Orus Berkley v. Mountain Valley Pipeline, LLC ( 2018 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-1042
ORUS ASHBY BERKLEY; JAMES T. CHANDLER; KATHY E. CHANDLER;
CONSTANTINE THEODORE CHLEPAS; PATTI LEE CHLEPAS; ROGER D.
CRABTREE; REBECCA H. CRABTREE; GEORGE LEE JONES; ROBERT
WAYNE MORGAN; PATRICIA ANN MORGAN; MARGARET MCGRAW
SLAYTON LIVING TRUST; THOMAS TRIPLETT; BONNIE B. TRIPLETT,
Plaintiffs - Appellants,
and
DAWN E. CISEK; MARTIN CISEK; EDITH FERN ECHOLS; ESTIAL E.
ECHOLS, JR.,
Plaintiffs,
v.
MOUNTAIN VALLEY PIPELINE, LLC; FEDERAL ENERGY REGULATORY
COMMISSION; NEIL CHATTERJEE, in his official capacity as Acting
Chairman of the Federal Energy Regulatory Commission,
Defendants - Appellees.
Appeal from the United States District Court for the Western District of Virginia, at
Roanoke. Elizabeth Kay Dillon, District Judge. (7:17-cv-00357-EKD)
Argued: May 10, 2018 Decided: July 25, 2018
Before GREGORY, Chief Judge, and WYNN, and THACKER, Circuit Judges.
Affirmed by published opinion. Judge Wynn wrote the opinion, in which Chief Judge
Gregory and Judge Thacker joined.
ARGUED: Justin Michael Lugar, GENTRY LOCKE, Roanoke, Virginia, for
Appellants. Susanna Y. Chu, FEDERAL ENERGY REGULATORY COMMISSION,
Washington, D.C., for Appellees Federal Energy Regulatory Commission and Neil
Chatterjee. Wade Wallihan Massie, PENN, STUART & ESKRIDGE, Abingdon,
Virginia, for Appellee Mountain Valley Pipeline, LLC. ON BRIEF: Cynthia M. Kinser,
Monica T. Monday, GENTRY LOCKE, Roanoke, Virginia, for Appellants. James P.
Danly, General Counsel, Robert H. Solomon, Solicitor, FEDERAL ENERGY
REGULATORY COMMISSION, Washington, D.C., for Appellees Federal Energy
Regulatory Commission and Neil Chatterjee. Mark E. Frye, Seth M. Land, PENN,
STUART & ESKRIDGE, Abingdon, Virginia, for Appellee Mountain Valley Pipeline,
LLC.
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WYNN, Circuit Judge:
Plaintiffs1 are landowners along the path of a proposed natural gas pipeline. They
brought this action against the Mountain Valley Pipeline, LLC, the Federal Energy
Regulatory Commission, and Neil Chatterjee, in his official capacity as Acting Chairman
of the Federal Energy Regulatory Commission (hereinafter collectively referred to as
“Defendants”) challenging the constitutionality of various provisions of the Natural Gas
Act, 15 U.S.C. § 717 et seq. But the district court, without reaching the merits of
Plaintiffs’ challenges, dismissed their action for lack of subject-matter jurisdiction on the
grounds that their claims must instead be brought through the agency review process laid
out in the Natural Gas Act. We affirm.
I.
A.
This case involves a complex administrative review framework that warrants some
introduction. In 1977, Congress transferred much of the authority from the now-defunct
Federal Power Commission to the new Federal Energy Regulatory Commission
1
Plaintiffs are Orus Ashby Berkley, James T. Chandler, Kathy E. Chandler,
Constantine Theodore Chlepas, Patti Lee Chlepas, Roger D. Crabtree, Rebecca H.
Crabtree, George Lee Jones, Robert Wayne Morgan, Patricia Ann Morgan, Margaret
McGraw Slayton Living Trust, Thomas Triplett, Bonnie B. Triplett, Dawn E. Cisek,
Martin Cisek, Edith Fern Echols, and Estial E. Echols, Jr. After this appeal was filed,
Dawn Cisek, Martin Cisek, Edith Echols, and Estial Echols withdrew their discrete
appeals. Accordingly, we have updated the caption of this case to reflect their status as
Plaintiffs and not as Plaintiff-Appellants.
3
(“FERC,” or “the Commission”). See 42 U.S.C. §§ 7171–72. Among the transferred
authorities was regulation of the natural gas industry, as outlined in the Natural Gas Act,
15 U.S.C. § 717 et seq. See also 42 U.S.C. § 7172 (transferring jurisdiction).
Under the Natural Gas Act, FERC is responsible for vetting and approving
construction of new interstate natural gas pipelines and expansions of existing pipelines.
See 15 U.S.C. § 717f. To approve such construction, FERC must find that the
construction “is or will be required by the present or future public convenience and
necessity.” Id. § 717f(e). Once FERC makes that required finding and issues a
“Certificate of public convenience and necessity” (“Certificate”), a pipeline company can
begin construction. Id. § 717f(c).
Issuing such a Certificate conveys and automatically transfers the power of
eminent domain to the Certificate holder. See id. § 717f(h). Thus, FERC does not have
discretion to withhold eminent domain power once it grants a Certificate. See Midcoast
Interstate Transmission, Inc. v. FERC, 198 F.3d 960, 973 (D.C. Cir. 2000). With the
transferred power of eminent domain, a Certificate holder can then initiate condemnation
proceedings in the appropriate U.S. district court or state court. See 15 U.S.C. § 717f(h).
Under the Natural Gas Act, an aggrieved party who seeks review from the
issuance of a Certificate must first file for rehearing before FERC. See id. § 717r. If
FERC either declines to rehear the matter or issues a final order upon rehearing the
matter, the aggrieved party can file a petition for review in the appropriate court of
4
appeals, which has “exclusive” jurisdiction “to affirm, modify, or set aside [the final]
order in whole or in part.” Id. § 717r(b). 2
B.
In the present case, FERC issued a Certificate to Mountain Valley Pipeline, LLC
(“Mountain Valley Pipeline”) in October 2017. See 15 U.S.C. § 717f(c). At the time
FERC issued the Certificate, Plaintiffs had already filed the complaint in this matter
against Defendants in the U.S. District Court for the Western District of Virginia
challenging the constitutionality of various provisions of the Natural Gas Act. The
Defendants moved to dismiss for lack of jurisdiction.
In December 2017, the district court granted the Defendants’ motions to dismiss
on two grounds. First, the district court found that Plaintiffs’ challenges “inher[e]” in a
FERC order and are thus subject to the exclusive review provisions of the Natural Gas
Act. J.A. 535–40. Alternatively, the district court held that, even if Plaintiffs’ challenges
fell outside that regime, Congress implicitly divested the district court of jurisdiction,
pursuant to the Supreme Court’s framework laid out in Thunder Basin Coal Co. v. Reich,
510 U.S. 200 (1994). Accordingly, the district court dismissed, without prejudice, three
of the four counts for lack of subject-matter jurisdiction. Plaintiffs subsequently
2
However, there are limits to appellate jurisdiction. For instance, “[n]o objection
to the order of the Commission shall be considered by the court [of appeals] unless such
objection shall have been urged before the Commission in the application for rehearing
unless there is reasonable ground for failure so to do.” 15 U.S.C. § 717r(b).
Additionally, “[t]he filing of an application for rehearing . . . shall not, unless specifically
ordered by the Commission, operate as a stay of the Commission’s order.” Id. § 717r(c).
5
stipulated to having the remaining count dismissed with prejudice and timely appealed to
this Court. 3
II.
We review the district court’s dismissal of a complaint for lack of subject-matter
jurisdiction de novo. Nat’l Taxpayers Union v. U.S. Soc. Sec. Admin., 376 F.3d 239, 241
(4th Cir. 2004). Ultimately, we agree with the district court that Congress implicitly
divested the district court of jurisdiction to hear claims of the kind brought by Plaintiffs
and instead intended for such claims to come to federal court through the administrative
review scheme established by the Natural Gas Act. As a result, the district court
correctly determined that it did not have jurisdiction to review the matter.
Over the past thirty years, the Supreme Court has issued a trio of cases addressing
when Congress intends to divest district courts of jurisdiction over claims that should
instead proceed exclusively through administrative review regimes. See Elgin v. Dep’t of
the Treasury, 567 U.S. 1 (2012); Free Enter. Fund v. Pub. Co. Accounting Oversight Bd.,
3
In a letter filed pursuant to Fed. R. App. P. 28(j), FERC informed this Court of
further developments regarding the pending request for rehearing before the Commission
in this case. Specifically, on June 15, 2018, FERC took final action on the matter and
upheld its issuance of the Certificate to Mountain Valley Pipeline. In the time since
FERC’s final order, no party has requested that we take any steps in light of this
development. Furthermore, although we have an obligation to raise mootness issues sua
sponte, see Friedman’s, Inc. v. Dunlap, 290 F.3d 191, 197 (4th Cir. 2002), we do not
believe issuance of that final order moots the case at bar, because there are still potential
benefits to the Plaintiffs to being able to pursue their original action in district court. See
Smith v. Ashcroft, 295 F.3d 425, 428 (4th Cir. 2002) (finding a case is not moot when the
petitioner is still “unmistakably affected by the legal implications of our decision”).
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561 U.S. 477 (2010); Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994). This Court
recently synthesized these three cases in Bennett v. SEC, 844 F.3d 174 (4th Cir. 2016).
In Bennett, the plaintiff, who owned an investment firm that was the subject of an
investigation by the Securities and Exchange Commission (“SEC”), filed suit in district
court claiming that the SEC unconstitutionally used administrative law judges as part of
its enforcement proceedings. See id. at 177–78. In analyzing whether the district court
had jurisdiction to hear that claim, this Court distilled the relevant Supreme Court
precedent into “a two-step inquiry.” Id. at 181.
At the first step, the court must consider “whether Congress’s intent to preclude
district-court jurisdiction is ‘fairly discernible in the statutory scheme.’” Id. (quoting
Thunder Basin, 510 U.S. at 207). “This [step] involves examining the statute’s text,
structure, and purpose.” Id. At the second step, the court must determine “whether
plaintiffs’ ‘claims are of the type Congress intended to be reviewed within this statutory
structure.’” Id. (quoting Thunder Basin, 510 U.S. at 212). With this framework in mind,
we turn to the case at hand.
A.
To determine whether the district court had jurisdiction to hear Plaintiffs’ claims,
we begin with the first step of our inquiry: “whether Congress’s intent to preclude
district-court jurisdiction is fairly discernible in the statutory scheme.” Id. at 181
(internal quotation marks omitted).
In Bennett, this Court found that aspects of the statute at issue in the case, the
Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., indicated that Congress
7
intended to divest the district court of jurisdiction. First, the statute established a
“comprehensive scheme that provides for judicial review in the appropriate court of
appeals.” Bennett, 844 F.3d at 181. Furthermore, the statute “demonstrated [that
Congress] knew how to preserve district-court jurisdiction, but declined to do so.” Id. In
particular, the Securities Exchange Act “authorize[d] district courts to exercise
jurisdiction over certain actions brought by the agency but not by private parties.” Id.
Thus, the statute indicated that Congress did not want cases brought by private parties,
like the plaintiff in Bennett, to be heard by district courts.
These considerations lead to the same conclusion in this case. Like the Securities
Exchange Act, the Natural Gas Act establishes an extensive review framework, including
review before FERC and eventually by a court of appeals. See 15 U.S.C. § 717r. And, as
with the statute in Bennett, the Natural Gas Act specifically allows for district court
jurisdiction over certain actions, such as condemnation proceedings. See id. § 717f(h).
Thus, as did the statute in Bennett, the Natural Gas Act indicates that Congress knew how
to allow for district court jurisdiction, yet it chose not to do so when it came to issues
related to review of a Certificate. Rather, in such situations, Congress gave “exclusive”
jurisdiction to the appropriate court of appeals—but only after going through the review
process with FERC. Id. § 717r. Nothing in the Natural Gas Act indicates Congress
intended to create exceptions to this exclusive jurisdiction of the courts of appeals, except
those exceptions specifically set out in the statute.
So, under this Court’s precedent in Bennett, the Natural Gas Act’s text and
structure evince an intent from Congress to remove district-court jurisdiction.
8
B.
Continuing our analysis of whether the district court had jurisdiction to hear
Plaintiffs’ claims in this matter, we next consider the second step of our inquiry:
“whether plaintiffs’ claims are of the type Congress intended to be reviewed within this
statutory structure.” Bennett, 844 F.3d at 181 (internal quotation marks omitted). In so
doing, we consider three factors: “(1) whether the statutory scheme foreclose[s] all
meaningful judicial review,” “(2) the extent to which the plaintiff’s claims are wholly
collateral to the statute’s review provisions, and (3) whether agency expertise could be
brought to bear on the . . . questions presented.” Id. (alteration in original) (internal
quotation marks omitted). Of the three factors considered at the second step, we stated in
Bennett that the first factor—“meaningful judicial review”—is the “most important.” Id.
at 183 n.7.
Regarding the first factor, whether the Natural Gas Act provides for meaningful
judicial review in the circumstances before us, Plaintiffs argue that, because their claims
are constitutional in nature and challenge the legitimacy of the statute itself, FERC cannot
rule on them. Thus, Plaintiffs argue that they are deprived of meaningful review by
having to wait until those claims are reviewed by a court of appeals.
In Bennett, however, we recognized that the Supreme Court had already rejected a
similar line of reasoning. See id. at 184. Specifically, in Thunder Basin, the Supreme
Court said that “constitutional claims . . . [could] be meaningfully addressed in the Court
of Appeals,” even if the agency could not adjudicate them in the first instance. 510 U.S.
at 215. The Supreme Court in Elgin said the same. See 567 U.S. at 15–18. Thus,
9
notwithstanding that Plaintiffs are “attack[ing] the legitimacy of the forum” itself, review
is still meaningful, even if it is withheld until first going through an agency that cannot
rule on Plaintiffs’ constitutional claims. Bennett, 844 F.3d at 184.
For that reason, in Bennett, this Court said that a question about the
constitutionality of an administrative law judge’s authority to hear cases must also go
through the agency review process, and that eventual review of the constitutional
question before the court of appeals would still be meaningful. See id. at 184–86. In this
way, Bennett, Thunder Basin, and Elgin fatally undercut Plaintiffs’ argument. All three
decisions establish that FERC’s inability to resolve Plaintiffs’ constitutional claims does
not mean that the statutory scheme deprives Plaintiffs of meaningful judicial review.
Plaintiffs further attempt to distinguish their case from Bennett by arguing that the
Natural Gas Act requires FERC to review petitions for rehearing within 30 days and that,
by tolling this period, FERC unfairly delays judicial review while simultaneously
allowing Mountain Valley Pipeline to begin construction. 4 This argument does not align
with the statute, however.
Contrary to what Plaintiffs argue, FERC is not required to finally decide petitions
for rehearing within 30 days. Rather, the statute says that “[u]nless the Commission acts
4
According to Plaintiffs—and undisputed by FERC—FERC regularly issues
statements within 30 days of petitions for rehearing being filed that state, “[i]n order to
afford additional time for consideration of the matters raised or to be raised, rehearing of
the Commission’s order is hereby granted for the limited purpose of further
consideration, and timely-filed rehearing requests will not be deemed denied by operation
of law. Rehearing requests of the above-cited order filed in this proceeding will be
addressed in a future order.” Appellants’ Br. at 20 n.7.
10
upon the application for rehearing within thirty days after it is filed, such application may
be deemed to have been denied.” 15 U.S.C. § 717r(a) (emphasis added). Thus, the
statute does not require a final decision within 30 days; it requires FERC to take some
kind of action within 30 days for the petition not to be deemed denied by operation of
law. FERC does so by issuing the tolling order.
That conclusion is not changed simply because the pipeline construction may
continue while a rehearing petition is pending. We know this because Congress
contemplated construction would be allowed to continue while FERC reviews a petition
for rehearing. Specifically, the Natural Gas Act provides that “[t]he filing of an
application for rehearing . . . shall not, unless specifically ordered by the Commission,
operate as a stay of the Commission’s order.” Id. § 717r(c). Therefore, Plaintiffs have
failed to establish that, under the facts of this case, the Natural Gas Act “foreclose[s] all
meaningful judicial review.” Bennett, 844 F.3d at 181 (alteration in original).
To be sure, we acknowledge the possibility that FERC’s use of a tolling order in
certain cases may, in effect, deny a plaintiff meaningful judicial review, regardless of
whether the Natural Gas Act could, in theory, provide such recourse. After all, there is a
“strong presumption that Congress did not mean to prohibit all judicial review of
executive action,” Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 681 (1986)
(internal quotation marks omitted), and undoubtedly in some rare situations, agency
inaction may turn the promise of meaningful review into meaningless review.
Notably, we recognized in Bennett that plaintiffs are denied meaningful review
when they are subject to “‘some additional and irremediable harm beyond the burdens
11
associated with the dispute resolutions process.’” 844 F.3d at 186 n. 13 (quoting Tilton v.
SEC, 824 F.3d 276, 286 (2d Cir. 2016)); see also McNary v. Haitian Refugee Ctr., Inc.,
498 U.S. 479, 496–97 (1991) (holding that respondents were not “as a practical matter
. . . able to obtain meaningful judicial review” when they sought to challenge certain
procedures used by the Immigration and Naturalization Service, because raising their
claims would have also required them to “voluntarily surrender themselves for
deportation”); Mathews v. Eldridge, 424 U.S. 319, 331 (1976) (finding that procedural
due process was violated where “an erroneous termination” of disability benefits would
“damage [the respondent] in a way not recompensable through retroactive payments”);
Hill v. SEC, 825 F.3d 1236, 1247 (11th Cir. 2016) (finding that the administrative review
scheme in the Securities Exchange Act of 1934 provides meaningful review of civil
enforcement actions brought by the SEC, because those challenging the actions could not
show they “are likely to suffer irreparable injury while awaiting judicial review”);
Kreschollek v. S. Stevedoring Co., 78 F.3d 868, 874–75 (3d Cir. 1996) (holding that the
Longshore and Harbor Workers’ Compensation Act did not provide meaningful review
under the Thunder Basin standard, because the result of requiring litigants to wait until
being heard before the court of appeals, “albeit not necessarily the absence of any judicial
review at all, might well be the absence of any effective judicial review,” as a result of
“serious irreparable injury” that could occur in the intervening time).
However, although Plaintiffs’ brief makes a few unsupported assertions about
injuries they will suffer, they point to no evidence to corroborate their claims and, more
critically, make no detailed arguments about those potential injuries. From the briefing,
12
we have no answer as to what specific injuries Plaintiffs are alleging are potentially
irreparable, why those injuries are not recompensable if post-deprivation relief is
provided by the court of appeals, and how those specific claims distinguish Plaintiffs’
case from seemingly contrary cases, such as Thunder Basin, Elgin, and Bennett. As the
case is currently presented, Plaintiffs have not adequately produced evidence of
irreparable injury, thereby indicating that the administrative review scheme found in the
Natural Gas Act can provide meaningful review for their claims. Thus, the first factor
weighs in favor of finding that Congress did not intend for district courts to have
jurisdiction over claims such as those brought by Plaintiffs.
We next consider the second factor—that is, whether a claim is “wholly collateral”
to the statutory review scheme. Bennett, 844 F.3d at 186. In Bennett, this Court found
that the plaintiff’s constitutional claims were not wholly collateral to the administrative
proceeding because they were “the vehicle by which she s[ought] to vacate the ALJ’s
initial findings.” Id. at 187 (internal quotation marks omitted).
The same analysis applies here. Plaintiffs’ constitutional claims are the means by
which they seek to vacate the granting of the Certificate to Mountain Valley Pipeline.
Therefore, their claims are not wholly collateral to the Natural Gas Act’s statutory review
scheme. This conclusion accords with the Supreme Court’s findings in its trio of cases.
In Elgin, for example, the plaintiff’s constitutional claims were not wholly
collateral to the statutory review scheme found in the Civil Service Reform Act of 1978
because the claims comprised the vehicle by which the plaintiff sought to challenge his
firing from government employment. See 567 U.S. at 7–8, 22. By way of contrast, in
13
Free Enterprise, the plaintiffs’ constitutional challenge to the Public Company
Accounting Oversight Board’s existence was wholly collateral to the review scheme
found in the Sarbanes-Oxley Act of 2002, because the plaintiffs’ challenge was unrelated
to any particular action taken by the Board. See 561 U.S. at 490–91. District-court
jurisdiction was the only way the plaintiffs’ claims in Free Enterprise could have been
reviewed by a court, absent the plaintiffs intentionally incurring a sanction by the Board
so as to create an administrative action through which to lodge their constitutional
challenge. Id.
The situation here is more like that of Elgin and Bennett. Plaintiffs are seeking to
reverse the issuance of a specific Certificate. The statutory review scheme provides for
eventual review of this issue before a court of appeals; therefore, Plaintiffs must work
through the statutory review scheme first. Thus, the second factor weighs in favor of
finding that Congress did not intend for district courts to have jurisdiction over claims
such as those brought by Plaintiffs.
Finally, we consider the third factor of “whether agency expertise could be
brought to bear on the . . . questions presented.” Bennett, 844 F.3d at 181 (internal
quotation marks omitted). When considering this factor in Bennett, this Court said that
agencies could “apply [their] expertise to threshold questions that may accompany a
constitutional claim against a federal statute, even when the agency disclaimed authority
to resolve those constitutional claims.” Id. at 187 (internal quotation marks omitted). For
example, the Bennett Court said the SEC “could bring its expertise to bear . . . by
concluding that the Division of Enforcement’s substantive claims [were] meritless,
14
thereby fully disposing of the case before reaching the constitutional question.” Id. at
187–88. The Court acknowledged such a result was “unlikely” but nonetheless found
that Supreme Court precedent “emphasized that ‘one of the principal reasons to await the
termination of agency proceedings is to obviate all occasion for judicial review.’” Id. at
188 (quoting FTC v. Standard Oil Co., 449 U.S. 232, 244 n.11 (1980)).
The same is true here. Although perhaps unlikely to occur, FERC had the ability
to, upon rehearing Plaintiffs’ challenge here—and may still in future cases—revoke its
issuance of a Certificate based upon threshold questions within its expertise. If that had
occurred, Plaintiffs’ constitutional claims would have been moot, without requiring a
court to rule on them at all. Thus, under our precedent in Bennett, this final factor also
weighs in favor of finding that Congress did not intend for district courts to have
jurisdiction over claims such as those brought by Plaintiffs.
III.
In conclusion, under the two-step analysis this Court set out in Bennett, Congress
intended to divest district courts of jurisdiction to hear the claims pursued by Plaintiffs
and instead intended those claims to be brought under the statutory review scheme
established by the Natural Gas Act. Accordingly, the district court lacked subject-matter
15
jurisdiction to hear Plaintiffs’ claims and appropriately dismissed their claims without
prejudice. 5
The judgment of the district court is
AFFIRMED.
5
We vacate the portion of the district court’s opinion discussing an alternative
ground for its holding—that the Plaintiffs’ challenges “inher[e]” in a Commission order
and are thus subject to the exclusive review provisions of the Natural Gas Act. J.A. 535–
40. And because we uphold the district court’s conclusion based upon its application of
Thunder Basin, Bennett, and related cases, we decline to address that other line of
reasoning in greater detail.
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