obtain Commission approval before abandoning a portion, or all, of its certificated service. Id. 717f(b).

In 1992, FERC discovered that the available capacity on one of Columbia's pipelines was lower than the level at which it had been certificated. FERC suspected that the decline in the pipeline's capacity was due to Columbia's failure to replace deteriorated compressor units. The Commission therefore ordered Columbia to show cause why it had not abandoned capacity without prior authorization. It also directed its General Counsel to begin a formal, non-public investigation into whether Columbia had unlawfully abandoned service without first obtaining FERC approval. See Columbia Gas Transmission Corp., 64 FERC p 61,365 (1993).

After a four-year investigation, FERC in August 1997 approved a settlement between Columbia and the Commission's Enforcement section. The settlement expressly declined to resolve whether Columbia had violated the Natural Gas Act. Instead Columbia, "without admitting or denying that any violation of the NGA or the Commission's regulations occurred, agree[d] to the remedies" the settlement contained. Columbia Gas Transmission Corp., 80 FERC p 61,220, 61,867 (1997). The centerpiece remedy was the requirement that Columbia conduct a 30-day "open season" to determine whether there was any demand for additional capacity on its pipeline, and to make that capacity available (up to its certificated level) to customers that desired it. Id. The settlement stopped short of requiring Columbia to pay money damages to customers that may have incurred higher costs as a result of the decline in its pipeline's capacity.

In September 1997, BG&E, one of Columbia's customers, moved to intervene in the administrative proceedings, and also petitioned for rehearing. BG&E argued both that FERC should not have settled with Columbia without submitting the agreement's terms to public notice and comment, and that the 30-day open season was inadequate to remedy the damages it had suffered from Columbia's capacity decline.

In December 1998, FERC permitted BG&E to intervene but denied its request for rehearing. See Columbia Gas Transmission Corp., 85 FERC p 61,437 (1998). The Commission explained that it was entitled to settle without notice and comment because the settlement was reached in the course of an agency investigation, and third parties have no right to participate in investigations. Because the investigation had now concluded, and because of BG&E's interests, FERC granted its motion to intervene. However, the Commission declined BG&E's invitation to reconsider its decision on rehearing. FERC cited its broad discretion to impose sanctions, which "includes the discretion not to order remedies for past violations in appropriate circumstances." Id. at 62,642. In particular, FERC explained that monetary relief was unwarranted because the magnitude of BG&E's asserted injuries was speculative, and because of Columbia's poor financial condition (it had been in bankruptcy from 1991 to 1995). Id. at 62,642-43.

Later that month BG&E filed another motion for rehearing. BG&E again complained that FERC had unlawfully excluded it from the investigation of Columbia, and that FERC was required to award it monetary relief for the losses it suffered. In December 1999, the Commission again denied rehearing. FERC explained that BG&E had no right to participate in its investigation of Columbia. FERC further claimed that its decision to proceed against Columbia through a settlement was "well within [its] discretion." And money damages against Columbia were unwarranted because calculating them would require "an undetermined expenditure of Commission ... resources" that FERC preferred to devote to "its current regulatory programs and initiatives." Columbia Gas Transmission Corp., 89 FERC p 61,325, 61,992 (1999).

BG&E then filed a petition for review with this Court. It maintains that FERC abused its discretion by approving the Columbia settlement without first giving BG&E an opportunity to participate in the proceedings. BG&E further argues that the Commission abused its discretion by remedying Columbia's assertedly unlawful conduct with a prospective open season, and not with money damages.¹ Intervenor Columbia moved to dismiss BG&E's petition. FERC and Columbia claim that this Court lacks jurisdiction to consider FERC's decision to settle, which is committed to the agency's nonreviewable discretion pursuant to Heckler v. Chaney, 470 U.S. 821 (1985). In a similar vein, they argue that, since this Court has no power to issue an order that could redress BG&E's claimed injury, BG&E lacks standing.

II. DISCUSSION

The Administrative Procedure Act ("APA") both authorizes and limits judicial scrutiny of the actions of administrative agencies. While there is a strong presumption of reviewability under the APA, Abbott Labs. v. Gardner, 387 U.S. 136, 140 (1967), that statute expressly provides that no judicial review is available of an "agency action [that] is committed to agency discretion by law." 5 U.S.C. 701(a)(2). The ban on judicial review of actions "committed to agency discretion by law" is jurisdictional. See, e.g., Fort Sumter Tours, Inc. v. Babbitt, 202 F.3d 349, 357 (D.C. Cir. 2000) (explaining that "the nonreviewability of a similar kind of agency decision is not simply a question of deference to agency discretion, but of the absence of jurisdiction"). That is, Congress has not given the courts the power to hear challenges to an agency's exercise of the discretion with which Congress has entrusted it.

In Heckler v. Chaney, the Supreme Court announced one specific application of 701(a)(2)'s denial of jurisdiction. Chaney sets forth the general rule that an agency's decision not to exercise its enforcement authority, or to exercise it in a particular way, is committed to its absolute discretion. Such matters are not subject to judicial review. 470 U.S. at 831; see also American Gas Ass'n v. FERC, 912 F.2d 1496, 1505 (D.C. Cir. 1990) (remarking that "nonenforcement decisions are ordinarily unreviewable by virtue of ... the Administrative Procedure Act"). This Court has held that the Chaney presumption of nonreviewability extends not just to a decision whether to bring an enforcement action, but to a decision to settle. New York State Dep't of Law v. FCC, 984 F.2d 1209, 1214 (D.C. Cir. 1993) (concluding that "an agency's decision to settle or dismiss an enforcement action is nonreviewable under Heckler v. Chaney").

The Chaney Court identified three reasons why agency enforcement decisions generally are nonreviewable. First, an agency's decision not to enforce "often involves a complicated balancing of a number of factors which are peculiarly within its expertise," including the allocation of agency resources and the likelihood of success. Chaney, 470 U.S. at 831. Second, an agency's refusal to act generally does not involve the exercise of "coercive power over an individual's liberty or property rights, and thus does not infringe upon areas that courts often are called upon to protect." Id. at 832. Third, and perhaps most importantly, an agency's decision not to enforce resembles a prosecutor's constitutional prerogative not to indict--"a decision which has long been regarded as the special province of the Executive Branch"--and so is entitled to similar deference. Id.

Indeed, Chaney's recognition that the courts must not require agencies to initiate enforcement actions may well be a requirement of the separation of powers commanded by our Constitution. The power to take care that the laws be faithfully executed is entrusted to the executive branch--and only to the executive branch. See U.S. Const. art. II, 3. One aspect of that power is the prerogative to decline to enforce a law, or to...