Delaware Riverkeeper Network v. Federal Energy Regulatory Commission

          Argued March 22, 2018

          Appeal from the United States District Court for the District of Columbia (No. 1:16-cv-00416)

          Jordan Yeager argued the cause for appellants. With him on the briefs was Aaron Stemplewicz.

          Christopher D. Ahlers was on the brief for amicus curiae Clean Air Council supporting plaintiff-appellants and supporting reversal of the decision below.

          Ross R. Fulton, Attorney, Federal Energy Regulatory Commission, argued the cause for appellees. With him on the brief were James P. Danly, General Counsel, and Robert H. Solomon, Solicitor.

          Jeremy C. Marwell argued the cause for intervenor-appellee PennEast Pipeline Company, LLC. With him on the brief were Michael B. Wigmore, Matthew X. Etchemendy, Frank H. Markle, and James D. Seegers.

          Melissa N. Patterson, Attorney, U.S. Department of Justice, argued the cause for amicus curiae United States of America. With her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jessie K. Liu, U.S. Attorney, and Scott R. McIntosh, Attorney.

          Erika Maley and William R. Levi were on the brief for amici curiae Interstate Natural Gas Association of America supporting appellees.

          Before: Griffith and Katsas, Circuit Judges, and Edwards, Senior Circuit Judge.

          OPINION

          Katsas, Circuit Judge.

         This appeal presents broad due-process challenges to how the Federal Energy Regulatory Commission conducts business. By statute, FERC is required to recover its costs from regulated industries. The appellants contend that this improperly incentivizes the Commission to approve new natural-gas pipelines, in order to ensure itself future funding sources. The appellants also challenge FERC's use of tolling orders to meet its statutory deadlines for acting on applications for rehearing.

         I

         The Natural Gas Act requires companies to obtain a "certificate of public convenience and necessity" before constructing facilities to transport natural gas in interstate commerce. 15 U.S.C. § 717f(c)(1)(A). FERC must issue a certificate to a qualified applicant if the proposed project is "required by the present or future public convenience and necessity," subject to any reasonable terms and conditions imposed by the Commission. Id. § 717f(e).

         FERC, a Commission within the Department of Energy, receives annual appropriations fixed by Congress. 42 U.S.C. § 7171(j). However, the Omnibus Budget Reconciliation Act of 1986 ("Budget Act") requires FERC to "assess and collect" from the various industries that it regulates, including the natural-gas industry, "fees and annual charges in any fiscal year in amounts equal to all of the costs incurred by the Commission in that fiscal year." Id. § 7178(a)(1). These receipts must be "credited to the general fund of the Treasury." Id. § 7178(f).

         A party "aggrieved by an order issued by the Commission in a proceeding under" the Natural Gas Act may seek rehearing. 15 U.S.C. § 717r(a). "Unless the Commission acts upon the application for rehearing within thirty days after it is filed, such application may be deemed to have been denied." Id. The aggrieved party then may seek judicial review, in the court of appeals, "within sixty days after the order of the Commission upon the application for rehearing." Id. § 717r(b).

         In 2015, intervenor PennEast Pipeline Co. sought a certificate to build a 114-mile natural-gas pipeline running through Pennsylvania and New Jersey. Appellants Delaware Riverkeeper Network and its director Maya van Rossum (collectively "Riverkeeper") intervened to oppose the project.

         In 2016, while FERC was still reviewing the proposal, Riverkeeper filed a complaint seeking declaratory relief against the Commission and its members. The complaint alleges that FERC's funding structure creates structural bias, in violation of the Due Process Clause of the Fifth Amendment, by incentivizing the Commission to approve new pipelines in order to secure additional sources for its future funding. The complaint also challenges the Commission's use of tolling orders to satisfy its 30-day deadline for acting on rehearing applications. Those tolling orders grant rehearing for the limited purpose of giving the Commission more time to consider pending applications. In the meantime, the complaint alleges, FERC routinely allows construction to proceed on approved projects. According to Riverkeeper, this frustrates judicial review, again in violation of the Due Process Clause.

         After PennEast intervened as a defendant in the district court, the Commission and PennEast moved to dismiss the complaint. They argued that Riverkeeper had not identified any liberty or property interest protected by the Due Process Clause and that, in any event, FERC provides all the process that is due. The district court agreed with both points and dismissed the complaint for failure ...