Del. Riverkeeper Network v. Fed. Energy Regulatory Comm'n

• Decision Date: 22 March 2017
• Docket Number: Civil Action No. 16-cv-416 (TSC)
• Citation: 243 F.Supp.3d 141
• Parties: DELAWARE RIVERKEEPER NETWORK, et al., Plaintiffs, v. FEDERAL ENERGY REGULATORY COMMISSION, et al., Defendants.
• Court: U.S. District Court — District of Columbia

243 F.Supp.3d 141

DELAWARE RIVERKEEPER NETWORK, et al., Plaintiffs,

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

Civil Action No. 16-cv-416 (TSC)

United States District Court, District of Columbia.

Signed March 22, 2017

Jordan B. Yeager, Curtin & Heefner LLP, Doylestown, PA, Michael T. Kirkpatrick, Public Citizen Litigation Group, Washington, DC, Aaron Stemplewicz, Delaware Riverkeeper Network, Bristol, PA, for Plaintiffs.

Ross R. Fulton, Federal Energy Regulatory Commission, OGC, Lisa Barbas Luftig, Office of Enforcement, Washington, DC, for Defendants.

MEMORANDUM OPINION

TANYA S. CHUTKAN, United States District Judge

The Federal Energy Regulatory Commission (FERC) is empowered to issue "certificate[s] of public convenience and necessity" allowing entities to transport natural gas and to construct, extend, acquire, or operate natural gas pipelines. 15 U.S.C. § 717f. Plaintiffs, an environmental organization and its executive director, assert that FERC is unable to make unbiased determinations on the issuance of pipeline certificates because of a provision of the Omnibus Budget Reconciliation Act of 1986 (the Omnibus Act) which requires FERC to recover its annual operating costs directly from the entities it regulates. 42 U.S.C. § 7178. Plaintiffs claim that the Commission's structure and the resulting actual or perceived bias has deprived them of constitutional Due Process under the Fifth Amendment. The PennEast Pipeline Company intervened as a Defendant, and before the court are both PennEast's and FERC's motions to dismiss the Complaint.

For the reasons below, both Defendants' motions to dismiss will be GRANTED.

I. BACKGROUND

Plaintiff Delaware Riverkeeper Network (DRN) is a non-profit organization established in 1988 to protect and restore the Delaware River and its associated watershed, tributaries, and habitats, reaching parts of New Jersey, New York, Pennsylvania, and Delaware. (Compl. ¶ 25). DRN has more than 16,000 members, some of whom own land that has been impacted by pipelines authorized by the Commission in the past, and DRN believes that others own land that will be impacted by future pipelines. (Id. ¶¶ 35, 48). Plaintiffs allege that "DRN's members who live within the blast radius of proposed or existing Commission-jurisdictional pipelines are concerned about the increased risk of bodily and/or property harm as a result of pipeline accidents or explosions." (Id. ¶ 49).

PennEast applied for a certificate of public convenience and necessity allowing it to build a new natural gas pipeline system in New Jersey and Pennsylvania, and on September 28, 2015, Plaintiffs filed a motion to intervene in the FERC review process opposing the request. (Id. ¶ 92). Pursuant to FERC regulations, Plaintiffs' unopposed motion to intervene was granted. (Id. ¶ 93); 18 C.F.R. § 385.214(c)(1). Plaintiffs brought this suit before completion of the FERC review process, alleging that the review process is itself constitutionally deficient. At the motions hearing on March 3, 2017, counsel for FERC informed the court that FERC has delayed the PennEast project twice to conduct additional environmental reviews, and that as of that date, it had not approved the project or granted a certificate.

FERC certification proceeds in several steps. The first is the "pre-filing process," in which the applicant must make an initial filing including, among other things, the desired schedule of the project, anticipated application filing date, and desired date of Commission approval; information about zoning; a detailed map and description; a list of state agencies in the project area with permitting requirements, and a description of the applicant's negotiations with those agencies; a list of other persons and organizations of interest whom the applicant has contacted about the project; a description of any planning work that has already been done; an "acknowledgement" that a complete Environmental Report is required with the application at the time of filing; and a proposed Public Participation Plan for "facilitat[ing] stakeholder communications and public information." 18 C.F.R. § 157.21.

Once the applicant has applied for the certificate, FERC then determines whether " ‘the applicant is able and willing properly to do the acts and to perform the service proposed ... and that the proposed service’ and ‘construction ... is or will be required by the present or future public convenience and necessity.’ " Minisink Residents for Envtl. Pres. & Safety v. FERC , 762 F.3d 97, 101 (D.C. Cir. 2014) (quoting 15 U.S.C. § 717f(e) ). In deciding whether to approve the application and grant the certificate, FERC conducts an environmental review as required by the National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321 – 4370h. FERC can approve or deny the application, and can "attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require." 15 U.S.C. § 717f.

The statutory scheme allows "[a]ny person, State, municipality, or State commission aggrieved by an order issued by the Commission" to "apply for a rehearing within thirty days after the issuance of [an] order," for example, approving or rejecting construction of a pipeline. 15 U.S.C. § 717r(a). If the Commission does not respond to the request for rehearing within thirty days, it is deemed denied. At that point, a party who is aggrieved can obtain a review in the federal Court of Appeals where the natural gas company is located. Id. Regulations allow "[a]ny person" to file a motion to intervene; if the motion is not opposed within 15 days, the person becomes a party automatically, see 18 U.S.C. § 385.214(a), (c), and is therefore qualified to appeal the denial of rehearing to the appropriate Court of Appeals.

The D.C. Circuit has held that section 717r's language requiring the Commission to take action with regard to a rehearing request within 30 days, or have it deemed denied, does not require FERC to act on the merits. California Co. v. Fed. Power Comm'n , 411 F.2d 720, 722 (D.C. Cir. 1969). The Court noted that its previous decision had "apparently agreed" with FERC's assertion that "the Commission has power to act on applications for rehearing beyond the 30-day period so long as it gives notice of this intent." Id. (quoting Texa co -Ohio Gas Co. v. Fed. Power Comm'n , 207 F.2d 615, 617 (1953) ). Where the Commission issues a "tolling order" within 30 days indicating that it is postponing deciding on the merits but not yet denying an application for rehearing, the Court has found a party's appeal remains unripe because "the tolling orders do not resolve the rehearing requests but simply extend the time to consider them." City of Glendale v. FERC , No. 03-1261, 2004 WL 180270, at *1 (D.C. Cir. Jan. 22, 2004) (unpublished). Tolling orders have no explicit statutory basis, but have been upheld by the First and Fifth Circuits, as well as by the D.C. Circuit in several unpublished orders. Kokajko v. FERC , 837 F.2d 524 (1st Cir. 1988) ; Gen. Am. Oil Co. of Texas v. Fed. Power Comm'n , 409 F.2d 597, 599 (5th Cir. 1969) ; California Co. , 411 F.2d at 722 ; California Mun. Utils. Ass'n v. FERC , No. 01-1156, 2001 WL 936359, at *1 (D.C. Cir. July 31, 2001) ; City of Glendale , 2004 WL 180270 at *1.

Plaintiffs claim the Commission is unconstitutionally structurally biased because of its funding mechanism, which requires the Commission to recover its budget by charging regulated natural gas companies, see 42 U.S.C. § 7178,¹ because Commissioners may be removed only for cause, and because "the Commission is insulated from Congressional budgetary oversight," resulting in deprivation of their Fifth Amendment due process rights. They argue that the Commission's actual bias supports their claim of structural bias, as evidenced by the Commission's: 100 percent approval rate; failure to enforce the terms and conditions of its certificates; treating requests for rehearing arbitrarily by issuing indefinite tolling orders; never granting a request for rehearing to a non-industry party; never determining that a full Environmental Impact Statement is necessary after completing an Environmental Assessment; failure to ever fund its Office of Public Participation; and "revolving door" through which former Commissioners have gone on to work in industry positions. (Compl. ¶¶ 175–240). Plaintiffs suggest FERC is able to effectuate pro-industry bias through the use of eminent domain and preemption of local and state laws; preventing Plaintiffs from attaining due process. (Id. ¶¶ 241–261).

Plaintiffs ask the court to either declare FERC's reimbursement mechanism to be unconstitutional, or declare the Commission's power of eminent domain or authority to preempt state and local laws to be unconstitutional. They also ask the court to declare the PennEast certification procedure specifically, along with the procedure the Commission utilized for any project in the Delaware River Basin, to be a violation of due process.

II. LEGAL STANDARD

A. Federal Rule of Civil Procedure 12(b)(1)

In evaluating a motion to dismiss under Rule 12(b)(1), the court must "assume the truth of all material factual allegations in the complaint and ‘construe the complaint liberally, granting plaintiff the benefit of all inferences that can be derived from the facts alleged.’ " Am. Nat'l Ins. Co. v. FDIC , 642 F.3d 1137, 1139 (D.C. Cir. 2011) (quoting Thomas v. Prin cipi , 394 F.3d 970, 972 (D.C. Cir. 2005) ). However, " ‘the court need not accept factual inferences drawn by plaintiffs if those inferences are not supported by facts alleged in the complaint, nor must the Court accept plaintiff's legal conclusions.’ " Disner v. United States , 888 F.Supp.2d 83, 87 (D.D.C. 2012) (quoting Speelman v. United States , 461 F.Supp.2d 71, 73 (D.D.C. 2006) ). Further, under Rule 12(b)(1), the court "is not limited to the allegations of...