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New Jersey Federal District Court Dismisses Enviro’s Constitutional Challenges to FERC’s Approval of PennEast’s $1B Gas Pipeline, Holding that the Court Doesn’t Have Jurisdiction under the Natural Gas Act

  By:  Alexander J. Bandza Image result for FERC Logo

On Monday, in N.J. Conservation Found. v. FERC (No. 17-11991), the U.S. District Court for the District of New Jersey dismissed the New Jersey Conservation Foundation’s (“NJCF”) suit against the Federal Energy Regulatory Commission (“FERC”) because the Court found that the courts of appeals, and not it, had subject matter jurisdiction under the Natural Gas Act (“NGA”).  NJCF’s suit sought to declare that FERC’s practice of issuing certificates authorizing the construction of natural gas pipeline facilities violated the U.S. Constitution.  While pled solely against FERC and its Commissioners, the case was predicated on FERC’s prior approval of PennEast Pipeline Company, LLC’s (“PennEast”) right to construct a $1B interstate natural gas pipeline.  NJCF’s case centered on three purported Constitutional issues with FERC’s environmental analysis: (1) FERC’s approvals that delegate the power of eminent domain in the absence of adequate public use analyses violate the Takings Clause; (2) FERC’s approvals that grant eminent domain prior to receiving environmental impact findings from regulatory agencies violate the Fifth Amendment; and (3) FERC’s approvals that provide for subsequent state or federal authorizations, which then may require changes to the pipeline route or prevent construction, also violate the Takings Clause.  The Court granted FERC’s motion to dismiss, holding that the Court did not have subject matter jurisdiction because the NGA vested the courts of appeals, not district courts, with exclusive jurisdiction to hear NJCF’s claims.  NJCF is another voice in a growing chorus of district court and appellate cases that have rejected dissatisfied parties’ collateral attempts to re-litigate FERC’s decisions and decision-making processes, especially with regard to environmental issues, outside of FERC. 

The FERC Proceedings

In September 2015, PennEast submitted an application under the NGA to construct and operate an interstate natural gas pipeline from Pennsylvania to New Jersey. Numerous parties, including NJCF, intervened in that FERC proceeding and submitted comments to FERC.  FERC’s Office of Energy Projects (“Office”) initiated an environmental review process under the National Environmental Policy Act to study the pipeline’s potential environmental impacts.  The Office concluded that the pipeline would result in some adverse effects, but they would be reduced to “less than significant levels” with certain mitigation measures.  The Office recommended that FERC’s final authorization, if any, should include these mitigation measures.

On January 19, 2018, FERC issued its Certificate Order of “public convenience and necessity” adopting the Office’s findings. FERC then granted a Certificate to PennEast, subject to compliance with environmental and operating conditions. Numerous parties, including NJCF, filed requests for rehearing and moved to stay the Certificate Order.  FERC ultimately issued a final order denying rehearing.  NJCF and others sought review of FERC’s PennEast orders in the D.C. Circuit in addition to instant matter, which contained Constitutional claims and was filed in the New Jersey District Court.

The New Jersey District Court’s Opinion

FERC moved to dismiss NJCF’s complaint for lack of subject matter jurisdiction, arguing that the New Jersey District Court lacked jurisdiction to hear NJCF’s claims because the NGA vests the courts of appeals with exclusive jurisdiction to hear matters relating to a pipeline certificate proceeding.  The Court agreed and dismissed NJCF’s complaint, holding that the “weight of the authorities” is that the NGA explicitly precluded the Court’s review of NJCF’s Constitutional claims.

According to the Court, the NGA confers on FERC “exclusive jurisdiction” over the “transportation and sale of natural gas in interstate commerce.”  Op. at 2.  Another section of the NGA provides that once a party requests rehearing of a FERC order, a party aggrieved by that particular order may seek judicial review in a court of appeals.  Id. at 3.  NJCF argued that the NGA’s statutory language limiting the avenues of review did not apply here because its case instead challenged “FERC’s general pattern and practice of granting unconstitutional certificates.”  Indeed, the Court recognized that NJCF “painstakingly characterize[d] its claims as constitutional in nature . . . — whether a conditional certificate, issued by FERC, that is not sufficient to authorize pipeline construction may constitutionally permit a private company to condemn land for a pipeline that may never be built.”

Despite NJCF’s artful pleading, the Court surveyed the substantial number of decisions holding that because the NGA’s exclusive jurisdiction provision is so broad in scope, the NGA is the “exclusive remedy for matters relating to the construction of interstate natural gas pipelines.”  Id. at 7-18.  The Court had no shortage of colorful language from the collection of “well-settled” authorities in support of its holding: Third and Fourth Circuits—“there is no area of review, whether relating to final or preliminary orders, available in the district court”; Sixth Circuit—“exclusive means exclusive”; Tenth Circuit—it “would be hard pressed to formulate a [statutory framework] with a more expansive scope”; and First Circuit (although under the Federal Power Act’s similar provision)—challenges brought in the district court outside that scheme are “impermissible collateral attacks.”  As a result, according to the Court, NJCF “cannot escape the NGA’s statutory scheme of review by circumventing [its] plain language.”

The Court’s opinion is available here.