On July 25, 2018, the U.S. Court of Appeals for the Fourth Circuit (“Fourth Circuit”) affirmed the U.S. District Court for the Western District of Virginia’s (“District Court”) opinion rejecting landowners’ constitutional challenge provisions of the Natural Gas Act (“NGA”) regarding the natural gas pipeline certificate process.  Specifically, the Fourth Circuit agreed that the District Court lacked jurisdiction to review the complaint, finding that Congress intended the complaint to be brought before FERC instead.

Under the NGA, FERC issues Certificates of Public Convenience and Necessity (“Certificates”) for the construction of new interstate natural gas pipeline projects.  Issuing such a Certificate automatically conveys the power of eminent domain to the Certificate holder, who can then initiate condemnation proceedings in the appropriate U.S. district court or state court.  Under the NGA, an aggrieved party contesting a FERC Certificate order must first file for rehearing before FERC.  If FERC either declines to rehear the matter or issues a final order upon rehearing the matter, the aggrieved party can then file a petition for review in the appropriate court of appeals.

In October 2017, FERC issued a Certificate to Mountain Valley Pipeline, LLC.  At the time, landowners along the path of the proposed natural gas pipeline (“Plaintiffs”) filed a complaint in federal District Court against Mountain Valley Pipeline, LLC, FERC, and Commissioner Neil Chatterjee, acting in his capacity as Acting Chairman of FERC (“Defendants”).  The complaint challenged the constitutionality of various provisions of the NGA and sought reversal of FERC’s Certificate order.  In response, Defendants moved to dismiss the complaint for lack of jurisdiction.  In December 2017, the District Court granted Defendants’ motion to dismiss on two grounds.  First, the District Court concluded that Plaintiffs’ underlying challenges were attached to FERC’s Certificate order and therefore were subject to the provisions of the NGA.  Second, the District Court found that even if the complaint fell outside of that regime, Congress implicitly divested the District Court of jurisdiction over Plaintiffs’ complaint.  Plaintiffs then appealed to the Fourth Circuit.

The Fourth Circuit affirmed that the District Court had no jurisdiction over the complaint because Plaintiffs did not go through FERC’s administrative review process established under the NGA.  First, the Fourth Circuit found that based on the extensive framework of the NGA, Congress did not intent for district courts to have jurisdiction with regard to reviewing a FERC Certificate order.  The Fourth Circuit added that while in other NGA provisions Congress explicitly preserved jurisdiction for district courts, Congress specifically chose not to do so in the context of pipeline Certificate review.  Second, the Fourth Circuit determined that despite Plaintiffs’ implication of the U.S. Constitution, their claims were still the type Congress intended to be reviewed under the NGA, finding that FERC could provide meaningful review and that the underlying constitutional claims were related to FERC’s original Certificate order.  Therefore, the Fourth Circuit found that Congress intended that the complaint should be brought under the FERC’s review process, as required by the NGA.

A copy of the opinion is available here.