N.J. Conservation Found. v. Fed. Energy Regulatory Comm'n

• Decision Date: 29 October 2018
• Docket Number: Civ. Action No. 17-11991(FLW)
• Citation: 353 F.Supp.3d 289
• Parties: NEW JERSEY CONSERVATION FOUNDATION, Plaintiff, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

353 F.Supp.3d 289

NEW JERSEY CONSERVATION FOUNDATION, Plaintiff,

v.FEDERAL ENERGY REGULATORY COMMISSION, et al., Defendants.

Civ. Action No. 17-11991(FLW)

United States District Court, D. New Jersey.

Signed October 29, 2018

Edward Lloyd, Susan J. Kraham, Columbia Law School, New York, NY, for Plaintiff.

Anand Ram Viswanathan, Susanna Y. Chu, Federal Energy Regulatory Commission, Washington, DC, for Defendant.

WOLFSON, United States District Judge:

In January 2018, defendant Federal Energy Regulatory Commission ("FERC" or "Commission"), issued an order granting third-party PennEast Pipeline Company, LLC ("PennEast") the right to construct and operate an interstate natural gas pipeline. Several parties to that agency proceeding, including Plaintiff New Jersey Conservation Foundation ("NJCF" or "Plaintiff"), have sought rehearing before the agency. While those requests were pending, NJCF brings this separate matter challenging FERC's purported ongoing pattern and practice of issuing certificates in violation of the Fifth Amendment of the United States Constitution.¹ In the present matter, Defendants move to dismiss for lack of subject matter jurisdiction, arguing, inter alia , that FERC's authorizing statute, i.e. , the Natural Gas Act (the "NGA"), vests the courts of appeals with exclusive jurisdiction to hear the type of claims asserted by Plaintiff in this case. For the reasons set forth below, Defendants' motion to dismiss is GRANTED .

BACKGROUND and PROCEDURAL HISTORY

I. Statutory and Regulatory Background

FERC is an "independent regulatory commission comprising up to five members appointed by the President, with advice and consent of the U.S. Senate." Department of Energy Organization Act, 42 U.S.C. § 7171(a) - (b). Commissioners may serve up to five-year terms, and no more than three members of the Commission may be members of the same political party. § 7171(b)(1). Each member has one vote and actions are determined by majority vote. As a governmental agency, FERC is relegated with the authority to regulate the interstate transmission and wholesale sale of electricity and natural gas, and licenses the construction and operation of hydropower projects, natural gas pipelines, and the projects' infrastructure.

The NGA, 15 U.S.C. § 717, et seq. , confers on the Commission "exclusive jurisdiction" over the "transportation and sale of natural gas in interstate commerce."

Schneidewind v. ANR Pipeline Co. , 485 U.S. 293, 300-301, 108 S.Ct. 1145, 99 L.Ed.2d 316 (1988) (the NGA is a "comprehensive scheme of federal regulation"); see Del. Riverkeeper Network v. FERC, 243 F.Supp.3d 141, 144 (D.D.C. 2017). Section 7 of the Act governs the process for obtaining a certificate authorizing the construction, extension, or abandonment of natural gas pipeline facilities. See 15 U.S.C. § 717f ; Del. Riverkeeper , 243 F.Supp.3d at 144–45 (describing FERC certification process); Myersville Citizens for a Rural Cmty., Inc. v. FERC , 783 F.3d 1301, 1307–08 (D.C. Cir. 2015). The Commission may issue a certificate only if it finds that the proposed project "is or will be required by the present or future public convenience and necessity," and may attach to the certificate "such reasonable terms and conditions as the public convenience and necessity may require." 15 U.S.C. § 717f(e). The NGA also permits any person aggrieved by a FERC order to seek rehearing before the Commission within thirty days after the order's issuance. 15 U.S.C. § 717r(a). After FERC issues a rehearing order, a party aggrieved by that particular order may seek judicial review in the appropriate court of appeals. 15 U.S.C. § 717r(b). Importantly, the Act vests jurisdiction in the U.S. Courts of Appeals to review final FERC orders and all matters inhering in a pipeline certificate. Id.

II. PennEast Pipeline Certificate²

In September 2015, PennEast submitted an application pursuant to the NGA, 15 U.S.C. § 717f(c), to construct and operate an interstate natural gas pipeline extending from Pennsylvania to New Jersey. Numerous parties, including Plaintiff, intervened in that FERC proceeding, in addition to submitting comments on the application to FERC. Upon filing PennEast's application, FERC's Office of Energy Projects (the "Office") initiated an environmental review process in accordance with the National Environmental Policy Act ("NEPA"), 42 U.S.C. § 4321, et seq. , to study the potential impact of the proposed pipeline. In that regard, the Office concluded that the proposed pipeline would result in some adverse effects, but they would be reduced to "less than significant levels" with the implementation of certain mitigation measures. See Final Environmental Impact Statement at ES-18. These proposed mitigation measures were recommended as conditions to any final authorization by FERC.

On January 19, 2018, FERC issued its Certificate Order of "public convenience and necessity," with one Commissioner dissenting, adopting the Office's findings. Consequently, FERC granted a Certificate to PennEast, subject to compliance with environmental and operating conditions. Thereafter, numerous parties, including Plaintiff, filed requests for agency rehearing. Plaintiff also moved to stay the Certificate Order.

Following the application for rehearing, FERC has the "power to grant or deny rehearing or to abrogate or modify its order without further hearing" within 30 days; otherwise the request is considered denied. 15 U.S.C. § 717r(a). On February 22, 2018, the Commission's Deputy Secretary issued a tolling order, granting rehearing for the limited purpose of affording the Commission time to consider the rehearing requests. During the pendency of the instant motion, the Commission issued a final order denying rehearing in the PennEast pipeline proceeding. Thereafter, Plaintiff, along with other third-parties, filed a petition for review of the Commission's PennEast orders pursuant to the NGA in the U.S. Court of Appeals for the D.C. Circuit.³

C. Plaintiff's Complaint

NJCF is a 501(c)(3) not-for-profit organization headquartered in Far Hills, New Jersey. Compl., ¶ 13. The purpose of the organization is preserving New Jersey's land and natural resources. Id. In that endeavor, NJCF owns over 20,000 acres of land preserved for the benefit of the public and the environment. Id. Indeed, NJCF owns property in Hunterdon County along the proposed route of the PennEast pipeline. Id. at ¶ 14. NJCF's land is subject to eminent domain proceedings under the Certificate at issue. Id. Plaintiff alleges that the pipeline will impact NJCF's property by interfering with NJCF's ownership of, access to, and normal use of its private lands. Id. at ¶ 15. NJCF further alleges that it will suffer economic harm if the public, members, and potential members cannot use the land as originally intended. Id.

In the Complaint, Plaintiff asserts three causes of action: (1) FERC's issuance of certificates that delegate the power of eminent domain in the absence of adequate public use analyses violates the Takings Clause of the Fifth Amendment; (2) FERC's practice of granting eminent domain prior to receiving environmental impact findings from regulatory agencies charged with making them violates the Fifth Amendment; and (3) FERC's practice of issuing a certificate conditioned on subsequent state or federal authorizations that may require changes to the pipeline route or prevent construction also violates the Takings Clause. In that regard, Plaintiff seeks a judgment and order declaring FERC's pattern and practices unconstitutional. Significantly, in its Complaint, Plaintiff painstakingly characterizes its claims as constitutional in nature, and that it is raising an issue of first impression — whether a conditional certificate, issued by FERC, that is not sufficient to authorize pipeline construction may constitutionally permit a private company to condemn land for a pipeline that may never be built.

In the instant matter, Defendants move to dismiss the Complaint for lack of subject matter jurisdiction. They argue that because the NGA vests the appropriate court of appeals — in this case, the Third Circuit or the D.C. Circuit — with exclusive jurisdiction to hear matters inhering in a pipeline certificate proceeding, this Court lacks jurisdiction to hear Plaintiff's claims.⁴

DISCUSSION

I. Legal Standard

Federal Rule of Civil Procedure 12(b)(1) mandates the dismissal of a case for "lack of subject-matter jurisdiction." FED. R. CIV. P. 12(b)(1). When jurisdiction is challenged pursuant to Rule 12(b)(1), the plaintiff bears the burden of persuading the court that subject matter jurisdiction exists. See Kehr Packages, Inc. v. Fidelcor, Inc. , 926 F.2d 1406, 1409 (3d Cir. 1991) ; Rudolph v. Adamar of N.J., Inc. , 153 F.Supp.2d 528, 533 (D.N.J. 2001) ; see also Hedges v. United States , 404 F.3d 744, 750 (3d Cir. 2005).

In evaluating a Rule 12(b)(1) motion to dismiss, courts must determine whether the motion attacks the complaint as deficient on its face, or whether the motion attacks the existence of subject matter jurisdiction in fact, apart from any pleadings. Mortensen v. First Fed. Sav. & Loan Ass'n , 549 F.2d 884, 891 (3d Cir. 1977). In a case where a defendant presents a factual attack, the court may consider evidence outside the pleadings. See Gotha v. United States , 115 F.3d 176, 178–79 (3d Cir. 1997) ; Mortensen , 549 F.2d at 891–92. When a defendant attacks subject matter jurisdiction "in fact," it disputes the existence of certain jurisdictional facts alleged by the plaintiff. See Carpet Group Intern. v. Oriental Rug Importers Ass'n, Inc. , 227 F.3d 62, 69 (3d Cir. 2000). In such a situation, "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Mortensen , 549 F.2d at 891. Additionally, the burden of proving the existence of subject matter jurisdiction...