Ne Hub Partners, L.P. v. CNG Transmission Corp. , 239 F.3d 333 ( 2001 )

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
1-29-2001
NE Hub Partners LP v. CNG Transmission
Precedential or Non-Precedential:
Docket 00-3387
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2001
Recommended Citation
"NE Hub Partners LP v. CNG Transmission" (2001). 2001 Decisions. Paper 14.
http://digitalcommons.law.villanova.edu/thirdcircuit_2001/14
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2001 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
Filed January 29, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-3387
NE HUB PARTNERS, L.P.,
Appellant
v.
CNG TRANSMISSION CORPORATION; PENN FUEL GAS,
INC.; JAMES M. SEIF; GEORGE J. MILLER; MICHELLE
A. COLEMAN; THOMAS W. RENWAND; BERNARD A.
LABUSKES, JR.
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civ. No. 99-00082)
District Judge: Honorable Yvette Kane
Argued October 6, 2000
BEFORE: NYGAARD, GREENBERG, and COWEN,
Circuit Judges
(Filed: January 29, 2001)
Walter A. Bunt, Jr. (argued)
Daniel P. Trocchio
Kirkpatrick & Lockhart
535 Smithfield Street
Henry W. Oliver Building
Pittsburgh, PA 15222
Andrew H. Cline
Kirkpatrick & Lockhart
240 North Third Street
Harrisburg, PA 17101
Attorneys for Appellant
Stanley R. Geary (argued)
Buchanan Ingersoll
301 Grant Street
One Oxford Centre, 20th Floor
Pittsburgh, PA 15219-1410
Attorney for Appellee
CNG Transmission Corporation
Karol L. Newman (argued)
Hogan & Hartson
555 13th Street, N.W.
Washington, DC 02004-1109
Attorney for Appellee
Penn Fuel Gas, Inc.
D. Michael Fisher
Attorney General
J. Bart DeLone (argued)
Deputy Attorney General
Calvin R. Koons
Senior Deputy Attorney General
John G. Knorr
Office of the Attorney General of
Pennsylvania, 15th Floor
Strawberry Square
Harrisburg, PA 17120
Attorney for Appellees
George J. Miller, Michelle Coleman,
Thomas W. Renwand, and
Bernard A Labuskes, Jr.
2
OPINION OF THE COURT
GREENBERG, Circuit Judge.
After detailed examination of numerous technical, safety,
and environmental issues, the Federal Ener gy Regulatory
Commission ("FERC") issued a certificate of public
convenience and necessity for plaintiff-appellant NE Hub
Partners, L.P.'s ("NE Hub") natural gas storage facility (the
"Facility") in Tioga County, Pennsylvania. The
Commonwealth of Pennsylvania may seek to revisit those
issues in consolidated administrative appeals in its own
permitting process in a costly pr oceeding that will delay NE
Hub's construction of the Facility. Consequently, NE Hub
brought a district court action seeking an injunction
against the state appellate proceedings in an attempt to bar
aspects of them on federal preemption gr ounds. The district
court, however, rejected the claim without reaching its
merits, principally on the jurisdictional gr ound that it was
not ripe for decision before the state pr ocess concluded. See
NE Hub Partners, L.P., No. 1: CA-99-0082 (M.D. Pa. Apr. 7,
2000) ("NE Hub"). We disagr ee with the district court on the
ripeness issue and accordingly will reverse its order
dismissing the action and will remand the case for further
proceedings.
I. BACKGROUND
A. Factual History1
Since 1995 NE Hub has been seeking a plethora of
federal and state permits to construct the Facility. The
construction is a substantial undertaking requiring NE Hub
to drill through the Oriskany sand formation which
contains competing storage facilities owned by Penn Fuel
Gas, Inc. ("Penn Fuel") and CNG Transmission Corp.
("CNGT").2 Not surprisingly Penn Fuel and CNGT have
_________________________________________________________________
1. We take the facts we recite mainly from the complaint which, for
purposes of this appeal, should be taken as true and afforded all
favorable inferences. See Standar d of Review, Part III, infra.
2. CNGT now is called Dominion Transmission, Inc. and Penn Fuel now
is called PPL Gas Utilities Corporation. As a matter of convenience we
nevertheless continue to refer to them as CNGT and Penn Fuel.
3
opposed NE Hub every step of the way before both FERC
and the Pennsylvania agencies exercising jurisdiction over
the construction.
Because the Facility will store natural gas for use in
interstate commerce it is subject to FERC's jurisdiction and
thus its construction requires a certificate of public
convenience and necessity (the "Certificate") pursuant to
section 7(c) of the Natural Gas Act, 15 U.S.C. SS 717 et seq.
("NGA"). NE Hub applied for the Certificate in November
1995, but Penn Fuel and CNGT intervened and r equested
FERC to reject NE Hub's application on a variety of
technical, safety and environmental grounds, including a
claim that the construction and use of the Facility
threatened to damage their own facilities.
FERC reviewed the entire range of technical, safety, and
environmental issues relating to the Facility, and, at the
instance of Penn Fuel and CNGT, convened a technical
conference on the application in September 1996 at which
they raised the following 23 issues relating to the technical,
safety, and environmental soundness of the Facility:
(1) Whether NE Hub's Drilling and Construction
Program, utilizing a large diameter drill bit, would
result in massive mud loss to the Oriskany sand
formation;
(2) Whether circulation materials would s atisfactorily
mitigate the mud loss into the surrounding
geological strata;
(3) Whether test drilling perfor med on well TW-501
indicated that the Drilling and Construction
Program would lead to massive fluid loss to the
Oriskany sand formation;
(4) Whether NE Hub's Drilling and Construction
Program had sufficient documentation r elating to
rates of penetration that could reasonably be
expected from the use of large diameter (28")
drilling bits to penetrate the Oriskany sand
formation;
(5) Whether NE Hub's Drilling and Construction
Program had properly taken into account fracture
permeability of the Oriskany sand formation;
4
(6) Whether NE Hub's Drilling and Construction
Program had accounted for the pressur e
fluctuations it might encounter during drilling
operations due to existing gas storage facilities;
(7) Whether NE Hub's Drilling and Construction
Program would result in cement invasion to the
Oriskany sand formation;
(8) Whether mud loss and cement invasion cause d
by NE Hub's Drilling and Construction Program
would result in irremediable damage to the
deliverability of gas from the CNGT/Penn Fuel
Storage;
(9) Whether NE Hub's Drilling and Construction
Program would lead to increased risk of gas leaks
and catastrophic blowouts;
(10) Whether the use of large quantities of loss
circulation materials in NE Hub's Drilling and
Construction Program would cause a ``cake' to
form across the Oriskany sand for mation and
reduce the likelihood of achieving an adequate
cement bond between the wall of the well and the
casing string;
(11) Whether NE Hub's Drilling and Construction
Program would achieve the turbulent flow
required to remove loss circulation material from
the Oriskany sand formation and permit the
development of an adequate cement bond;
(12) Whether NE Hub's Drilling and Construction
Program required or contained sufficient
contingencies in the event an adequate cement
bond was not achieved;
(13) Whether NE Hub's Drilling and Construction
Program included procedures for the use of a
cement bond log tool to evaluate the integrity of
the cement bond between the well and casing
string;
(14) Whether NE Hub's Drilling and Construction
Program would lead to fracturing of the casing
shoe;
5
(15) Whether NE Hub's Drilling and Construction
Program would lead to overpressuring of shallow
formations;
(16) Whether NE Hub's Drilling and Construction
Program would increase the likelihood of gas loss
or gas migration for the CNGT/Penn Fuel
Storage;
(17) Whether NE Hub's Drilling and Construction
Program would result in salt caver n subsidence;
(18) Whether NE Hub's Drilling and Construction
Program relied on proper resear ch and data
regarding the tensile and compressive strengths
for salt;
(19) Whether NE Hub's Drilling and Construction
Program relied on proper mechanical integrity
testing of the salt caverns;
(20) Whether NE Hub had failed to consider alter nate
sites for cavern development;
(21) Whether the Sandia National Laboratories r eport
used in development of the Drilling and
Construction Program adequately addressed
cavern operating pressures, caver n creep and
subsidence, and rock mechanics;
(22) Whether the geologic conditions at locations
targeted by NE Hub's Drilling and Construction
Program were adequate for cavern development;
and
(23) Whether NE Hub should be requir ed to obtain
insurance and/or indemnities that would be
available to compensate CNGT and/or Penn Fuel
for potential losses arising from the construction
or operation of the Facility.
App. at 20-22.
For the next year and a half FERC, in consultation with
NE Hub, Penn Fuel, and CNGT and with the assistance of
an outside consulting firm, exhaustively r eviewed NE Hub's
proposal for the Facility, taking Penn Fuel's and CNGT's
6
objections into account. In connection with this r eview NE
Hub, Penn Fuel, and CNGT led what NE Hub has
characterized as "a parade of experts and technical
consultants before F.E.R.C." See app. at 24. FERC also
made an Environmental Impact Assessment of the Facility
pursuant to the National Environmental Policy Act, treating
at least seven issues:
(1) Requirements for NE Hub to create more than the
two salt caverns approved by the Certificate;
(2) Locations of structures and facilities necessary for
the Facility, including right-of-ways and the
freshwater intake structure;
(3) Whether the Facility could be constructed and
operated with insignificant effects on bodies of
water, including rivers and streams;
(4) Whether NE Hub's erosion and sedimentation
plans were sufficient to minimize impacts on soil
and bodies of water;
(5) Whether NE Hub's air pollution control plans were
sufficient to minimize air quality impacts,
including impacts from fugitive dust;
(6) Whether NE Hub's water quality management and
N.P.D.E.S. stormwater discharge plans were
sufficient to minimize impacts on water quality;
and
(7) Whether NE Hub's land use and reclamation plans
were adequate.
See app. at 23. We call these seven issues along with the 23
issues enumerated above the "30 Issues". In addition,
FERC considered competitive and market issues.
On April 20, 1998, FERC issued the Certificate in a 93-
page order. See app. at 39 et seq. The order stated that
FERC had exercised its jurisdiction over the Facility and
found that it could be constructed and operated safely. See
app. at 24. The order, however, imposed various conditions
on the construction and operation of the Facility, and
stated that "NE Hub must comply with the State of
Pennsylvania's drilling regulations," app. at 101, and that
7
"[r]egulation of underground storage safety is at the state
level." App. at 66. It also stated:
Any state or local permits issued with r espect to the
jurisdictional facilities authorized herein must be
consistent with the conditions of this certificate. The
Commission encourages cooperation between interstate
pipelines and local authorities. However, this does not
mean that state and local agencies, through
application of state or local laws, may prohibit or
unreasonably delay the construction or operation of
facilities[3] by this Commission.4
App. at 109.
Even before FERC issued its order NE Hub had applied
to the Pennsylvania Department of Environmental
Protection ("Pa.D.E.P.") for the r equisite state permits and
thus it was proceeding on parallel regulatory paths. See
app. at 25. While Pa.D.E.P. had monitor ed the FERC
proceedings, it chose not to seek to intervene in them as it
could have under 15 U.S.C. S 717n(a) and 18 C.F.R.
S 385.214(a)(2). See app. at 25. Penn Fuel and CNGT raised
each of the 30 Issues in repeated appearances before
Pa.D.E.P. but nevertheless on July 17, 1997, Pa.D.E.P.
issued the permits NE Hub sought. See app. at 25-26.
Over the next year Penn Fuel and CNGT filed thr ee
appeals protesting issuance of the state per mits with the
Environmental Hearing Board for the Commonwealth of
Pennsylvania ("E.H.B."), which is authorized to hear such
appeals. All the individual defendant-appellees r emaining in
this action, i.e., all defendants except Penn Fuel and CNGT,
are administrative law judges on the E.H.B., to whom we
will refer collectively as E.H.B. In the appeals to E.H.B.,
which have since been consolidated, see app. at 26, Penn
_________________________________________________________________
3. Presumably "authorized" or a wor d of similar meaning should appear
here.
4. The district court interpreted this language to mean that the
Certificate "was conditioned on NE Hub's obtaining any and all
necessary state or local permits requir ed to carry out the drilling and
construction program." See NE Hub, slip op. at 5. The parties agree that
this interpretation is correct.
8
Fuel and CNGT again raised each issue they had advanced
before FERC, including the 30 Issues, and pr esented
testimony and documentation they had presented to FERC.
See app. at 27. E.H.B. has not decided the appeals but the
Pa.D.E.P. permits are valid pending its decision. See app. at
1021.
B. Procedural History
On January 15, 1999, NE Hub filed a complaint in the
district court against Penn Fuel, CNGT, E.H.B. and James
M. Seif, the Secretary of Pa.D.E.P., asking for a declaratory
judgment that the NGA preempted the Pa.D.E.P . and E.H.B.
review process. NE Hub also requested an order enjoining
the E.H.B. proceedings and "such other r elief as this Court
deems just and proper." See app. at 32. However, NE Hub
in the district court and in this court pared the scope of its
requested relief down to the 30 Issues, and renounced any
claim that the Certificate completely bars state r egulation of
the Facility in areas outside the 30 Issues. 5 The complaint
also sought a declaratory judgment and injunctive r elief
barring Penn Fuel and CNGT from relitigating the 30 Issues
before Pa.D.E.P. and E.H.B. because in NE Hub's view this
relitigation would amount to an appeal of the FERC order,
which they could prosecute only pursuant to 15 U.S.C.
S 717r(a). See app. at 32-33.
Secretary Seif settled with NE Hub on June 30, 1999,
stipulating that Pa.D.E.P. lacked authority to regulate the
Facility with respect to the 30 Issues, and thus the district
court dismissed him as a party on July 2, 1999. See NE
Hub, slip op. at 9; app. at 842-59. All other defendants, i.e.,
_________________________________________________________________
5. See, e.g., NE Hub's Resp. in Opp'n to CNG Transmission Corp.'s Mot.
to Dismiss at app. at 490 ("[T]he Complaint does not seek a declaration
that NE Hub is not required to comply to any extent with state
environmental or safety requirements.. . . NE Hub instead seeks a
declaration that state authorities may not r egulate or adjudicate the
technical, safety or environmental issues that have already been decided
by the federal agency with jurisdiction over such issues." (Emphasis
added.)); NE Hub's Br. in Opp'n to the E.H.B. Defendants' Mot. to
Dismiss at app. at 748; id. at 750-51; NE Hub's Br. in Opp'n to James
M. Seif 's Mot. to Dismiss at app. at 731; id. at 734; NE Hub Appellant's
Br. at 20 n.7.
9
the appellees here, moved to dismiss the complaint under
Fed. R. Civ. P. 12(b)(1) on a variety of gr ounds, including
ripeness, the Eleventh Amendment, abstention, and the
Anti-Injunction Act. The parties agreed to stay the E.H.B.
proceedings pending the outcome of this case. See NE Hub,
slip op. at 8.
The district court, in a Memorandum and Order dated
April 7, 2000, granted the appellees' motions and dismissed
NE Hub's complaint without prejudice. See id. at 21. The
court parsed NE Hub's claim against E.H.B. into two
theories of preemption: one claiming pr eemption only
insofar as the state process conflicted with the Certificate,
the other claiming a right to be completely fr ee from any
state regulation. The court dismissed the action with
respect to the conflict theory for lack of ripeness because
E.H.B. had not yet taken an action that could inter fere with
the federal regulations and the court believed that the
requirement that NE Hub go through the state review
process was not in itself a cognizable har m in the conflict
preemption context. See id. at 15-18. The court dismissed
the action with respect to the total exemption from
regulation theory on the grounds that NE Hub's
contentions challenged the terms of the Certificate
requiring the obtaining of state permits and thus should
have been presented to FERC for rehearing under 15 U.S.C.
S 717r(a), which precludes judicial r eview of FERC orders
prior to rehearing by FERC. See NE Hub, slip op. at 18-19.
The court then found that its jurisdiction with r espect to
NE Hub's claims against Penn Fuel and CNGT depended on
its jurisdiction over the claims against E.H.B., and, as the
latter was lacking, so was the former. See id. at 19-20.
Accordingly, it dismissed the action in its entirety.
NE Hub then timely filed this appeal contending that the
district court erred in dismissing its pr eemption claim for
lack of ripeness. See NE Hub's Br. at 3. NE Hub further
contends that it is not challenging FERC's or der and thus
it argues that the district court erred in holding that this
action is barred because it has not sought r ehearing of the
FERC order.
10
II. JURISDICTION
We have jurisdiction over this appeal of afinal judgment
of the district court pursuant to 28 U.S.C. S 1291.6 The
district court had federal question jurisdiction under 28
U.S.C. SS 1331 and 1337, because the case ar ose under the
Supremacy Clause in Article VI of the United States
Constitution, and the NGA.
III. STANDARD OF REVIEW
Our review of a dismissal for lack of ripeness is plenary.
See Philadelphia Fed'n of Teachers v. Ridge, 150 F.3d 319,
321 (3d Cir. 1998); see also Gould Elecs. v. United States,
220 F.3d 169, 176 (3d Cir. 2000). Mor eover, when, as here,
defendants move to dismiss a complaint under Rule
12(b)(1) for failure to allege subject matter jurisdiction we
treat the allegations of the complaint as true and afford the
plaintiff the favorable inferences to be drawn from the
complaint.7 See Mortensen v. First Fed. Sav. & Loan Ass'n,
549 F.2d 884, 891 (3d Cir. 1977); see also Fed. R. Civ. P.
8(f).
IV. ANALYSIS
A. Ripeness
The Supreme Court stated the purpose and ef fect of the
ripeness doctrine in the context of interfering with an
administrative process in Abbott Labs v. Gardner, 387 U.S.
136, 148-49, 87 S. Ct. 1507, 1515 (1967):
[T]o prevent the courts, through avoidance of
_________________________________________________________________
6. We are not deprived of jurisdiction by reason of the dismissal having
been without prejudice. See Black Horse Lane Assoc., L.P. v. Dow Chem.
Corp., 228 F.3d 275, 282-87 (3d Cir . 2000).
7. A challenge to a complaint for failure to allege subject matter
jurisdiction is known as a "facial" challenge, and must not be confused
with a "factual" challenge contending that the court in fact lacks subject
matter jurisdiction, no matter what the complaint alleges, as factual
challenges are subject to different standards. See Mortensen v. First Fed.
Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977); 5A Wright & Miller,
Federal Practice & Procedure S 1350, at 212-18 (West 1990).
11
premature adjudication, from entangling themselves in
abstract disagreements over administrative policies,
and also to protect the agencies from judicial
interference until an administrative decision has been
formalized and its effects felt in a concrete way by the
challenging parties.
In some circumstances the ripeness requir ement is drawn
from Article III limitations on judicial power and in others
from prudential limitations. See Suitum v. Tahoe Regional
Planning Agency, 520 U.S. 725, 733 n.7, 117 S.Ct 1659,
1664 n.7 (1997); see also Ridge, 150 F .3d at 323 n.3
(noting ambiguity over whether ripeness is a prudential
limitation on federal jurisdiction or is requir ed by the case-
or-controversy requirement of Article III of United States
Constitution); Travelers Ins. Co. v. Obusek, 72 F.3d 1148,
1154 (3d Cir. 1995) (same); Armstr ong World Indus., Inc. v.
Adams, 961 F.2d 405, 411 n.12 (3d Cir . 1992) (same).
Ripeness is a matter of degree whose thr eshold is
notoriously hard to pinpoint. See, e.g., Maryland Cas. Co. v.
Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 512
(1941) ("The difference between an abstract question and a
``controversy' contemplated by the Declaratory Judgment
Act is necessarily one of degree, and it would be difficult, if
it would be possible, to fashion a precise test. . . .");
McCahill v. Borough of Fox Chapel, 438 F .2d 213, 215 (3d
Cir. 1971) ("The considerations, while catholic, are not
concrete."); Step-Saver Data Sys., Inc. v. Wyse Tech., 912
F.2d 643, 646 (3d Cir. 1990) ("it is difficult to define the
contours of the ripeness doctrine with precision") (footnote
omitted)).
The Supreme Court in Abbott Labs laid out two
fundamental considerations for determination of a ripeness
question: (1) "the fitness of the issues for judicial decision,"
and (2) "the hardship to the parties of withholding court
consideration."8 387 U.S. at 149, 87 S.Ct. at 1515. In the
_________________________________________________________________
8. Factors relevant to the "fitness" consideration include, but are not
limited to, whether the issue is purely legal (as against factual), the
degree to which the challenged action is final, whether the claim involves
uncertain and contingent events that may not occur as anticipated or at
all, the extent to which further factual development would aid decision,
and whether the parties to the action are sufficiently adverse. The
"hardship" consideration focuses on whether a plaintiff faces a direct
and immediate dilemma, such that lack of review will put it to costly
choices. See Ridge, 150 F.3d at 323.
12
context of declaratory judgments, we generally analyze
ripeness under the threefold rubric of Step-Saver, 912 F.2d
at 647, as did the district court here: first, the adversity of
the parties' interests; second, the probable conclusiveness
of a judgment; third, the practical utility to the parties of
rendering a judgment.9 See Pic-A-State Pa, Inc. v. Reno, 76
F.3d 1294, 1298 (3d Cir. 1996).
1. Adversity
NE Hub claims that the state permit pr ocess with respect
to the 30 Issues is preempted but that E.H.B. nevertheless
will continue with that process unless enjoined. In these
circumstances, NE Hub's and E.H.B.'s inter ests hardly
could be more adverse.
Nevertheless, the district court held NE Hub's inter ests
insufficiently adverse to E.H.B.'s because:
In order to demonstrate that its claims ar e ripe, NE
_________________________________________________________________
9. The Step-Saver rubric is a distillation of the factors most relevant to
the Abbott Labs considerations. See Ridge, 150 F.3d at 323 n.4.
Adversity and conclusiveness apparently ar e subsumed under the
"fitness" prong of the Abbott Labs test, while utility is relevant both
to
"fitness" and "hardship." Our cases have fit the factors relevant in the
Abbott Labs framework into the Step-Saver headings, as follows:
ADVERSITY:
- Whether the claim involves uncertain and contingent events, or
presents a real and substantial threat of harm. See, e.g.,Presbytery of
N.J. v. Florio, 40 F.3d 1454, 1466 (3d Cir. 1994).
CONCLUSIVENESS:
- Whether issues are purely legal (as against factual).
- Whether further factual development would be useful.
See, e.g., id. at 1468; T ravelers Ins. Co., 72 F.3d at 1155.
UTILITY:
- Hardship to the parties of withholding decision.
- Whether the claim involves uncertain and contingent events.
See, e.g., Travelers Ins. Co. , 72 F.3d at 1155-56.
Of course, there may be other factors consider ed in a ripeness analysis.
13
Hub must show that the probability of the EHB
Defendants acting adversely to NE Hub is real and
substantial . . . . [T]he Environmental Hearing Board
Defendants have not, as yet, taken any action or
issued any decision potentially conflicting with the 7(c)
certificate. Further, it is entirely possible that the
Environmental Hearing Board will uphold the issuance
of the permits by [Pa.D.E.P.] and will never issue any
decision conflicting with the federal regulatory scheme.
See NE Hub, slip op. at 15-16.10 This analysis, which
focuses on the possible ultimate result of the state
regulatory process, does not take into account the case law
that preemption may operate to spare a party from that
very process. In fact, the process itself may give rise to
adversity so that an action challenging the pr ocess is ripe
even before the process concludes. Thus, in Freehold
Cogeneration Associates, L.P. v. Boar d of Regulatory
Commissioners, 44 F.3d 1178 (3d Cir . 1995), we held that
a preemption challenge to ongoing proceedings before the
New Jersey Board of Regulatory Commissioners invading
FERC's domain was ripe even though "the plaintif f did not
challenge the ultimate substantive decision, but rather its
authority to conduct proceedings":
[T]he issue here is ripe for adjudication. The
proceedings before the [state agency] have been
ongoing for nearly one year. The inter est that Freehold
seeks to vindicate in this proceeding is the right to be
free from ``state laws . . . respecting the rates . . . of
electric utilities' and from the expense, delay, and
uncertainty inherent in the administration of such
laws. If, as Freehold insists, the ongoing[state agency]
_________________________________________________________________
10. The district court also said NE Hub's claim was "based on the
``possibility' that state regulatory officials might enter an order that
would
interfere with the regulatory scheme. Pl. Mem. Supp. Prelim. Inj. at 19.
That ``possibility' constitutes a contingency only, and is insufficient to
constitute adversity of interests." See NE Hub, slip op. at 16. That
statement mischaracterizes NE Hub's position which was that the
process itself, at least as it related to the 30 Issues, interfered with
the
regulatory scheme. See, e.g. NE Hub's Br. in Opp'n to the E.H.B.
Defendants' Mot. to Dismiss at app. at 749-51; NE Hub's Br. in Opp'n to
James M. Seif 's Mot. to Dismiss at app. at 731, 734.
14
proceedings constitute state regulation of utility rates
and the burdens on Freehold occasioned by those
proceedings are the kinds of burdens which Congress
intended [certain facilities] to be spar ed, Congress'
mandate would be frustrated if Freehold's right to
judicial review were postponed. Ther e is a concrete
dispute that has already worked a sever e hardship
upon Freehold, and a determination of the legal issue
of preemption need not await any further developments
. . . .
Id. at 1189.
In Sayles Hydro Associates v. Maughan, 985 F.2d 451,
453-54, 456 (9th Cir. 1993), a Califor nia state water board
withheld a hydroelectric plant permit because the applicant
did not supply certain reports and studies. The court held
that a claim that the Federal Power Act preempted the
ongoing state permitting process by occupying the field of
power projects regulation was ripe, explaining as follows:
The hardship is the process itself. Pr ocess costs
money. If a federal licensee must spend years
attempting to satisfy an elaborate, shifting array of
state procedural requirements, then he must borrow a
fortune to pay lawyers, economists, accountants,
archaeologists, historians, engineers, r ecreational
consultants, biologists, and others, with no r evenue, no
near-term prospect of revenue, and no certainty that
there ever will be revenue. Meanwhile, politics, laws,
interest rates, construction costs, and costs of
alternatives change. Undue process may impose cost
and uncertainty sufficient to thwart the federal
determination that a power project should proceed.
Id. at 454. Similarly the court in Middle South Energy, Inc.
v. Arkansas Public Service Commission, 772 F .2d 404 (8th
Cir. 1985), found ripe a claim based on pr eemption and the
Commerce Clause against ongoing Arkansas state agency
proceedings determining whether to void certain interstate
power purchase contracts claimed to be within FERC's sole
jurisdiction. The plaintiff successfully
challenge[d] not the state's ultimate substantive
decision but its authority even to conduct the
15
contemplated proceeding. It can hardly be doubted that
a controversy sufficiently concrete for judicial review
exists when the proceeding sought to be enjoined is
already in progress.
Id. at 410-11.
Courts have found insufficient adversity for ripeness
where the chance of the defendant acting against plaintiff
is but a "contingency." See, e.g. , Presbytery of N.J. v. Florio,
40 F.3d 1454, 1464-68, 1470 (3d Cir. 1994) (insufficient
adversity where state said it would not enfor ce challenged
law against plaintiff); Armstrong World Indus., 961 F.2d at
413-14 (insufficient adversity between state and plaintiffs
challenging validity of takeover law, because takeover of
plaintiffs was "contingency which may not occur," in which
case they would not suffer from law). Her e, however, there
is little doubt that E.H.B. will continue with the permit
review process, and that the process itself is the alleged
harm.
We recognize that E.H.B. in its pr oceedings has not yet
taken a position on whether it will reconsider the 30 Issues,
and if so in what depth. Thus, arguably its interest is not
substantively adverse to that of NE Hub. See Step-Saver,
912 F.2d at 648. Nevertheless, inasmuch as the process
creates the adversity and E.H.B. has not disclaimed a right
to reexamine the issues we hold that its inter est is adverse
to that of NE Hub. See Supplemental letter brief of E.H.B.
at 4, Sept. 13, 2000 ("Because of the structur e and nature
of its adjudicatory function, it is not possible for the EHB
to determine what issues will be brought to its attention by
CNGT and Penn Fuels in their challenge to NE Hub's
permits."). At oral argument befor e us E.H.B. adhered to
that position.
2. Conclusiveness
Conclusiveness is a short-hand term for whether a
declaratory judgment definitively would decide the parties'
rights. See Step-Saver, 912 F.2d at 648. It also addresses
the extent to which further factual development of the case
would facilitate decision, so as to avoid issuing advisory
opinions, or whether the question presented is
predominantly legal. See Travelers Ins. Co., 72 F.3d at
16
1155. In this case, a declaratory judgment would establish
that E.H.B. may or may not review and base its permit
decision on a consideration of the 30 Issues, a conclusive
result.
Furthermore, additional factual development is
unnecessary. We need not await the result of the E.H.B.
process to ascertain whether a judgment will be conclusive
because NE Hub's contention is that the process itself is
preempted as to the 30 Issues regar dless of what the
outcome of a proceeding before the E.H.B. would be as to
those issues. Moreover, a determination of whether there is
preemption primarily raises a legal issue, a circumstance
which facilitates entry of a declaratory judgment. See
Pacific Gas & Elec. Co. v. State Energy Res. Conservation &
Dev. Comm'n, 461 U.S. 190, 201, 103 S. Ct. 1713, 1720-21
(1983) ("The question of pre-emption is pr edominantly legal,
and although it would be useful to have the benefit of [the
state's interpretation and application of its r egulations],
resolution of the pre-emption issue need not await that
development."); Travelers Ins. Co., 72 F.3d at 1155
(preemption is predominantly legal question conducive to
declaratory judgment); Freehold Cogeneration Assocs., 44
F.3d at 1188 (judgment would be conclusive because, inter
alia, factual developments at ongoing state pr oceedings
would not add to construction of allegedly pr eemptive
federal statute); cf. Abbott Labs, 387 U.S. at 149, 87 S. Ct.
at 1515 (issue ripe for decision because, inter alia, it is "a
purely legal one").
The district court held that a judgment would be
inconclusive because
without knowing whether Commonwealth will
ultimately deny project authority and on what ground,
it is impossible to determine whether its r equirements
burden or delay the NE Hub Project to such an extent
so as to be preempted by the 7(c) certificate.
See NE Hub, slip op. at 16. Again, this statement overlooks
that the state regulatory process itself can be the
preempted burden. See discussion, infra, in part IV B of
Freehold Cogeneration Assocs., Sayles Hydro Assocs., and
Middle South; see also National Fuel Gas Supply Corp. v.
17
Public Service Comm'n, 894 F.2d 571, 578 (2d Cir. 1990)
(finding state regulations of gas lines pr eempted for
inconsistency with FERC permits because "[e]ven if a [gas]
transporter were successful before the[state commission],
the practical effect would be to under mine the F.E.R.C.
approval by imposing the costs and delays inher ent in
litigation that must be undertaken without any guidelines
as to the limits on the exercise of state authority"); cf.
Pacific Gas & Elec. Co., 461 U.S. at 201-02, 103 S.Ct. at
1721 (preemption claim against moratorium on new
nuclear power plants ripe because "to requir e the industry
to proceed without knowing whether the moratorium is
valid would impose a palpable and considerable har dship
on the utilities, and may ultimately work har m on the
citizens of California").
3. Practical Utility
Practical utility goes to "whether the parties' plans of
actions are likely to be affected by a declaratory judgment,"
Step-Saver, 912 F.2d at 649 n.9, and considers the
hardship to the parties of withholding judgment. See
Freehold Cogeneration Assocs., 44 F .3d at 1189 (discussing
hardship to preemption plaintiff of delay under utility prong
of Step-Saver). A declaratory judgment "must be of some
practical help to the parties. The Declaratory Judgments
Act was enacted to clarify legal relationships so that
plaintiffs (and possibly defendants) could make responsible
decisions about the future." Travelers Ins. Co., 72 F.3d at
1155 (quotation and citation omitted).
A holding that the state proceedings ar e preempted
obviously would be useful to NE Hub, which would be
spared the hardships associated with the E.H.B.
proceedings. NE Hub alleges that it is being put to
considerable delay and expense by these proceedings in
connection with the issues already dealt with by FERC.11
See, e.g., app. at 981-82. As we stated above, the
_________________________________________________________________
11. This contention is undisputed, and is corr oborated by the statement
of counsel for Penn Fuel at oral argument before the district court about
the expenditures of his own client: "W e spent certainly in the seven
figures, I would imagine, in litigating these permits before the E.H.B."
See app. at 957.
18
requirement to go through a bur densome process can
constitute hardship for purposes of ripeness. See, e.g.,
Freehold Cogeneration Assocs., 44 F .3d at 1188-89; Sayles
Hydro Assocs., 985 F.2d at 453-56; National Fuel Gas, 894
F.2d at 578-79; Middle South Ener gy, 772 F.2d at 410-411.
Resolving the preemption question now also will eliminate
the possibility that E.H.B. may overturn the Pa.D.E.P.
permits on allegedly preempted gr ounds. Cf. Pacific Gas &
Elec., 461 U.S. at 201-02, 103 S.Ct. at 1720-21
(uncertainty entailed by existence of state pr ocedures part
of harm cognizable in assessing ripeness of pr eemption
claim); Sayles Hydro Assocs., 985 F .2d at 454 (same); but
see Ridge, 150 F.3d at 323-26 (uncertainty as to way new
procedures for determining pension levels would be applied
insufficient hardship to ripen due pr ocess claim).
The district court found that there was not a hardship
because (1) the E.H.B. proceedings would not necessarily
result in meaningless rehashing of issues, (2) additional
process cannot constitute ripeness hardship, and (3) no
state regulation presently stands in NE Hub's way. See NE
Hub, slip op. at 17-18.
The first proposition is correct but beside the point: there
may be some issues that E.H.B. can consider outside of the
30 Issues. Indeed, NE Hub asks that the proceedings before
the E.H.B. be preempted only to the extent of precluding
review of the 30 Issues. Thus, NE Hub does not suggest
that federal preemption precludes E.H.B. from considering
other issues.12 If the state pr ocess is preempted with
respect to the 30 Issues, then undergoing the E.H.B.
process with respect to those issues is a hardship
cognizable for preemption purposes, and thus for
determining ripeness of NE Hub's preemption claims.
For the second proposition, the district court quoted two
cases:
[T]he Court has not considered . . . litigation cost-
saving sufficient by itself to justify review in a case that
would otherwise be unripe. The ripeness doctrine
_________________________________________________________________
12. We understand that NE Hub expects that review of any other issues
will be less burdensome than a review of the 30 Issues.
19
reflects a judgment that the disadvantages of a
premature review that may prove too abstract or
unnecessary ordinarily outweigh the additional costs of
--even repetitive--post-implementation litigation.
Ohio Forestry Ass'n, Inc. v. Sierra Club , 118 S. Ct. 1665,
1671 (1998).
[T]he burden of participating in further administrative
and judicial proceedings . . . do[es] not constitute
sufficient hardship for the purposes of ripeness.
Florida Power & Light Co. v. EPA, 145 F.3d 1414, 1421
(D.C. Cir. 1998). See NE Hub, slip op. at 17. But neither
case involved a claim of preemption. When such a claim
has been advanced, the need to participate in a state
regulatory process in conflict with federal policy has been
recognized as a hardship. See, e.g., Freehold Cogeneration
Assocs., 44 F.3d at 1188-89; Sayles Hydro Assocs., 985
F.2d at 453-56; National Fuel Gas, 894 F.2d at 578-79;
Middle South Energy, 772 F.2d at 410-11; cf. First Iowa
Hydro-Electric Coop. v. Federal Power Comm'n , 328 U.S
152, 66 S. Ct. 906 (1946) (hydroelectric plant project subject
to jurisdiction of Federal Power Commission (FERC's
predecessor) need not obtain permit fr om Iowa, despite law
apparently conditioning federal license on compliance with
state laws). Thus, while the district court's quotations are
accurate they are not controlling pr ecedent in the
circumstances here.
Moreover, the extra litigation or administrative burden at
issue in the cases quoted by the district court was
apparently the burden of filing the same lawsuit later, not
of undergoing an expensive and time-consuming state
process. The cases quoted by the district court involved
challenges to a Plan issued by the United States For est
Service and a rule allegedly issued by the Envir onmental
Protection Agency, respectively. See Sierra Club, 118 S. Ct.
at 1668; Florida Power & Light, 145 F .3d at 1416. In both
cases, how and even whether the Plan and rule would be
applied was unclear; in Florida Power & Light , the court
held the EPA had not even issued a rule. See Florida Power
& Light, 145 F.3d at 1418-19. In Sierra Club, the Court
stated that requiring a challenger to a rule to engage in
20
post-implementation litigation over the rule does not
constitute sufficient hardship to ripen "a case that would
otherwise be unripe." Sierra Club, 118 S. Ct. at 1671.
Clearly, that holding is hardly controlling when the
plaintiff 's challenge is to the conduct of an administrative
process that imposes an ongoing burden.
The district court's third proposition also misses the
point that process can constitute hardship. While it is true
that the Pa.D.E.P. permits are valid pending the E.H.B.
outcome, it is not a regulation but the r egulatory process
that afflicts NE Hub. If the process is pr eempted it is quite
immaterial that the effectiveness of the per mits challenged
has not been stayed. Moreover, if NE Hub goes forward
construction of the Facility while the E.H.B. pr oceedings
are pending it may find itself in a difficult situation if Penn
Fuel and CNGT are successful before E.H.B.
B. State regulatory process is susceptible of preemption
by conflict or by field occupation.
E.H.B. contends that the cases holding a state r egulatory
process preempted have involved only field occupation
preemption, and should be so confined and thus
preemption principles are not applicable here as, in
E.H.B.'s view, the NGA and FERC have not occupied the
field. See E.H.B.'s br. at 17-23. The district court agreed
that this case does not involve field occupation. We,
however, strongly doubt that the district court was correct
in this conclusion. See Schneidewind v. ANR Pipeline Co.,
485 U.S. 293, 295 n.1., 300-05, 108 S. Ct. 1145, 1148 n.1,
1150-53 (1988); Sayles Hydro Assocs., 985 F.2d at 453;
Pennsylvania Med. Soc'y v. Marconis, 942 F .2d 842, 847 (3d
Cir. 1991); Public Utils. Comm'n v. FERC , 900 F.3d 269, 274
(D.C. Cir. 1990). Nevertheless, we need not characterize
definitively the type of preemption implicated here to
determine ripeness, which is the only issue before us. To
the extent the district court already tacitly has decided
what type of preemption is involved, on r emand, if it
reaches the issue, it should reconsider its decision.13
_________________________________________________________________
13. The correct result here with r espect to preemption may be that we
are dealing with a hybrid situation in which basically there is field
21
We realize that there would be a r easonable basis for a
holding that process preemption should be applicable only
when field preemption is implicated. The foundation for the
holding would be that unless it is very clear that any result
of a state permitting process either will be invalid or
redundant a court should not stop the state fr om
considering issues that in the absence of pr eemption would
be within state jurisdiction and instead should trust in the
judgment of the state officials not to inter fere unduly with
a federal program.
_________________________________________________________________
occupation but FERC, by requiring NE Hub to comply with state drilling
regulations and indicating that regulation of underground storage safety
is at the state level but providing that state and local authorities
should
not prohibit or unreasonably delay the construction or operation of the
Facility, effectively has converted the case into a conflict preemption
matter. In this regard we point out that even within an occupied field
federal regulations may tolerate or authorize some exercises of state
authority. See First Iowa, 328 U.S. at 167, 66 S.Ct. at 913; cf. National
Fuel Gas, 894 F.2d at 579 (noting that though field of interstate gas
facility regulation was occupied, FERC could choose to require licensees
to obtain state permits).
It is unclear why Judge Nygaard perceives himself as disagreeing with
us on this point, for he believes (a) that field preemption applies here,
but also (b) "FERC properly exercised its congressionally delegated
authority by requiring compliance with state permitting procedures,"
dissent at 28, and (c) he acknowledges the Certificate's requirement that
the results of those permitting pr ocedures "must be consistent with the
conditions [thereof]." Thus, FERC has entire control over the occupied
field (field occupation), but has allowed the state a regulatory role that
it may exercise only insofar as it does not conflict with FERC's decisions
(conflict preemption), which is precisely the hybrid sort of preemption by
which the dissent purports to be "especially tr oubl[ed]." Id. at 28.
Judge Nygaard also assigns to us a position that we nowhere take,
namely, that the E.H.B. appeals conflict with federal law only because
they "conflict with congressional intent to legislate exclusively."
Dissent
at 34 (emphasis in original). Quite the contrary, we recognize the
possibility that Congress delegated authority to FERC, and that FERC, in
turn has delegated some regulatory authority to the state, which the
state may exercise only insofar as it does not conflict with the decisions
already made by FERC. Thus, federal rules would not be exclusive
because they would not be the only ones the NE Hub must obey, but
some state regulations might still conflict with the federal regulations.
22
Nevertheless, the process preemption cases do not
confine themselves to the field occupation context, nor
would such a limitation be wise. Even where afield has not
been occupied to the exclusion of state regulation, certain
state regulatory acts clearly would conflict with federal law,
and it is as logical to preempt state pr ocess concerning
such matters as state actions in occupied fields. 14 Indeed,
even if this is a conflict preemption case, it would be quite
remarkable to hold that there cannot be pr ocess
preemption here inasmuch as Secretary Seif on behalf of
Pa.D.E.P. in settling the case recognized that, to the extent
that FERC exercised jurisdiction, Pa.D.E.P . "[d]oes not have
jurisdiction to consider and cannot conduct final
appealable decisionmaking." App. at 855. This r ecognition
broadly extended to "all construction activities related to
the [Facility], including the drilling and construction of the
brining facilities and the technical, safety, and
environmental issues which were raised before and
considered by FERC." App. at 846. While this stipulation
may not be binding on the appellees, inasmuch as the state
administrator himself recognizes the pr eemptive effect of
the NGA and FERC's exercise of jurisdiction, we have good
reason to recognize that conflict pr eemption principles
might bar E.H.B. from upholding Penn Fuel's and CNGT's
appeal on the 30 Issues.
We also point out that, as the Supreme Court recently
has emphasized, the different categories of preemption are
not
_________________________________________________________________
14. Again, it is unclear why Judge Nygaar d perceives himself as
disagreeing with us on this point for he "can possibly envision conflict
preemption barring an on-going legal pr oceeding . . . in which the
outcome sought by the party opposing preemption is almost certain to
conflict with federal law." Dissent at 35. That is exactly what we hold.
He
then says that that is not the case here, because the E.H.B. might
"impose additional requirements on NE Hub that do not conflict with the
7(c) certificate." Id. That is unquestionably true but irrelevant because
NE Hub does not seek preemption of the entir e state process, only of the
process with respect to the 30 Issues. W e do not decide whether the
outcome of the E.H.B. proceedings with r espect to the 30 Issues would
clearly so conflict. That is for the district court to decide on remand.
23
rigidly distinct. Indeed, field pre-emption may be
understood as a species of conflict pre-emption: A state
law that falls within a pre-empted field conflicts with
Congress' intent (either express or plainly implied) to
exclude state regulation.
English v. General Elec. Co., 496 U.S. 72, 79 n.5, 110 S. Ct.
2270, 2275 n.5 (1990); see also Crosby v. National Foreign
Trade Council, 120 S. Ct. 2288, 2294 n.6 (2000); Gade, 505
U.S. at 98, 104 n.2, 112 S. Ct. at 2383, 2386 n.2 (1992)
(plurality opinion) ("Our ultimate task in any pre-emption
case is to determine whether state regulation is consistent
with the structure and purpose of the statute as a whole."
(Emphasis added.)); Sayles Hydro Assocs. , 985 F.2d at 456
("The dichotomy between the two types of pr eemption
[conflict and field] is not so sharp in practical terms as the
legal categorization makes it appear . . . .").
A comparison of the standards for identifying these two
types of preemption15 shows the reason for the blurring.16
Conflict preemption exists where state law stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress. See e.g., Hines v.
Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 404 (1941). An
occupied field is one in which the federal r egulatory scheme
is "so pervasive as to make reasonable the inference that
Congress left no room for the States to supplement it." Rice
v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct.
1146, 1152 (1947). That inference is reasonable where any
state regulation of the "occupied" subject matter would
interfere with the purposes and objectives of the federal
plan: a very similar standard to that for conflict
preemption. See, e.g., Ray v. Atlantic Richfield Co., 435 U.S.
151, 168, 98 S. Ct. 988, 999 (1978) (finding field preemption
of vessel regulations because "a state law in this area . . .
would frustrate the Congressional desir e . . .").
_________________________________________________________________
15. We are not concerned here with express preemption which is another
type of preemption.
16. Contrary to the dissent's suggestion, at 31, by no means do we
obliterate the distinction between the types of pr eemption, and we
recognize the continuing existence of each. W e simply note that an
instance of preemption need not necessarily be pigeonholed into one
category or another for purposes of analyzing ripeness.
24
We therefore hold that state r egulatory process may be
preempted by conflict with federal law,17 as well as by field
occupation. Moreover, we reiterate that we are quite unable
to understand why, regardless of the type of preemption
asserted, that a claim that a state administrative process is
preempted necessarily cannot be ripe when the alleged
preemption is of the process itself rather than the possible
outcome of the process. We also note that it would be
entirely logical in an appropriate case to hold that the
process is not preempted but to hold later that the result of
the process is preempted.
Furthermore, if it is evident that the r esult of a process
must lead to conflict preemption, it would defy logic to hold
that the process itself cannot be preempted and that a
complaint seeking that result would not raise a ripe issue.
Thus, in view of the substantial showing her e that E.H.B.
by upholding Penn Fuel's and CNGT's position on the 30
Issues might well reach a result that would be preempted,
the process preemption claim is ripe. Of course, we hasten
to add that we do not state a conclusion on whether the
process actually is preempted here for, as even NE Hub
recognizes, the district court should make that decision on
the remand. See Presbytery of N.J. , 40 F.3d at 1470.18
C. The need for FERC rehearing
Finally we reject the district court's and appellees' view
that NE Hub by bringing this action was circumventing
_________________________________________________________________
17. Federal law includes federal regulations, which have no less
preemptive effect than federal statutes. See e.g., Capital Cities Cable,
Inc.
v. Crisp, 467 U.S. 691, 699, 104 S. Ct. 2694, 2700 (1984).
18. Our opinion should not be overread. W e are not holding that any
claim of process preemption necessarily is ripe so that the court should
consider the preemption claim before the process is completed. It well
may be that in a particular case when conflict pr eemption is implicated
the court may conclude that it reasonably can be anticipated that the
process will yield a result that is not pr eempted. But in this case we
have an unusual situation in which the state administrator has
stipulated the agency's jurisdiction effectively has been preempted, a
result which, though not binding on the appellees, if accepted would
mean that a successful administrative appeal would lead to a preempted
outcome.
25
FERC's rehearing process. In the first place, the district
court reached that conclusion on the err oneous theory that
NE Hub was contending "that Pennsylvania lacks authority
to subject the NE Hub Project to any regulation
whatsoever." NE Hub, slip op. at 18. In fact, NE Hub does
not challenge FERC's requirement that it obtain state
permits and cooperate with state and local agencies.
Indeed, it has done these things. It simply contends that
the E.H.B. state proceedings are pr eempted but only to the
extent that they involve the 30 Issues consider ed by FERC.
We see nothing in the Certificate or the NGA that precludes
NE Hub's preemption argument and it ther efore follows that
in making that argument NE Hub is not challenging the
terms of the Certificate. Furthermor e, we do not believe
that a requirement that a party obtain applicable state
permits and cooperate with state and local agencies in any
way determines the scope of what issues a state
administrative agency may consider on an appeal fr om the
issuance of the permits.19
V. CONCLUSION
For the foregoing reasons we will r everse the order of
April 7, 2000, dismissing this action and will r emand the
case to the district court to reinstate this action. On the
remand the district court should consider the preemption
argument on the merits unless it upholds another defense
to this action.
_________________________________________________________________
19. The dissent characterizes NE Hub's claim as a challenge to the terms
of the Certificate because the E.H.B. proceeding is one "that FERC
implicitly sanctioned." Dissent at 40. But the dissent does not explain
where in the Certificate FERC "implicitly sanctioned" a state proceeding
insofar as it deals with measures already disposed of by FERC.
Judge Nygaard states that he and we "disagr ee over who should
determine whether the state actions at issue were ``consistent' with
FERC's certificate. The Majority believes that FERC delegated that
authority to the federal courts. I believe that FERC maintained its
discretion." Dissent 32 n.5. Federal agencies do not "delegate" authority
to decide federal constitutional and legal questions to courts; as noted
above, at 37, federal court jurisdiction over such matters comes from
Congress. We are aware of no authority granting FERC a right of first
refusal to decide such questions, nor does Judge Nygaard proffer any.
26
NYGAARD, Circuit Judge, dissenting :
I would affirm the District Court's disposition of N.E.
Hub's field preemption claim. Therefor e, I dissent. Central
to the Majority's holding is its assertion that"we need not
characterize definitively the type of preemption implicated
here." Majority at 21. I believe that characterizing N.E.
Hub's claim is the first and most important issue in this
case. By failing to resolve it, the Majority ignores binding
Supreme Court precedent and unnecessarily complicates a
well-settled area of law. Especially tr oubling are its
proposal of a new class of "hybrid" pr eemption, and its
reference to a mysterious "process" preemption.
Congress intended to occupy the field of law at issue.
Therefore, the disputed appeals ar e subject to federal field
preemption. Nonetheless, I would affir m the District Court's
decision, because FERC properly exercised its
congressionally delegated authority by r equiring compliance
with state permitting procedures. More importantly, even if
FERC overstepped its bounds, the proper course for N.E.
Hub would have been to challenge FERC directly under the
guidelines established by federal statute. Because N.E. Hub
failed to do so, I agree with the District Court that we lack
jurisdiction to consider the current claim.
I.
A brief review of the law of preemption is instructive.
Assuming it has the constitutional power to legislate in a
given area, Congress can preempt state law whenever it
intends federal law to control. See Fr eehold Cogeneration
Assocs., L.P. v. Board of Regulatory Comm'rs of State of New
Jersey, 44 F.3d 1178, 1190 (3d Cir . 1995) ("[T]he
application of the preemption doctrine r equires a
determination of congressional intent in enacting a federal
law."). The key inquiry is congressional intent, which can
either be explicit or implied. When it is implied, intent can
take one of two forms. First, "[i]f Congress evidences an
intent to occupy a given field, any state law falling within
that field is preempted." Silkwood v. Kerr-McGee Corp., 464
U.S. 238, 248, 104 S. Ct. 615, 621 (1984). Congr essional
intent to occupy a field can be inferred fr om:
27
a ``scheme of federal regulation so pervasive as to make
reasonable the inference that Congr ess left no room to
supplement it,' ``because the Act of Congr ess may touch
a field 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,' or
because ``the object sought to be obtained by the federal
law and the character of obligations imposed by it may
reveal the same purpose.'
Pacific Gas & Elec. Co. v. State Energy Res. Conservation &
Dev. Comm'n, 461 U.S. 190, 204, 103 S. Ct. 1713, 1722
(1983). Second, if Congress has not occupied an entire
field, "state law is still preempted to the extent it actually
conflicts with federal law, that is, when it is impossible to
comply with both state and federal law." Id.
In sum, there are three circumstances under which
federal law preempts state law: (1) when Congr ess, through
explicit statutory language, defines an ar ea in which federal
law controls, (2) when Congress implicitly indicates an
intent to occupy a given field to the exclusion of state law,
and (3) when federal law actually conflicts with state law.
See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112
S. Ct. 2608, 2617 (1992); Buzzard v. Roadrunner Trucking,
Inc., 966 F.2d 777, 780 (3d Cir. 1992). We have consistently
analyzed preemption claims according to this framework.
See Abdullah v. American Airlines, 181 F .3d 363, 367 (3d
Cir. 1999).
II.
Next, I turn to N.E. Hub's specific claim. In Schneidewind
v. ANR Pipeline Co., the Supreme Court held that Congress
intended to occupy the field at issue.1 See 485 U.S. 293,
308, 108 S. Ct. 1145, 1155 (1988) ("[T]he control of rates
and facilities of natural gas companies . . . ar e precisely the
things over which FERC has comprehensive authority.").
The Court noted that it "is now well settled[that] Congress
_________________________________________________________________
1. Because Congress failed to describe explicitly the extent to which the
NGA preempts state regulation of natural gas facilities, the first of the
aforementioned circumstances (expr ess preemption) does not apply.
28
occupied the field of matters relating to wholesale sales and
transportation of natural gas in interstate commer ce." Id. at
305, 108 S.Ct. at 1153. An overwhelming amount of
authority supports this assertion.2 Even in Maritimes &
Northeast Pipeline, L.L.C., No. CP97-238-001, 1997 WL
812154, at *8 (F.E.R.C. Nov. 4, 1997), the case most heavily
relied upon by CNGT and Penn Fuel, FERC noted that "the
NGA preempts State and local agencies fr om regulating the
construction and operation of interstate pipeline facilities."
It is simply beyond peradventure that Congr ess intended
the NGA to occupy the field of law at issue.
Both the Majority and the District Court disagr ee and
hold that field preemption does not apply. The District
Court expressly rejected field pr eemption, but nonetheless
addressed and rejected the claim on its merits. The
Majority purports to avoid categorizing the claim, but still
implicitly endorses conflict preemption. I believe that field
preemption does apply, but I agree with the District Court
that the claim fails on its merits. This is an important
question. If field preemption applies but FERC validly
exercised its authority, we should affir m the District
Court's decision and not remand the case. Fundamentally,
the resolution of this question -- whetherfield preemption
applies -- controls whether this case is r emanded or
affirmed. I therefore review the opinions of the Majority and
District Court in turn.
_________________________________________________________________
2. See e.g., Interstate Natural Gas Co. v. Federal Power Comm'n, 331 U.S.
682, 690, 67 S. Ct. 1482, 1487 (1947) ("As was stated in the House
Committee Report, the ``basic purpose' of Congr ess in passing the Natural
Gas Act was "to occupy this field in which the Supreme Court has held
that the States may not act."); Pennsylvania Medical Soc'y v. Marconis,
942 F.2d 842, 847 (3d Cir. 1991) ("The field of matters relating to
wholesale sales and transport of natural gas in interstate commerce
[has] been occupied by federal legislation."); Public Utils. Comm'n of
State
of California v. FERC, 900 F.2d 269, 274 (D.C. Cir. 1990) ("Cases are
legion affirming the exclusive character of FERC jurisdiction where it
applies . . . under the NGA."); Algonquin LNG v. Loqa, 79 F. Supp. 2d 49,
51 (D.R.I. 2000) ("Congress clearly has manifested an intent to occupy
the field.").
29
A.
The Majority at first seems to agree with me that field
preemption should apply. It states that "[t]he district court
[held] that this case does not involve field occupation. We,
however, strongly doubt that the district court was correct."
Majority at 21 (emphasis added). The Majority fails to apply
field preemption, however, and instead holds that "we need
not characterize definitively the type of pr eemption
implicated here to determine ripeness." Majority at 21. In
spite of this, I believe that the Majority tacitly does
characterize N.E. Hub's claim. It rejects field preemption
and endorses conflict preemption, even though its
reasoning assumes that Congress has occupied the field.
The District Court's decision requires us to categorize the
claim in this case, because it addressed N.E. Hub's two
preemption "theories" and reached different outcomes for
each. The court held that conflict preemption was not ripe,
but rejected field preemption on separate grounds.3 The
Majority states that ripeness "is the only issue before us."
Majority at 21. The District Court discussed ripeness only
in connection to conflict preemption. Ther efore, the
Majority's opinion, to the extent that it exclusively focuses
on ripeness, holds that only conflict preemption is at issue.
Furthermore, because courts need only address conflict
preemption in the absence of field pr eemption, see
Silkwood, 464 U.S. at 248, 104 S.Ct. at 621 ("If Congress
has not entirely displaced state regulation over the matter
in question, state law is still preempted to the extent it
actually conflicts with federal law."), the Majority's focus on
ripeness tacitly rejects field preemption. If field preemption
applied, there would be no reason to analyze the ripeness
of the conflict preemption claim.4 In fact, the Majority
_________________________________________________________________
3. The District Court explicitly addressed the field preemption claim, "NE
Hub's alternative theory, that Pennsylvania lacks authority to subject the
NE Hub Project to any regulation whatsoever." MemOp. at 18. The court
characterized the claim as a direct "challenge to the express provisions
of [FERC's] 7(c) certificate," and found that it lacked jurisdiction
because
N.E. Hub should have appealed directly to FERC. MemOp. at 18.
4. The Majority argues that we need not categorize the preemption claim
in order to analyze its ripeness. However , the District Court only found
ripeness lacking in the conflict preemption claim; therefore, we need not
address ripeness unless the claim is one of conflict preemption.
30
explicitly holds that N.E. Hub never raised a field
preemption claim. See Majority at 26. Thus, even though it
"strongly doubt[s] that the district court was correct [to
reject field preemption]," Majority at 21, the Majority rejects
it as well.
Instead, the Majority suggests that we have a "hybrid
situation" in which "there is field occupation but FERC . . .
has converted the case into a conflict preemption matter."
Majority at 21-22 n.13. I disagree with this characterization
for two reasons. First, neither law nor logic suggests the
existence of such a thing, and second, for r easons I explain
more fully in Section II.B., supra, FERC does not have the
authority to abdicate its congressionally delegated authority.5
In addition, I fail to see how this "hybrid" differs practically
from pure conflict preemption considering that FERC "has
converted the case into a conflict pr eemption matter."
Majority at 21-22 n.13 (emphasis added). If a "hybrid"
preemption claim carries with it a differ ent standard, the
Majority does not describe what it might be. For these
reasons, I believe that the Majority, in spite of its language
to the contrary, tacitly did categorize N.E. Hub's claim as
conflict preemption, and the District Court must apply that
doctrine upon remand.
The Majority offers two additional arguments to support
its position: (1) field and conflict preemption overlap and
are difficult to distinguish, and (2) the existence of a legal
process can form the basis of a field or conflict preemption
_________________________________________________________________
5. The Majority believes that FERC delegated its occupation of the
field, at least in part, to the states. Ther efore, any "conflicts"
that
arose could form the basis of a conflict preemption claim in
federal
court. The important difference between us is that I believe FERC
continued to maintain its ultimate authority. Because it continued
to occupy the field, it maintained its discr etion to interpret the
terms of its 7(c) certificate. If an alleged"conflict" arose, it
was up
to FERC to determine if the certificate had been violated. Our
review
of such a decision would be the same as our r eview of any other
action by an administrative agency in an occupiedfield. In sum, the
Majority and I disagree over who should deter mine whether the
state actions at issue were "consistent" with FERC's certificate.
The
Majority believes that FERC delegated that authority to the federal
courts. I believe that FERC maintained its discr etion.
31
claim. See Majority at 24-25. When r eviewed carefully,
neither support the Majority's holding; in fact, both
ironically assume that Congress has pr eempted the field.
First, the Majority argues that it need not characterize
N.E. Hub's claim, because field and conflict pr eemption are
not "rigidly distinct," see English v. General Elec. Co., 496
U.S. 72, 79 n.5, 110 S. Ct. 2270, 2275 n.5 (1990), 6
implying, based upon its definitions, that field and conflict
preemption are indistinguishable. T echnically, all forms of
federal preemption can be described as (and meet the
definition of) conflict preemption,7 for the simple reason
that preemption only occurs when a state action conflicts
with congressional intent.8 In spite of its extremely broad
definition, however, conflict preemption does not refer to the
entire range of all federal preemption. Instead, courts use
the term quite narrowly -- it applies when a state
regulation conflicts with federal law in a non-occupied field.9
See Silkwood, 464 U.S. at 248, 104 S.Ct. at 621 ("If
Congress has not entirely displaced state regulation over
the matter in question, state law is still pr eempted to the
extent it actually conflicts with federal law.").
_________________________________________________________________
6. The Supreme Court footnote from which the Majority derives its
argument nonetheless explicitly upheld the thr ee categories of
preemption. See English, 496 U.S. at 79 n.5, 110 S. Ct. at 2275 n.5
("[B]ecause we previously have adverted to the three-category framework,
we invoke and apply it here.").
7. According to its broad definition, conflict preemption applies whenever
a state regulation "actually conflicts with federal law, that is, when it
is
impossible to comply with both state and federal law, or where the state
law stands as an obstacle to the accomplishment of the full purposes
and objectives of Congress." See Silkwood, 464 U.S. at 248, 104 S.Ct. at
621 (citations omitted); see also e.g., English, 496 U.S. at 79, 110 S.Ct.
at 2275 (citations omitted).
8. Courts have identified, and labeled, thr ee forms of federal preemption
(express, field, and conflict preemption) that vary according to their
scope. According to the Supreme Court,"[f]requently, the preemptive
``label' we choose will carry with it substantive implications for the
scope
of preemption." Gade v. National Solid W aste Mgmt. Ass'n, 505 U.S. 88,
104 n.2, 112 S. Ct. 2374, 2386 n.2 (1992).
9. Conflict preemption in an occupiedfield would be unnecessary and
duplicative, because all state regulation is barred by field preemption.
32
The Majority fails to make this distinction. It compares
the definitions of conflict and field preemption and argues
that field preemption is simply a presumption of conflict
preemption over an entire area of law.10 Because all three
categories of federal preemption technically fall within the
definition of conflict preemption, any state regulation (or
judicial proceeding, as in this case) subject to field
preemption would also be barred under the technical
definition of conflict preemption. See English, 496 U.S. at
79, 110 S.Ct. at 2275 (defining conflict pr eemption, in part,
to apply when "state law ``stands as an obstacle to the
accomplishment and execution of the full purposes and
objectives of Congress' ").
However -- and this is the critical point -- in this case,
the only reason that the challenged state actions (the
appeals) satisfy the definition of conflict pr eemption is
because Congress has preempted thefield. The Majority
never asserts that the appeals at issue make it"impossible
to comply with both state and federal law," but merely that
they frustrate congressional intent to legislate exclusively in
this area. In other words, as the Majority phrases it,
conflict preemption holds because the state proceedings
"interfere with the purposes and objectives of the federal
plan." Majority at 24. The "federal plan," I suppose, refers
to Congress' intent to occupy the field at issue. Thus, the
Majority's argument, when closely scrutinized, goes
something like this: (1) Congress preempted the field, and
(2) the appeals at issue constitute state action within that
field; therefore, (3) the appeals conflict with congressional
intent to legislate exclusively. The Majority's r easoning
implicitly recognizes that Congress intended to occupy the
field at issue. As such, I would affix the pr oper "label" to
N.E. Hub's preemption claim. When a state law"conflicts"
with "the purposes and objectives" of Congr ess to occupy a
given field, courts label it field, notconflict, preemption.11
_________________________________________________________________
10. See e.g., English, 496 U.S. at 79 n.5, 110 S. Ct. at 2275 n.5 ("[F]ield
preemption may be understood as a species of conflict preemption: A
state law that falls within a preempted field conflicts with Congress'
intent (either express or plainly implied) to exclude state regulation.").
11. In a footnote, the Majority claims that "by no means do we mean to
obliterate the distinction between the types of pr eemption, and we
33
The Majority's second argument further underscores its
implicit recognition that Congress has pr eempted the field.12
The Majority argues that it need not classify the claim at
issue, because either field or conflict pr eemption can bar a
legal process such as the appeals in this case.13 See
Majority at 23 ("[T]he process pr eemption cases do not
confine themselves to the field occupation context."). The
Majority cites no case in which any court has held that
conflict preemption bars an unfinished legal process with
an indeterminate outcome. I too was unable tofind such a
case.14
The only scenario in which I can possibly envision
conflict preemption barring an on-going legal proceeding is
one in which the outcome sought by the party opposing
preemption is certain to conflict with federal law. In other
words, for conflict preemption to apply, the relief sought by
CNGT and Penn Fuel would have to conflict totally with
FERC's 7(c) certificate. This is not the case. It is entirely
possible that the Environmental Hearing Boar d could, as a
result of the appeals at issue, impose additional
_________________________________________________________________
recognize the continuing existence of each." Majority at 24 n.16.
However, if we need not classify the pr eemption claim in this case, in
spite of Supreme Court precedent explicitly holding that Congress has
occupied the field, I fail to see how the distinction retains any force.
12. For the remainder of this dissent, I r efer to conflict preemption in
the
manner that courts apply it (in a non-occupied field) rather than
according to its sweeping definition, which encompasses all forms of
federal preemption.
13. I assume that when the Majority uses the ter m "process preemption,"
it is referring to a federal preemption claim based upon an ongoing legal
process. Unlike conflict or field preemption, "process preemption" is not
a term of art; in fact, a Westlaw search revealed that no federal court
has
ever used the term.
14. The Majority relies upon two unsupported assertions: (1) its own
belief that "certain regulatory acts clearly would conflict with federal
law,
and it is as logical to preempt state pr ocess concerning such matters as
state actions in occupied fields," and (2) a statement by the
administrator of the Pennsylvania Department of Environmental
Protection that the agency lacked jurisdiction to "conduct final
appealability decisionmaking" in this matter . Majority at 23.
34
requirements on N.E. Hub that would not conflict with the
7(c) certificate.15
In sum, the Majority purports to avoid categorizing N.E.
Hub's claim. In reality, however, it r ejects field preemption
and requires the District Court to apply conflict preemption
upon remand, even though its reasoning assumes that
Congress has occupied the field. Accor ding to the Supreme
Court, conflict preemption should be applied only if
"Congress has not entirely displaced state regulation over
the matter in question" explicitly or thr ough implied field
preemption. Silkwood, 464 U.S. at 248, 104 S.Ct. at 621. In
this case, the overwhelming weight of Supreme Court
precedent indicates that Congress intended the NGA to
occupy the field at issue. As a result, I disagree with the
Majority's approach and would instead applyfield
preemption.
B.
The District Court addressed the classification issue
explicitly. It held that field preemption does not apply,
because FERC had affirmatively limited its own jurisdiction.
It noted that "[a]lthough the Natural Gas Act might be read
to completely preempt any state regulation of the transport,
storage and sale of natural gas in interstate commer ce,
FERC has interpreted its jurisdiction under the Natural Gas
Act to allow for some state regulation." MemOp. at 13. In
effect, the District Court held that FERC r efused to occupy
the given field and instead partially delegated its
_________________________________________________________________
15. The Majority states that conflict pr eemption bars "the process with
respect to the 30 Issues," because its outcome is "almost certain to
conflict with federal law." Majority at 23 n.14. In practice, I seriously
doubt that a court could effectively isolate state proceedings likely to
lead to conflicting outcomes from those that could possibly lead to
"additional requirements . . . that donot conflict with the 7(c)
certificate."
Majority at 23 n.14. Forcing courts to do so would in effect require them
to predict the outcomes of unfinished legal proceedings in separate
jurisdictions. I suspect that this difficulty explains why courts have
widely refused to apply conflict preemption to bar an ongoing state
process, and have instead relied uponfield preemption when it is
appropriate.
35
responsibilities to the states. The Majority seems to endorse
this conclusion hesitantly in a footnote, ter ming this case a
"hybrid" situation. See Majority at 21 n.13.
The District Court's analysis, and the Majority's r eference
to it, is flawed. Admittedly, Chevron v. NRDC, 467 U.S. 837,
842-43, 104 S. Ct. 2778, 2781-82 (1984), often r equires
courts to defer to an agency's statutory interpr etation, and
we have held that Chevron defer ence extends to an agency's
interpretation of its own jurisdiction. See Puerto Rico Mar.
Shipping Auth. v. Valley Freight Sys., Inc., 856 F.2d 546,
552 (3d Cir. 1988) ("This rule of defer ence is fully applicable
to an agency's interpretation of its own jurisdiction.").
However, courts need only defer to an agency when the
intent of Congress is unclear. See Chevron, 467 U.S. at 842-
43, 104 S. Ct. at 2781-82 ("If the intent of Congr ess is clear,
that is the end of the matter.").16 Here, as previously
discussed, the intent of Congress to occupy the entire field
is, and has been for decades, clearly established by the
Supreme Court. As a result, FERC could not limit its
jurisdiction in the face of contrary, clear congr essional
intent. See id. at 843 n.9, 104 S. Ct. at 2781 n.9 ("The
judiciary is the final authority on issues of statutory
construction and must reject administrative constructions
which are contrary to clear congressional intent.").
Furthermore, based upon my reading of Maritimes, FERC
did not intend to restrict its jurisdiction. See 1997 WL
812154, at *8. Quite the contrary - it exer cised its wide-
ranging jurisdiction in order to requir e that natural gas
companies comply with state regulations as a condition to
granting a 7(c) certificate. After reaffir ming the NGA's
preemption of state and local regulation, FERC stated that
"as a matter of policy, . . . the Commission has imposed
upon applicants a requirement that they cooperate with
_________________________________________________________________
16. See also Neal v. United States, 516 U.S. 284, 295, 116 S. Ct. 763, 769
(1996) ("Absent . . . compelling evidence bearing on Congress' original
intent, our system demands that we adhere to our prior interpretations
of statutes."); Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497
U.S.
116, 131, 110 S. Ct. 2759, 2768 (1990) ("Once we have determined a
statute's clear meaning, we adhere to that determination under the
doctrine of stare decisis, and we judge an agency's later interpretation
of
the statute against our prior determination of the statute's meaning.").
36
State and local authorities." Id. (emphasis added). FERC did
not limit its own jurisdiction, but rather used its authority
to implement a policy objective. If it had, in fact, abdicated
its jurisdiction, it would have been unable to impose state
regulations upon anyone.
It is undisputed by both the Majority and the District
Court that Congress intended federal law to occupy the
entire field at issue. Because neither FERC nor this Court
have the discretion to contravene clear congr essional
intent, field preemption should apply. The ripeness of N.E.
Hub's conflict preemption claim is ther efore irrelevant.
III.
Finally, I address the merits of N.E. Hub'sfield
preemption claim. First of all, it is clearly ripe. We require
that a claim satisfy three elements in or der to be ripe for
decision: "adversity of the interests of the parties,
conclusiveness of the judicial judgment and the practical
help, or utility, of that judgment." Step-Saver Data Systems,
Inc. v. WYSE Technology, 912 F.2d 643, 647 (3d Cir. 1990).
All three are satisfied. The state pr oceedings themselves
constitute an injury establishing adversity of inter est. See
Sayles Hydro Assocs. v. Maughan, 985 F .2d 451, 454 (9th
Cir. 1993) (holding that in the field preemption context,
"[t]he hardship is the process itself.").17 A decree indicating
that FERC's 7(c) certificate preempted all state regulation of
N.E. Hub's project would be "conclusive" under any
definition of the term, see Step-Saver , 912 F.2d at 648, and
it would be "useful," because it would allow N.E. Hub to
proceed with its project. See id.
_________________________________________________________________
17. See also Freehold, 44 F.3d at 1189 (holding that a field preemption
claim was ripe because "the plaintiff did not challenge the state's
ultimate substantive decision, but rather its authority to conduct
proceedings."); Middle South Ener gy, Inc. v. Arkansas Pub. Serv. Comm'n,
772 F.2d 404, 410-11 (8th Cir. 1985) (claim ripe where the plaintiff
"challenges not the state's ultimate substantive decision but its
authority
to even conduct the contemplated proceeding. It can hardly be doubted
that a controversy sufficiently concr ete for judicial review exists when
the proceeding sought to be enjoined is alr eady in progress.").
37
Apparently, the District Court agreed that if field
preemption applied, N.E. Hub's claim was ripe. After a
lengthy and unnecessary discussion of the ripeness of the
conflict preemption claim, it moved immediately to the
merits of the field preemption claim (without discussing its
ripeness). The court held that the claim failed on its merits:
NE Hub's alternative theory, that Pennsylvania lacks
authority to subject NE Hub Project to any r egulation
whatsoever, must also fail on jurisdictional grounds.
Such an attack constitutes a challenge to the expr ess
provisions of the 7(c) certificate issued by FERC to NE
Hub, which clearly contemplate and even direct NE
Hub's compliance with state regulation. As pointed out
by Defendants CNGT and Penn Fuel in their motions to
dismiss, the Court lacks jurisdiction over such a
challenge to the 7(c) certificate, as NE Hub failed to
apply to FERC for a rehearing of its April 29, 1998
Order issuing the 7(c) certificate.
MemOp. at 18-19 (citations omitted). I agree with the
Court's reasoning and outcome, but it would be helpful to
elaborate further. FERC's 7(c) certificate required
compliance with state and local regulations. Specifically, it
stated that:
Any state or local permits issued with r espect to the
jurisdictional facilities authorized herein must be
consistent with the conditions of this certificate. The
Commission encourages cooperation between interstate
pipelines and local authorities. However, this does not
mean that state and local agencies, through
application of state or local laws, may prohibit or
unreasonably delay the construction or operation of
facilities by this Commission.
J.A. at 109. The District Court interpreted this language to
require that N.E. Hub obtain "any and all necessary state
or local permits required to carry out the drilling and
construction program." MemOp. at 5. In addition, the 7(c)
certificate also contained a number of mor e specific
provisions that required compliance with individual state
regulations. See MemOp. at 14-15.
38
FERC's discretion in granting a 7(c) certificate is far-
reaching. Section 717f(e) of the NGA pr ovides that, "[t]he
Commission shall have the power to 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 requir e." 15 U.S.C.
S 717f(e). Under this authority, FERC r equired compliance
with state and local regulations as long as they did not
"prohibit or unreasonably delay the construction or
operation of [the] facilities." J.A. at 109. FERC did not
abdicate its jurisdiction; it exercised it.
This interpretation is consistent with FERC's discussion
of state regulations in Maritimes, 1997 WL 812154, at *8.
In that case, FERC described its "requir ement" that
applicants cooperate with state and local authorities as
being something it had "imposed" as "a matter of policy." Id.
A plain reading suggests that FERC was simply exercising
its wide jurisdiction over the field, requiring applicants to
comply with state and local regulations that impose
additional, non-conflicting measures. W ere an actual
conflict to arise, FERC noted that its decisions would
control.
FERC could have required, subsequent to its S 717f(e)
authority, that applicants comply with conditions identical
to those found in state regulations. It is unclear why, and
indeed N.E. Hub has failed to argue that, r equiring
compliance with state regulations that impose potentially
non-conflicting conditions would be outside FERC's
authority. Even if it were, as the District Court held, N.E.
Hub's proper course would have been to challenge the
validity of FERC's 7(c) certificate by seeking a r ehearing
within thirty days of its issuance. See 15 U.S.C. S 717r(a).
It failed to do so. N.E. Hub cannot now collaterally attack
FERC's authority under S 717f(e) by challenging a state
appellate process that FERC implicitly sanctioned. See City
of Tacoma v. Taxpayers of Tacoma, 357 U.S. 320, 335-36,
78 S. Ct. 1209, 1218-19 (1958); Williams Natural Gas Co. v.
City of Oklahoma City, 890 F.2d 255, 262 (10th Cir. 1989)
("[A] challenger may not collaterally attack the validity of a
prior FERC order in a subsequent proceeding . . . whether
the collateral action is brought in state court or federal
court.").
39
IV.
I would affirm the District Court's decision based upon
its disposition of the one legitimate claim at issue - N.E.
Hub's argument that the state proceedings at issue are field
preempted by FERC's 7(c) certificate. Field preemption does
apply, but FERC exercised its wide-ranging authority to
require compliance with state regulations. Because N.E.
Hub failed to challenge FERC's authority dir ectly, it cannot
now challenge the 7(c) certificate in this Court. The District
Court properly held that it lacked jurisdiction over the
claims at issue, and as a result, N.E. Hub's claims were
properly dismissed.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
40