Delaware Riverkeeper Network v. Federal Energy Regulatory Commission

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
DELAWARE RIVERKEEPER )
NETWORK, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 16-cv-416 (TSC)
)
FEDERAL ENERGY REGULATORY )
COMMISSION, et al., )
)
Defendants. )
)
MEMORANDUM OPINION
The Federal Energy Regulatory Commission (FERC) is empowered to issue
“certificate[s] of public convenience and necessity” allowing entities to transport natural gas and
to construct, extend, acquire, or operate natural gas pipelines. 15 U.S.C. § 717f. Plaintiffs, an
environmental organization and its executive director, assert that FERC is unable to make
unbiased determinations on the issuance of pipeline certificates because of a provision of the
Omnibus Budget Reconciliation Act of 1986 (the Omnibus Act) which requires FERC to recover
its annual operating costs directly from the entities it regulates. 42 U.S.C. § 7178. Plaintiffs
claim that the Commission’s structure and the resulting actual or perceived bias has deprived
them of constitutional Due Process under the Fifth Amendment. The PennEast Pipeline
Company intervened as a Defendant, and before the court are both PennEast’s and FERC’s
motions to dismiss the Complaint.
For the reasons below, both Defendants’ motions to dismiss will be GRANTED.
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I. BACKGROUND
Plaintiff Delaware Riverkeeper Network (DRN) is a non-profit organization established
in 1988 to protect and restore the Delaware River and its associated watershed, tributaries, and
habitats, reaching parts of New Jersey, New York, Pennsylvania, and Delaware. (Compl. ¶ 25).
DRN has more than 16,000 members, some of whom own land that has been impacted by
pipelines authorized by the Commission in the past, and DRN believes that others own land that
will be impacted by future pipelines. (Id. ¶¶ 35, 48). Plaintiffs allege that “DRN’s members
who live within the blast radius of proposed or existing Commission-jurisdictional pipelines are
concerned about the increased risk of bodily and/or property harm as a result of pipeline
accidents or explosions.” (Id. ¶ 49).
PennEast applied for a certificate of public convenience and necessity allowing it to
build a new natural gas pipeline system in New Jersey and Pennsylvania, and on September 28,
2015, Plaintiffs filed a motion to intervene in the FERC review process opposing the request.
(Id. ¶ 92). Pursuant to FERC regulations, Plaintiffs’ unopposed motion to intervene was granted.
(Id. ¶ 93); 18 C.F.R. § 385.214(c)(1). Plaintiffs brought this suit before completion of the FERC
review process, alleging that the review process is itself constitutionally deficient. At the
motions hearing on March 3, 2017, counsel for FERC informed the court that FERC has delayed
the PennEast project twice to conduct additional environmental reviews, and that as of that date,
it had not approved the project or granted a certificate.
FERC certification proceeds in several steps. The first is the “pre-filing process,” in
which the applicant must make an initial filing including, among other things, the desired
schedule of the project, anticipated application filing date, and desired date of Commission
approval; information about zoning; a detailed map and description; a list of state agencies in the
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project area with permitting requirements, and a description of the applicant’s negotiations with
those agencies; a list of other persons and organizations of interest whom the applicant has
contacted about the project; a description of any planning work that has already been done; an
“acknowledgement” that a complete Environmental Report is required with the application at the
time of filing; and a proposed Public Participation Plan for “facilitat[ing] stakeholder
communications and public information.” 18 C.F.R. § 157.21.
Once the applicant has applied for the certificate, FERC then determines whether “‘the
applicant is able and willing properly to do the acts and to perform the service proposed ... and
that the proposed service’ and ‘construction ... is or will be required by the present or future
public convenience and necessity.’” Minisink Residents for Envtl. Pres. & Safety v. FERC, 762
F.3d 97, 101 (D.C. Cir. 2014) (quoting 15 U.S.C. § 717f(e)). In deciding whether to approve the
application and grant the certificate, FERC conducts an environmental review as required by the
National Environmental Policy Act (NEPA), 42 U.S.C. §§ 4321–4370h. FERC can approve or
deny the application, and can “attach to the issuance of the certificate and to the exercise of the
rights granted thereunder such reasonable terms and conditions as the public convenience and
necessity may require.” 15 U.S.C. § 717f.
The statutory scheme allows “[a]ny person, State, municipality, or State commission
aggrieved by an order issued by the Commission” to “apply for a rehearing within thirty days
after the issuance of [an] order,” for example, approving or rejecting construction of a pipeline.
15 U.S.C. § 717r(a). If the Commission does not respond to the request for rehearing within
thirty days, it is deemed denied. At that point, a party who is aggrieved can obtain a review in
the federal Court of Appeals where the natural gas company is located. Id. Regulations allow
“[a]ny person” to file a motion to intervene; if the motion is not opposed within 15 days, the
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person becomes a party automatically, see 18 U.S.C. § 385.214(a), (c), and is therefore qualified
to appeal the denial of rehearing to the appropriate Court of Appeals.
The D.C. Circuit has held that section 717r’s language requiring the Commission to take
action with regard to a rehearing request within 30 days, or have it deemed denied, does not
require FERC to act on the merits. California Co. v. Fed. Power Comm’n, 411 F.2d 720, 722
(D.C. Cir. 1969). The Court noted that its previous decision had “apparently agreed” with
FERC’s assertion that “the Commission has power to act on applications for rehearing beyond
the 30-day period so long as it gives notice of this intent.” Id. (quoting Texaco-Ohio Gas Co. v.
Fed. Power Comm’n, 207 F.2d 615, 617 (1953)). Where the Commission issues a “tolling
order” within 30 days indicating that it is postponing deciding on the merits but not yet denying
an application for rehearing, the Court has found a party’s appeal remains unripe because “the
tolling orders do not resolve the rehearing requests but simply extend the time to consider them.”
City of Glendale v. FERC, No. 03-1261, 2004 WL 180270, at *1 (D.C. Cir. Jan. 22, 2004)
(unpublished). Tolling orders have no explicit statutory basis, but have been upheld by the First
and Fifth Circuits, as well as by the D.C. Circuit in several unpublished orders. Kokajko v.
FERC, 837 F.2d 524 (1st Cir. 1988); Gen. Am. Oil Co. of Texas v. Fed. Power Comm’n, 409
F.2d 597, 599 (5th Cir. 1969); California Co., 411 F.2d at 722; California Mun. Utils. Ass’n v.
FERC, No. 01-1156, 2001 WL 936359, at *1 (D.C. Cir. July 31, 2001); City of Glendale, 2004
WL 180270 at *1.
Plaintiffs claim the Commission is unconstitutionally structurally biased because of its
funding mechanism, which requires the Commission to recover its budget by charging regulated
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natural gas companies, see 42 U.S.C. § 7178,1 because Commissioners may be removed only for
cause, and because “the Commission is insulated from Congressional budgetary oversight,”
resulting in deprivation of their Fifth Amendment due process rights. They argue that the
Commission’s actual bias supports their claim of structural bias, as evidenced by the
Commission’s: 100 percent approval rate; failure to enforce the terms and conditions of its
certificates; treating requests for rehearing arbitrarily by issuing indefinite tolling orders; never
granting a request for rehearing to a non-industry party; never determining that a full
Environmental Impact Statement is necessary after completing an Environmental Assessment;
failure to ever fund its Office of Public Participation; and “revolving door” through which former
Commissioners have gone on to work in industry positions. (Compl. ¶¶ 175–240). Plaintiffs
suggest FERC is able to effectuate pro-industry bias through the use of eminent domain and
preemption of local and state laws; preventing Plaintiffs from attaining due process. (Id. ¶¶ 241–
261).
Plaintiffs ask the court to either declare FERC’s reimbursement mechanism to be
unconstitutional, or declare the Commission’s power of eminent domain or authority to preempt
state and local laws to be unconstitutional. They also ask the court to declare the PennEast
certification procedure specifically, along with the procedure the Commission utilized for any
project in the Delaware River Basin, to be a violation of due process.
II. LEGAL STANDARD
A. Federal Rule of Civil Procedure 12(b)(1)
In evaluating a motion to dismiss under Rule 12(b)(1), the court must “assume the truth
of all material factual allegations in the complaint and ‘construe the complaint liberally, granting
1
Plaintiffs claim these charges comprise twenty percent of the Commission’s overall budget and
100 percent of the gas program budget. (Opp. at 37).
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plaintiff the benefit of all inferences that can be derived from the facts alleged.’” Am. Nat’l Ins.
Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011) (quoting Thomas v. Principi, 394 F.3d 970,
972 (D.C. Cir. 2005)). However, “‘the court need not accept factual inferences drawn by
plaintiffs if those inferences are not supported by facts alleged in the complaint, nor must the
Court accept plaintiff’s legal conclusions.’” Disner v. United States, 888 F. Supp. 2d 83, 87
(D.D.C. 2012) (quoting Speelman v. United States, 461 F. Supp. 2d 71, 73 (D.D.C. 2006)).
Further, under Rule 12(b)(1), the court “is not limited to the allegations of the complaint,” Hohri
v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S. 64
(1987), and “a court may consider such materials outside the pleadings as it deems appropriate to
resolve the question [of] whether it has jurisdiction to hear the case.” Scolaro v. D.C. Bd. of
Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000) (citing Herbert v. Nat’l Acad. of Scis.,
974 F.2d 192, 197 (D.C. Cir. 1992)).
Federal courts are vested with the power of judicial review extending only to “Cases” and
“Controversies.” U.S. Const. art. III, § 2. Courts have, in interpreting this limitation on judicial
power, “developed a series of principles termed ‘justiciability doctrines,’ among which are
standing ripeness, mootness, and the political question doctrine.” Nat’l Treasury Emps. Union v.
United States, 101 F.3d 1423, 1427 (D.C. Cir. 1996) (citing Allen v. Wright, 468 U.S. 737, 750
(1984)).
Standing requires, at a minimum, that a plaintiff have “suffered an ‘injury in fact,’” that
was or is “actual or imminent, not ‘conjectural’ or ‘hypothetical;’” that there be a causal
relationship between the injury and the basis for the claim; and that it be “‘likely,’ as opposed to
merely ‘speculative,’ that the injury will be ‘redressed by a favorable decision’.” Lujan v. Defs.
of Wildlife, 504 U.S. 555, 560–61 (1992) (quoting Allen v. Wright, 468 U.S. 737, 756 (1984);
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Whitmore v. Arkansas, 495 U.S. 149, 155, (1990); Simon v. E. Ky. Welfare Rights Org., 426 U.S.
26, 38, (1976)). The plaintiff bears the burden of proof to establish each of the elements of
Article III standing. Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015) (citing Lujan, 504 U.S.
at 561).
Ripeness also “shares the constitutional requirement of standing that an injury in fact be
certainly impending.” Nat’l Treasury Emps. Union 101 F.3d at 1427. Additionally, the ripeness
doctrine has a “prudential aspect;” in which the “court balances ‘the fitness of the issues for
judicial decision and the hardship to the parties of withholding court consideration’—that extends
beyond standing’s constitutional core.” Id. at 1427–28 (quoting Abbott Labs. v. Gardner, 387
U.S. 136, 149 (1967)). A court can decline to exercise jurisdiction where it finds that there is
little hardship to the parties and the issue is not well-suited to adjudication. The D.C. Circuit has
recognized that where there is a claim of actual bias in an administrative proceeding, there is a
“presumption in favor of withholding judicial review until after final agency action.” Air Line
Pilots Ass’n, Int’l v. Civil Aeronautics Bd., 750 F.2d 81, 88 (D.C. Cir. 1984). A court may
consider an actual bias claim unripe in the absence of final agency action.
B. Federal Rule of Civil Procedure 12(b)(6)
A Rule 12(b)(6) motion to dismiss “tests the legal sufficiency of a complaint.”
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). In order to survive a motion to
dismiss, a complaint must contain factual allegations that are “enough to raise a right to relief
above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Additionally, the facts alleged in the complaint must “state a claim to relief that is plausible on
its face.” Id. at 570. The “plausibility standard is not akin to a ‘probability requirement,’ but it
asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). In considering a motion to dismiss for failure to state a claim under
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Rule 12(b)(6), a court must construe the complaint in the light most favorable to the plaintiffs
and “must assume the truth of all well-pleaded allegations.” Warren v. District of Columbia, 353
F.3d 36, 39 (D.C. Cir. 2004).
III. ANALYSIS
A. Justiciability
i. Standing
Defendants FERC and PennEast contend that Plaintiffs—the Delaware Riverkeeper
Network and its Director—do not have standing to bring this suit. An association may have
standing when it can demonstrate that it meets the elements of standing as an entity, or when “its
members would otherwise have standing to sue in their own right, the interests at stake are
germane to the organization’s purpose, and neither the claim asserted nor the relief requested
requires the participation of individual members in the lawsuit.” Friends of the Earth, Inc. v.
Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 181 (2000).
Plaintiffs’ Complaint states that “DRN is . . . deeply familiar with the impacts to human
health, the environment, and property rights as a result of pipeline construction activity.”
(Compl. ¶ 39). It indicates that DRN “brings this action on behalf of the organization as part of
the pursuit of its organizational mission, and on behalf of its impacted members, the board, and
staff.” (Id. ¶ 41). According to the Complaint, DRN’s director, Maya K. van Rossum,
“regularly visits” the Delaware River and “has taken family, friends, DRN members, and other
interested people onto the Delaware River and its tributaries to educate them.” (Id. ¶ 45). The
Complaint asserts that “DRN’s members . . . have had their aesthetic, recreational, and property
interests harmed as a result of construction and operational activity” of pipelines within the
Commission’s jurisdiction. (Id. ¶ 46). The Complaint alleges that the various pipelines’ impact
on DRN members is both past and future, including “damage to real estate,” “encroachment of
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construction debris upon their homes and property,” “increased risk of bodily and/or property
harm as a result of pipeline accidents or explosions,” members’ property being subject to
eminent domain proceedings, which in turn “compromise[s]” members’ “bargaining position
with pipeline companies for easement agreements,” and aesthetic degradation of public parks
affecting members’ recreational interests. (Id. ¶¶ 48–52). Generally, the Complaint alleges
irreparable injury to “members’ aesthetic, conservation, economic, recreational, scientific,
educational, wildlife preservation, and property interests.” (Id. ¶ 54). It also alleges injury in the
form of FERC’s “violat[ion] [of] DRN’s right to timely judicial review of Commission
certificates.” (Id. ¶ 53).
FERC argues that Plaintiffs cannot establish standing: while allegations of past injury
cannot be used to attain standing for declaratory or injunctive relief, as Plaintiffs seek, their
claims of future injury are too attenuated and speculative. See Clapper v. Amnesty Int’l USA,
133 S. Ct. 1138, 1147 (2013) (upholding dismissal of suit for declaratory relief regarding
provision of Foreign Intelligence Surveillance Act because plaintiffs could not demonstrate “that
the injury is certainly impending” (internal quotation marks omitted). PennEast adds that DRN
has not stated any facts that would establish standing based on injury to DRN itself.
Plaintiffs’ opposition clarifies that they do not argue that DRN has standing as an
organization, but rather that they intend to demonstrate only associational standing. They
maintain that they have associational standing because DRN’s members, including director
Rossum (whom Plaintiffs call “the Riverkeeper”), “have suffered a constitutional injury” in the
form of being “subject to a biased decisionmaking process, or the appearance of a biased
process.” (Opp. at 9). Plaintiffs argue that they need not demonstrate a protected liberty or
property interest in order to have standing, because the deprivation of fair process itself
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constitutes sufficient injury. Plaintiffs cite a case in which the Seventh Circuit found a church
had experienced constitutional injury in the form of deprivation of due process when a medical
commission with a direct financial stake in the matter presided over a determination of whether
to revert the church’s land title. United Church of the Med. Ctr. v. Med. Ctr. Comm’n, 689 F.2d
693 (7th Cir. 1982). Plaintiffs also cite a Sixth Circuit case in which landowners alleged, among
other things, deprivation of due process by a state agency, which plaintiffs claimed was biased in
favor of the state’s interests, and which granted a permit to a waste water treatment facility
impacting their land. Hammond v. Baldwin, 866 F.2d 172, 176 (6th Cir. 1989). The court found
that “the injury is the submission [to a biased decision-making process] itself; the biased (or
potentially biased) decision may also result in injury, but it is a separate, distinct one.” Id.
But neither the Sixth nor Seventh Circuit addressed what type of interest has to be at
stake for a biased decision-making process to constitute injury. Both cases made an implicit
assumption that the plaintiffs had a cognizable liberty interest at stake, which they pursued in an
allegedly biased administrative forum. The Supreme Court has explicitly rejected the argument
that a procedural injury alone is sufficient for standing: “deprivation of a procedural right
without some concrete interest that is affected by the deprivation—a procedural right in vacuo—
is insufficient to create Article III standing. Only a ‘person who has been accorded a procedural
right to protect his concrete interests can assert that right without meeting all the normal
standards for redressability and immediacy.’” Summers v. Earth Island Inst., 555 U.S. 488, 496
(2009) (emphasis added) (quoting Lujan, 504 U.S. at 572 n.7).
Plaintiffs suggest that their status as intervenors in the PennEast proceeding—which
required them to demonstrate an “interest which may be directly affected by the outcome of the
proceeding,” see 18 C.F.R. § 385.214, is sufficient to establish standing based on procedural
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injury. But leave to intervene in the FERC proceedings is granted automatically absent
opposition, meaning that a person could be granted intervenor status without actually
demonstrating any interest that may be affected by the proceeding. While neither FERC nor
PennEast objected to the intervention, this court’s jurisdiction requires that the plaintiffs have
standing, and jurisdiction is not waivable.
Plaintiffs must, therefore, demonstrate a concrete interest tethered to the alleged
deprivation of due process in order to have standing, but the inquiry is not identical to the
question of whether they have stated a claim for a procedural due process violation, which
requires a protected liberty or property interest. The threshold for the former is lower.
Plaintiffs submitted six declarations from DRN members and van Rossum, describing
some past pipeline-related injuries, (see Farrell Decl.), as well as future likely injuries of the type
stated in the Complaint: the upsetting impact of seeing the Delaware River and surrounding area
“permanently altered and damaged by the Project” (van Rossum Decl. ¶ 11); negative impact to
the use and enjoyment of areas near the pipeline resulting from deforestation, construction, and
decreased wildlife (van Rossum Decl. ¶ 13); potential damage to property that sits fifty to a
hundred feet from the PennEast proposed pipeline (Rader Decl. ¶¶ 7, 11); potential damage from
proximity to a proposed pipeline expansion by Columbia Gas and/or from possible drilling under
a DRN member’s property for that project, as well as excessive construction noise (Nelson Decl.
¶¶ 16, 25, 27, 32–22); potential impact on property values and ability to enjoy wildlife (Heindel
Decl. ¶¶ 9, 13); and potential adverse impact to commercial hay production and drinking water
quality (Kelly-Mackey Decl. ¶¶ 21, 28).
The court finds Plaintiffs have stated sufficiently concrete and imminent injury, tethered
to the alleged procedural due process violation, for the purposes of standing. Plaintiffs have
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plausibly alleged the high likelihood of PennEast’s approval for the pipeline project, as well as
the high likelihood that its members will suffer concrete and particularized injuries as a result. 2
FERC argues that the alleged potential injuries are too speculative because the pipeline has not
been approved and “may never be,” but FERC’s interpretation of the Supreme Court’s standing
precedent is too narrow. The likelihood of approval is enough. See City of Los Angeles v. Lyons,
461 U.S. 95, 105 (1983) (plaintiff’s “standing to seek the injunction requested depended on
whether he was likely to suffer future injury”). If Plaintiffs had to wait until the project was
approved, they would be effectively unable to seek review for a procedural due process violation.
Although PennEast may, as FERC states, change the route of the pipeline in the future, the fact
that, at the time the Complaint was filed, the proposed route would touch or impact the
declarants’ property is enough. FERC asks the court to interpret standing in such a way that
would render declarative or injunctive relief unavailable under any circumstances, if the conduct
giving rise to imminent injury had not yet occurred. “Imminent” cannot be read out of the
standard, as FERC seems to request. Plaintiffs’ alleged future injuries are not as attenuated as in
Arpaio v. Obama or Clapper. Nor is FERC’s citation to Metcalf v. Nat’l Petroleum Council, 553
F.2d 176, 177 (D.C. Cir. 1977), in which the court found plaintiffs did not have standing based
on their status as “consumers and citizens,” apposite. Plaintiffs here cite harms that are
significantly more particularized than the Metcalf plaintiffs. The harms are also more specific
than those in Summers, in which the Court found an absence of Article III standing where the
2
Plaintiffs cite as evidence of actual bias that the Commission has a 100% approval rate for its
projects. (Compl. ¶ 99). PennEast responds with several examples of denials of certificate
applications, (PennEast Mot. to Dismiss at 28), which Plaintiffs in turn say do not disprove their
claim that “Defendants have a perfect approval record for pipeline projects that come before the
Commission for a vote.” (Opp. at 39–40). There appears to be no dispute that the approval rate
is high, regardless of whether it is 100 percent; the court finds it is high enough to state a
likelihood of approval for standing purposes.
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plaintiff alleged “plans to visit several unnamed national forests in the future” and a “vague
desire to return” to the Allegheny National Forest. Summers, 555 U.S. at 495–96.
The other two elements of standing are causation and redressability. Plaintiffs’
Complaint and the declarations submitted with their Opposition plausibly allege causation.
While the past harms described in the declarations do not support injunctive relief, they do
demonstrate that the potential injuries Plaintiffs describe would be “fairly . . . traceable” to the
Commission’s approval of a pipeline project. Lujan, 504 U.S. at 560. Plaintiffs need not prove
causation at the motion to dismiss stage; they must only plausibly allege it. When the
Commission grants a certificate to a specific proposed pipeline project, and the project results in
harm to wildlife or construction on a person’s property, or near a person’s property, in a way that
causes them harm, the result is “fairly traceable.”
Redressability is a slightly more challenging element, but is “loosen[ed]” in the
procedural due process context, at least where statutory procedural rights are at issue. See
Summers, 555 U.S. at 497. (See also FERC Reply at 5). FERC focuses its redressability
analysis on the underlying potential harms described by Plaintiffs, not the procedural harm they
allege from being subject to a biased proceeding. (“Riverkeeper’s only basis to think [that the
requested relief would alter how the Commission operates] is a misguided claim that the
Commission would not approve natural gas pipelines but-for its supposed structural bias.”
(FERC Reply at 11)). But because Plaintiffs’ alleged injury is procedural, and the alleged
potential aesthetic and environmental harms are the concrete interests that give Plaintiffs enough
of a claim of a procedural right for purposes of standing, the redressability analysis involves the
procedural injury and not the underlying concrete interests. Plaintiffs need not allege that FERC
would decide not to approve PennEast or any other pipeline in order to demonstrate
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redressability; they need only allege, as they do, that the requested relief would redress their
procedural injury. The court finds that Plaintiffs have Article III standing.3
ii. Ripeness
PennEast devotes several pages to arguing that Plaintiffs’ actual bias claim is not ripe. In
response, Plaintiffs indicate that they do not intend to bring an actual bias claim regarding the
PennEast pipeline approval, but rather to use that pipeline as an “example” of structural bias.
PennEast’s concerns about ripeness are not implicated in a structural bias claim.
B. Rule 12(b)(6)
Stating a claim for a procedural due process violation requires a showing that (1) an
official has deprived the plaintiff (2) of liberty or property (3) without “providing appropriate
procedural protections.” Atherton v. D.C. Office of Mayor, 567 F.3d 672, 689 (D.C. Cir. 2009).
FERC emphasizes that even if Plaintiffs could “show a constitutionally cognizable property
interest,” they fail to state a claim of unconstitutional bias or appearance of bias. PennEast
argues that Plaintiffs have failed to demonstrate deprivation of a protected liberty or property
interest.
i. Deprivation of a liberty or property interest
3
FERC claims that Plaintiffs’ suit is “a preemptive attempt to avoid D.C. Circuit precedent that
actual bias claims with ‘no foundation’ lack standing.” (FERC Mot. to Dismiss at 19) (citing No
Gas Pipeline, 756 F.3d 764, 770 (D.C. Cir. 2014)). In No Gas Pipeline, the D.C. Circuit rejected
a constitutional challenge to FERC’s funding structure, finding that it had jurisdiction only to
review the grant of a specific pipeline certificate, and district court would be the appropriate
forum in which to bring a constitutional claim. The Court also noted, “lest we overlook anything
which we should address, we note that [plaintiff] has made no real attempt to demonstrate
standing . . . while [plaintiff] asserts that there is actual bias and not merely an appearance, it
provides no foundation upon which we could review that claim.” Id. at 770. The Court
explained that plaintiff’s evidence of actual bias, the high approval rate, did not actually suggest
bias. Id. The Court did not find an absence of injury, causation, or redressability for the
purposes of standing. This court does not interpret the D.C. Circuit’s comment to mean that
actual bias claims without foundation lack standing; evidence of actual bias would go to failure
to state a claim under Rule 12(b)(6), not standing.
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Plaintiffs conflate the requirements of standing with the requirements of stating a claim
for a procedural due process violation, suggesting that they need not demonstrate deprivation of
a protected liberty or property interest in order to survive the motion to dismiss. But
administrative decision-maker bias is a subset of procedural due process, not an independent area
of law. The Supreme Court addressed the issue of administrative decision-maker bias in Tumey
v. Ohio, 273 U.S. 510 (1927); Ward v. Village of Monroeville, 409 U.S. 57 (1972); and
Schweiker v. McClure, 456 U.S. 188 (1982). All three cases involved clear liberty or property
interests: in Tumey, a criminal fine and accompanying imprisonment; in Ward, fines for traffic
tickets; and in McClure, Medicare benefits. It is one of the basic tenets of procedural due
process claims that a liberty or property interest is required. See Mathews v. Eldridge, 424 U.S.
319, 332, (1976) (“Procedural due process imposes constraints on governmental decisions which
deprive individuals of ‘liberty’ or ‘property’ interests within the meaning of the Due Process
Clause of the Fifth or Fourteenth Amendment.”). Plaintiffs have not provided any precedent
suggesting that there may be a procedural due process claim where there is no protected liberty
or property interest.
Plaintiffs argue that the Pennsylvania Constitution creates and confers a property right in
the environment that is afforded due process protection. Article I, section 27 of the state
constitution reads: “The people have a right to clean air, pure water, and to the preservation of
the natural, scenic, historic and esthetic values of the environment. Pennsylvania’s public natural
resources are the common property of all the people, including generations yet to come. As
trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit
of all the people.” Pa. Const. art. I, § 27. Plaintiffs argue the right to clean air, pure water, and
preservation of the environment is analogous to the right created by the state constitution to a
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free public education, which a federal district court found merited due process protection. See
Mullen v. Thompson, 155 F. Supp. 2d 448, 452 (W.D. Pa. 2001) (finding that state constitution
creates a right to free public education, but no right to public education at a school of plaintiffs’
choice).
Mullen v. Thompson is not analogous to the case at bar. While free public education is a
right that is specific to an individual, section 27 creates a general, public right. Pennsylvania
courts have affirmed this principle. See, e.g., Payne v. Kassab, 361 A.2d 263, 273 (1976)
(“merely to assert that one has a common right to a protected value under the trusteeship of the
State, and that the value is about to be invaded, creates no automatic right to relief”). While
section 27 may confer a public right that would entitle plaintiffs to sue the state of Pennsylvania
for failing to protect the environment, it does not create a federal protected property interest for
purposes of the Fifth or Fourteenth Amendment. As PennEast points out, it would be untenable
for every citizen of Pennsylvania to have a federal due process right at stake any time the state
takes action that could impact the environment. Moreoever, the language of section 27 is too
vague to confer a property interest, as it does not state how clean the water must be or how pure
the air. See Town of Castle Rock v. Gonzales, 545 U.S. 748, 763–64 (2005) (rejecting a claim
that restraining order statute mandating that police “use every reasonable means to enforce a
restraining order” created a property interest protected by due process).
Plaintiffs also hint at potential impact to real property as a property interest for which
they are guaranteed due process. But any actual taking of real property related to a FERC
proceeding would occur through the process of eminent domain, which would be a separate
proceeding from the issuance of a certificate, and which has generated its own due process
jurisprudence. Plaintiffs do not appear to be challenging a lack of due process in the exercise of
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eminent domain; they appear to challenge the FERC proceedings which sometimes lead to
eminent domain, and the real property at stake in potential subsequent eminent domain
proceedings does not constitute a protected property interest granting the Plaintiffs additional,
pre-eminent domain due process rights during the certificate approval stage.
Neither are aesthetic interests or enjoyment of wildlife “liberty interests” of the type
protected by the Fifth Amendment. Liberty interests that garner such protection include liberty
from actual physical restraint; marriage and reproductive choices, and the right to live in the
United States, see Kerry v. Din, 135 S. Ct. 2128, 2142 (2015) (citing Griswold v. Connecticut,
381 U.S. 479, 485–486 (1965) and Ng Fung Ho v. White, 259 U.S. 276, 284–285 (1922)); and
reputation, see Gen. Elec. Co. v. Jackson, 610 F.3d 110, 121 (D.C. Cir. 2010).
Because Plaintiffs have not identified any liberty or property interest that is cognizable
under the Fifth Amendment’s due process clause, they have failed to state a claim upon which
relief can be granted. The declarations attached to Plaintiffs’ opposition allege some degree of
past property damage caused by FERC-approved pipelines, but those allegations do not allege a
“deprivation” of a protected liberty or property interest within the meaning of the Fifth
Amendment. Negligent conduct on the part of the government does not constitute a Fifth
Amendment deprivation. Davidson v. Cannon, 474 U.S. 344, 347 (1986). Additionally,
Plaintiffs have not alleged a sufficient connection between the Commission’s conduct and the
potential deprivations they foresee in the form of damage to property from drilling or potential
dangers from pipeline accidents.
ii. Structural or actual bias
Although the court finds that Plaintiffs have failed to state a claim for procedural due
process violation based on Plaintiffs’ inability to demonstrate deprivation of a protected liberty
or property interest, the court will also address Plaintiffs’ claims of bias.
17
Plaintiff’s claim of structural bias is that the Budget Act’s provision requiring that FERC
recoup its annual operating budget through a proportional charge on the regulated entities means
that FERC cannot make unbiased determinations on applications for certificates. FERC argues,
and the court agrees, that Plaintiffs have not plausibly pleaded that the funding structure results
in bias. Plaintiffs do not dispute that Congress determines FERC’s budget, which has no
relationship to the number of approved pipelines or the quantity of gas being transported within
FERC’s jurisdiction. Plaintiffs do claim that there are “contested issues of fact” surrounding
whether FERC can “increase its annual revenues beyond the amount appropriated by Congress.”
(Opp. at 28). But this statement, without more, is insufficient; the court is not required to assume
the truth of allegations by Plaintiffs that directly conflict with the statutory scheme at issue. The
plain language of the statute indicates that FERC does not have control over its own budget. The
Commission’s budget cannot be increased by approving pipelines; rather, 42 U.S.C. § 7178
requires the Commission to make adjustments to “eliminate any overrecovery or underrecovery.”
If Plaintiffs are unhappy with Congress’s chosen appropriations to the Commission (“Congress
does not set meaningful expense limits on the commission,” (Opp. at 30)), Plaintiffs’ recourse
lies with their legislative representatives.
Unlike the agencies in Tumey, Ward, and McClure, FERC stands to gain no direct benefit
from the approval of a particular pipeline project. If FERC does not approve any one project, its
budget remains the same, with the proportional volumetric charge per gas company being
slightly higher. If FERC commissioners also had ownership interests in gas companies, they
might individually have a financial stake in granting certificates because it would reduce the
proportional charges on their own companies. See, e.g., Gibson v. Berryhill, 411 U.S. 564, 578
(1973) (finding state optometry board unconstitutionally biased because, as private practitioners,
18
board members had a pecuniary interest in revoking the licenses of plaintiffs in order to subsume
their business).
But the Commission’s general, long-term interest in its own continued existence does not
result in a “possible temptation to the average [person] as a judge . . . which might lead him not
to hold the balance nice, clear, and true.” Tumey, 273 U.S. at 532. The connection between the
act of approving an individual pipeline and the financial sustainability of the Commission as a
whole is simply too remote to create any such bias. Not only are there “[m]ore than twenty-five
federal agencies [that] receive a portion, if not all, of their respective operating costs through the
collection of user fees and other annual assessments” (see Statement of Interest of the United
States at 14, ECF No. 13), but the theory does not pass muster. Given the lifespan of a natural
gas pipeline, which Plaintiffs allege “can extend twenty years, forty years, or longer” (Compl. ¶
122), it is not plausible that the potential for FERC’s budget to “dry up” if FERC stopped
approving pipeline projects is imminent or tangible enough to create any bias. See Dugan v.
Ohio, 277 U.S. 61, 62–63 (1928) (finding no due process violation where defendant was
convicted in mayor’s court and portions of the fines assessed went into general fund out of which
mayor’s fixed salary was paid).
Plaintiffs argue that discovery is necessary to gather information regarding the dates that
all current pipeline projects will theoretically have run their full course, but the court disagrees
with the premise that the existence of such a date creates a potential for bias. Additionally, if it
became clear at some future point that FERC’s ability to recoup its full budget through
volumetric charges was jeopardized, Congress would likely come up with a new funding
mechanism, because ultimately it is Congress, not regulated pipeline companies, that funds the
Commission and determines its authority and activities.
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Because the court finds there is no inherent structural bias or appearance of structural
bias, Plaintiffs’ purported examples of actual bias, which Plaintiffs offer as “evidence of the
Commission’s inherent bias” (Opp. at 8), are not relevant to the court’s analysis. Allegations of
actual bias cannot create structural bias where the court determines there is none. The Budget
Act on its face does not create a FERC funding mechanism that creates unconstitutional bias for
the basic reason that approval of pipeline projects does not increase FERC’s budget. Plaintiffs
have not alleged facts upon which relief could be granted.4
IV. Conclusion
For the reasons set forth above, both Defendants’ motions to dismiss will be
GRANTED.
A corresponding order will issue separately.
Dated: March 22, 2017
Tanya S. Chutkan
TANYA S. CHUTKAN
United States District Judge
4
Because the court finds that Plaintiffs fail to state a claim under Rule 12(b)(6), and dismissal is
therefore appropriate, the court will not reach FERC’s argument that the court should exercise its
discretion to dismiss a declaratory judgment case. (FERC Mot. to Dismiss at 41–42).
20