Northern Natural Gas Co. v. Iowa Utilities BoardNorthern Natural Gas Co. v. Iowa Utilities Board
David Jay Lynch, argued, Des Moines, IA, for appellant.
Bret Alan Dublinske, argued, Des Moines, IA (Helen C. Adams, on the brief), for appellee.
Before MELLOY, McMILLIAN, and COLLOTON, Circuit Judges.
COLLOTON, Circuit Judge.
Appellants Diane Munns, Mark Lambert, and Elliott Smith, members of the Iowa Utilities Board (collectively “the Board members“), appeal the district court‘s1 grant of summary judgment and entry of a permanent injunction in favor of appellees Northern Natural Gas Company and Northern Border Pipeline Company in this case involving natural gas pipeline regulation. We affirm.
I.
This appeal concerns the efforts of the State of Iowa to regulate the environmental effects of the construction and maintenance of interstate natural gas pipelines, as well as its attempt to delineate private damage remedies for certain harms caused by natural gas companies. This is our court‘s second consideration of Iowa laws regulating the construction of natural gas pipelines. In ANR Pipeline Company v. Iowa State Commerce Commission, 828 F.2d 465, 473 (8th Cir.1987), we held that Iowa statutes regulating the safety of interstate natural gas pipelines were preempted by federal law. We found that Iowa regulatory provisions relating to environmental protection, such as topsoil preservation, were not severable from the safety provisions, and were thus preempted as well. Id. Our court reserved decision, however, on the possibility that “Iowa may be able to enact legislation to protect its valuable topsoil and other aspects of the environment, and to provide private damage remedies, as long as the state regulations do not conflict with existing federal standards.” Id.
Taking note of the court‘s statement, the Iowa legislature moved the environmental provisions preempted only by reason of their non-severability to a separate chapter of the Iowa Code,
In 2001, Northern Natural Gas sought to upgrade one of its pipelines near DeWitt, Iowa. The company was authorized to do so under a “blanket certificate” of public convenience and necessity granted by the FERC on September 1, 1982. See Northern Natural Gas Co., Div. of InterNorth, Inc., 20 FERC ¶ 62,410, 1982 WL 40871 (Sept. 1, 1982). With certain restrictions, a blanket certificate allows pipeline companies to engage in activities such as constructing new facilities without seeking further approval from the FERC. See
To proceed with the upgrade project, Northern Natural Gas requested that the Iowa Utilities Board waive certain land restoration rules contained in
The gas companies brought suit in the district court seeking injunctive relief and a declaratory judgment that the Iowa statutory and regulatory provisions were preempted by various provisions of federal law, including the Natural Gas Act and implementing regulations promulgated by the FERC, and violated the Contract Clause of the United States Constitution.2 The parties filed cross-motions for summary judgment.
The district court granted the motion for summary judgment filed by the gas companies on the preemption claim, and also entered a permanent injunction prohibiting Iowa from enforcing
II.
A.
Under the Supremacy Clause of the Constitution,
We agree with the district court that
We believe it follows from Schneidewind that the Iowa provisions regulate in an occupied field, and are thus preempted by the Natural Gas Act. The NGA confers on the FERC authority over the issues addressed by the Iowa statutory and regulatory provisions. The NGA specifically provides that the FERC will oversee the construction and maintenance of natural gas pipelines through the issuance of certificates of public convenience and necessity. See
The Court in Schneidewind also took note of the “imminent possibility of collision between” the Michigan statute and the NGA, which “further demonstrate [d] the NGA‘s complete occupation of the field[.]” 485 U.S. at 310. As the district court observed, there is substantial potential for collision between the Iowa provisions and the FERC Plan, because the Iowa regulations impose additional requirements in a number of areas. For example, the Iowa regulations require that all topsoil up to 36 inches be separated when excavating,
In this case, the Iowa Utilities Board refused to grant a waiver for Northern Natural Gas‘s construction project, stating in part that the requirements under the FERC Plan were not as stringent as the Iowa regulations. This decision represents the sort of “disagreement between state and federal authorities” that further demonstrated the NGA‘s complete occupation of the field in Schneidewind, 485 U.S. at 310. As in Schneidewind, the imminent possibility of collision between the Iowa provisions and the federal regulatory scheme affects the ability of FERC to “achieve the uniformity of regulation which was an objective of the Natural Gas Act,” id., and further demonstrates that the Iowa provisions regulate in an occupied field.
The Board members argue that the Iowa regulations are not preempted, because they do not conflict with the FERC Plan, and language in the FERC Plan even contemplates supplemental state environmental regulation. Schneidewind, however, did not rely on an actual conflict between federal and state regulations, or even on a specific intent by the FERC to preempt state law. The broad powers that the FERC had at its disposal in regulating the rates and facilities of natural gas companies were sufficient to demonstrate an implicit intent of Congress to preempt state regulation through occupation of the field. Id. at 309 & n. 12. We think it is undeniable that Congress delegated authority to the FERC to regulate a wide range of environmental issues relating to pipeline facilities, and we agree with the conclusion of the Second Circuit that “[b]ecause FERC has authority to consider environmental issues, states may not engage in concurrent site-specific environmental review.” Nat‘l Fuel Gas Supply Corp. v. Pub. Serv. Comm‘n, 894 F.2d 571, 579 (2d Cir.1990). Accordingly, we are obliged to hold that the Iowa provisions regulate in an area over which the FERC exercises authority granted by Congress, and that
We have considered carefully whether a line of administrative decisions by the FERC, beginning with Maritimes & Northeast Pipeline, L.L.C. (”Maritimes“), impacts the preemption analysis that flows from Schneidewind. In Maritimes, the FERC interpreted language in a certificate issued to Maritimes & Northeast Pipeline Company in 1997. In that certificate, the FERC provided that “[t]he Commission encourages cooperation between interstate pipelines and local authorities,” but further stated that “this does not mean that state and local agencies, through application of state and local laws, may prohibit or unreasonably delay the construction of facilities approved by this Commission.” Maritimes and Northeast Pipeline, L.L.C., 80 FERC ¶ 61,136, 1997 WL 465608, at *13 n. 40 (July 31, 1997). In its subsequent order, the FERC explained that “[a]lthough the Natural Gas Act and the regulations promulgated by the Commission pursuant to that statute generally preempt state and local law, the Commission has encouraged applicants to cooperate with state and local agencies with regard to the siting of pipeline facilities, environmental mitigation measures, and construction procedures.” 81 FERC ¶ 61,166, 1997 WL 812154, at *7 (Nov. 4, 1997) (quoting Iroquois Gas Transmission Sys., L.P., 59 FERC ¶ 61,094, 1992 WL 510728, at *2 (Apr. 28, 1992)).3 The Commission acknowledged that “as held by the [Second Circuit] in National Fuel, the NGA preempts state and local agencies from regulating the construction and operation of interstate pipeline facilities.” Maritimes, 1997 WL 812154, at *8. But the FERC went on to say, “[n]evertheless, as a matter of policy, in part to implement the National Environmental Policy Act of 1969 (NEPA), the Commission has imposed upon applicants a requirement that they cooperate with State and local authorities.” Id. (emphasis added). The FERC has required such cooperation through conditions placed in newly issued certificates of public convenience and necessity. Id.
In discussion that has created some confusion about the scope of preemption of state environmental regulations, the FERC continued in Maritimes by saying that “[i]f a conflict arises ... between the requirements of a State or local agency and the Commission‘s certificate conditions, the principles of preemption will apply and the federal authorization will preempt the State or local requirements.” Id. at *9. The FERC rejected the contention that the gas company in Maritimes needed not go beyond federal standards to comply with more stringent or additional requirements imposed by the State, saying it did “not view the concept of conflict so broadly.” Id. According to the FERC in Maritimes, a “rule of reason” must govern whether “additional costs or delays are unreasonable in light of the Commission‘s goal to include State and local authorities to the extent possible in the planning and construction activities of pipeline applicants.” Id. In the end, the FERC directed the company that the certificate of public convenience and necessity, which was conditioned on cooperating with state and local regulators, did in fact mandate compliance with certain state environmental requirements. Id.; see also NE Hub Partners, L.P. v. CNG Transmission Corp., 239 F.3d 333, 339, 346 n. 13 (3d Cir.2001) (concluding that field of natural gas regulation was occupied by federal law, but that FERC required gas company to comply with state regulations through conditions in certificate); cf. U.S. Telecom. Ass‘n v. FCC, 359 F.3d 554, 567 (D.C.Cir.2004) (federal agencies may condition their approval on the decision of a State or local agency, “so long as there is a reasonable connection between the outside entity‘s decision and the federal agency‘s determination.“).
There is language in the Maritimes line of decisions to suggest that the FERC, if it were considering the issuance of a new certificate to Northern Natural Gas for its project in Iowa, might well require — as a matter of FERC policy — compliance with certain Iowa regulations that would not cause unreasonable cost or delay in a pipeline construction project. In this case, however, Northern Natural Gas is operating pursuant to a blanket certificate issued by the FERC in 1982, and there is no claim that the certificate includes conditions regarding state regulation comparable to those set forth in Maritimes. The Board members in this litigation have not challenged the validity of Northern Natural Gas‘s certificate, or the manner in which the FERC treats various natural gas companies through the issuance of different types of certificates. The State of Iowa would seem to have a strong case to make with the FERC that protection of Iowa‘s valuable natural resources warrants at least the same level of cooperation by natural gas companies with state authorities that the FERC required of gas companies in other States through certificates discussed in the Maritimes line of decisions. But whether there is an avenue for the Board to seek relief from the FERC, in the way of Maritimes-like conditions on Northern Natural Gas‘s blanket certificate or otherwise, is not before us.
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At oral argument, the Board members acknowledged that if the environmental provisions of