Opinion ID: 532625
Heading Depth: 2
Heading Rank: 1

Heading: The Exclusive Judicial Review Provisions of NGA Sec. 19.

Text: 20 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, 78 S.Ct. 1209, 1218, 2 L.Ed.2d 1345 (1958). Thus, we begin our jurisdictional analysis with the statutorily provided means for contesting a FERC certificate issued pursuant to Sec. 7(c) of the NGA. First, Sec. 19(a) of the NGA, 15 U.S.C. Sec. 717r(a), provides in pertinent part: 21 (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 set forth specifically the ground or grounds upon which such application is based. Upon such application the Commission shall have power to grant or deny rehearing or to abrogate or modify its order without further hearing. 22 Consistent with these requirements, ONG timely filed on March 1 its request for a rehearing before FERC. After that request was denied by FERC on May 31, ONG further pressed its appeal to the Court of Appeals for the District of Columbia Circuit, in accordance with Sec. 19(b) of the NGA, 15 U.S.C. Sec. 717r(b): 23 (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. 24 (Emphasis added.) 25 As the statutory language plainly states, the special judicial review provisions of Sec. 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, 85 S.Ct. 551, 557, 558, 13 L.Ed.2d 386 (1964)). The provisions of Sec. 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, e.g., City of Tacoma, 357 U.S. at 334-36, 78 S.Ct. at 1217-18 (interpreting the provisions of Federal Power Act (FPA), Sec. 313(b), 16 U.S.C. Sec. 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. Sec. 660(a)); United States v. McBride, 788 F.2d 1429, 1432 (10th Cir.1986) (Federal Aviation Act (FAA), 49 U.S.C. Sec. 1486(a), (d)); County of Halifax, Va. v. Lever, 718 F.2d 649, 652 (4th Cir.1983) (FPA, Sec. 313(b), 16 U.S.C. Sec. 8251(b)); City of Rochester v. Bond, 603 F.2d 927, 934-35 (D.C.Cir.1979) (FAA, 49 U.S.C. Sec. 1486(a), (d)). 26 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 project's dams would result in the total inundation of a state-owned 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 Sec. 75.20.010, which required the State's permission to construct any dam exceeding certain size specifications. Shortly thereafter the Commission granted the license. The State then petitioned for a rehearing, which was denied. 27 Pursuant to Sec. 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 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 Sec. 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 Sec. 313(b): 28 [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. 29 357 U.S. at 335-36, 78 S.Ct. at 1218. 30 Judicial review under Sec. 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, 85 S.Ct. at 558. In Whitney Nat'l Bank, the Court applied City of Tacoma, to hold that, under the Bank Holding Company Act of 1956, challengers to a determination of the Federal 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 Sec. 19, where parties must first appeal to FERC. 8 31 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, e.g., City of Tacoma, or federal court, e.g., McCulloch. Our interpretation of Sec. 19 is entirely consistent with Sec. 10(b) of the Administrative Procedure Act, 5 U.S.C. Sec. 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.... Cf. City of Rochester v. Bond, 603 F.2d at 935. 32 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 of Tacoma is helpful. There the Supreme Court read Sec. 313(b) of the FPA to necessarily preclude[ ] de novo litigation between the parties of all issues inhering in the controversy. 357 U.S. at 336, 78 S.Ct. at 1218 (emphasis added). We would be hard pressed to formulate a doctrine with a more expansive scope. 33 Additionally, we fail to find provision in Sec. 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): 34 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.... 35 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 bifurcating jurisdiction over various substantive grounds between district court and the court of appeals. The likelihood of duplication and inconsistency would exist in either case. 36 603 F.2d at 936 (footnotes omitted). 37 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 is 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 decision 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, 73 S.Ct. 803, 806, 97 L.Ed. 1206 (1953)). 38 As we have already chronicled, ONG contested the jurisdiction of FERC in its original intervention and protest 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) p 61,160, at 61,559 (1989). 39 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 FERC jurisdiction, but rather are subject to the jurisdiction of the Oklahoma Corporation Commission. Although this argument expressly hinged on the language of Sec. 1(b) of the NGA, 15 U.S.C. Sec. 717(b), 9 ONG argued more broadly: 40 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 [68 S.Ct. 190, 92 L.Ed. 128] (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 [81 S.Ct. 435, 445, 5 L.Ed.2d 377] (1961). 41 ... 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. 42 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) p 61,308, at n. 5 (1989), 1989 FERC LEXIS 1363. 43 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.... 357 U.S. at 339, 78 S.Ct. at 1220. 10 44 We need not reach the question of whether the various arguments by ONG in FERC proceedings were sufficient, for purposes of Sec. 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 Sec. 19(b), or not at all. City of Tacoma, 357 U.S. at 336, 78 S.Ct. at 1218. Accordingly, because ONG filed its petition for review under Sec. 19(b) with the United States Court of Appeals for the D.C. Circuit, this court cannot reach the merits of the preemption issue. 45 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. 46 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 Sec. 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 Sec. 7(h) of the NGA, 15 U.S.C. Sec. 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. Sec. 1487). 47