Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-06228/USCOURTS-ca10-89-06228-0/pdf.json

Parties Involved:
Federal Energy Regulatory Commission
Amicus Curiae
Oklahoma Natural Gas Company
Appellee
Powersmith Cogeneration Project
Appellant
Smith Cogeneration, Inc.
Appellant
The City of Oklahoma City
Appellee
Williams Natural Gas Company
Appellant

Document Text:

PUBLISH . FILED 

·UNITED STATES-COURT OF APPEALS 

TENTH CIRCUIT 

Urntrd States t·u1u•t of Appeals 

Tenth Circuit 

{,1 ov ~ .8 1989 

WILLIAMS NATURAL GAS COMPANY, a Utah 

Corporation, 

Plaintiff-Appellant~ 

SMITH COGENERATION, INC., an Oklahoma 

Corporation, and POWERSMITH COGENERATION PROJECT, a limited partnership, 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

v. 

Plaintiffs-Intervenors-Appellants, ) 

) 

) 

THE CITY OF OKLAHOMA CITY, a Municipal 

Corporation, and OKLAHOMA NATURAL GAS 

COMPANY, a Delaware Corporation, 

Defendants-Appellees. 

) 

) . 

) 

) 

) 

) 

ROBERT L. I-IOECKER 

Clerk 

Nos. 89-6209, 89-6227 

and 89-6228 

(CIV-89-519) 

(W.D. Okla.) 

Douglas E. Nordlinger of Skadden, Arps, Slate, Meagher & Flom, 

Washington, D.C. (J. Clayton La Grone, William R. Burkett & Steven 

L. Tolson of Hall, Estill, Hardwick, Gable, Golden & Nelson, 

Oklahoma City, Oklahoma; John S.L. Katz and John N. Estes of 

Skadden, Arps, Slate, Meagher & Flom, Washington, D.C.; and s. 

Paul Hammons of Andrews, Davis, Legg, Bixler, Milsten & Price, 

P.C., Oklahoma City, Oklahoma, on the briefs), for PlaintiffAppellant and Plaintiffs-Intervenors-Appellants. 

Curtis M. Long of Huffman Arrington Kihle Gaberino & Dunn, Tulsa, 

Oklahoma (J. Clarke Kendall II, Gerald L. Hilsher, and Brad D. 

Fuller of Huffman Arrington Kihle Gaberino & Dunn; Burck Bailey, 

Harry H. Selph II, Doneen Douglas Jones, and Thomas J. Enis of 

Fellers, Snider, Blankenship, Bailey & Tippens, Oklahoma City, 

Oklahoma, on the briefs), for Defendants-Appelle~s. 

Catherine C. Cook, General Counsel, Jerome M. Feit-; Solicitor, and 

Katherine Waldbauer filed an Amicus Curiae brief for the Federal 

Energy Regula_tory Commission. 

Before MCKAY, LOGAN, and BRORBY, Circuit Judges. 

BRORBY, Circuit Judge. 

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 1 
This appeal arises from the United States District Court for 

the Western . District . of_ -Oklahoma, .. where that court denied 

appellant's motion to construe federal condemnation rights under 

the Natural Gas Act and to disregard and stay the order of the 

Oklahoma County District Court. The order of the federal district 

court, issued M~y 30, 1989, effectively denied appellants full 

enforcement of a Federal Energy Regulatory Commission ("FERC" or 

"Commission") certificate authorizing appellants to construct and 

operate a natural gas pipeline to service the PowerSmi th 

Cogeneration Project's ("PowerSmith'') cogeneration facility in 

Oklahoma City. 1 

We find the state court lacked jurisdiction to entertain a 

collateral challenge to the FERC oertificate and, accordingly, we 

REVERSE. 

I. Statement of the Case 

The dispute has its genesis in the competition between 

appellee Williams Natural Gas Company ("Williams") and appellant 

Oklahoma Natural Gas Company ("ONG") for the contract to transport 

natural gas to the PowerSmith facility--a competition eventually 

won by Williams. In order to service PowerSmith, Williams needed 

to construct a twelve-mile extension of an existing interstate 

1 PowerSmith Cogeneration Project, Limited Partnership, is a 

developer of cogeneration projects (facilities that burn fuel for 

the production of electric and thermal energy, such as steam). 

PowerSmith is now completing construction of a 108-megawatt, $80 

million cogeneration facility in Oklahoma City, on the grounds of 

a tire manufacturing plant owned by Firestone- Tire & Rubber 

Company. The facility is designed to burn natural gas. 

-2-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 2 
.pipeline to ,PowerSmith. As an interstate "natural-gas company" 

under. the. NaturaLGas .Act (".NGA"), 15 u .. s.c. §§ 71.7-717z (1988), 

Williams could not construct or operate the extension without 

applying to and receiving from FERC, pursuant to§ 7(c) of the 

NGA, 15 u.s.c. § 717f(c), an authorizing certificate of public 

convenience and necessity. 

ONG is the local distribution company with a city franchise 

to sell, transport and distribute natural gas to the general 

public in Oklahoma City. The city franchise grants ONG the right 

to construct, operate and maintain facilities in the public 

streets and other public ways for its distribution purposes. 

Williams' pipeline construction would also require access to and 

use of the streets of Oklahoma City. Therefore, on October 18, 

1988, before Williams was able to complete its application to 

FERC, ONG commenced the race to the courthouse and filed a 

declaratory judgment action in Oklahoma County District Court, 

asserting its franchise gives it the right to use City streets to 

the exclusion of a nonfranchised transporter. Williams and 

PowerSmith answered on November 10, 1988, asserting as a defense 

that the NGA, 15 u.s.c. §§ 717-717z, preempts Oklahoma franchise 

law and therefore Williams was not required to obtain a franchise. 

On October 28, 1988, ten days after ONG had filed its action 

in state court, Williams applied to FERC for the certificate of 

public convehience and necessity authorizing the construction and 

operation of the PowerSmith pipeline. ONG responded by protesting 

-3-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 3 
and intervening in .. opposition .t.o .. Williams' application. In its 

intervention, ONG contested FERC's jurisdiction .to regulate the 

. proposed pipeline, questioned the sufficiency and substance of 

Williams' application and urged the Commission 

alternative proposals. 

to explore 

More specifically, in its challenge to FERC's jurisdiction, 

ONG argued that the facilities proposed by Williams should be 

subject to local rather than federal regulation: "[T]he proposal, 

notwithstanding that it is cast as an application to expand 

service by an interstate pipeline, in fact relates to service in 

the nature of distribution or intrastate transportation," and 

"[a]s such, the facilities- are local in nature and should be 

subject not to FERC jurisdiction, but rather to local regulation 

II Indeed, ONG argued, "[t]his case cries out for local, not 

federal, regulation." 

On February 16, 1989, after denying ONG's request for a 

hearing in the matter, FERC granted Williams. a certificate 

authorizing and directing Williams to construct and operate the 

PowerSmith pipeline. As to ONG's jurisdictional contentions, FERC 

found that the facilities proposed by Williams were within its 

jurisdiction and therefore subject to subsections (c) and (e) of 

§ 7 of the NGA, 15 U.S.C. § 717f(c), (e). Williams Natural Gas 

Co., 46 Fed. Energy Reg. Comm'n Rep. (CCH) ,1 61,160 (1989). In 

support of this finding FERC determined that the facilities 

proposed bore little res.emblance to a local distribution system. 

-4-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 4 
~urther, ... incorporating language from its previous decision in 

··--~Panhandle. Eastern .Pipe Line Co., 42 Fed .. Energy Reg. Comm'n Rep. 

(CCH) ,1 61,076 (1988), the Commission stated, 

"[I]rrespective of any local effects resulting from the 

by-pass, we believe that the transportation service at 

issue here essentially concerns Federal interests, that 

is, those embodied in developing interstate 

transportation policy that provides consumers with a 

variety of supply options by promoting a competitively 

priced spot market for natural gas." 

Williams, 46 Fed. Energy Reg. Comm'n Rep. (CCH) ,1 61,160 at 61,559 

(quoting Panhandle). 

On March 1, 1989, ONG filed with FERC a Request for Rehearing 

and Motion to Stay the FERC Order. FERC denied ·ONG's motion to 

stay on March 31, 1989, and denied ONG's request for rehearing on 

May 31, 1989. 47 Fed. Energy Reg. Comm'n Rep. (CCH) ,1 61,308, 

1989 FERC LEXIS 1363. 2 

Also on February 16, 1989, the same day FERC issued its 

order, the Oklahoma state court ruled in ONG's declaratory 

judgment action. The court held, under Oklahoma law, ONG's 

franchise insulates it from competition in Oklahoma City from 

nonfranchisees. The state court specifically reserved for a later 

time (pending stu~y of further briefs to be submitted by the 

parties) the issue whether federal law preempts the requirements 

of Oklahoma law and, thus, whether the authority of a FERC 

2 ONG subsequently filed a petition for review of the FERC 

orders with the United States Court of Appeals for the District of 

Columbia Circuit. Oklahoma Natural Gas Co. v. FERC, No. 89-1376 

(D.C. Cir. filed June 12, 1989). Williams and PowerSmith have 

moved to transfer that petition for review to this Court. 

-5-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 5 
... ce .. rtif icate .negates. the Oklahoma franchise requirement • 

• On March 28, approximately six weeks after the orders of FERC 

and the state court had been issued, Williams brought an action to 

enforce the FERC certificate in the United States District Court 

for the Western District of Oklahoma pursuant to § 7(h) of the 

NGA, 15 U.S.C. § 717f(h). Specifically, Williams sought to 

condemn rights of way across city streets to construct and operate 

the PowerSmith pipeline under the FERC certificate and to quiet 

Williams' title to those rights of way as against ONG's franchise 

rights. Thereafter, by order of April 18, the federal district 

court authorized Williams to condemn city rights of way "for the 

purpose of laying a pipeline" pursuant to the FERC certificate. 

However, the court's order made no mention of Williams' ability to 

"operate" the pipeline. 

In response, on April 28, ONG sought and obtained from the 

state district court a temporary restraining order ( "TRO") 

enjoining Williams from constructing the pipeline across city 

streets. On May 1, the federal district court responded by 

enjoining enforcement of the state TRO, finding that it interfered 

with its jurisdiction and order permitting the construction. 

However, in issuing this order, the federal court declined -t-o---

enjoin the state court's consideration of the preemption issue and 

abstained from ruling on the question of federal preemption 

because that issue had been first presented to the state court. 

-6-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 6 
On May 11, Williams and PowerSmith requested the federal 

district court to reconsider its decision to_abst~in and again 

requested the court to enjoin the state court's consideration of 

the preemption question. However, on May 19, while this motion to 

reconsider was pending, the state court decided the preemption 

issue before it, holding the FERC certificate did not preempt the 

state franchise requirement. The state court therefore 

permanently enjoined the· construction and operation of the· 

pipeline, notwithstanding the authority of the FERC certificate. 3 

After the state court granted its injunction, the federal 

district court issued its final order on May 22, granting the 

condemnation rights to Williams "for the purpose of the 

construction, maintenance and operation" of the pipeline. The 

court then held a hearing on May 24 to consider a further request 

by Williams and PowerSmith to construe federal condemnation rights 

under the NGA and to stay the enforcement of the state court order 

to the extent it interfered with the May 22 condemnation order. 

Williams and PowerSmith argued the state court injunction was an 

impermissible infringement upon the federal district court's 

exclusive condemnation jurisdiction under§ 7(h) to enforce the 

FERC certificate. After further briefing by the parties, the 

federal court, in an order issued May 30, refused ~Q grant further 

3 FERC, in its decision of May 31 declining ONG's request for a 

rehearing, expressed its complete. disapproval of the state 

district court's decision and reaffirmed its conclusion that 

Williams' proposed service to PowerSmith would benefit the public 

interest. Williams Natural Gas Co., 47 Fed. Energy Reg. Comm'n 

Rep. (CCH) ~ 61,308; 1989 FERC LEXIS 1363. 

-7-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 7 
injunctive relief and declined to alter its previous decision to 

abstain. The court concluded that the intervening state court __ _ 

decision on preemption had effectively deprived the federal courts 

of authority to reverse or reconsider the issue. The court 

believed itself bound by the doctrine of Rooker v. Fidelity Trust 

Co., 263 U.S. 413, 415-16 (1923), to defer to the state court's 

decision, with appellate relief available to Williams only through 

the Oklahoma Supreme·Court. 4 However, the court certified the 

matter for immediate review to this court under 28 u.s.c. 

§ 1292(b). 5 

II. Analysis 

The issues presented to this court in the parties' briefs 

focus primarily on the merits of the federal district court's 

order of May 30, 1989. Thus framed, we are urged to decide 

whether the district court, relying upon the Rooker doctrine, 

erred by abstaining from deciding the question of federal 

preemption and by refusing to enjoin enforcement of the state 

court decision. Additionally, the appellants urge this court to 

decide the underlying substantive issues of whether the Oklahoma 

4 An appeal to the Oklahoma Supreme Court is pending 

decision of the District Court for Oklahoma County, 

captioned Smith Cogeneration, Inc. v. Oklahoma Natural 

No. 73649 (Okla. filed July 18, 1989). 

from the 

Oklahoma, 

Gas Co., 

5 Prior to oral argument, the appellants petitioned this court 

for emergency injunctive relief. We denied the relief requested 

in our order of July 24, 1989. Apparently in response to statements of the court at oral argument, appellees submitted a notice 

to this court of changed circumstances regarding appellants' 

emergency petition. We hav~ not considered this material as it is 

in violation of Fed. R. Civ. P. 28(c) and 10th Cir. Rule 31.2.1. 

-8-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 8 
franchise requirement is preempted by the NGA and/or invalid under 

the commerce clause. However, we cannot even.attempt to address 

these issues until we air certain core jurisdictional issues that 

lurk beneath the surface of the controversy. 

In an introduction to their brief, appellants present a 

three-part analysis of what they view to be the exclusive 

jurisdiction of FERC to handle the issues of this case. ·First, 

appellants submit FERC is empowered with the exclusive authority 

to regulate the interstate transportation of natural gas and, 

accordingly, the PowerSmith pipeline. Thus, they argue, the state 

proceeding was barred from the outset. Secondly, they argue the 

provisions of NGA§ 19(b), 15 u.s.c. l 717r(b) (1988), create the 

exclusive avenue for judicial review of FERC orders. Third, and 

as a corollary to the second, appellants contend the validity and 

conditions of a FERC certificate cannot be collaterally attacked 

in federal district court during an eminent domain proceeding 

pursuant to NGA§ 7(h). 

We choose not to address the appellant's first jurisdictional 

point for two reasons. First, so expansive an argument virtually 

assumes the conclusion of the underlying, substantive federal 

pr..eemption question. 6 Second, . and more importantly, we view this 

6 We note, without comment, the recent decision of the United 

States Court of Appeals for the Sixth Circuit in Michigan 

Consolidated Gas Co. v. Panhandle Eastern Pipe Line Co., 887 F.2d 

1295 (6th Cir. 1989), which held that Michigan's authority to 

regulate the interstate transportation of natural gas in the 

"bypass" of a local distribution company is preempted by.the 

Natural Gas Act. As explained hereih, we do not reach the merits 

-9-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 9 
argument to be unnecessary to detexmine the proper jurisdictional 

course here, where FERC issued its certification order before the 

I 

state court entertained issues of federal jurisdiction or 

preemption. We proceed to the second part of appellants' 

jurisdictional analysis.7 

A. The Exclusive Judicial Review Provisions of NGA S 19. 

It is well established that Congress, acting within its 

constitutional powers, may prescribe the procedures and conditions 

under which, and the courts in which, judicial review of 

administrative orders may be had. City of Tacoma v. Taxpayers of 

Tacoma, 357 U.S. 320, 336 (1958). Thus, we begin our 

jurisdictional analysis with the statutorily provided means for 

contesting a FERC certificate issued pursuant to§ 7(c) of the 

NGA. First, § 19(a) of the NGA, 15 U.S.C. § 717r(a), provides in 

pertinent part: 

(a) Any person, State, municipality, or State 

commission aggrieved by an order issued by the 

Commission in a proceeding under this chapter to which 

such person ••• is a party may apply for a rehearing 

within thirty days after the issuance of such order. 

The application for rehearing shall s·et forth 

specifically the ground or grounds upon which such application is based. Upon such application· the Commis-:-

sion shall have power to grant or deny rehearing or to 

abrogate or modify its order without further hearing. 

Consistent with these requirements, ONG timely filed on March 

1 its request for a rehearing before FERC. After that request was 

of the preemption issue. 

7 Issues of jurisdiction are questions of law requiring de novo 

review. Walden v. Bartlett, 840 F.2d 771, 772-73 (10th Cir. 

1988). 

-10-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 10 
denied by FERC on May 31, ONG further pressed its appeal to the 

Court of Appeals fat the District of Columbia Circuit, in 

accordance with§ 19(b) of the NGA, 15 u.s.c. § 717r(b):-

(b) Any party to a proceeding under this chapter 

aggrieved by an order issued by the Commission in such 

proceeding may obtain a review of ·such order in the 

court of appeals of the United States for any circuit 

wherein the natural-gas company to which the order 

relates is located or has its principal place of 

business, or in the United States Court of Appeals for 

the District of Columbia, by filing in such court, 

within sixty days after the order of the Commission upon 

·the application for rehearing, a written petition 

praying that the order of the Commission be modified or 

set aside in whole or in part ••.• Upon the filing of 

such petition such court shall have jurisdiction, which 

upon the filing of the record with it shall be 

exclusive, to affirm, modify, or set aside such order in 

whole - or in part. No objection to the order of the 

Commission shall be considered by the court 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 •.•• The judgment and decree 

of the court, affirming, modifying, or setting aside, in 

whole or in part, any such order of the Commission, 

shall be final, subject to review by the Supreme Court 

of the United States upon certiorari or certification as 

provided in sections 346 and 347 of Title 28. 

(Emphasis added.) 

As the statutory language plainly states, the special 

judicial review provisions of § 19 are exclusive. McCulloch 

Interstate Gas Corp. v. Federal Power Comm'n, 536 F.2d 910, 913 

(10th Cir. 1976) (citing Whitney Nat'l Bank v. Bank of New Orleans 

Bank & Trust Co., 379 U.S. 411,. 420, 422, (1964)). The provisions 

of § 19 are nearly identical to the judicial review provisions of 

various other federal regulatory programs. In each case, these 

provisions have been interpreted to establish an exclusive scheme 

of review. See, ~, City of Tacoma, 357 U.S. at 334-36 

-11-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 11 
(interpreting the provisions. of Federal Power Act ("FPA"), 

S 313(b), 16 u;s.c. S 825l(b)); United States by_Donovan v. Howard 

Electric Co., 798 F.2d 392, 395 (10th Cir. 1986) (Occupational 

Safety and Health Act, 29 u.s.c. S 660(a)); United States v. 

McBride, 788 F.2d 1429, 1432 (10th Cir. 1986) (Federal Aviation 

Act ("FAA"), 49 u.s.c. S 1486(a), (d)); County of Halifax, Va. v. 

Lever, 718 F.2d 649, 652 (4th Cir. 1983) (FPA, § 313(b), 16 U.S.C. 

§ 825l(b)); City of Rochester v. Bond, 603 F.2d 927, 934-35 (D.C. 

Cir. 1979) (FAA, 49 U.S.C. § 1486(a), (d)). 

The watershed case in this regard was City of Tacoma. In 

City of Tacoma, the City sought to obtain a license from the 

Federal Power Commission ("FPC") to construct a power project on 

the Cowlitz River in the state of Washington. One of the 

projec~•s dams would result in the total inundation of a stateowned fish hatchery. The State intervened and participated in the 

hearings before the Commission and alleged, inter alia, that the 

project would violate a state law, Wash. Rev. Code § 75.20.010, 

which required the State's permission to construct any dam 

excee~ing certain size specifications. Shortly thereafter the 

Commission granted the license. The State then petitioned for a 

rehearing, which was denied. 

Pursuant to§ 313(b) of the FPA, the State petitioned for a 

review of the Commission's order before the Court of Appeals for 

the Ninth Circuit, where the FPC's decision was affirmed. The 

Supreme Court denied certiorari. In a subsequent state 

-12-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 12 
proceeding, the City sought a judgment declaring valid a large 

issue of revenue .. bonds to finance the construction of the project~ 

The State answered and filed a cross-complaint alleging that the 

project would interfere with the navigation of the Cowlitz River, 

in violation of state law Wash. Rev. Code§ 80.40.010. The state 

trial court entered judgment in favor of the State and enjoined 

the City from constructing the project. The Supreme Court of 

Washington affirmed. The United States Supreme Court reversed, 

finding the objections raised in state court to the FPC license to 

be "impermissible collateral attacks" under§ 313(b): 

[Section 313(b) of the Federal Power Act] is written in 

simple words of plain meaning and leaves no room to 

doubt the congressional purpose and intent.... It 

thereby necessarily precluded de novo litigation between 

the parties of all issues inhering in the controversy, 

and all other modes of judicial review. 

357 U.S. at 335-36. 

Judicial review under§ 19(b) is exclusive in the courts of 

appeals once the FERC certificate issues. Cf. Whitney Nat'l Bank, 

379 U.S. at 421-22. In Whitney Nat'l Bank, the Court applied City. 

of Tacoma, to hold that; under the Bank Holding Company Act of 

195~, challengers to a determination of the F~deral Reserve Board 

must first bring their attack before the Board, subject only to 

review by the court of appeals. This review structure parallels 

that of § 19, where parties must first appeal---to FERC. 8 

8 Linguistically, the language of § 19(b) providing for 

exclusive jurisdiction "upon the filing of such petition'' with the 

court of appeals might permit a separate action if a federal or 

state court reviews an agency order before a petition for review 

can_be filed, or if a petition is never filed. However, to allow 

parties to circumvent the scheme of judicial review under§ 19 

-13-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 13 
Thus, a _____ challenger may not collaterally· attack the validity 

of a prior FERC order in a subsequent proceeding. McCulloch, 536 

F.2d at 913 (quoted in Howard Electric, 798 F.2d at 394). 

Moreover, the prohibition on collateral attacks applies whether 

the collateral action is brought in state court,~, City of 

Tacoma, or federal court,~, McCulloch. Our interpretation of 

§ 19 is entirely consistent with§ l0(b) of the Administrative 

Procedure Act, 5 U.S.C. § 703 (1976), which provides "[t]he form 

of proceeding for judicial review is the special statutory review 

proceeding relevant to the subject matter in a court specified by 

statute or, in the absence of inadequacy thereof, any applicable 

form of legal action 

F.2d at 935. 

. . . . II Cf. City of Rochester v • Bond, 603 

Furthermore, we see nothing in the substantive character of 

ONG's challenges to the FERC order that would exempt those 

arguments from the statutory appellate scheme. Here again, City 

simply by choosing not to file a petition for review with FERC or 

the court of appeals would be to allow precisely the type of 

collateral challenge that ·city of ~acoma condemned and would 

defeat the "exclusive" review provisions of§ 19(b). City of 

Rochester v. Bond, 603 F.2d at 935 (collateral challenge violated 

an exclusive statutory scheme of judicial review even where the 

challenger to an order of the Federal Aviation Administration was 

not a party to the.- administrative proceedings, had no actual 

notice of such proceedings, and thus failed to timely file a peti-

·tion for review in the court of appeals). See also, McBride, 788 

F.2d at 1432-33 (collateral action impermissible where the 

challenger to an agency order failed to file a timely appeal under 

the applicable statute); County of Halifax, Va. v. Lever, 718 F.2d 

at 651 (collateral action impermissible where the challenger to a 

FERC permit deliberately declined to press for relief through the 

available statutory means in favor of a collateral action in 

federal district court). 

-14-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 14 
of Tacoma._is helpful. There the.Supreme Court read § 313(b) of 

the FPA.to "necessaril.y preclude[] de novo litigation between the 

parties of all issues inhering ih the controversy." 357 U.S. at 

336 (emphasis. added). We would be hard pressed to formulate a 

doctrine with a more expansive scope. 

Additionally, we fail to find provision in§ 19 of the NGA 

for the bifurcation of judicial review along substantive lines. 

This is not surprising, however, given that such a procedure would 

negate most of the benefits attending the ''exclusive" scheme of 

review. In City of Rochester v. Bond, the D.C. Circuit addressed 

this same issue when it confronted a collateral challenge to a 

determination of the Federal Aviation Administration based on 

another federal statute, the National Environmental Policy Act 

("NEPA"): 

First, we disagree that the district court may 

exercise concurrent jurisdiction merely because a 

violation of NEPA is alleged. The allegation may be 

raised directly in the courts of appeals; and insofar as 

it may affect the lawfulness of a directly appealable 

order we think it must be ..•• 

The rationale for statutory review is that 

coherence and economy are best served if all suits 

pertaining to designated agency decisions are segregated 

in particular courts. The choice of forum is, as we 

have said, for Congress and we cannot imagine that 

Congress intended the exclusivity vel non of statutory 

review to depend on the substantive infirmity alleged. 

The .. "policy behind having a special review .procedure in 

the first place similarly disfavors bifuicating 

jurisdiction over various substantive grounds between 

district court and the court of appeals. The likelihood 

of duplication and inconsistency would exist in either 

case. 

603 F.2d at 936 (footnotes omitted). 

-15-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 15 
Here, .. however .characterized, the state court's .consideration 

of the preemption issue.ultimately challenges FERC's determination 

of its own jurisdiction~ Jurisdiction is not an issue with which 

FERC i$ unfamiliar or which it is incapable of addressing on 

appeal. In fact, as we have previously held, the "mode of 

challenging an agency's jurisdictional deqision is by direct 

attack." Howard Electric, 798 F.2d at 394, and McCulloch, 536 

F.2d at 913 (both citing Callanan Road Co. v. United States, 345 

U.S. 507, 512, (1953)). 

As we have already chronicled, ONG contested the jurisdiction 

of FERC in its original intervention and pro~est before the 

Commission. ONG's jurisdictional arguments were laced with the 

theme of conflict between state and federal regulation. (However, 

whether intentionally or unintentionally, ONG never expressly 

' 

advanced those arguments in terms of "preemption.") FERC 

responded in kind by discussing, in its order of February 19, 

1989, its view as to why the pipeline was essentially a federal 

concern and subject to its jurisdiction. Williams Natural Gas 

Co., 46 Fed. Energy Reg. Comm'n Rep. (CCH) ,1 61,160, at 61,559 

(1989). 

ONG again raised the preemption argument in everything but 

name in its request for rehearing before FERC. In its 

specification of errors, ONG contended the Commission erred in 

failing to find that the PowerSmith facilities, and the activities 

thereon, were matters of local interest which are not subject to 

-16-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 16 
FERC jurisdiction, but rather are.subject to the jurisdiction of 

.the. Oklahoma Corporation ... Commission. _ Al though· this argument 

expressly hinged on the language of§ l(b) of the NGA, 15 u.s.c. 

§ 717(b), 9 ONG argued more broadly: 

When enacting the NGA, ••• Congress created a dual 

state-federal regulatory scheme over natural gas. The 

manifest purpose in enacting the NGA was to close 

regulatory gaps by complementing and strengthening state 

regulation. See Panhandle Eastern Pipe Line Co. v. 

Indiana Public Service Comm., 332 U.S. 507 (1947). 

Moreover, "Congress did not desire comprehensive federal 

regulation~ much authority was reserved for the States 

•••• " Transcontinental Gas Pipe Line Corp. v. Federal 

Power Comm., 365 U.S. 1, 19 (1961) • 

••. Thus, while Congress made sales for resale and 

the transportation of natural gas in interstate commerce 

subject to federal regulation, Congress expressly 

withheld from federal regulatory jurisdiction all other 

transportation of natural gas. 

In denying the rehearing request, FERC once more· expressed 

its view on the subject of federal jurisdiction, noting that it 

completely disapproved of the conflicting state opinion. Williams 

Natural Gas Co., 47 Fed. Energy Reg. Comm'n Rep. (CCH) ,1 61,308, 

at n.5 (1989), 1989 FERC LEXIS 1363. 

9 Section l(b) of the NGA, 15 U.S.C. § 717(b} provides: 

(b} The provisions of this chapter shall apply to the 

transportation of natural gas in interstate commerce, to 

the sale in interstate commerce of natural gas for 

resale for ultimate public consumption for domestic, 

commercial, industrial, or any other use, and to 

natural-gas companies engaged in such transportation or 

sale, but shall not apply to any other transportation or 

sale of natural gas or to the loc~l distribution of 

natural gas or to the facilities used for such 

distribution or to the production or gathering of 

natural gas. 

-17-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 17 
.. However, our conclusion. does not depend on a finding that ONG 

implicitly or .. · expressly submitted the preemption issue to FERC. 

Instead, it is sufficient to hold that the issue could have and 

should have been raised before FERC. Again, the analysis of the 

Supreme Court in City of Tacoma is instructive: 

We think these recitals show that the very issue upon 

which the respondents stand here was raised and 

litigated in the Court of Appeals and decided by its 

judgment. But even if it might be thought that this 

issue was not raised in·the Court of Appeals, it cannot 

be doubted that it could and should have been, for that 

was the court to which Congress had given "exclusive 

jurisdiction to affirm, modify, or set aside" the 

Commission's order. And the State may not reserve the 

point, for another round of piecemeal litigation, by 

remaining silent on the issue while its action to review 

and reverse the Commission's order was pending in that 

court .••• 

10 357 U.S. at 339. 

We need not reach the question of whether the various 

arguments by ONG in FERC proceedings were sufficient, for purposes 

of S 19(b), to permit argument on the preemption issue before the 

D.C. Circuit. Nor ·do we feel compelled to explore whether ONG 

has, in fact, submitted the issue to that court. We hold only 

that ONG could have and should have raised the preemption issue 

before FERC originally or upon its motion for rehearing. The 

issue may be advanced by direct attack, pursuant to the appellate 

structure of S 19(b), or not at all. City of Tacoma, 357 U.S. at 

10 Although the City of Tacoma court did not find it necessary 

to hinge its conclusion upon an extra-statutory doctrine such as 

res judicata, estoppel, collateral estoppel, or waiver, 357 U.S. 

at 336-37, in United States v. Utah Constr. & Mining Co., 384 U.S • . 394, 422 (1966), the court held that res judicata principles may 

apply to an administrative agency's adjudication. 

-18-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 18 
I 

\ 

336. Accordingly, because ONG f ile_d its petition for review under 

S .19(b) with the.. United States Court of. Appeals for the D.C. 

Circuit, this court cannot reach the merits of the preemption 

issue. 

The structure Congress has provided to litigate and resolve 

disputes arising under the Natural Gas Act should not be lightly 

disregarded. In the instant case it is apparent that ONG filed 

its action in state court as a "preemptive strike." It makes 

little sense for the state court action to have been filed unless 

ONG at the time of filing knew or had reason to believe that 

Williams would be awarded. the requisite certificate of public 

convenience and necessity. The roadway to resolution of the 

dispute between Williams and ONG has been both charted and 

mandated by Congress. It makes no sense to permit the parties to 

chart their own route and thus· allow piecemeal and unending 

litigation to ensue. 

We hold that the proceedings in the state court that resulted 

in the order enjoining Williams' exercise of rights granted in the 

FERC certificate constituted an impermissible collateral attack on 

a FERC order in contravention of§ 19 of the NGA. Thus, the 

federal district court erred in refusing to enjoin the enforcement 

of the state court injunction. We also hold that a collateral 

challenge to the FERC order could not be entertained by the 

federal district court. We agree with the appellants that the 

eminent domain authority granted the district courts under§ 7(h) 

-19-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 19 
of the NGA,· 15 U.S.C. § 717f(h) ,: does .not provide challengers with 

_ .. an additional forum to attack the. substance and validity of a FERC 

order. The district court's function under the statute is not 

appellate but, rather, to provide for enforcement. See McBride, 

788 F.2d at 1432 (addressing an enforcement action under the FAA, 

49 u.s.c. S 1487). 

B. The Rooker Doctrine. 

Finally, we do not view our conclusion that the state court 

lacks appellate jurisdiction over the FERC determination to be at 

odds with the doctrine of Rooker v. Fidelity Trust Co., 263 U.S. 

413, 415-16 (1923)~ Instead, we consider it Rooker~s necessary 

complement. 

In Rooker, the Supreme Court held that the lower federal 

courts do not have appellate jurisdiction to review state court 

decisions. Such jurisdiction is vested only in the state 

appellate courts and in the Supreme Court of the United States. 

263 U.S. at 416. The rule applies even when the state court 

decision is challenged as unconstitutional, id.; District of 

Columbia Court of Appeals v. Feldman, 460 U.S. 462, 482, (1983); 

Van Sickle v. Holloway, 791 F.2d 1431, 1436 (10th Cir. 1986), or 

when the state court erroneously decides a federal question, see 

Texaco Inc. v. Pennzoil Co.,· 784 F.2d 1133, 1142 (2d Cir. 1986), 

rev'd on other grounds, 481 U.S. 1 (1987). 

As the Supreme Court articulated in Atlantic Coast Line R. 

-20-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 20 
Co. v. _Brotherhood .of Locomotive Eng'rs, 398 U.S. 281, 286, 

( 1970), . the. Rooker doctrine. is .a necessity .in .. a. nation with two 

separate legal systems: 

[T]his dual system could not function if state and 

federal courts were free to fight each other for control 

of a particular case. Thus, in order to make the dual 

system work and "to prevent needless friction between 

state and federal courts," Oklahoma Packing Co .. v. Gas 

Co., 309 U.S. 4, 9, (1940), it was necessary to work out 

lines of demarcation between the two systems. 

However, the Rooker "line of demarcation," and the principles 

of comity it represents, cannot be observed unilaterally if it is 

to achieve its desired effects. Just as the federal courts lack 

jurisdiction to review the decisions of the state courts, so also 

must state courts· defer to the federal appellate process _mandated 

by Congress. 11 What is sauce for the goose is also sauce for the 

gander. Otherwise, the "needless friction" that Rooker seeks to 

prevent would be commonplace. 

Here, despite the existence of the prior FERC determination 

and the exclusive review provisions of § 19, the state court 

proceeded to decide a question that could have and should have 

been raised before FERC and, based on its determination of that 

11 This requirement is akin to the reciprocal nature of res 

judicata principles between the state and federal courts. 

It would be unthinkable to suggest that state courts 

should be free to disregard the judgment of federal 

courts, given the basic requirement(s] that ••• federal 

courts must honor state court judgments.... The 

requirement that federal court judgments command at 

least the centr•l core of res judicata effects in Atate 

courts is "indispensable to federalism." 

18 C. Wright, A. Miller & E. Cooper, Federal Practice and 

Procedure§ 4468, at 648-49 (1981) (footnotes omitted). 

-21-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 21 
issue, .... enjoined enforcement of . the FERC .. order. We .do not dispute 

.the.assertion of the .. appellees .that the Oklahoma. courts have 

jurisdiction to decide questions of federal preemption. See, 

~, Chick Kam Choo v. Exxon Corp., 486 U.S. 140, , 108 S. Ct. 

1684, 1691 (1988). However, that issue was not advanced in a 

vacuum. Preemption was considered by the state court only after 

the FERC certificate issued and after the exclusive judicial 

review provisions of§ 19 attached. 12 Consequently, the state 

action crosses the Rooker boundary, just as a federal court 

exceeds its jurisdiction when it disregards the exclusivity of a 

state's ongoing appellate process. This court will not misuse 

Rooker to·shield a state court injunction that runs afoul of the 

very principles of comity that lay at Rocker's base. 13 

12 Appellees also assert that Pan American Petroleum Corp. v. 

Superior Court of Delaware, 366 U.S. 656 (1961), is dispositive 

here. We obviously disagree. The state court proceeding there 

was not a collateral challenge to a FERC order and thus was not 

violative of§ 19. Instead, the state court action was brought 

simply to enforce the terms of a contract. 

A customer of Pan American sought to recover certain 

overpayments made to Pan American after an order of the Kansas 

Corporation Commission was declared invalid. By amended contract, 

refund of the overpayments was conditioned on such declaration. 

Earlier, Pan American had filed its rate schedules with the FPC, 

along with the basic contracts underlying those rates. Therefore, 

Pan American arg~ed · the rate could only be changed pursuant to 

§ 19 of the NGA. However, the actions of the FPC did not serve to 

abrogate the basic contract between the parties and the Court held 

that the state court was not deprived by the provisions of§ 19 or 

S 22 of jurisdiction to decide questions of state contract law. 

366 U.S. at 662-63. 

13 As counsel for appellees expressed at oral argument, 

appellees would have us apply Rooker to bar the D.C. Circuit from 

reaching the preemption issue during its review of FERC 

certificate. This would be akin to allowing a federal district 

court's review of a state decision to thereafter deprive state 

appellate courts of jurisdiction to hear the same issue. Such a 

result is impermissible under Rooker. 

-22-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 22 
Thus, . _.i.t .. is Gur ·"·view that _ the , defer.ence afforded .the 

decisions of state courts under Rooker is not warranted where, as 

here, a state court has erroneously taken appellate jurisdiction 

over issues that have been previously decided by a federal agency, 

or when review of those issues could have and should have been 

sought pursuant to the federal statutory scheme. 

C. Conclusion 

We therefore hold, upon the issuance of a FERC certificate 

pursuant to§ 7(c) of the NGA, 15 u.s.c. § 717f(c), the provisions 

of§ 19(a)-(b) provided the exclusive course for judicial review· 

of the FERC decision and barred collateral attack in either the 

state or federal district courts as to those issues that could 

have been raised in the FERC proceeding or appeal. The appellees 

have chosen the wrong roads, state and federal, for challenging 

FERC's order. They are left with their appeal before the Court of 

Appeals for the District of Columbia and, to the extent they have 

complied with the provisions of§ 19(b), will be able there to 

present all of their challenges to the validity of the FERC 

certificate. 

Accordingly, the judgment of the district court is REVERSE9 

and the cause REMANDED for further proceedings consistent with 

this opinion. 

-23-

Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 23 
Appellate Case: 89-6228 Document: 010110136461 Date Filed: 11/22/1989 Page: 24