Consol. Land Co. v. Rockies Express Pipeline Llc.

Decision Date29 September 2010
Docket NumberNo. 09-3864.,09-3864.
Citation622 F.3d 602
PartiesAMERICAN ENERGY CORPORATION; Consolidated Land Company, Plaintiffs-Appellants, v. ROCKIES EXPRESS PIPELINE LLC, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

OPINION TEXT STARTS HERE

ARGUED: Mark S. Stemm, Porter, Wright, Morris & Arthur LLP, Columbus, Ohio, for Appellants. Gregory D. Brunton, Reminger Co., L.P.A., Columbus, Ohio, for Appellee. ON BRIEF: Mark S. Stemm, Alvin J. McKenna, Robert J. Stalter, Porter, Wright, Morris & Arthur LLP, Columbus, Ohio, for Appellants. Gregory D. Brunton, Paul N. Garinger, Reminger Co., L.P.A., Columbus, Ohio, for Appellee. Vladimir P. Belo, Bricker & Eckler LLP, Columbus, Ohio, for Amicus Curiae.

Before: SUTTON and McKEAGUE, Circuit Judges; JONKER, District Judge. *

OPINION

SUTTON, Circuit Judge.

This is round three in a land-use dispute between two coal companies and a pipeline company. Round one: over the coal companies' objection, the pipeline company obtained an order from the Federal Energy Regulatory Commission (FERC) permitting it to build a natural gas pipeline over the coal companies' mine, after which the coal companies appealed the order to the D.C. Circuit, where it is now pending. Round two: the pipeline company filed a condemnation action in federal court seeking a surface easement over the coal mine in return for compensating the coal companies for the costs of the easement. Round three: the coal companies filed an action in state court, later removed to federal court, to enjoin the building of the pipeline and to recover tort damages from the pipeline company caused by construction of the pipeline. In this last action, the subject of today's appeal, the district court granted the pipeline company's motion to dismiss, holding that the plaintiffs' claims belonged before the courts handling the first two actions. We affirm.

I.

The FERC Proceeding. In 2007, the pipeline company filed an application with FERC to build a natural gas pipeline from Missouri to eastern Ohio. Rockies Express Pipeline LLC, Nos. CP07-208-000, CP07-208-001, 123 FERC ¶ 61234, 2008 WL 2224961, at ¶ 1 ( FERC Certificate ). At stake was a “certificate of public convenience and necessity,” which is what an energy company needs to build a pipeline crossing state lines. 15 U.S.C. § 717f(c). The coal companies opposed the certificate request, and FERC permitted them to intervene in the proceeding. As the coal companies saw it, the pipeline would interfere with their business and endanger their mining operations. FERC nonetheless granted the certificate in 2008. FERC issued the certificate subject to several conditions, one of which required the pipeline company to “collaborate with [the coal companies] to develop a construction and operations plan” addressing “pipeline integrity and operation” for the portion of the pipeline that runs over the mine. FERC Certificate at ¶ 97, Appendix E ¶ 147.

The pipeline company submitted the required “construction and operations plan” and supplemental materials. The coal companies renewed their objections to the proposed pipeline route. FERC approved the plan and notified the pipeline company that it could begin constructing the pipeline. The coal companies requested a rehearing, which FERC granted in part and denied in part on July 15, 2009. The coal companies appealed FERC's final order to the D.C. Circuit, where it is currently pending. See Murray Energy Corp. v. FERC, No. 09-1207 (D.C.Cir. filed July 20, 2009).

The Federal Court Condemnation Action. A FERC certificate grants the holder the right to acquire any portion of the necessary right of way by eminent domain when the certificate holder cannot obtain permission through negotiations with the property owner. 15 U.S.C. § 717f(h). On June 6, 2008, the pipeline company filed a condemnation action in federal district court seeking to obtain easement rights along the right of way needed to construct the pipeline. See Rockies Express Pipeline LLC v. 4.895 Acres of Land, More or Less, in Butler County, Ohio, No. 2:08-CV-554, R.2, 2008 WL 6710440 (S.D.Ohio June 11, 2008). The pipeline company eventually brought the coal companies into the action as defendants, and that action remains pending in the District Court for the Southern District of Ohio.

The Conversion Action. On April 10, 2009, the coal companies filed this action in state court in Ohio. Four days later, the pipeline company removed the action, involving diverse parties, to federal district court. The essence of the coal companies' position is that they face injuries from the construction of the pipeline that neither their FERC appeal nor the condemnation action can compensate. The district court disagreed, granting the pipeline company's motion to dismiss under Civil Rule 12(b)(6). This appeal followed.

II.

The coal companies seek four types of relief: (1) a declaration that they have the right to extract all of the mine's coal without the pipeline company's interference, requiring the pipeline company to “determine” and “commit to implement and pay for” those measures that “will eliminate the risk of imminent danger and disruptions” to mining, R.3 ¶ A; (2) an injunction halting pipeline construction until the pipeline company presents a mitigation plan adequate to avoid danger and disruptions; (3) an injunction requiring the company to develop a mitigation plan; and (4) a finding that the pipeline has converted the coal companies' property under state law-by “wrongfully interfer[ing] with [their] right to plan for [their] mining and [to] mine all of the coal,” id. ¶ 70-and an award of compensatory damages, id. ¶ D. We give fresh review to the district court's decision to dismiss these claims as a matter of law and treat all of the coal companies' factual allegations as true. Rossborough Mfg. Co. v. Trimble, 301 F.3d 482, 489 (6th Cir.2002).

A.

We can make short work of the coal companies' first three claims-all for equitable relief of one sort or another. At the heart of these claims lies the belief that FERC did not adequately consider the safety risks and business interruptions that the coal companies would face from the pipeline-including the fear that the pipeline would cause “imminent danger and disruptions” and “crippling financial losses.” R.3 ¶¶ 50, 56. These fears may or may not be well-founded, but one thing is clear: They are not for us to resolve.

The Natural Gas Act sets forth a highly reticulated procedure for obtaining, and challenging, a FERC certificate to build an interstate pipeline. A party aggrieved by such an order may apply for rehearing before FERC. 15 U.S.C. § 717r(a). And no entity may seek judicial review of a FERC order unless it first sought rehearing from the agency. Id. Once FERC concludes the rehearing, the aggrieved party may petition for review either in the D.C. Circuit or in the circuit where the natural gas company is located or has its principal place of business-in this instance, the Third or Fifth Circuit. 15 U.S.C. § 717r(b); R.2 at 3 (the pipeline company is a Delaware LLC and has its principal place of business in Texas). The relevant court of appeals thereafter has “exclusive” jurisdiction “to affirm, modify, or set aside [FERC's] order in whole or in part.” 15 U.S.C. § 717r(b); see also 15 U.S.C. § 717r(d)(1). Exclusive means exclusive, and the Natural Gas Act nowhere permits an aggrieved party otherwise to pursue collateral review of a FERC certificate in state court or federal district court.

Yet it is precisely this exclusive jurisdiction that the coal companies wish to sidestep. In the absence of their desired injunctive and declaratory relief, they say, the pipeline will interrupt their mining business and create safety risks. FERC, however, evaluated those same claims and same types of claims in its original order granting the certificate. See FERC Certificate at ¶¶ 88-89 (addressing the coal companies' concern that the pipeline would cross the mine's underground entrance), ¶ 91 (addressing the coal companies' concerns that the proposed pipeline will “present numerous dangers to the pipeline's integrity” and “will interfere with the ongoing and future extraction of hundreds of millions of tons of coal”), ¶ 93 (addressing the steps the pipeline company had taken to prevent safety hazards and reiterating the certificate's requirements for “Rockies Express to consult with the mining companies prior to the start of construction” to ensure the route's safety), Appendix E ¶ 147 (addressing the requirement that the pipeline company collaborate with the coal companies to develop a “construction and operations plan” that “address[es] the primary concern of maintaining pipeline integrity and operation while not impeding the mining operation”).

More, FERC addressed some of these same concerns again in reviewing the coal companies' rehearing petition. See Rockies Express Pipeline LLC, No. CP07-208-005, 128 FERC ¶ 61045, 2009 WL 2049170, at ¶ 31 ([The coal companies] argue that the Commission erred in approving [the pipeline company's certificate] ... because the plan is deficient, unsafe, and fails to protect [the coal companies'] mining operations.”), ¶ 71 (We believe ... that construction and operation of the REX-East pipeline, as conditioned by our orders, will not constitute a significant safety risk.”). Proving that FERC took the coal companies' concerns seriously, it imposed an additional condition on the pipeline company. To “ensure the safety of miners working” in the mine, FERC required the pipeline company, prior to any surface blasting, to “provide the Commission with proof that [the coal companies] and the Ohio Department of Natural Resources Office of Mine Safety have received actual notice of” the pipeline company's plans. Id. at ¶ 85.

Now that FERC has issued its final order and now that the coal companies have appealed that order to the D.C. Circuit, the matter lies within that court's...

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