Third Circuit: Takings Challenge To Pipeline Belongs In FERC

Come on, let's be candid here. When we pick up an opinion filled with statutory and regulatory jargon -- replete with agency acronyms -- our eyes see the words, but our brains process them like they are being spoken by the adults in the Peanuts cartoons.

But then we spot the words "eminent domain" and BAM! we're all in. 

So it is with the U.S. Court of Appeals' opinion in Delaware Riverkeeper Network v. Secretary Pennsylvania Dep't of Environmental Protection, No. 16-2211 (Sep. 4, 2018), which does not disappoint it the jargon department: PADEP, NGA, FERC, Water Quality Certification, EHB, &c. But this is a challenge to a pipeline and also involves eminent domain (if only peripherally), so yeah, we're diving in despite the buzzing sound.

Short story: natural gas pipelines need Federal Energy Regulatory Commission permission before they can start taking property under the Natural Gas Act. Part of getting FERC's permission is showing that "compliance with other mandates" such as the Clean Water Act. Check off under the CWA, in turn, requires check off from state agencies, here, the Pennsylvania Department of Environmental Protection (for it is in Pennsylvania that our scene lies). PADEP did so, certifying that the pipeline "would comply with Pennsylvania's water-quality standards if it satisfied certain conditions." Two of those conditions required the pipeline to obtain other Pennsylvania permits, while a third required a NPDES (discharge) permit. 

The plaintiffs -- who object to the pipelines -- objected, filing a federal lawsuit under the NGA, and an admin appeal of PADEP's decision in the Pennsylvania Environmental Hearing Board (EHB, if you are keeping track). 

The question presented to the Third Circuit was whether the federal courts have "original and exclusive" jurisdiction over the case under the NGA. Under the Act, a U.S. court of appeals has such jurisdiction to review a state agency's "action" which is undertaken "pursuant to federal law" for stuff related to the construction of a natural gas pipeline. The issue was whether this requires final agency action by PADEP. In other words, did the state admin appeal need to run its course before the federal court of appeals had jurisdiction?

Short answer from the Third Circuit: yes, final agency action required. If you are an admin law person, go read that part of the opinion. Same with the court's analysis of whether PADEP's action here qualified as final. We like admin law (really!) but much of this we skim (cue Peanuts adult voices). Short answer to this question: yes, PADEP's action was final. Bottom line: Third Circuit had NGA jurisdiction. 

Final question: did PADEP's final action violate the NGA (by not complying with the requirements of the "other mandates" such as the CWA)? No, ir didn't. Again, go read that portion of the opinion for why.

And finally, the payoff starting on page 22: the objectors argued that "PADEP's issuance of a conditional Water Quality Certification violates the Takings Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment." Slip op. at 22. This is important because "[u]nder the Natural Gas Act, any natural gas company holding a Certificate of Public Convenience and Necessity may acquire a pipeline right-of-way through eminent domain." Id. "Petitioners assert that PADEP violated the Fifth and Fourteenth Amendments when it issued a conditional Water Quality Certification—a condition precedent for initiating eminent domain proceedings under Transco’s Certificate of Public Convenience and Necessity—based on a relatively restricted administrative process." Slip op. at 23.

The court avoided answering that question directly, concluding instead that "Petitioners’ eminent-domain argument is in substance a challenge to FERC’s order granting a Certificate of Public Convenience and Necessity." Id. This lawsuit was not the right way to do that, and "that order may only be challenged by a request for a rehearing before FERC itself, or by a petition for review by an appropriate federal circuit court."  

That the challengers might lose in FERC was of no moment: "Petitioners respond, in essence, that those avenues are inadequate because if Petitioners took advantage of them, Transco would resist and Petitioners might lose. That argument refutes itself." Slip op. at 23. 

Finally, the court rejected on the merits the challengers' claims that they had a property right in natural resources under Pennsylvania law, concluding first that this wasn't a matter for Pennsylvania courts (as the pipeline argued), and then that because PADEP might, in future proceedings, consider their environmental property and harm claims, the challengers have not yet been damaged. 

If pipelines float your boat (or even if they don't, but you just want to find out more about what is going on in this very hot area), be sure to register for the 2019 ALI-CLE Eminent Domain and Land Valuation Litigation Conference, January 24-26, 2019 in Palm Springs, California. There, we will have no less that two major sessions on pipeline issues, presented by faculty who are right on the front lines of the controversies and challenges. The first (Where You Haven't Gone Before: New Ways to Challenge the Take) is, as the title reflects, about creative ways to challenge and defend pipeline takings. The second, focuses on the unique compensation issues which these takings produce, "Compensation Pitfalls: How to Avoid Problems." Come, join us! 

Delaware Riverkeeper Network v. Secretary Pa. Dep't of Environ. Protection, No. 16-2211 (3d Cir. Sep. 4, 20...