Petition for Writ of Certiorari — Orus Ashby Berkley, et al., Petitioners v. Federal Energy Regulatory Commission, et al.

Supreme Court briefOct 23, 2018

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APPENDIX

TABLE OF CONTENTS

Appendix A Opinion and Judgment in the United

States Court of Appeals for the Fourth

Circuit

(July 25, 2018) . . . . . . . . . . . . . . . App. 1

Appendix B Final Order and Final Judgment in

the United States District Court for

the Western District of Virginia

Roanoke Division

(January 9, 2018) . . . . . . . . . . . . App. 20

Appendix C Memorandum Opinion in the United

States District Court for the Western

District of Virginia Roanoke Division

(December 11, 2017) . . . . . . . . . App. 23

Appendix D Constitution and Statutes

U.S. Const. art. I, §1 . . . . . . . . . App. 43

U.S. Const. art. II, §1, cl. 1 . . . . App. 43

U.S. Const. art. III, §1 . . . . . . . . App. 44

U.S. Const. amend. V . . . . . . . . . App. 44

15 U.S.C. § 717f(h) . . . . . . . . . . . App. 45

15 U.S.C. § 717r . . . . . . . . . . . . . App. 46

Appendix E Verified Complaint in the United

States District Court for the Western

District of Virginia Roanoke Division

(July 27, 2017) . . . . . . . . . . . . . . App. 51

Exhibit 1: Statement of Policy

(September 15, 1999) . . . . . . App. 92

Appendix F Memorandum of Law in Support of

Plaintiffs’ Motion for a Preliminary

Injunction in the United States

District Court for the Western District

of Virginia Roanoke Division

(July 27, 2017) . . . . . . . . . . . . . App. 143

Appendix G Memorandum of Defendant Mountain

Valley Pipeline, LLC in Support of its

Motion to Dismiss in the United

States District Court for the Western

District of Virginia Roanoke Division

(August 11, 2017) . . . . . . . . . . . App. 199

Appendix H Plaintiffs’ Response in Opposition to

Mountain Valley Pipeline’s Motion to

Dismiss in the United States District

Court for the Western District of

Virginia Roanoke Division

(September 1, 2017) . . . . . . . . . App. 222

Appendix I [Excerpt] Response of Defendant

Mountain Valley Pipeline, LLC to

Order Dated October 17, 2017 in the

United States District Court for the

Western District of Virginia Roanoke

Division

(October 27, 2017) . . . . . . . . . . App. 250

Exhibit 1: FERC Order Issuing

Certificates and Granting

Abandonment Authority

(October 13, 2017) . . . . . . . . App. 251

iii

Appendix J [Excerpt] Transcript of Motions

Hearing in the United States District

Court for the Western District of

Virginia Roanoke Division

(November 3, 2017) . . . . . . . . . App. 254

Appendix K Opening Brief of Appellant in the

United States Court of Appeals for the

Fourth Circuit

(January 31, 2018) . . . . . . . . . . App. 259

Appendix L Joint Reply Brief of Appellants in the

United States Court of Appeals for the

Fourth Circuit

(March 6, 2018) . . . . . . . . . . . . App. 311

App. 1

APPENDIX A

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 18-1042

[Filed July 25, 2018]

___________________________________

ORUS ASHBY BERKLEY;

)

JAMES T. CHANDLER;

)

KATHY E. CHANDLER;

)

CONSTANTINE THEODORE

)

CHLEPAS; PATTI LEE

)

CHLEPAS; ROGER D.

)

CRABTREE; REBECCA H.

)

CRABTREE; GEORGE LEE

)

JONES; ROBERT WAYNE

)

MORGAN; PATRICIA ANN

)

MORGAN; MARGARET

)

MCGRAW SLAYTON LIVING

)

TRUST; THOMAS TRIPLETT;

)

BONNIE B. TRIPLETT,

)

Plaintiffs - Appellants,

)

and

)

DAWN E. CISEK; MARTIN

)

CISEK; EDITH FERN ECHOLS;

)

App. 2

ESTIAL E. ECHOLS, JR.,

)

Plaintiffs,

)

MOUNTAIN VALLEY PIPELINE,

)

LLC; FEDERAL ENERGY

)

REGULATORY COMMISSION;

)

NEIL CHATTERJEE, in his

)

official capacity as Acting

)

Chairman of the Federal

)

Energy Regulatory Commission,

)

Defendants - Appellees.

)

___________________________________ )

Appeal from the United States District Court for the

Western District of Virginia, at Roanoke. Elizabeth

Kay Dillon, District Judge. (7:17-cv-00357-EKD)

______________

Argued: May 10, 2018

Decided: July 25, 2018

______________

Before GREGORY, Chief Judge, and WYNN, and

THACKER, Circuit Judges.

______________

Affirmed by published opinion. Judge Wynn wrote the

opinion, in which Chief Judge Gregory and Judge

Thacker joined.

______________

ARGUED: Justin Michael Lugar, GENTRY LOCKE,

Roanoke, Virginia, for Appellants. Susanna Y. Chu,

FEDERAL ENERGY REGULATORY COMMISSION,

App. 3

Washington, D.C., for Appellees Federal Energy

Regulatory Commission and Neil Chatterjee. Wade

Wallihan Massie, PENN, STUART & ESKRIDGE,

Abingdon, Virginia, for Appellee Mountain Valley

Pipeline, LLC. ON BRIEF: Cynthia M. Kinser, Monica

T. Monday, GENTRY LOCKE, Roanoke, Virginia, for

Appellants. James P. Danly, General Counsel, Robert

H. Solomon, Solicitor, FEDERAL ENERGY

REGULATORY COMMISSION, Washington, D.C., for

Appellees Federal Energy Regulatory Commission and

Neil Chatterjee. Mark E. Frye, Seth M. Land, PENN,

STUART & ESKRIDGE, Abingdon, Virginia, for

Appellee Mountain Valley Pipeline, LLC.

______________

WYNN, Circuit Judge:

Plaintiffs1 are landowners along the path of a

proposed natural gas pipeline. They brought this action

against the Mountain Valley Pipeline, LLC, the

Federal Energy Regulatory Commission, and Neil

Chatterjee, in his official capacity as Acting Chairman

of the Federal Energy Regulatory Commission

(hereinafter collectively referred to as “Defendants”)

challenging the constitutionality of various provisions

Plaintiffs are Orus Ashby Berkley, James T. Chandler, Kathy E.

Chandler, Constantine Theodore Chlepas, Patti Lee Chlepas,

Roger D. Crabtree, Rebecca H. Crabtree, George Lee Jones, Robert

Wayne Morgan, Patricia Ann Morgan, Margaret McGraw Slayton

Living Trust, Thomas Triplett, Bonnie B. Triplett, Dawn E. Cisek,

Martin Cisek, Edith Fern Echols, and Estial E. Echols, Jr. After

this appeal was filed, Dawn Cisek, Martin Cisek, Edith Echols,

and Estial Echols withdrew their discrete appeals. Accordingly, we

have updated the caption of this case to reflect their status as

Plaintiffs and not as Plaintiff-Appellants.

App. 4

of the Natural Gas Act, 15 U.S.C. § 717 et seq. But the

district court, without reaching the merits of Plaintiffs’

challenges, dismissed their action for lack of subjectmatter jurisdiction on the grounds that their claims

must instead be brought through the agency review

process laid out in the Natural Gas Act. We affirm.

This case involves a complex administrative review

framework that warrants some introduction. In 1977,

Congress transferred much of the authority from the

now-defunct Federal Power Commission to the new

Federal Energy Regulatory Commission (“FERC,” or

“the Commission”). See 42 U.S.C. §§ 7171–72. Among

the transferred authorities was regulation of the

natural gas industry, as outlined in the Natural Gas

Act, 15 U.S.C. § 717 et seq. See also 42 U.S.C. § 7172

(transferring jurisdiction).

Under the Natural Gas Act, FERC is responsible for

vetting and approving construction of new interstate

natural gas pipelines and expansions of existing

pipelines. See 15 U.S.C. § 717f. To approve such

construction, FERC must find that the construction “is

or will be required by the present or future public

convenience and necessity.” Id. § 717f(e). Once FERC

makes that required finding and issues a “Certificate

of public convenience and necessity” (“Certificate”), a

pipeline company can begin construction. Id. § 717f(c).

Issuing such a Certificate conveys and

automatically transfers the power of eminent domain

to the Certificate holder. See id. § 717f(h). Thus, FERC

does not have discretion to withhold eminent domain

App. 5

power once it grants a Certificate. See Midcoast

Interstate Transmission, Inc. v. FERC, 198 F.3d 960,

973 (D.C. Cir. 2000). With the transferred power of

eminent domain, a Certificate holder can then initiate

condemnation proceedings in the appropriate U.S.

district court or state court. See 15 U.S.C. § 717f(h).

Under the Natural Gas Act, an aggrieved party who

seeks review from the issuance of a Certificate must

first file for rehearing before FERC. See id. § 717r. If

FERC either declines to rehear the matter or issues a

final order upon rehearing the matter, the aggrieved

party can file a petition for review in the appropriate

court of appeals, which has “exclusive” jurisdiction “to

affirm, modify, or set aside [the final] order in whole or

in part.” Id. § 717r(b).2

In the present case, FERC issued a Certificate to

Mountain Valley Pipeline, LLC (“Mountain Valley

Pipeline”) in October 2017. See 15 U.S.C. § 717f(c). At

the time FERC issued the Certificate, Plaintiffs had

already filed the complaint in this matter against

Defendants in the U.S. District Court for the Western

District of Virginia challenging the constitutionality of

However, there are limits to appellate jurisdiction. For instance,

“[n]o objection to the order of the Commission shall be considered

by the court [of appeals] 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.” 15 U.S.C.

§ 717r(b). Additionally, “[t]he filing of an application for rehearing

. . . shall not, unless specifically ordered by the Commission,

operate as a stay of the Commission’s order.” Id. § 717r(c).

App. 6

various provisions of the Natural Gas Act. The

Defendants moved to dismiss for lack of jurisdiction.

In December 2017, the district court granted the

Defendants’ motions to dismiss on two grounds. First,

the district court found that Plaintiffs’ challenges

“inher[e]” in a FERC order and are thus subject to the

exclusive review provisions of the Natural Gas Act. J.A.

535–40. Alternatively, the district court held that, even

if Plaintiffs’ challenges fell outside that regime,

Congress implicitly divested the district court of

jurisdiction, pursuant to the Supreme Court’s

framework laid out in Thunder Basin Coal Co. v. Reich,

510 U.S. 200 (1994). Accordingly, the district court

dismissed, without prejudice, three of the four counts

for lack of subject-matter jurisdiction. Plaintiffs

subsequently stipulated to having the remaining count

dismissed with prejudice and timely appealed to this

Court.3

In a letter filed pursuant to Fed. R. App. P. 28(j), FERC informed

this Court of further developments regarding the pending request

for rehearing before the Commission in this case. Specifically, on

June 15, 2018, FERC took final action on the matter and upheld its

issuance of the Certificate to Mountain Valley Pipeline. In the time

since FERC’s final order, no party has requested that we take any

steps in light of this development. Furthermore, although we have

an obligation to raise mootness issues sua sponte, see Friedman’s,

Inc. v. Dunlap, 290 F.3d 191, 197 (4th Cir. 2002), we do not believe

issuance of that final order moots the case at bar, because there

are still potential benefits to the Plaintiffs to being able to pursue

their original action in district court. See Smith v. Ashcroft, 295

F.3d 425, 428 (4th Cir. 2002) (finding a case is not moot when the

petitioner is still “unmistakably affected by the legal implications

of our decision”).

App. 7

II.

We review the district court’s dismissal of a

complaint for lack of subject-matter jurisdiction de

novo. Nat’l Taxpayers Union v. U.S. Soc. Sec. Admin.,

376 F.3d 239, 241 (4th Cir. 2004). Ultimately, we agree

with the district court that Congress implicitly divested

the district court of jurisdiction to hear claims of the

kind brought by Plaintiffs and instead intended for

such claims to come to federal court through the

administrative review scheme established by the

Natural Gas Act. As a result, the district court

correctly determined that it did not have jurisdiction to

review the matter.

Over the past thirty years, the Supreme Court has

issued a trio of cases addressing when Congress

intends to divest district courts of jurisdiction over

claims that should instead proceed exclusively through

administrative review regimes. See Elgin v. Dep’t of the

Treasury, 567 U.S. 1 (2012); Free Enter. Fund v. Pub.

Co. Accounting Oversight Bd., 561 U.S. 477 (2010);

Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994).

This Court recently synthesized these three cases in

Bennett v. SEC, 844 F.3d 174 (4th Cir. 2016).

In Bennett, the plaintiff, who owned an investment

firm that was the subject of an investigation by the

Securities and Exchange Commission (“SEC”), filed

suit in district court claiming that the SEC

unconstitutionally used administrative law judges as

part of its enforcement proceedings. See id. at 177–78.

In analyzing whether the district court had jurisdiction

to hear that claim, this Court distilled the relevant

Supreme Court precedent into “a two-step inquiry.” Id.

at 181.

App. 8

At the first step, the court must consider “whether

Congress’s intent to preclude district-court jurisdiction

is ‘fairly discernible in the statutory scheme.’” Id.

(quoting Thunder Basin, 510 U.S. at 207). “This [step]

involves examining the statute’s text, structure, and

purpose.” Id. At the second step, the court must

determine “whether plaintiffs’ ‘claims are of the type

Congress intended to be reviewed within this statutory

structure.’” Id. (quoting Thunder Basin, 510 U.S. at

212). With this framework in mind, we turn to the case

at hand.

To determine whether the district court had

jurisdiction to hear Plaintiffs’ claims, we begin with the

first step of our inquiry: “whether Congress’s intent to

preclude district-court jurisdiction is fairly discernible

in the statutory scheme.” Id. at 181 (internal quotation

marks omitted).

In Bennett, this Court found that aspects of the

statute at issue in the case, the Securities Exchange

Act of 1934, 15 U.S.C. § 78a et seq., indicated that

Congress intended to divest the district court of

jurisdiction. First, the statute established a

“comprehensive scheme that provides for judicial

review in the appropriate court of appeals.” Bennett,

844 F.3d at 181. Furthermore, the statute

“demonstrated [that Congress] knew how to preserve

district-court jurisdiction, but declined to do so.” Id. In

particular, the Securities Exchange Act “authorize[d]

district courts to exercise jurisdiction over certain

actions brought by the agency but not by private

parties.” Id. Thus, the statute indicated that Congress

App. 9

did not want cases brought by private parties, like the

plaintiff in Bennett, to be heard by district courts.

These considerations lead to the same conclusion in

this case. Like the Securities Exchange Act, the

Natural Gas Act establishes an extensive review

framework, including review before FERC and

eventually by a court of appeals. See 15 U.S.C. § 717r.

And, as with the statute in Bennett, the Natural Gas

Act specifically allows for district court jurisdiction

over certain actions, such as condemnation

proceedings. See id. § 717f(h). Thus, as did the statute

in Bennett, the Natural Gas Act indicates that

Congress knew how to allow for district court

jurisdiction, yet it chose not to do so when it came to

issues related to review of a Certificate. Rather, in such

situations, Congress gave “exclusive” jurisdiction to the

appropriate court of appeals—but only after going

through the review process with FERC. Id. § 717r.

Nothing in the Natural Gas Act indicates Congress

intended to create exceptions to this exclusive

jurisdiction of the courts of appeals, except those

exceptions specifically set out in the statute.

So, under this Court’s precedent in Bennett, the

Natural Gas Act’s text and structure evince an intent

from Congress to remove district-court jurisdiction.

Continuing our analysis of whether the district

court had jurisdiction to hear Plaintiffs’ claims in this

matter, we next consider the second step of our inquiry:

“whether plaintiffs’ claims are of the type Congress

intended to be reviewed within this statutory

structure.” Bennett, 844 F.3d at 181 (internal quotation

App. 10

marks omitted). In so doing, we consider three factors:

“(1) whether the statutory scheme foreclose[s] all

meaningful judicial review,” “(2) the extent to which

the plaintiff’s claims are wholly collateral to the

statute’s review provisions, and (3) whether agency

expertise could be brought to bear on the . . . questions

presented.” Id. (alteration in original) (internal

quotation marks omitted). Of the three factors

considered at the second step, we stated in Bennett that

the first factor—“meaningful judicial review”—is the

“most important.” Id. at 183 n.7.

Regarding the first factor, whether the Natural Gas

Act provides for meaningful judicial review in the

circumstances before us, Plaintiffs argue that, because

their claims are constitutional in nature and challenge

the legitimacy of the statute itself, FERC cannot rule

on them. Thus, Plaintiffs argue that they are deprived

of meaningful review by having to wait until those

claims are reviewed by a court of appeals.

In Bennett, however, we recognized that the

Supreme Court had already rejected a similar line of

reasoning. See id. at 184. Specifically, in Thunder

Basin, the Supreme Court said that “constitutional

claims . . . [could] be meaningfully addressed in the

Court of Appeals,” even if the agency could not

adjudicate them in the first instance. 510 U.S. at 215.

The Supreme Court in Elgin said the same. See 567

U.S. at 15–18. Thus, notwithstanding that Plaintiffs

are “attack[ing] the legitimacy of the forum” itself,

review is still meaningful, even if it is withheld until

first going through an agency that cannot rule on

Plaintiffs’ constitutional claims. Bennett, 844 F.3d at

184.

App. 11

For that reason, in Bennett, this Court said that a

question about the constitutionality of an

administrative law judge’s authority to hear cases must

also go through the agency review process, and that

eventual review of the constitutional question before

the court of appeals would still be meaningful. See id.

at 184–86. In this way, Bennett, Thunder Basin, and

Elgin fatally undercut Plaintiffs’ argument. All three

decisions establish that FERC’s inability to resolve

Plaintiffs’ constitutional claims does not mean that the

statutory scheme deprives Plaintiffs of meaningful

judicial review.

Plaintiffs further attempt to distinguish their case

from Bennett by arguing that the Natural Gas Act

requires FERC to review petitions for rehearing within

30 days and that, by tolling this period, FERC unfairly

delays judicial review while simultaneously allowing

Mountain Valley Pipeline to begin construction.4 This

argument does not align with the statute, however.

Contrary to what Plaintiffs argue, FERC is not

required to finally decide petitions for rehearing within

30 days. Rather, the statute says that “[u]nless the

Commission acts upon the application for rehearing

within thirty days after it is filed, such application may

According to Plaintiffs—and undisputed by FERC—FERC

regularly issues statements within 30 days of petitions for

rehearing being filed that state, “[i]n order to afford additional

time for consideration of the matters raised or to be raised,

rehearing of the Commission’s order is hereby granted for the

limited purpose of further consideration, and timely-filed

rehearing requests will not be deemed denied by operation of law.

Rehearing requests of the above-cited order filed in this proceeding

will be addressed in a future order.” Appellants’ Br. at 20 n.7.

App. 12

be deemed to have been denied.” 15 U.S.C. § 717r(a)

(emphasis added). Thus, the statute does not require a

final decision within 30 days; it requires FERC to take

some kind of action within 30 days for the petition not

to be deemed denied by operation of law. FERC does so

by issuing the tolling order.

That conclusion is not changed simply because the

pipeline construction may continue while a rehearing

petition is pending. We know this because Congress

contemplated construction would be allowed to

continue while FERC reviews a petition for rehearing.

Specifically, the Natural Gas Act provides that “[t]he

filing of an application for rehearing . . . shall not,

unless specifically ordered by the Commission, operate

as a stay of the Commission’s order.” Id. § 717r(c).

Therefore, Plaintiffs have failed to establish that,

under the facts of this case, the Natural Gas Act

“foreclose[s] all meaningful judicial review.” Bennett,

844 F.3d at 181 (alteration in original).

To be sure, we acknowledge the possibility that

FERC’s use of a tolling order in certain cases may, in

effect, deny a plaintiff meaningful judicial review,

regardless of whether the Natural Gas Act could, in

theory, provide such recourse. After all, there is a

“strong presumption that Congress did not mean to

prohibit all judicial review of executive action,” Bowen

v. Mich. Acad. of Family Physicians, 476 U.S. 667, 681

(1986) (internal quotation marks omitted), and

undoubtedly in some rare situations, agency inaction

may turn the promise of meaningful review into

meaningless review.

Notably, we recognized in Bennett that plaintiffs are

denied meaningful review when they are subject to

App. 13

“‘some additional and irremediable harm beyond the

burdens associated with the dispute resolutions

process.’” 844 F.3d at 186 n. 13 (quoting Tilton v. SEC,

824 F.3d 276, 286 (2d Cir. 2016)); see also McNary v.

Haitian Refugee Ctr., Inc., 498 U.S. 479, 496–97 (1991)

(holding that respondents were not “as a practical

matter . . . able to obtain meaningful judicial review”

when they sought to challenge certain procedures used

by the Immigration and Naturalization Service,

because raising their claims would have also required

them to “voluntarily surrender themselves for

deportation”); Mathews v. Eldridge, 424 U.S. 319, 331

(1976) (finding that procedural due process was

violated where “an erroneous termination” of disability

benefits would “damage [the respondent] in a way not

recompensable through retroactive payments”); Hill v.

SEC, 825 F.3d 1236, 1247 (11th Cir. 2016) (finding that

the administrative review scheme in the Securities

Exchange Act of 1934 provides meaningful review of

civil enforcement actions brought by the SEC, because

those challenging the actions could not show they “are

likely to suffer irreparable injury while awaiting

judicial review”); Kreschollek v. S. Stevedoring Co., 78

F.3d 868, 874–75 (3d Cir. 1996) (holding that the

Longshore and Harbor Workers’ Compensation Act did

not provide meaningful review under the Thunder

Basin standard, because the result of requiring

litigants to wait until being heard before the court of

appeals, “albeit not necessarily the absence of any

judicial review at all, might well be the absence of any

effective judicial review,” as a result of “serious

irreparable injury” that could occur in the intervening

time).

App. 14

However, although Plaintiffs’ brief makes a few

unsupported assertions about injuries they will suffer,

they point to no evidence to corroborate their claims

and, more critically, make no detailed arguments about

those potential injuries. From the briefing, we have no

answer as to what specific injuries Plaintiffs are

alleging are potentially irreparable, why those injuries

are not recompensable if post-deprivation relief is

provided by the court of appeals, and how those specific

claims distinguish Plaintiffs’ case from seemingly

contrary cases, such as Thunder Basin, Elgin, and

Bennett. As the case is currently presented, Plaintiffs

have not adequately produced evidence of irreparable

injury, thereby indicating that the administrative

review scheme found in the Natural Gas Act can

provide meaningful review for their claims. Thus, the

first factor weighs in favor of finding that Congress did

not intend for district courts to have jurisdiction over

claims such as those brought by Plaintiffs.

We next consider the second factor—that is,

whether a claim is “wholly collateral” to the statutory

review scheme. Bennett, 844 F.3d at 186. In Bennett,

this Court found that the plaintiff’s constitutional

claims were not wholly collateral to the administrative

proceeding because they were “the vehicle by which she

s[ought] to vacate the ALJ’s initial findings.” Id. at 187

(internal quotation marks omitted).

The same analysis applies here. Plaintiffs’

constitutional claims are the means by which they seek

to vacate the granting of the Certificate to Mountain

Valley Pipeline. Therefore, their claims are not wholly

collateral to the Natural Gas Act’s statutory review

App. 15

scheme. This conclusion accords with the Supreme

Court’s findings in its trio of cases.

In Elgin, for example, the plaintiff’s constitutional

claims were not wholly collateral to the statutory

review scheme found in the Civil Service Reform Act of

1978 because the claims comprised the vehicle by

which the plaintiff sought to challenge his firing from

government employment. See 567 U.S. at 7–8, 22. By

way of contrast, in Free Enterprise, the plaintiffs’

constitutional challenge to the Public Company

Accounting Oversight Board’s existence was wholly

collateral to the review scheme found in the SarbanesOxley Act of 2002, because the plaintiffs’ challenge was

unrelated to any particular action taken by the Board.

See 561 U.S. at 490–91. District-court jurisdiction was

the only way the plaintiffs’ claims in Free Enterprise

could have been reviewed by a court, absent the

plaintiffs intentionally incurring a sanction by the

Board so as to create an administrative action through

which to lodge their constitutional challenge. Id.

The situation here is more like that of Elgin and

Bennett. Plaintiffs are seeking to reverse the issuance

of a specific Certificate. The statutory review scheme

provides for eventual review of this issue before a court

of appeals; therefore, Plaintiffs must work through the

statutory review scheme first. Thus, the second factor

weighs in favor of finding that Congress did not intend

for district courts to have jurisdiction over claims such

as those brought by Plaintiffs.

Finally, we consider the third factor of “whether

agency expertise could be brought to bear on the . . .

questions presented.” Bennett, 844 F.3d at 181

(internal quotation marks omitted). When considering

App. 16

this factor in Bennett, this Court said that agencies

could “apply [their] expertise to threshold questions

that may accompany a constitutional claim against a

federal statute, even when the agency disclaimed

authority to resolve those constitutional claims.” Id. at

187 (internal quotation marks omitted). For example,

the Bennett Court said the SEC “could bring its

expertise to bear . . . by concluding that the Division of

Enforcement’s substantive claims [were] meritless,

thereby fully disposing of the case before reaching the

constitutional question.” Id. at 187–88. The Court

acknowledged such a result was “unlikely” but

nonetheless found that Supreme Court precedent

“emphasized that ‘one of the principal reasons to await

the termination of agency proceedings is to obviate all

occasion for judicial review.’” Id. at 188 (quoting FTC v.

Standard Oil Co., 449 U.S. 232, 244 n.11 (1980)).

The same is true here. Although perhaps unlikely to

occur, FERC had the ability to, upon rehearing

Plaintiffs’ challenge here—and may still in future

cases—revoke its issuance of a Certificate based upon

threshold questions within its expertise. If that had

occurred, Plaintiffs’ constitutional claims would have

been moot, without requiring a court to rule on them at

all. Thus, under our precedent in Bennett, this final

factor also weighs in favor of finding that Congress did

not intend for district courts to have jurisdiction over

claims such as those brought by Plaintiffs.

III.

In conclusion, under the two-step analysis this

Court set out in Bennett, Congress intended to divest

district courts of jurisdiction to hear the claims

pursued by Plaintiffs and instead intended those claims

App. 17

to be brought under the statutory review scheme

established by the Natural Gas Act. Accordingly, the

district court lacked subject-matter jurisdiction to hear

Plaintiffs’ claims and appropriately dismissed their

claims without prejudice.5

The judgment of the district court is

AFFIRMED.

We vacate the portion of the district court’s opinion discussing an

alternative ground for its holding—that the Plaintiffs’ challenges

“inher[e]” in a Commission order and are thus subject to the

exclusive review provisions of the Natural Gas Act. J.A. 535–40.

And because we uphold the district court’s conclusion based upon

its application of Thunder Basin, Bennett, and related cases, we

decline to address that other line of reasoning in greater detail.

App. 18

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 18-1042

(7:17-cv-00357-EKD)

[Filed July 25, 2018]

___________________________________

ORUS ASHBY BERKLEY;

)

JAMES T. CHANDLER;

)

KATHY E. CHANDLER;

)

CONSTANTINE THEODORE

)

CHLEPAS; PATTI LEE

)

CHLEPAS; ROGER D.

)

CRABTREE; REBECCA H.

)

CRABTREE; GEORGE LEE

)

JONES; ROBERT WAYNE

)

MORGAN; PATRICIA ANN

)

MORGAN; MARGARET

)

MCGRAW SLAYTON LIVING

)

TRUST; THOMAS TRIPLETT;

)

BONNIE B. TRIPLETT,

)

Plaintiffs - Appellants,

)

and

)

DAWN E. CISEK; MARTIN

)

CISEK; EDITH FERN ECHOLS;

)

ESTIAL E. ECHOLS, JR.,

)

Plaintiffs,

)

MOUNTAIN VALLEY PIPELINE,

)

App. 19

LLC; FEDERAL ENERGY

REGULATORY COMMISSION;

NEIL CHATTERJEE, in his

official capacity as Acting

Chairman of the Federal

Energy Regulatory Commission,

)

Defendants - Appellees.

)

___________________________________ )

___________________

JUDGMENT

___________________

In accordance with the decision of this court, the

judgment of the district court is affirmed.

This judgment shall take effect upon issuance of

this court’s mandate in accordance with Fed. R. App. P.

41.

/s/ PATRICIA S. CONNOR, CLERK

App. 20

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF VIRGINIA

ROANOKE DIVISION

Case No. 7:17-cv-00357-EKD

[Filed January 9, 2018]

________________________________

ORUS ASHBY BERKLEY, et al., )

)

Plaintiffs,

)

MOUNTAIN VALLEY PIPELINE, )

LLC, et al.,

)

Defendants.

)

________________________________ )

FINAL ORDER

By Order entered December 11, 2017, this Court

granted the Defendants’ Motion to Dismiss on Counts

I-III (Dkt. No. 46).

On December 21, 2017, the West Virginia Plaintiffs

filed a Motion for Rule 54(b) Certification (Dkt. No. 49),

and on January 4, 2018, Defendant Mountain Valley

Pipeline, LLC, filed a Response in Opposition (Dkt. No.

52).

App. 21

On January 9, 2018, the parties jointly filed a

Stipulation of Dismissal pursuant to Rule

41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure

dismissing with prejudice Count IV of the Plaintiffs’

Complaint (Dkt. No. 53).

As there are no issues remaining before the Court

subsequent to the parties’ Stipulation of Dismissal, the

West Virginia Plaintiffs’ Motion for Rule 54(b)

Certification is DENIED AS MOOT.

Count IV, the sole remaining claim before this

Court, is hereby DISMISSED WITH PREJUDICE.

By separate document, the court will enter final

judgment.

The clerk is directed to provide a copy of this order

and the final judgment to all counsel of record and to

Mark R. Herring, Attorney General of Virginia, Office

of the Attorney General, 202 N. Ninth Street,

Richmond, Virginia 23219.

Entered: January 9, 2018.

/s/ Elizabeth K. Dillon

Elizabeth K. Dillon

United States District Judge

App. 22

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF VIRGINIA

ROANOKE DIVISION

Case No. 7:17-cv-00357-EKD

[Filed January 9, 2018]

________________________________

ORUS ASHBY BERKLEY, et al., )

)

Plaintiffs,

)

MOUNTAIN VALLEY PIPELINE, )

LLC, et al.,

)

Defendants.

)

________________________________ )

FINAL JUDGMENT

Pursuant to the final order entered this day, final

judgment is hereby entered in favor of defendants as to

Counts I, II, and III. Count IV is hereby dismissed with

prejudice per the parties’ stipulation.

The clerk is directed to strike this case from the

active docket of the court.

Entered: January 9, 2018.

/s/ Elizabeth K. Dillon

Elizabeth K. Dillon

United States District Judge

App. 23

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF VIRGINIA

ROANOKE DIVISION

Civil Action No. 7:17-cv-00357

[Filed December 11, 2017]

________________________________

ORUS ASHBY BERKLEY, et al., )

)

Plaintiffs,

)

MOUNTAIN VALLEY PIPELINE, )

LLC, et al.,

)

Defendants.

)

________________________________ )

By:

Elizabeth K. Dillon

United States District Judge

MEMORANDUM OPINION

Plaintiffs in this case are landowners whose

properties are in the path of a proposed natural gas

pipeline. Before plaintiffs filed suit, defendant

Mountain Valley Pipeline (MVP) had filed an

application with the Federal Energy Regulatory

Commission (FERC) seeking authority to obtain

private land for the building of the pipeline. In addition

to suing MVP, plaintiffs named as defendants FERC

App. 24

and its chairman, currently Neil Chatterjee

(collectively the FERC defendants). The FERC

defendants seek dismissal of the three claims against

them—Counts One, Two, and Three—on the ground,

among others, that this court lacks jurisdiction over the

claims. MVP, too, asserts that this court lacks

jurisdiction over the same three counts.1 The

jurisdictional issues have been fully briefed and were

argued before the court at a November 3, 2017 hearing.

For the reasons explained in this opinion, the court

concludes that it lacks jurisdiction over plaintiffs’

claims in Counts One, Two, and Three. Thus, it will

grant the motions to dismiss for lack of jurisdiction,

dismiss Counts One, Two, and Three without prejudice,

and dismiss the FERC defendants from the case. The

court will hold a separate hearing as to the viability of

Count Four against MVP, in which plaintiffs challenge

the constitutionality of Virginia Code § 56-49.01, after

proper notice has been given to the Commonwealth of

Virginia of that claim. Because Count Four is brought

only on behalf of Virginia plaintiffs, moreover, the court

also will dismiss all non-Virginia plaintiffs from the

case.

I. BACKGROUND

Plaintiffs in this case are landowners within the

path of MVP’s proposed natural gas pipeline. At the

time plaintiffs filed suit, MVP had filed an application

with FERC to obtain a certificate of public convenience

MVP admits that the only other count against it, Count Four, is

not subject to dismissal on jurisdictional grounds, but urges that

it should be dismissed pursuant to Federal Rule of Civil Procedure

12(b)(6) because it fails to state a claim.

App. 25

and necessity, which is required under the Natural Gas

Act (NGA), 15 U.S.C. § 717 et seq., for a gas company to

assert the power of eminent domain. 15 U.S.C.

§ 717f(h) (stating requirements for an entity to claim

condemnation, including that the entity be a “holder of

a certificate of public convenience and necessity” issued

by FERC). After suit was filed, but before the hearing

on the jurisdictional questions, FERC issued the

certificate of public convenience and necessity to MVP,

although that certificate contains a number of

conditions. See Mountain Valley Pipeline, LLC, 161

FERC ¶ 61,043 (October 13, 2017 Order Issuing

Certificates and Granting Abandonment Authority),

https://www.ferc.gov/CalendarFiles/20171013192058CP16-10-000.pdf. After that certificate was issued,

MVP filed condemnation actions—including one filed in

this court—seeking to exercise eminent domain power

over multiple parcels of land. See, e.g., Mountain Valley

Pipeline, LLC v. Easements to Construct, Operate, and

Maintain a Natural Gas Pipeline Over Tracts of Land

in Giles County, Craig County, Montgomery County,

Roanoke County, Franklin County, and Pittsylvania

County, Virginia, et al., No. 7:17-cv-492 (W.D. Va.).

Those condemnation actions remain pending.

Plaintiffs describe the instant case, “in its simplest

form,” as a “constitutional challenge to the eminent

domain provision of the NGA, 15 U.S.C. § 717f(h), and

the resulting unconstitutional acts of FERC and

ultimately MVP.” (Compl. 2, Dkt. No. 1.) Plaintiffs’

complaint contains four counts. In Count One,

plaintiffs allege a violation of their Fifth Amendment

rights by defendants. In particular, they contend that

the standards and tests that FERC uses to determine

whether land is being taken for “public use” “fall well

App. 26

below the standard imposed by the Fifth Amendment.”

(Compl. 29–30.)

Counts Two and Three are related. In Count Two,

plaintiffs contend that Congress’ delegation to FERC of

the power of eminent domain is overly broad and

unconstitutional, focusing primarily on the fact that

the delegation itself in § 717f(h) is overly broad.

(Compl. 30–31.) Specifically, they assert that Congress

did not set forth any intelligible principle for FERC to

follow, in violation of the non-delegation doctrine. In

Count Three, plaintiffs allege that FERC’s “subdelegation” of the power of eminent domain to MVP

under § 717f(h) is unconstitutional.2

In Court Four, which is brought only against MVP

and not the FERC defendants, plaintiffs allege that

MVP has violated the Virginia plaintiffs’ rights under

the Fifth Amendment to the United States Constitution

and Article I, § 11 of the Virginia Constitution through

surveying it has already conducted on plaintiffs’ land.3

With regard to both “delegation” arguments, MVP asserts that

the claims are based on an incorrect premise and that there is no

sub-delegation. Specifically, it argues that, although Congress

delegated regulatory authority over natural gas and natural gas

companies to FERC in the NGA, the NGA itself delegates the

power of eminent domain directly to natural gas companies. (MVP

Mem. Supp. Mot. to Dismiss 15–16, Dkt. No. 11.) MVP cites to

many cases holding that the delegation of eminent domain power

to gas companies in the NGA does not violate the United States

Constitution. (Id. at 16.) The court does not address these

arguments because it lacks jurisdiction over the claims based on

them.

Although it is not clear from the complaint, plaintiffs’ briefing

makes plain—and their counsel confirmed at the hearing—that

App. 27

As noted, pending before the court are a motion to

dismiss by MVP and a motion to dismiss by the FERC

defendants. The two motions raise very similar

arguments, with their primary argument being that

plaintiffs have brought their challenges in the wrong

court at the wrong time. Specifically, they claim that

plaintiffs’ claims are governed by a provision in the

NGA that confers exclusive jurisdiction on specific

federal courts of appeals to “to affirm, modify, or set

aside” FERC orders. 15 U.S.C. § 717r(b). Plaintiffs

counter that they are not raising a challenge to any

particular FERC order, but that they are challenging

on constitutional grounds the NGA itself and the

standards that FERC uses to determine what

constitutes a sufficient “public use.”

II. DISCUSSION

A. The Natural Gas Act’s Exclusivity Provision

Precludes This Court’s Exercise of

Jurisdiction.

The NGA provides its own framework for challenges

to FERC orders. Effectively, to challenge a FERC order,

a party must first apply for rehearing before FERC

and, thereafter, may obtain judicial review before

either the United States Court of Appeals for the D.C.

they believe Virginia Code § 56-49.01 is unconstitutional. (See, e.g.,

Pls.’ Opp’n MVP Mot. Dismiss 15–16, Dkt. No. 22.) Thus, the court

directed plaintiffs’ counsel to provide notice to the Commonwealth

of the constitutional challenge, pursuant to Federal Rule of Civil

Procedure 5.1 and 28 U.S.C. § 2403. To date, though, plaintiffs

have not filed anything indicating that they have provided the

required notice. The court’s accompanying order instructs them to

do so.

App. 28

Circuit or any other court of appeals where the natural

gas company related to the order “is located or has its

principal place of business.” 15 U.S.C. § 717r(b).

The pertinent language from NGA § 19, codified at

15 U.S.C. § 717r, provides that “[a]ny person . . .

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.” § 717r(a). If, and only

if, a person files for rehearing, however, may the

person obtain judicial review: “No proceeding to review

any order of the Commission shall be brought by any

person unless such person shall have made application

to the Commission for a rehearing thereon.” Id.

Subsection (b) explains that a person may obtain

review of FERC’s 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.”

§ 717r(b). It describes that review as “exclusive,” noting

that “[u]pon 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.” Id. It also requires

exhaustion: “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 a reasonable ground for failure to do so.” Id.

As the Fourth Circuit recognized almost forty years

ago, the NGA’s exclusive jurisdiction provision has a

broad reach:

App. 29

Section 19(b) . . . vests exclusive jurisdiction to

review all decisions of the Commission in the

circuit court of appeals . . . ; there is no area of

review, whether relating to final or preliminary

orders, available in the district court. And this

has been the uniform construction given the

statute.

Consol. Gas Supply Corp. v. FERC, 611 F.2d 951, 957

(4th Cir. 1979) (internal citations omitted). The

jurisdictional provision applies to “all issues inhering

in the controversy.” City of Tacoma v. Taxpayers of

Tacoma, 357 U.S. 320, 336 (1958); Williams Nat. Gas

Co. v. City of Oklahoma City, 890 F.2d 255, 261–62

(10th Cir. 1989) (explaining that the NGA’s

jurisdictional provision precludes litigation “between

the parties of all issues inhering in the controversy,

and all other modes of judicial review” and noting that

the court “would be hard pressed to formulate a

doctrine with a more expansive scope”) (citing City of

Tacoma, 357 U.S. at 335–36).

In a factually similar case, where landowners

sought to enjoin the building of a pipeline and recover

tort damages for conversion, the Sixth Circuit affirmed

the district court’s dismissal for lack of jurisdiction,

emphasizing that “[e]xclusive means exclusive.” Am.

Energy Corp. v. Rockies Express Pipeline LLC, 622 F.3d

602, 605 (6th Cir. 2010). Likewise, in Maine Council of

Atlantic Salmon Federation v. National Marine

Fisheries Service, 858 F.3d 690 (1st Cir. 2017), the First

Circuit affirmed the district court’s dismissal of the

case before it for lack of jurisdiction, relying on the

App. 30

judicial review provision of the Federal Power Act.4

There, just as here, a FERC order was issued after the

filing of the suit, and the appellate court noted: “Once

issued, the FERC order was unquestionably subject to

the Federal Power Act’s provision for direct appellate

jurisdiction of the court of appeals . . . .” 858 F.3d at

693.

The court in Williams Natural Gas Co., too, made

clear that the fact that suit was filed prior to the

issuance of the order does not alter the result that

jurisdiction was proper only in the appropriate courts

of appeals. As that court reasoned:

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

Because the judicial review provisions of the Federal Power Act

and the NGA are “in all material respects substantially identical,”

courts routinely cite “interchangeably decisions interpreting the

pertinent sections of the two statutes.” Ark. La. Gas Co. v. Hall,

453 U.S. 571, 577 n.7 (1981).

App. 31

parties to chart their own route and thus allow

piecemeal and unending litigation to ensue.

Williams Natural Gas Co., 890 F.2d at 264.

Indeed, defendants have cited to numerous cases, in

addition to those cited above, holding that district

courts have no jurisdiction to review or modify FERC

orders, even in cases where the challenge is not a direct

challenge to the order. See, e.g., Hunter v. FERC, 569

F. Supp. 2d 12, 15–16 (D.D.C. 2008) (concluding district

court lacked jurisdiction over request for declaratory

judgment where the claim was “so intertwined” with a

FERC order to show cause and the accompanying

enforcement proceedings that “it must be construed as

an attack on the [order to show cause] itself”); Pub.

Util. Dist. No. 1 v. FERC, 270 F. Supp. 2d 1, 5 (D.D.C.

2003) (holding that the Federal Power Act’s exclusivity

provision governed a public utility’s claim that FERC

commissioners violated the Sunshine Act by being

involved in ex parte contact, and so the court lacked

jurisdiction over the dispute and was without authority

to disqualify the commissioners); Town of Dedham v.

FERC, No. 15-cv-12352-GAO, 2015 WL 4274884, at *2

(D. Mass. July 15, 2015) (concluding the court lacked

jurisdiction to consider plaintiff’s action to stay

enforcement of the order of the commission because, in

seeking a stay despite the FERC notice to proceed,

Dedham was “effectively asking for review of that

notice,” which could be reviewed only by the courts of

appeals under § 717r).

By contrast, plaintiffs have not cited a single case

where a district court exercised jurisdiction over

claims—whether characterized as constitutional

challenges or otherwise—that would require a

App. 32

modification of a FERC order if the claims were

successful. Nonetheless, plaintiffs contend that the

NGA’s jurisdictional provision is inapplicable to their

challenges because they are not challenging a FERC

order, but are instead raising constitutional challenges

to the statutes granting authority to FERC in the first

instance.

Given the breadth of the case law interpreting this

provision, however, the court concludes that §717r

governs plaintiffs’ claims.5 While it is true that none of

the cases relied upon by defendants presented the

precise constitutional challenges that plaintiffs raise,

their challenges are “inhering” in the issuance of the

FERC order and would fall within the scope of the

exclusivity provision. See City of Tacoma, 357 U.S. at

336. To conclude otherwise would be to conclude that

the claims are separate and apart from any FERC

proceeding. But plaintiffs’ own complaint—and their

standing arguments—make clear that they are

concerned not with some abstract constitutional

violation, but with the fact that their land will be

affected by MVP’s proposed pipeline. See, e.g., Sw. Ctr.

for Biological Diversity v. FERC, 967 F. Supp. 1166,

1172–73 (D. Ariz. 1997) (rejecting plaintiffs’ argument

that they were not challenging FERC authority to issue

a license under the Federal Power Act, but FERC’s

independent affirmative duty to consult with the

United States Fish and Wildlife Service under the

Plaintiffs’ assertion that this court’s dismissal for lack of

jurisdiction would deprive them of an opportunity for judicial

review over their constitutional claims in an Article III court is

incorrect. Their claims can be reviewed by a federal court of

appeals. See § 717r(b).

App. 33

Endangered Species Act, and explaining that “[t]he law

is clear that any attempt to challenge a license issued

by the FERC, however artfully pleaded, will fall under

the exclusive jurisdiction of the Federal Courts of

Appeal under the FPA.”).

Furthermore, there are some cases involving

constitutional (or like) challenges where the courts held

they lacked jurisdiction due to the NGA’s judicial

review provision. For example, in Adorers of the Blood

of Christ v. FERC, No. 17-3163 (3d Cir. Oct. 13, 2017),

the Third Circuit issued an order denying an injunction

pending appeal “for essentially the reasons” given by

the district court in dismissing the claims for lack of

jurisdiction. The district court had concluded that it

lacked jurisdiction over plaintiff’s challenge to a FERC

order certifying a natural gas pipeline, even though the

challenge was based on religious expression grounds.

Adorers of the Blood of Christ v. FERC, No. 17-cv-3163,

2017 WL 4310369, at *2–*3 (E.D. Pa. Sept. 28, 2017).

The district court called the law concerning the

exclusive jurisdiction of the court of appeals “wellsettled” and relied heavily on the Sixth Circuit’s

decision in American Energy Corp., 622 F.3d 602. See

also Lovelace v. United States, No. 1:15-cv-30131-MAP

(D. Mass. Feb. 18, 2016) (concluding that plaintiff’s

claims challenging an anticipated FERC decision,

including an allegation of an unconstitutional taking,

were outside the jurisdiction of the district court).6

In short, all of plaintiffs’ challenges can be raised in

the appropriate court of appeals reviewing the FERC

Lovelace is Attachment 1 to the FERC defendants’ motion to

dismiss for lack of subject matter jurisdiction. (Dkt. No. 20.)

App. 34

order. Thus, the exclusive remedies available to

plaintiffs are to ask for a rehearing before FERC and

then file in the appropriate court of appeals. This court

does not have jurisdiction to adjudicate the claims

raised in Counts One, Two, and Three.

B. The Thunder Basin Framework Also

Precludes This Court’s Exercise of

Jurisdiction.

Even if plaintiffs’ constitutional challenges fell

outside the scope of the NGA’s broad exclusivity

provision, this court would still lack jurisdiction over

their claims based on an application of the so-called

Thunder Basin framework, derived originally from

Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994).

This framework is used by courts to determine whether

Congress has impliedly precluded jurisdiction in the

district courts “by creating a statutory scheme of

administrative adjudication and delayed judicial review

in a particular court.” Bennett v. U.S. Sec. & Exch.

Comm’n, 844 F.3d 174, 178 (4th Cir. 2016).

The analysis involves two steps and, at the second

step, the court looks at three factors. At the first step,

the court asks whether Congress’ intent to preclude

district-court jurisdiction is “fairly discernible in the

statutory scheme,” based on an examination of the

statute’s text, structure, and purpose. Thunder Basin,

510 U.S. at 207; Bennett, 844 F.3d at 181. At the second

step, the court asks whether plaintiffs’ claims “are of

the type Congress intended to be reviewed within this

statutory structure.” Thunder Basin, 510 U.S. at 212.

In doing so, the court considers three factors, with the

first being the most significant: (1) whether the

statutory scheme “foreclose[s] all meaningful judicial

App. 35

review”; (2) the extent to which the plaintiff’s claims

are “wholly collateral” to the statute’s review provision;

and (3) whether “agency expertise could be brought to

bear on the . . . questions presented.” Id. at 212–13

(internal quotation marks and alterations omitted); see

also Bennett, 844 F.3d at 181 (summarizing same

framework).

The framework and the primary Supreme Court

cases that have employed it were recently addressed at

length by the Fourth Circuit in Bennett. 844 F.3d 174.

Bennett did not involve FERC or the NGA, but the

court there applied the Thunder Basin framework to

conclude that a district court lacked jurisdiction over

constitutional challenges brought by a person

challenging the SEC’s administrative enforcement

proceeding against her.

In so holding, the Fourth Circuit discussed

extensively the primary trio of Supreme Court cases

applying the framework: Thunder Basin, 510 U.S. 200;

Free Enterprise Fund v. Public Accounting Oversight

Board, 561 U.S. 477 (2010); and Elgin v. Department of

the Treasury, 567 U.S. 1 (2012). In two of the three,

Thunder Basin and Elgin, the Supreme Court

concluded that the statutory schemes at issue (under

the Federal Mine Safety and Health Amendments Act

of 1977 and the Civil Service Reform Act of 1978,

respectively) provided the exclusive vehicle for the

plaintiffs’ constitutional challenges. In the third, Free

Enterprise, the Court determined that the plaintiff’s

challenge was not subject to the exclusivity provision of

the Sarbanes-Oxley Act of 2002. See Bennett, 844 F.3d

at 178–81 (discussing the background of all three).

App. 36

Unsurprisingly, defendants contend that this case

is more like Thunder Basin and Elgin, while plaintiffs

argue that the result in this case should be governed by

Free Enterprise and by Califano v. Sanders, 430 U.S. 99

(1977), a case cited but not discussed in detail in

Bennett.7 Based on the analysis in Bennett and a fair

reading of the trio of cases, the court concludes that the

cases clearly support its conclusion that it lacks

jurisdiction over the plaintiffs’ constitutional claims.

First of all, in explaining and analyzing these cases,

Bennett specifically noted that the Free Enterprise case

was something of an anomaly from a factual

standpoint. 844 F.3d at 182. There, the plaintiff

accounting firm had been inspected and criticized in a

report by the Public Accounting Oversight Board (the

Board), an entity created by the Sarbanes-Oxley Act

whose members were appointed by the SEC. 561 U.S.

at 484, 487. The accounting firm asserted that the

Sarbanes-Oxley Act was unconstitutional because it

Califano is not on point. There, the Supreme Court held that the

Social Security Act did not authorize judicial review of a final

agency decision refusing to reopen a claim for social security

benefits. 430 U.S. 99. Plaintiff seizes on language from the opinion,

though, explaining that district court judicial review of such

decisions is available where a plaintiff raises a constitutional

challenge because “[c]onstitutional questions obviously are

unsuited to resolution in administrative hearing procedures and,

therefore, access to the courts is essential to the decision of such

questions.” Id. at 109. But in Califano, the statutory scheme was

different than here. There, not allowing constitutional challenges

to be heard by a district court would result in no judicial review at

all, by any court, beyond a sixty-day time limit. Here, by contrast,

there is “delayed” judicial review in designated courts. Thus, the

Thunder Basin framework is the appropriate analysis to apply

here. See Bennett, 844 F.3d at 178.

App. 37

violated separation of powers by conferring executive

power on Board members without subjecting them to

Presidential control and also because it violated the

Appointments Clause. Id. at 487. The Supreme Court

held that the district court had jurisdiction to hear the

constitutional challenges. It reasoned that the

exclusive jurisdiction provision in the Act applied to a

“final order of the Commission” or a “rule of the

Commission,” and explained that the Commission is

the body that reviews any Board rule or sanction, but

the Commission had not issued any order or rule from

which there could be judicial review. Id. at 489. Indeed,

there was not even a sanction imposed by the Board

that would allow an appeal to the Commission. Id. at

490. Further, the Court noted that the challenges in

the case were “object[ions] to the Board’s existence, not

to any of its auditing standards” and thus were

“‘collateral’ to any Commission orders or rules from

which review might be sought.” Id. Meaningful review

was not otherwise available, therefore, because there

was no active proceeding against the specific litigants,

who would have had to “bet the farm” by either

challenging a rule at random or incurring penalties for

noncompliance in order to get their challenges

addressed within the statutory framework. Bennett,

844 F.3d at 185–86. Indeed, the Fourth Circuit in

Bennett distinguished Free Enterprise on that basis

because, in Bennett, disciplinary proceedings had

already been instituted against the plaintiff. 844 F.3d

at 182.

In that respect, the case of Time Warner

Entertainment Co. v. FEC, 93 F.3d 957 (D.C. Cir. 1996),

is similar to Free Enterprise. There, the court held that

a district court had jurisdiction to consider

App. 38

constitutional challenges to an agency’s enabling

statute. Time Warner involved facial challenges under

the First Amendment to provisions of two acts

applicable to the cable television industry. In Time

Warner, though—like Free Enterprise and unlike

here—the constitutional challenge was “entirely

independent of any agency proceedings, whether actual

or prospective.” 93 F.3d at 965. Indeed, the Time

Warner court distinguished the case before it from

another case where the district court had no

jurisdiction, even though that case also involved a

challenge to an enabling statute, because in the other

case there was a related, ongoing agency proceeding.

Id. at 965 (discussing Ticor Title Ins. Co. v. FTC, 814

F.2d 731 (D.C. Cir. 1987)).

Here, of course, there was an active FERC

proceeding at the time plaintiffs filed suit that had the

potential to affect their properties, and now there is a

FERC order that still has the potential to affect their

properties. Thus, their constitutional challenges to that

order are not “wholly collateral” to an ongoing

proceeding.

Turning to the application of the Thunder Basin

factors here, the court first concludes that the intent of

Congress to vest jurisdiction in the appropriate court of

appeals is “fairly discernible” from the Natural Gas

Act. See Thunder Basin, 510 U.S. at 207. Much like the

exclusive jurisdiction provision that was at issue in

Thunder Basin itself, the provision here provides for

“exclusive” jurisdiction in the court of appeals to

“affirm, modify, or set aside such [FERC] order in

whole or in part.” 15 U.S.C. § 717r(b). And although

plaintiffs claim they are simply raising a general

App. 39

constitutional challenge, the effect of a ruling in their

favor would be to modify or set aside the FERC order in

whole or in part. By the very text of the statute, the

authority to do that lies only with a court of appeals.

Further, as pointed out by defendants, the NGA

expressly provides for district court jurisdiction over

other aspects of FERC decisions, such as presiding over

condemnation proceedings. 15 U.S.C. § 717u. The

inclusion of these provisions further supports the

conclusion that district courts were to be excluded from

addressing the validity of FERC orders and matters

related to their validity. See Total Gas & Power N. Am.,

Inc. v. FERC, No. 4:16-cv-1250, 2016 WL 3855865, at

*14 (S.D. Tex. July 15, 2016) (discussing text and

structure of NGA as part of Thunder Basin analysis

and describing district court involvement set forth in

the NGA as “narrowly tailored to assisting FERC in

performance of its functions”).

The court thus turns to the second step, which is

whether plaintiffs’ claims “are of the type Congress

intended to be reviewed within this statutory

structure.” Thunder Basin, 510 U.S. at 212. In

reviewing the three factors to be considered at this

step, the court concludes that the first two factors

clearly favor a ruling that this court lacks jurisdiction.

And significantly, the first factor is the most important

one to the analysis. Bennett, 884 at 183 n.7 (“We agree

with our sister circuits to have addressed the matter

that meaningful judicial review is the most important

factor in the Thunder Basin analysis.”).

As to this important first factor, the statutory

scheme here does not “foreclose all meaningful judicial

review”; it merely vests that review in a court of

App. 40

appeals. Plaintiffs have the ability to raise their

constitutional challenges before an Article III court. It

is thus clear that the statutory scheme here provides

meaningful judicial review: a federal appeals court is

an Article III court and well versed in addressing

constitutional challenges, and it can address the

challenges that plaintiffs raise here in due course.

Indeed, Thunder Basin, Elgin, and Bennett all stand for

the proposition that meaningful judicial review is

available under a statutory scheme similar to the one

here.

Second, as already discussed, plaintiffs’ claims here

are not are “wholly collateral” to the statute’s review

provision. Bennett adopted the following standard as to

that prong: “Claims are not wholly collateral when they

are the vehicle by which [plaintiffs] seek to reverse

agency action.” 844 F.3d at 186–87 (citation and

internal quotation marks omitted). In Bennett, the

plaintiff’s constitutional claim would have provided an

affirmative defense and, if successful, would have

invalidated a Commission order. Thus, her claim was

not wholly collateral. The same is true here. Indeed,

plaintiffs admitted as much at argument, in that they

conceded that if they were successful on their

constitutional claims, the FERC order would be

invalidated, at least insofar as it conveyed to MVP

eminent domain authority. (Hr’g Tr. 48–49, Dkt. No.

43.) Thus, the court concludes that plaintiffs’ claims are

the “vehicle by which plaintiffs seek to reverse agency

action,” Bennett, 844 F.3d at 186–87, despite plaintiffs’

protestations to the contrary.

The third factor slightly favors plaintiffs, in that it

is true that FERC does not have expertise in ruling on

App. 41

constitutional questions, nor could it rule on whether

authority was unconstitutionally delegated to it. But

that factor simply is not dispositive of the jurisdictional

question. Indeed, in another case applying the Thunder

Basin factors, the Fourth Circuit noted that even if the

agency lacked the expertise or ability to address a

constitutional contention, the appropriate court of

appeals could still provide meaningful review. Nat’l

Taxpayers Union v. U.S. Soc. Sec. Admin., 376 F.3d

239, 240 (4th Cir. 2004) (“[E]ven if the administrative

agency elects not to decide the constitutional claims

presented[,] . . . this court can do so at the appropriate

time.”) Furthermore, even where the agency cannot

rule on a constitutional question, it may nonetheless

have “expertise [that] could be brought to bear on the

. . . questions presented.” Thunder Basin, 510 U.S. at

212–13. Thus, the fact that the agency here has

admitted it does not have expertise in, and could not

address, constitutional challenges to its own authority,

does not mean that a district court must have

jurisdiction. Instead, under Thunder Basin, the ability

of the court of appeals to address the constitutional

challenges is key.

To summarize, the Thunder Basin framework also

supports the court’s conclusion that plaintiffs’

challenges, including their constitutional challenges,

are subject to the NGA’s exclusivity provision.

Accordingly, this court lacks jurisdiction to address

them. See also Total Gas & Power N. Am., Inc., 2016

WL 3855865, at *11, 22 (applying Thunder Basin test

to conclude that district court lacked jurisdiction over

plaintiffs’ claims, which included constitutional

challenges to FERC’s authority to impose civil

penalties, and noting that the constitutional challenges

App. 42

could be raised through judicial review under § 717r in

the courts of appeals).

III. CONCLUSION

For the foregoing reasons, the court will grant

defendants’ motions to dismiss (Dkt. Nos. 10, 19) and

will dismiss the FERC defendants from this case, as

well as all non-Virginia plaintiffs. Plaintiffs’ motion for

preliminary injunction (Dkt. No. 4), which is based only

on the first three counts, will also be denied as moot.

An appropriate order will be entered. The order also

will require plaintiffs to provide a certificate indicating

that they have given the Attorney General of Virginia

the notice required by Federal Rule of Civil Procedure

5.1 and 28 U.S.C. § 2403 with regard to Count Four,

and that such certificate be filed not later than 10 days

after entry of the court’s order.

Entered: December 11, 2017.

/s/ Elizabeth K. Dillon

Elizabeth K. Dillon

United States District Judge

App. 43

APPENDIX D

U.S. Const. art. I, § 1

Article I describes the design of the legislative branch

of US Government -- the Congress. Important ideas

include the separation of powers between branches of

government (checks and balances), the election of

Senators and Representatives, the process by which

laws are made, and the powers that Congress has. See

more...

Section 1.

All legislative powers herein granted shall be vested in

a Congress of the United States, which shall consist of

a Senate and House of Representatives.

U.S. Const. art. II, § 1, Cl. 1

Section 1.

The executive power shall be vested in a President of

the United States of America. He shall hold his office

during the term of four years, and, together with the

Vice President, chosen for the same term, be elected, as

follows:

Each state shall appoint, in such manner as the

Legislature thereof may direct, a number of electors,

equal to the whole number of Senators and

Representatives to which the State may be entitled in

the Congress: but no Senator or Representative, or

App. 44

person holding an office of trust or profit under the

United States, shall be appointed an elector.

***

U.S. Const. art. III, § 1

Section 1.

The judicial power of the United States, shall be vested

in one Supreme Court, and in such inferior courts as

the Congress may from time to time ordain and

establish. The judges, both of the supreme and inferior

courts, shall hold their offices during good behaviour,

and shall, at stated times, receive for their services, a

compensation, which shall not be diminished during

their continuance in office.

U.S. Const. amend. V

No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictment of a grand jury, except in cases arising in

the land or naval forces, or in the militia, when in

actual service in time of war or public danger; nor shall

any person be subject for the same offense to be twice

put in jeopardy of life or limb; nor shall be compelled in

any criminal case to be a witness against himself, nor

be deprived of life, liberty, or property, without due

process of law; nor shall private property be taken for

public use, without just compensation.

App. 45

15 U.S.C. § 717f - Construction, extension, or

abandonment of facilities

***

(h) RIGHT OF EMINENT DOMAIN FOR CONSTRUCTION

OF PIPELINES, ETC.

When any holder of a certificate of public convenience

and necessity cannot acquire by contract, or is unable

to agree with the owner of property to the

compensation to be paid for, the necessary right-of-way

to construct, operate, and maintain a pipe line or pipe

lines for the transportation of natural gas, and the

necessary land or other property, in addition to rightof-way, for the location of compressor stations, pressure

apparatus, or other stations or equipment necessary to

the proper operation of such pipe line or pipe lines, it

may acquire the same by the exercise of the right of

eminent domain in the district court of the United

States for the district in which such property may be

located, or in the State courts. The practice and

procedure in any action or proceeding for that purpose

in the district court of the United States shall conform

as nearly as may be with the practice and procedure in

similar action or proceeding in the courts of the State

where the property is situated: Provided, That the

United States district courts shall only have

jurisdiction of cases when the amount claimed by the

owner of the property to be condemned exceeds $3,000.

App. 46

15 U.S.C. § 717r - Rehearing and review

(a) Application for rehearing; time

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,

State, municipality, or State commission 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. 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. No proceeding to review any order of the

Commission shall be brought by any person unless

such person shall have made application to the

Commission for a rehearing thereon. Until the record

in a proceeding shall have been filed in a court of

appeals, as provided in subsection (b), the Commission

may at any time, upon reasonable notice and in such

manner as it shall deem proper, modify or set aside, in

whole or in part, any finding or order made or issued by

it under the provisions of this chapter.

(b) Review of Commission order

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,

App. 47

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. A copy of such petition shall

forthwith be transmitted by the clerk of the court to

any member of the Commission and thereupon the

Commission shall file with the court the record upon

which the order complained of was entered, as provided

in section 2112 of title 28. 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 finding of the

Commission as to the facts, if supported by substantial

evidence, shall be conclusive. If any party shall apply

to the court for leave to adduce additional evidence,

and shall show to the satisfaction of the court that such

additional evidence is material and that there were

reasonable grounds for failure to adduce such evidence

in the proceedings before the Commission, the court

may order such additional evidence to be taken before

the Commission and to be adduced upon the hearing in

such manner and upon such terms and conditions as to

the court may seem proper. The Commission may

modify its findings as to the facts by reason of the

additional evidence so taken, and it shall file with the

court such modified or new findings, which is

supported by substantial evidence, shall be conclusive,

and its recommendation, if any, for the modification or

App. 48

setting aside of the original order. 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 section 1254 of title 28.

The filing of an application for rehearing under

subsection (a) shall not, unless specifically ordered by

the Commission, operate as a stay of the Commission‘s

order. The commencement of proceedings under

subsection (b) of this section shall not, unless

specifically ordered by the court, operate as a stay of

the Commission‘s order.

(d) Judicial review

(1) In general

The United States Court of Appeals for the circuit

in which a facility subject to section 717b of this

title or section 717f of this title is proposed to be

constructed, expanded, or operated shall have

original and exclusive jurisdiction over any civil

action for the review of an order or action of a

Federal agency (other than the Commission) or

State administrative agency acting pursuant to

Federal law to issue, condition, or deny any permit,

license, concurrence, or approval (hereinafter

collectively referred to as “permit”) required under

Federal law, other than the Coastal Zone

Management Act of 1972 (16 U.S.C. 1451 et seq.).

App. 49

(2) Agency delay

The United States Court of Appeals for the District

of Columbia shall have original and exclusive

jurisdiction over any civil action for the review of an

alleged failure to act by a Federal agency (other

than the Commission) or State administrative

agency acting pursuant to Federal law to issue,

condition, or deny any permit required under

Federal law, other than the Coastal Zone

Management Act of 1972 (16 U.S.C. 1451 et seq.),

for a facility subject to section 717b of this title or

section 717f of this title. The failure of an agency to

take action on a permit required under Federal law,

other than the Coastal Zone Management Act of

1972, in accordance with the Commission schedule

established pursuant to section 717n(c) of this title

shall be considered inconsistent with Federal law

for the purposes of paragraph (3).

(3) Court action

If the Court finds that such order or action is

inconsistent with the Federal law governing such

permit and would prevent the construction,

expansion, or operation of the facility subject to

section 717b of this title or section 717f of this title,

the Court shall remand the proceeding to the

agency to take appropriate action consistent with

the order of the Court. If the Court remands the

order or action to the Federal or State agency, the

Court shall set a reasonable schedule and deadline

for the agency to act on remand.

App. 50

(4) Commission action

For any action described in this subsection, the

Commission shall file with the Court the

consolidated record of such order or action to which

the appeal hereunder relates.

(5) Expedited review

The Court shall set any action brought under this

subsection for expedited consideration.

App. 51

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF VIRGINIA

ROANOKE DIVISION

Case No. 7:17-CV-00357

[Filed July 27, 2017]

______________________________________

ORUS ASHBY BERKLEY,

)

JAMES T. AND KATHY E.

)

CHANDLER,

)

CONSTANTINE THEODORE

)

AND PATTI LEE CHLEPAS,

)

MARTIN AND DAWN E. CISEK,

)

ROGER D. AND REBECCA H.

)

CRABTREE,

)

ESTIAL E. ECHOLS,

)

JR. AND EDITH FERN ECHOLS,

)

GEORGE LEE JONES,

)

ROBERT WAYNE AND PATRICIA

)

ANN MORGAN,

)

MARGARET

)

MCGRAW SLAYTON LIVING

)

TRUST,

)

App. 52

and

)

THOMAS AND BONNIE B.

)

TRIPLETT,

)

Plaintiffs,

)

MOUNTAIN VALLEY PIPELINE, LLC )

Serve:

)

(Registered Agent)

)

CT Corporation System

)

4701 Cox Road, Suite 285

)

Glen Allen, VA 23060,

)

FEDERAL ENERGY REGULATORY

)

COMMISSION

)

Serve:

)

888 First Street, N.E.

)

Washington, D.C. 20426

)

and

)

CHERYL A. LAFLEUR,

)

in her official capacity as Acting

)

Chairman of the Federal

)

Energy Regulatory Commission,

)

Serve:

)

888 First Street, N.E.

)

Washington, D.C. 20426

)

Defendants.

)

______________________________________ )

App. 53

VERIFIED COMPLAINT

The Plaintiffs, by counsel, state their Complaint

against Defendants, the Federal Energy Regulatory

Commission and Acting Chairman Cheryl A. LaFleur

in her official capacity (collectively “FERC” or the

“Commission”), and Mountain Valley Pipeline, LLC

(“MVP”) as follows:

PRELIMINARY STATEMENT OF THE CASE

1. The case before the Court, in its simplest form,

is a constitutional challenge to the eminent domain

provisions of the Natural Gas Act, 15 U.S.C. § 717f(h),

and the resulting unconstitutional acts of FERC and

ultimately MVP. In 1947, Congress delegated the

power of eminent domain to FERC (at that time, the

agency was known as the Federal Power Commission)

to condemn properties for the construction and

operation of interstate gas pipelines. Congress,

however, failed to set forth any set standard, known as

an intelligible principle, rendering its delegation of

power overly broad and unconstitutional. Without

boundaries from Congress, FERC has run wild in the

years since, and has unconstitutionally sub-delegated

the power of eminent domain to private parties seeking

private profits. MVP is one such company seeking

FERC’s permission to proceed. Worse yet, FERC has

published its Statement of Policy regarding its

decision-making process for granting the power of

eminent domain, and each of the tests falls well short

of the Constitution and the Supreme Court’s

interpretation of the Takings Clause in Kelo v. City of

New London, 545 U.S. 469 (2005).

App. 54

2. The Plaintiffs in this case are all landowners

within the path of MVP’s proposed 42-inch high

pressure natural gas pipeline, from Summers County,

West Virginia to Franklin County, Virginia. These

Plaintiffs seek declaratory and injunctive relief to

protect their constitutional rights to secure their

private property from a government-sanctioned land

grab for private pecuniary gain.

THE PARTIES

3. Orus Ashby Berkley is a resident of Summers

County, West Virginia and owns land near Pence

Springs, West Virginia and along the Greenbrier River

(Summers County Tax ID Nos. 7-15A-13.1, 7-15A-13).

Mr. Berkley has invested heavily in his riverfront

property and maintains two rental cottages, a

commercial sewer system, and a large parking lot. Mr.

Berkley has been delayed in completing site

development for 50 riverside campsites for over three

years due to MVP’s plans to utilize his property as an

access area to cross the Greenbrier River.

4. James T. and Kathy E. Chandler maintain their

family home on Bent Mountain in Roanoke County,

Virginia (Roanoke County Tax ID Nos. 111.00-0162.01-0000, 111.00-01-62.02-0000, and 117.00-01-38.000000). MVP’s proposed route bisects the Chandlers’

property and MVP plans to use the only means of

ingress and egress to the property as a permanent

access road. James T. Chandler is a trauma orthopedic

surgeon called to the operating room at a moment’s

notice, rendering a permanent access road particularly

problematic.

App. 55

5. Constantine Theodore and Patti Lee Chlepas are

residents of Monroe County, West Virginia and

maintain their permanent residence on a 21-acre tract

near Lindside, West Virginia (Monroe County Tax ID

No. 03-12-4). The Chlepas operate Birdsong Farm,

LLC, an organic apiary and bee preserve from the

property. Birdsong Farm sells natural raw honey, 100%

beeswax candles, all-natural insect repellants,

essential oils, soaps, lip balm, and other natural

products of the hive. MVP’s plans entail construction of

an access road as well as part of the main pipeline

across the Chlepas’ property.

6. Martin and Dawn E. Cisek reside along the

border of Giles County and Craig County, Virginia in

the historic town of Newport (Giles County Tax ID Nos.

47-12A, 47-12B; Craig County Tax ID No. 120-A-9).

MVP’s proposed line will traverse across the middle of

the Ciseks’ property and within less than 150 feet of

their home.

7. Roger D. and Rebecca H. Crabtree reside in

Monroe County, West Virginia near the town of

Lindside. The Crabtrees own two parcels of land

totalling approximately 30 acres (Monroe County Tax

ID Nos. 3-30-18.8, 3-30-38.1). MVP plans to construct

its pipeline on the Crabtrees’ agricultural parcel, which

contains a 20’x24’ metal barn, a well, and a livestock

watering system comprised of over 1,000’ of piping. The

Crabtrees raise sheep, chicken, and rams, and harvest

hazelnuts, apples, walnuts, chestnuts and peaches. The

Crabtrees’ residence is located on the second parcel

immediately adjacent to the agricultural parcel and is

within the blast zone of the pipeline.

App. 56

8. Estial E. Echols, Jr., a U.S. Army veteran, and

Edith Fern Echols are residents of Giles County,

Virginia and have maintained their family home in the

town of Newport, Virginia (Giles County Tax ID Nos.

46-20A, 46-19B) for 48 years. The center of MVP’s

proposed line traverses the Echols’ property some 62

feet from their kitchen window.

9. George Lee Jones, a U.S. Navy veteran, was born

in 1930 on his family farm in Giles County, Virginia

(Giles County Tax ID Nos. 47-1, 47-2). The family farm,

now maintained by the seventh generation of Jones’,

will be bisected by the MVP pipeline.

10.

Robert Wayne and Patricia Ann Morgan

reside in Franklin County, Virginia near the town of

Rocky Mount (Franklin County Tax ID No.

0440018700). MVP’s proposed pipeline will bisect their

tract of property and will be within several hundred

feet of the Morgans’ residence.

11.

The Margaret McGraw Slayton Living Trust

owns the residence of Michael E. and Margaret M.

Slayton in Montgomery County, Virginia in the Mount

Tabor area (Montgomery County Tax ID No. 017-A2D).

The Slayton’s residence is located along a ridge in the

middle of a 90-acre tract of land which will be

traversed by MVP’s proposed pipeline near the family

home.

12.

Thomas and Bonnie B. Triplett own five

contiguous parcels of land and maintain their residence

in Montgomery County, Virginia, less than 1500 feet

from the center of the proposed line. MVP’s proposed

route will divide a 33-acre tract of pristine, old growth

forest in half (Montgomery County Tax ID No. 017-

App. 57

A2C). The Tripletts’ affected tract contains an old cabin

and serves as a family retreat and bountiful hunting

grounds.

13.

MVP is a Delaware limited liability company

with its principal office located at 625 Liberty Avenue,

Suite 1700 in Pittsburg, Pennsylvania 15222 and its

registered agent listed as CT Corporation System, 4701

Cox Road, Suite 285 in Glen Allen, Virginia 23060.

MVP conducts business in Virginia and West Virginia,

including in the Western District of Virginia, Roanoke

Division.

14.

FERC is an independent federal agency

charged with issuing Certificates of Convenience and

Public Necessity pursuant to the Natural Gas Act for

jurisdictional natural gas pipeline projects. The

Commission is headquartered at 888 First Street, N.E.,

Washington, D.C. 20426.

15.

Cheryl LaFleur is the Acting Chairman of

FERC, located at FERC’s headquarters in Washington,

D.C.

JURISDICTION AND VENUE

16.

This Court has subject matter jurisdiction

over this action pursuant to 28 U.S.C. § 1331 because

this action asserts several federal questions of

constitutionality.

17.

This Court possesses supplemental

jurisdiction over the Virginia Plaintiffs’ state

constitutional challenge pursuant to 28 U.S.C. § 1367.

18.

This Court has personal jurisdiction over

MVP and FERC because, inter alia, MVP and FERC

App. 58

conduct business in the Commonwealth of Virginia,

including, inter alia, engaging in activities related to

planning and constructing an interstate natural gas

pipeline, and entering into agreements for the sale and

purchase of property and property rights located in the

Commonwealth of Virginia as well as the regulation of

pipeline approval, construction, and operations.

19.

The properties at issue include properties

located within this District.

20.

Venue is proper in this Court pursuant to 28

U.S.C. § 1391(b)(2) because a substantial part of the

acts and transactions complained of herein occurred in

this District, pursuant to 28 U.S.C. § 1391(b)(3)

because MVP is subject to personal jurisdiction at the

time this action is commenced, and pursuant to 28

U.S.C. § 1391(e)(1) because FERC is an agency of the

United States.

I. Introduction

21.

In the summer of 2014, EQT Corporation

(“EQT”) and a subsidiary of NextEra Energy, Inc.

(“NextEra”), proclaimed their intent to build a 42-inch

high pressure natural gas pipeline from Wetzel County,

West Virginia to Transcontinental Gas Pipeline

Company’s (“Transco”) Zone 5 compressor station 164

in Pittsylvania County, Virginia. Stretching more than

300 miles through the steep slopes of the Appalachian

mountains, across the George Washington National

Forest and the Appalachian Trail, through countless

watersheds serving the residents of West Virginia and

Virginia, EQT and NextEra aptly named the project

the Mountain Valley Pipeline (“MVP”). MVP’s stated

intent in constructing the pipeline is to connect the

App. 59

Marcellus and Utica shale fields to existing pipeline

networks for shipment of cheap, fracked gas to the

southeastern United States.

22.

Late in the summer of 2014, Dominion

Energy (“Dominion”) teamed with Duke Energy

(“Duke”), among others, and announced its intention to

construct a 550-mile 42-inch high pressure natural gas

pipeline to connect the same Marcellus and Utica

formations from Harrison County, West Virginia to

Chesapeake, Virginia and Robeson County, North

Carolina. Dominion and Duke called the project the

Atlantic Coast Pipeline (“ACP”) and proclaimed it

would serve markets in the southeastern United

States, a reference to Dominion’s initial name for the

project – the Southeast Reliability Project.

23.

As is evinced by the rush to build by ACP and

MVP, there is no doubt that former Chairman of FERC

Norman Bay was correct in stating, “[t]he shale

revolution has upended U.S. energy markets” and

global energy markets.1 Despite these massive changes

in the past decade, no federal agency, including the

Commission, has ever “conducted a comprehensive

study of the environmental consequences of increased

production from th[e Marcellus and Utica shale]

region.”2 Likewise, in evaluating whether expanding

infrastructure warrants certification, FERC has

“largely relied on the intent to which potential shippers

See Norman Bay’s Separate Statement in Order Granting

Abandonment and Issuing Certificates, FERC Docket Nos. CP15115-000, CP15-115-001 (February 3, 2017).

Id.

App. 60

have signed precedent agreements for capacity on the

proposed pipeline” to show market need rather than

engage in a comprehensive evaluation of need.3 Isolated

evaluation of applications for new natural gas

infrastructure projects within the boom-bust world of

the energy industry has led to stranded assets, such as

the abandonment of several gas import terminals built

in the early 2000s.

24.

But the boom in infrastructure projects does

not excuse FERC from its fundamental constitutional

obligations to exercise power lawfully and in

accordance with its jurisdictional mandate. Rather

than exercise its delegated powers in accordance with

Congress’ instructions and well-established intelligible

principles, FERC has morphed into judge, jury, and

(almost never) executioner for the plethora of natural

gas infrastructure expansion by private companies for

private gain. Worse yet, not only does FERC exercise

authority outside of its delegated powers, FERC has

replaced our Founders’ guidance in the Fifth

Amendment Takings Clause with its own economic

sliding scale/balancing test that, at best, weighs

perceived public benefits against adverse effects when

determining whether to grant a private corporation the

uniquely governmental power of eminent domain.

25.

When challenged through the administrative

process, FERC inevitably tolls all challenges to the

Commission’s actions under the Administrative

Procedures Act, permitting construction to proceed at

a blistering pace, thus rendering any challenges moot.

FERC’s actions embody the spirit of seeking

Id.

App. 61

forgiveness rather than permission, while landowners

and other interested citizens are demoted to

subservient permission seekers, bearing no

resemblance to the principle of the “consent of the

governed” upon which this Nation’s laws were derived.

26.

FERC should no longer be permitted to

exceed its unlawfully delegated authority or to apply an

unconstitutional standard in determining when a

private corporation should be permitted to take private

property for private gain under auspices of the Natural

Gas Act, 15 U.S.C. § 717, et seq. The Commission’s

interpretation and application of the Natural Gas Act’s

eminent domain provisions, 15 U.S.C. § 717f(h), are

facially unconstitutional and unconstitutional as

applied to the MVP project. This Court is the only

check on FERC’s exercise of near absolute power;

accordingly, FERC must be enjoined from issuing a

Certificate to MVP and to any other private natural gas

company under the Commission’s fundamentally

flawed policy for assessing public use/purpose in

contravention of the Fifth Amendment.

II. Factual Background

A. The Natural Gas Act

27.

The year 1938 marked the 75th anniversary of

the Battle of Gettysburg, the first appearance of

Superman in Action Comics #1, the terror-inducing

first radio broadcast of Orson Welles’s The War of the

Worlds, and Seabiscuit’s famous victory over War

Admiral at Pimlico. In Europe, Winston Churchill

prodded Neville Chamberlain to challenge Adolf Hitler

and the rise of Nazism in Germany, while in the United

States, the Supreme Court issued its landmark

App. 62

decision in Erie Railroad Co. v. Tompkins, 304 U.S. 64

(1938) and, with much less fanfare, Congress passed

the Natural Gas Act, 15 U.S.C. § 717, et seq. Congress

determined for the first time that “the business of

transporting and selling natural gas in interstate

commerce for ultimate distribution to the public is

affected with a public interest.” 52 Stat. 821, § 1(a)

(1938) (emphasis added). Congress proclaimed that the

Natural Gas Act “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….” Id. at

§ 1(b) (emphasis added).

28.

The 1938 Natural Gas Act provided the

Federal Power Commission4 with authority to order a

natural gas company to expand its facilities, after

notice and an opportunity for a hearing, where the

Commission “finds such action necessary or desirable

in the public interest.” Id. at 824, § 7(a) (emphasis

added). Section 7(c) addressed the topic of independent,

private expansion by a natural gas company,

mandating that a company obtain a “certificate that

the present or future public convenience and necessity

require or will require such new construction or

operation….” Id. at 825, § 7(c). Congress clarified that

“it being the intention of Congress that natural gas

shall be sold in interstate commerce for resale for

ultimate public consumption for domestic,

commercial, industrial, or any other use at the lowest

possible reasonable rate consistent with the

The Federal Power Commission was the predecessor to the

Federal Energy Regulatory Commission.

App. 63

maintenance of adequate service in the public interest.”

Id. (emphasis added). Notably, Congress did not

delegate the power of eminent domain to a private

natural gas company in 1938 and the issuance of a

Certificate did not result in any automatic conferral of

governmental power to a natural gas company.

29.

Nine years later, Congress amended section

7 of the Natural Gas Act providing that “[w]hen any

holder of a certificate of public convenience and

necessity cannot acquire by contract, or is unable to

agree with the owner of property to the compensation

to be paid for, the necessary right-of-way to construct,

operate, and maintain a pipe line or pipe lines for the

transportation of natural gas … it may acquire the

same by exercise of the right of eminent domain in the

district court of the United States for the district in

which such property may be located, or in the State

courts.” 52 Stat. 824 (1947). Since 1947, private

companies have exercised the power of eminent domain

upon obtaining a certificate of public convenience and

necessity.

30.

Following the oil crisis of 1973, President

Carter signed into law the Department of Energy

Organization Act of 1977, which consolidated a variety

of energy-related agencies under the newly formed

Department of Energy. One such independent agency,

the Federal Power Commission, was part of this

consolidation. See 91 Stat. 565 (1977). As part of the

creation of the Department of Energy, Congress

dissolved the Federal Power Commission, created

FERC, and transferred the powers under the Natural

Gas Act conferred to the Federal Power Commission to

FERC. Id; see also 42 U.S.C. § 7172(a).

App. 64

31.

Accordingly, when FERC issues a Certificate

to a natural gas company, so too does FERC “confer[]

on the developer eminent domain authority (15 U.S.C.

§ 717f(h)).”5 By operation of section 717f(h) in the form

of a Certificate granted by FERC, a private natural gas

company obtains “the authority to secure property

rights to lay the pipeline if the developer cannot secure

the necessary rights-of-way from landowners through

negotiation.”6 FERC, then, is the governmental agency

responsible for conferring the power of eminent domain

to a private gas company under the Natural Gas Act,

an act which is itself independently unconstitutional.

B. A Boom in Domestic Natural Gas

Production Has Led to Overbuilding of

Pipeline Infrastructure and a Domestic Gas

Glut

32.

In more recent times, the domestic production

of natural gas has expanded dramatically, and led to

unprecedented infrastructure growth, particularly

between 1998 and 2013.7 Growth in production stems

largely from the exploitation of the Marcellus and Utica

shale fields across the Appalachian Basin and the

Paul W. Parfomak, Interstate Natural Gas Pipelines: Process and

Timing of FERC Permit Application Review, Congressional

Research Service, January 16, 2015, at p. 5.

Id. at p. 6.

Natural Gas Infrastructure Implications of Increased Demand

from Electric Power Sector, U.S. Departmenet of Energy, Feb.

2015, p.9.

App. 65

Haynesville field near the Gulf Coast.8 As a result of

this expanded production in the shale fields, energy

companies have continued to seek approval to construct

and operate natural gas pipelines to get natural gas to

market. Recent economic studies conclude, however,

that “[t]he pipeline capacity being proposed exceeds the

amount of natural gas likely to be produced from the

Marcellus and Utica formations over the lifetime of the

pipelines.”9 Likewise, economists have concluded that

“the supply capacity of the Virginia-Carolina region’s

existing natural gas infrastructure is more than

sufficient to meet expected future peak demand.”10

33.

Concurrent to the pipeline infrastructure

boom has been a steep rise in natural gas exports from

the United States to the rest of the world. In the U.S.

Energy Information Administration’s (“EIA”) Annual

Energy Outlook 2017, the United States is on pace to

become a net exporter of natural gas on an average

Id. at p. 3.

Cathy Kunkel and Tom Sanzillo, Risks Associated with Natural

Gas Pipeline Expansion in Appalachia, Proposed Atlantic Coast

and Mountain Valley Pipelines Need Greater Scrutiny, Institute for

Energy Economics and Financial Analysis, p. 11 (April 2016); see

also Are the Atlantic Coast Pipeline and the Mountain Valley

Pipeline Necessary? An examination of the need for additional

pipeline capacity into Virginia and Carolinas, Synapse Energy

Economics, Inc. (September 12, 2016).

Are the Atlantic Coast Pipeline and the Mountain Valley Pipeline

Necessary? An examination of the need for additional pipeline

capacity into Virginia and Carolinas, Synapse Energy Economics,

Inc., p. 1 (September 12, 2016).

App. 66

annual basis by 2018.11 The EIA noted that pipeline

imports of natural gas will continue to decline, while

pipeline exports to Mexico and Canada steadily rise

and liquid natural gas (“LNG”) exports increase

dramatically between 2017 and 2040:12

By 2020, at least five LNG export terminals will be in

operation and capable of exporting 9.2 billion cubic feet

of gas per day. By 2040, LNG exports are expected to

grow to 23 billion cubic feet of gas per day.13 LNG

export terminals that have already been approved and

are currently under construction include Dominion

Energy’s Cove Point LNG facility in Lusby, Maryland;

Southern LNG Company’s Elba Island, Georgia facility;

See U.S. Energy Information Administration, Annual Energy

Outlook 2017, p. 66; EIA: LNG exports expected to drive growth in

U.S. natural gas trade, World Oil, February 24, 2017.

Annual Energy Outlook 2017, at p. 66.

Id.

App. 67

and various other LNG facilities in Sabine and

Hackberry, Louisiana; as well as Freeport and Corpus

Christi, Texas:

App. 68

Three of these LNG facilities, Cove Point, Elba Island,

and Sabine Pass, are directly connected to the 10,500mile Transco line, which traverses from the Gulf Coast

to the New York City area and which MVP seeks to

connect with in Pittsylvania County at the Zone 5 Hub

at Station 165:

C. The Role of the Federal Energy Regulatory

Commission

34.

The application and approval process for

interstate pipelines is regulated by FERC. In order to

construct, and then to operate, a natural gas pipeline,

a natural gas company must file an application with

FERC seeking a Certificate of Public Convenience and

Necessity (“Certificate”). If a natural gas company is

granted a Certificate, it is granted the power of

App. 69

eminent domain pursuant to the Natural Gas Act, 15

U.S.C. § 717f(h).

35.

As part of any application for a Certificate, a

natural gas company is expected to provide information

to FERC, such as a “concise description of the proposed

service, sale, operation, construction, extension, or

acquisition [that] is or will be required by the present

or future public convenience and necessity.” 18 C.F.R.

§ 157.6(b)(2). 18 CFR § 157.14(12) requires a natural

gas company to provide certain market data in Exhibit

I to its application. In particular, the regulations

require a natural gas company to provide “[a] systemwide estimate of the volumes of gas to be delivered

during each of the first 3 full years of operation of the

proposed service, sale, or facilities and during the years

when the proposed facilities are under construction,

and actual data of like import for each of the 3 years

next preceding the filing of the application.” 18 C.F.R.

§ 157.14(12). Exhibit I should also provide “[n]ames

and locations of customer companies and

municipalities, showing the number of residential,

commercial, firm industrial, interruptible industrial,

residential space-heating, commercial space-heating,

and other types of customers… [as well as] an

explanation of the end use to which each of these

industrial customers will put the gas.” 18 C.F.R.

§ 157.14(12)(i). A natural gas company’s application

must also “contain copies of any contracts, purchase

agreements, or other documentation reflecting the sale

or transport of natural gas as part of the application.”

18 C.F.R. § 157.14(12)(v).

36.

Despite this plethora of regulations setting

forth the application process and documentation

App. 70

required by FERC, changes in the natural gas industry

due to the shale boom caused FERC to examine its

certification policies in 1999 and 2000. FERC analyzed

various issues affecting the gas industry, including

whether the Commission should independently

evaluate markets to determine true need and whether

to more closely scrutinize supply agreements between

affiliates of the applicant.

37.

The Commission issued a Statement of Policy

on September 15, 1999 regarding its new approach to

certification and pricing of new construction projects.

See 88 FERC ¶ 61, 227, attached hereto as Exhibit 1.

Prior to issuing the Statement of Policy, FERC held a

public conference and considered comments from

interested parties, namely from the natural gas

industry. Id. After conducting the public conference

and considering comments, FERC decided that it

needed to review “the Commission’s policy for

determining whether there is a need for a specific

project and whether, on balance, the project will serve

the public interest.” Id. at 2.

38.

In considering how to present its policy to

stakeholders, FERC solicited responses from

commenters on key questions, including: “(1) Should

the Commission look behind precedent agreement or

contracts presented as evidence of market demand to

assess independently the market’s need for additional

gas service?, and (2) Should the Commission apply a

different standard to precedent agreements or

contracts with affiliates than with non-affiliates?” Id.

at 3.

39.

In summarizing the weaknesses in FERC’s

historical policy, the Commission noted that it

App. 71

previously relied too heavily on the existence of

precedent contracts to evince a need in the market,

which FERC equates to evincing a public need.

Specifically, FERC noted that “[t]he amount of capacity

under contract also is not a sufficient indicator by itself

of the need for a project…[and u]sing contracts as the

primary indicator of market support for the proposed

pipeline project also raises additional issues when the

contracts are held by pipeline affiliates.” Id. at 16. Put

another way, FERC recognized that market need as

expressed with affiliate/subsidiary precedent contracts

may not really establish a market need, but instead

establish that a pipeline project seeks approval to ship

its indirectly-owned gas.

40.

In response, FERC outlined a new analysis

focused on balancing “the public benefits against the

potential adverse consequences” of a new pipeline

project. Id. at 18. In determining whether to grant a

Certificate, FERC considers “all relevant factors

reflecting on the need for the project … [including]

precedent agreements, demand projections, potential

cost savings to consumers, or a comparison of projected

demand with the amount of capacity currently serving

the market.” Id. If the supposed public benefits

outweigh the adverse effects, FERC grants a

Certificate.

41.

In its Statement of Policy, FERC listed

several typical indicators of public benefit, such as

eliminating bottlenecks, providing access to new

suppliers, and providing competitive alternatives.

FERC was clear that while “[v]ague assertions of public

benefit will not be sufficient,” an applicant need not

conduct a market study for each project, but “could rely

App. 72

on generally available studies by EIA or GRI….” Id. at

25. FERC described its view of eminent domain as

requiring a “sliding scale approach” where “the

strength of the benefit showing will need to be

proportional to the applicant’s proposed exercise of

eminent domain.” Id. at 27. Put simply, FERC’s

decision-making process employs a proportional/sliding

scale/balancing test to weigh potential public benefits

against the potential adverse effects (e.g.,

environmental harms, economic harm, landowner

interests, etc.).

D. MVP’s Application and Its Self-Created

Need

42.

MVP filed its Application for a Certificate

with FERC on October 23, 2015, seeking authorization

to construct, own, and operate a 301-mile interstate

pipeline through West Virginia and Virginia, as well as

three compressor stations and other required facilities.

MVP seeks authorization to construct a 42-inch

pipeline to provide up to 2.0 million dekatherms per

day (“MMDth/d”) “of firm transportation service, which

has been fully subscribed, to satisfy the growing

demand for natural gas by local distribution companies

(“LDCs”), industrial users, and power generation

facilities in the Mid-Atlantic and southeastern

markets, as well as markets in the Appalachian region,

using natural gas produced in the Appalachian Basin

shale region.”14 MVP’s proposed route is as follows:

Certificate Application at 2, available at https://www.mountain

valleypipeline.info/~/media/sites/mvp/files/Certificate-ApplicationVOL-I.pdf (last accessed July 26, 2017).

App. 73

43.

MVP anticipates four interconnection

facilities including one interconnection with Equitrans’

exhibiting H-302 pipeline near the MarkWest Mobely

Processing facility in Wetzel County, West Virginia;

one interconnection in Harrison County, West Virginia

near another processing facility; one interconnection in

App. 74

Braxton County, West Virginia at Columbia’s WB

System; and one interconnection with Transco near

station 165 in Pittsylvania, Virginia. Certificate

Application, at 8. MVP claimed that “at least one tap

will be installed to serve Roanoke Gas Company, LLC,

an LDC in southwestern Virginia.” Id. at 9.

44.

MVP declared in its application that the

primary purpose of constructing the pipeline will be to

connect shale natural gas supplies from northern West

Virginia to Transco Station 165, which is the “existing

pooling point for Zone 5 on Transco’s system and a gas

trading hub for the Mid-Atlantic market.” Id. at 10. In

court proceedings in West Virginia, MVP admitted that

“[t]he primary purpose of [MVP’s pipeline] is to deliver

gas to the Transco pool.” Mt. Valley Pipeline, LLC v.

McCurdy, 793 S.E.2d 850, 861 (W.Va. 2016).

45.

MVP’s main evidence of market demand

stems from four precedent agreements for 2.0

MMDth/d resulting in the project being fully subscribed

prior to approval. Id. MVP also cited U.S. Census

Bureau population growth estimates, the demands of

the Clean Power Plan, as well as the Energy

Information Administration’s 2015 Annual Energy

Outlook as a basis for market need.

46.

MVP noted that as a result of the shale boom,

“natural gas produced in the Appalachian Basin has

greatly outpaced regional market demand” resulting in

“reduced gas prices in the Appalachian region to

historic lows” and has triggered the emergence of new

pipelines to “access this prolific supply and transport it

to market.” Id. at 14-15. MVP claimed in its application

that its new 301-mile pipeline “will serve the growing

natural gas needs of the Mid-Atlantic and southeastern

App. 75

markets as well as markets along the pipeline route

and will enhance the reliability and flexibility of the

interstate pipeline grid in these regions.” Id. at 15.

47.

To illustrate need, MVP attached four

precedent agreements accounting for a full subscription

to ship 2.0 MMDth/d on the pipeline. See Exhibit I to

MVP’s Application, Market Data. MVP extolled that

the line was fully subscribed by EQT Energy, LLC;

Roanoke Gas; USG Properties Marcellus Holdings,

LLC; and WGL Midstream, Inc. Id. at 16. Absent from

MVP’s application, however, is any mention that the

pipeline is fully subscribed solely by affiliates of MVP.

EQT Energy, LLC subscribed to 1,290,000 Dth/d,

representing 64.5% of the capacity of the pipeline. EQT

Energy, LLC operates as a subsidiary of EQT

Midstream Partners, LP, and EQT Midstream

Partners, LP owns the largest stake in MVP, 45.5%.

48.

Similarly, MVP exhibited a precedent

agreement with USG Properties Marcellus Holdings,

LLC for 500,000 Dth/d, accounting for 25% of the

subscription capacity on the line. USG Properties

Marcellus Holdings, LLC, is an affiliate of US

Marcellus Gas Infrastructure, LLC, the direct owner of

31% of MVP, and a subsidiary of NextEra US Gas

Assets, LLC. NextEra US Gas Assets, LLC is an

indirect, wholly-owned subsidiary of NextEra Energy

Inc.

49.

MVP produced an executed precedent

agreement for 200,000 Dth/d with WGL Midstream,

Inc. accounting for 10% of the subscription capacity.

WGL Midstream, Inc. currently owns 10% of MVP.

App. 76

50.

MVP’s final precedent agreement was

executed with Roanoke Gas Company for 10,000 Dth/d,

or 0.5% of the subscription capacity of the pipeline.

RGC Midstream, LLC is a subsidiary of RGC

Resources, Inc. RGC Resources, Inc. is the holding

company for Roanoke Gas Company. RGC Midstream,

LLC owns 1% of MVP and joined the MVP joint

venture 13 months after MVP was originally

incorporated, and just weeks prior to MVP’s application

for a Certificate.

51.

While MVP claimed that its capacity is fully

subscribed, 100% of the subscription capacity derives

from entities that own the pipeline and the precedent

agreements are not binding until after issuance of a

Certificate.

52.

MVP also conducted several binding open

season offers between 2014 and 2015 as well as a nonbinding interim period open season to “provide all

market participants the opportunity to identify shortterm transmission capacity needs at diverse receipt

locations in the Appalachian Basin to the new WB

Interconnect in Braxton County, West Virginia.”

Application at 16-17. MVP claimed to have received

interest in the non-binding interim open season, but no

agreements have been produced to date.

53.

Whether MVP obtained interest in its binding

open seasons is unknown. However, MVP claimed it

has been fully subscribed only by its affiliates. Prior to

these affiliate subscriptions, MVP’s first open season

was announced on June 12, 2014 on joint EQT and

NextEra Energy letterhead, and was slated to be closed

July 10, 2014. This first open season sought

subscriptions for the entirety of the pipeline and noted

App. 77

that the “primary point of delivery will be Transco Zone

5 Station 165 in Pittsylvania County, Virginia.” Exhibit

Z-4 to Application. MVP described Transco Zone 5

Station 165 as a “highly liquid trading area” that

“merges with the mainline at Station 165 as well as

[provides] deliveries to Cove Point LNG.” Id.

54.

MVP’s second open season was again

advertised on joint EQT and NextEra Energy

letterhead as a binding open season between

September 9, 2014 and September 29, 2014 for the full

length of the proposed line. MVP advertised access to

the liquefaction plant at Cove Point, Maryland. On the

final date of the binding open season, MVP announced

that it would extend the subscription offers to October

6, 2014. MVP extended the open season three more

times, to October 10, 2014, October 14, 2014, and

October 21, 2014. It is unknown whether any nonaffiliates responded to any of MVP’s open seasons and

MVP’s Certificate Application does not mention any

binding open seasons for capacity on the entirety of the

line, and instead only refers to the interim non-binding

open season offered in September 2015.

55.

MVP’s first executed precedent agreement

was entered on March 10, 2015 with 10% owner WGL

Midstream. MVP’s precedent agreements with Roanoke

Gas Company (i.e., RGC Midstream, 1% stake), USG

Properties Marcellus Holdings, LCC (i.e., NextEra

Energy, 31% stake), and EQT Energy, LLC (i.e., EQT

Midstream, 45.5% stake), were executed just days prior

to MVP’s filing of its Certificate Application.

56.

On January 22, 2016, MVP announced that

Consolidated Edison, Inc., through its subsidiary Con

Edison Gas Midstream, acquired a 12.5% ownership in

App. 78

MVP, and at the same time a sister subsidiary,

Consolidated Edison Company of New York, Inc.,

entered into a precedent agreement subscribing to

250,000 Dth/d, while USG Properties Marcellus

Holdings, LLC decreased its subscription by 250,000

Dth/d.15

57.

To date, MVP has not exhibited any nonaffiliate subscription agreements or any other evidence

of negotiations with non-affiliates. Likewise, FERC’s

Draft and Final Environmental Impact Statement fails

to acknowledge, much less highlight, the fact that 100%

of the subscription commitments for use of MVP are by

owner-affiliates of MVP.

E. FERC’s Criteria for Analyzing Certification

Falls Well Short of Constitutional

Standards

58.

As noted above, FERC issued a Statement of

Policy on September 15, 1999, setting forth its policies

on certification and natural gas pricing of new

construction projects due to the rapid changes in the

natural gas industry that occurred in the late 1990s.

See Exhibit 1. FERC noted that any effective

certification policy should “further the goals and

objectives of the Commission’s natural gas regulatory

policies” including “foster[ing] competitive markets,

protect[ing] captive customers, and avoid[ing]

See http://www.roanoke.com/business/news/mountain-valleysecures-new-pipeline-partner-and-customer-in-con/

article_419a2c13-3105-5960-b446-cf5b82dfc2cb.html; DEIS at 1-10,

available at https://www.mountainvalleypipeline.info/

~/media/Sites/MVP/Files/MVP%20EEP%20DEIS%20Sections%2

01-5.ashx?la=en (last accessed July 26, 2017).

App. 79

unnecessary environmental and community impacts

while serving increasing demands for natural gas.” Id.

at p. 13. FERC’s purpose was to introduce and apply

“an analytical framework for deciding … when a

proposed project is required by the public convenience

and necessity” in a manner consistent with the

Commission’s regulatory policies. Id. Notably absent,

however, is any reference to, or recognition of, the

constitutional standards at play for determining

whether the taking of private property, even with just

compensation, is for a public use or purpose. Rather

than analyze and apply a standard for assessing public

purpose/use that comports with the Constitution,

FERC devised a series of sliding scale tests that fail to

pass constitutional muster.

59.

The Commission’s primary, and threshold

concern, focuses not on determining any need for the

project or whether the project would be for a public

purpose or use, but instead on what the market effects

might be on captive customers of the natural gas

company. Id. at 18. Consistent with FERC’s stated

policy goal of protecting captive customers, the

Commission analyzes whether the proposed project will

be subsidized by current customers of the company as

well as what steps the company is willing to take to

mitigate the potential adverse effects suffered by

current customers, landowners, or the communities

affected by the proposed project.

60.

In the Commission’s own words, “if an

applicant can show that the project is financially viable

without subsidies, then it will have established the

first indicator of public benefit.” Id. at 22. Put another

way, if the natural gas company can finance a project

App. 80

without pushing the cost of the project to the public (or

a small subset of the public: the consumers of that

company’s services), there is presumed to be a public

benefit.

61.

Assuming a proposed project meets the

threshold requirements on financing, a public benefit

will be presumed to exist and FERC moves on to

“balance” factors to determine whether the public

benefits outweigh adverse impacts. Id. at 22-23. An

applicant should demonstrate public benefit to FERC

by providing “precedent agreements, demand

projections, potential cost savings to consumers, or a

comparison of projected demand with the amount of

capacity currently serving the market.” Id. at 23. The

natural gas company’s path to obtaining the federal

power of eminent domain involves making a “sufficient

showing of the public benefits of its proposed project to

outweigh any residual adverse effects.” Id.

62.

In assessing adverse effects, FERC closely

examines the interests of the applicant’s existing

customers, the interests of competition pipelines and

their captive customers, as well as the interests of

landowners and the surrounding communities. Id. The

Commission’s approach is almost singularly economic

in nature, but FERC’s Statement of Policy mentions,

albeit in passing, that “there are other interests that

may need to be separately considered in a certificate

proceeding, such as environmental interests.” Id. While

recognizing that landowner and community interests

can be distinct from environmental interests, the

Commission states that “[t]raditionally, the interests of

the landowners and the surrounding community have

App. 81

been considered synonymous with the environmental

impacts of the project.” Id. at 24.

63.

FERC also sets forth a list of factors

indicating a public benefit, and an applicant “must

show public benefits that would be achieved by the

project that are proportional to the project’s adverse

impacts.” Id. at 25. Because the test promulgated by

FERC is a proportional test, the Commission’s policy is

clear that the “amount of evidence necessary to

establish the need for a proposed project will depend on

the potential adverse effects of the proposed project on

the relevant interests.” Id. Under this approach, if

FERC determines that it cannot articulate any adverse

effects at all (whether economic, environmental, or

otherwise), the Commission would grant a Certificate,

as well as the power of eminent domain, upon a

showing of no public benefit at all.

64.

While the Commission states that “[v]ague

assertions of public benefits will not be sufficient” to

obtain a Certificate, the Commission nevertheless

equates even a scintilla of evidence of market demand,

even through affiliate-only precedent agreements, with

public benefit. A private market need for a private

natural gas company to ship its affiliate-owned fracked

natural gas to market, domestic or otherwise, does not

equate to a public benefit, much less a public purpose

or public use. FERC views precedent agreements, even

solely with affiliates, as “significant evidence of

demand for the project.” Id. To FERC, demand equates

to public benefit.

65.

Indeed, the Commission explains that where

a natural gas company can illustrate that it has

acquired through negotiations a significant portion of

App. 82

easements to construct a project, “a few holdout

landowners cannot veto a project, as feared by some

commenters” because the natural gas company need

only “present some evidence of market demand” to

outweigh the holdout landowners’ concerns. Id. at 27.

66.

Because FERC has promulgated a

proportional balancing test premised upon a sliding

scale of evidence for determining whether to confer a

Certificate and the power of eminent domain, it does

not apply “bright line standards or tests.” Id. at 26.

Instead, as FERC itself articulates, “[t]he objective is

for the applicant to develop whatever record is

necessary, and for the Commission to impose whatever

conditions are necessary, for the Commission to be able

to find that the benefits to the public from the project

outweigh the adverse impact on the relevant interests.”

Id. Put another way, the Commission will sub-delegate

the power of eminent domain to a private natural gas

company so long as the private natural gas company

gives FERC enough of a record to justify an approval.

F. MVP Has Already Engaged in Unlawful

Takings in Virginia in Violation of the

United States Constitution and the Virginia

Constitution

67.

The Virginia General Assembly enacted § 5649.01 of the Virginia Code in 2004. Section 56-49.01

provides a conditional statutory right of entry to a

natural gas company to “make such examinations,

tests, hand auger borings, appraisals, and surveys for

its proposed line or location of its works as are

necessary ….” Va. Code § 56-49.01(A). There are two

initial, necessary threshold requirements that must be

satisfied before the natural gas company may enter the

App. 83

property without the owner’s permission: the

examinations must be necessary “(i) to satisfy any

regulatory requirements” and necessary “(ii) for the

selection of the most advantageous location or route….”

Va. Code § 56-49.01(A)(i)-(ii).

68.

Once a natural gas company triggers the

right of entry by showing necessity under § 5649.01(A)(i)-(ii), the company must also satisfy three

further conditions including: (a) it must request the

landowner’s permission in accordance with the strict

procedures set forth in § 56-49.01(B); (b) it must show

that the owner’s permission is not received prior to the

date proposed by the company; and (c) it must provide

the landowner notice of its intent to enter pursuant to

the procedures set out in § 56-49.01(C). Only when all

of these conditions are satisfied by the natural gas

company does the “right of entry” spring into existence

and exempt the particular entry from common law civil

and criminal trespass. Va. Code § 56-49.01(D).

69.

Eight years after the enactment of § 56-49.01,

on November 6, 2012, an amendment to § 11 of Article

I (Bill of Rights) of the Virginia Constitution was

ratified by an overwhelming majority of voters and took

effect on January 1, 2013. The 2012 amendment added

significant protection to the right of private property,

including “[t]hat the General Assembly shall pass no

law whereby private property, the right to which is

fundamental, shall be damaged or taken except for

public use.” Va. Const., Art. I, § 11. The amendments

provided that “a public service company, public service

corporation, or railroad exercises the power of eminent

domain for public use when such exercise is for the

authorized provision of utility, common carrier, or

App. 84

railroad services” but in any other cases, “a taking or

damaging of private property is not for public use if the

primary use is for private gain, private benefit, private

enterprise, increasing jobs, increasing tax revenue, or

economic development ….” Id.

70.

In this case, MVP has been engaged in

surveying activities across Virginia under claimed right

of entry pursuant to Virginia Code § 56-49.01. The

invasive survey activities MVP performs, including

inter alia, cultural, wetland, endangered species,

centerline, water, and soil, cannot be deemed trivial or

inconsequential. Like an invasive non-consensual blood

draw or an unauthorized disclosure of private medical

records, the information and data MVP collects about

a landowner’s property is not readily ascertainable or

available from public records, and amounts to an

unlawful private taking. The information and data

surveyors gather from a landowner’s land through

surveying activities is a portable and marketable

commodity. In the current age of information, data as

well as metadata, are valuable commodities that can

readily be sold to the highest commercial bidder, and

any and all information obtained by MVP in connection

with its surveying activities is not subject to any

regulatory oversight.

71.

The information gathered by MVP through

its surveying activities holds tangible and intangible

value that forms just one part of the bundle of rights

possessed by a fee simple owner of real property. It has

long been recognized that the fee simple holder of real

property is the “owner of everything above and below

the surface from the sky to the center of the earth,

expressed in the maxim, Cujus est solum, ejus est usque

App. 85

ad coelum et ad infernos ….” Clinchfield Coal Corp. v.

Compton, 148 Va. 437, 451 (1927). Everything above

and below the surface from the sky to the center of the

earth necessarily includes the tangible and intangible

property contained therein, including information

about the contents and constituent parts of the land,

water, flora, and fauna contained within the bounds of

a tract of real property.

72.

The law also recognizes that the information

and data obtained through surveying activities

possesses commercial value that receives specific tax

treatment under the Internal Revenue Code. As

explained by the Tax Court, the “benefit derived” from

surveying like that conducted by MVP constitutes

“information” and “scientific knowledge” that may

qualify as a capital expenditure. See Louisiana Land &

Exploration Co. v. Comm’r., 7 T.C. 507, 515 (1946)

(treating the cost of a geophysical survey by a land

developer as a capital expenditure rather than an

ordinary business expense). Section 197 of Title 26,

United States Code, provides for an amortized

deduction for any intangible property, including

“business books and records, operating systems, or any

other information base.” 26 U.S.C. § 197(d)(1)(C)(ii).

73.

The law recognizes that intangible and

tangible property possesses inherent value. In this

case, the intangible and tangible property taken by

MVP from Virginians has immense value, so much so

that MVP will not share the property it has taken with

landowners and treats the information as confidential

and proprietary. Specifically, MVP classifies Volume IV

of its Application for a Certificate as “Privileged” and

includes “[c]ultural resource and landowner

App. 86

information from Environmental Report and

confidential, proprietary contractual information.” See

Cover Letter to MVP’s Application for a Certificate of

Public Convenience and Necessity, attached as Exhibit

2. Indeed, FERC recognizes the value of the

information and refuses to release information

obtained by MVP and shared with FERC to the very

landowners that are the only persons that should have

exclusive rights of possession.

Count One: Violation of the Fifth Amendment

Rights of All Plaintiffs by FERC and MVP

74.

The Plaintiffs hereby incorporate the facts

and allegations contained in paragraphs 1-73 above.

75.

The Fifth Amendment to the United States

Constitution requires that private property may only

be taken “for public use” and that “just compensation”

must be paid. As outlined above, FERC does not

evaluate proposed pipeline projects according to a

constitutional standard and instead applies its own

proportional, sliding scale economic balancing test to

determine if it will approve a project and empower a

private party with the power of eminent domain.

76.

As applied by FERC generally and ultimately

to MVP here, the power to exercise eminent domain as

derived under the Natural Gas Act, 15 U.S.C. § 717f(h)

is unconstitutional, because FERC’s tests for granting

the power of eminent domain via a Certificate fall well

below the standard imposed by the Fifth Amendment.

77.

As applied in this case, then, MVP’s

application and FERC’s application of its tests as set

forth in its Statement of Policy cannot pass

App. 87

constitutional muster. Accordingly, FERC should be

precluded from granting MVP a Certificate.

Count Two: Congress’ Delegation to FERC of

the Power of Eminent Domain under 15 U.S.C.

§ 717f(h) is Overly Broad and Unconstitutional

78.

The Plaintiffs hereby incorporate the facts

and allegations contained in paragraphs 1-77 above.

79.

FERC cannot lawfully exercise the power of

eminent domain delegated to it by Congress via the

Natural Gas Act because Congress’ delegation of the

power under 15 U.S.C. § 717f(h) is overly broad.

80.

Under the non-delegation doctrine, Congress

must properly limit the exercise of any delegated power

by setting forth an intelligible principle—a

standard—for the regulatory body to follow in its caseby-case assessments. Congress failed to set forth any

intelligible principle to FERC under the Natural Gas

Act. In doing so, Congress delegated not only the

authority to execute the law to FERC but also the

authority to determine what the law shall be, which is

impermissible under the Constitution, regardless of

whether the standard applied by FERC could even pass

constitutional muster, which it does not here.

81.

Because Congress’ delegation of the power of

eminent domain to FERC is overly broad, FERC cannot

lawfully exercise the power of eminent domain and

cannot confer the power to MVP or any other natural

gas company.

App. 88

Count Three: FERC’s Sub-Delegation of the

Power of Eminent Domain to MVP under 15

U.S.C. § 717f(h) Unconstitutional

82.

The Plaintiffs hereby incorporate the facts

and allegations contained in paragraphs 1-81 above.

83.

While Congress’ delegation of the power of

eminent domain under 15 U.S.C. § 717f(h) is overly

broad and unconstitutional on its own as alleged in

Count Two, FERC’s sub-delegation to MVP pursuant to

a Certificate is also constitutionally impermissible.

84.

It is well-established that delegated powers

cannot lawfully be further delegated as explained by

the maxim, “Delegata potestas non potest delegari.” See

J.W. Hampton, Jr., & Co. v. United States, 276 U.S.

394, 405-06 (1928). Accordingly, FERC cannot lawfully

delegate the power of eminent domain to MVP by

issuing MVP a Certificate, or by any other means.

Count Four: MVP Has Already Violated the

Virginia Plaintiffs’ Rights under the Fifth

Amendment and Article I, §11 of the Virginia

Constitution

85.

The Plaintiffs hereby incorporate the facts

and allegations contained in paragraphs 1-84 above.

86.

MVP has repeatedly invoked Virginia Code

§ 56-49.01 to obtain a right of entry to engage in

surveying activities on the Virginia Plaintiffs’

properties.

87.

MVP’s surveying activities, including the

collection of tangible property (e.g., historical artifacts,

soil samples, water samples, etc.) and intangible

App. 89

property (e.g., data and information not available to

anyone other than the landowner and the landowner’s

designees), constitute an unlawful taking under the

Fifth Amendment to the United States Constitution as

well as in violation of Article I, § 11 of the Virginia

Constitution.

WHEREFORE, the Plaintiffs respectfully request

that the Court enter judgment in their favor against

the Defendants, and issue a preliminary and

permanent injunction declaring the following, as well

as any other relief as may be deemed just :

• FERC’s Certification process is unconstitutional

because it fails to asses public use or public

purpose, and instead apples at least three

different tests that each fail to satisfy the

requirements of the Constitution;

• Any exercise or delegation of the power of

eminent domain by FERC under 15 U.S.C.

§ 717f(h) is unconstitutional because Congress’

delegation of the power of eminent domain is

overly broad and lacks any intelligible

principles;

• Any Certificate issued by FERC to MVP cannot

constitutionally sub-delegate the power of

eminent domain to MVP and MVP cannot

exercise the power of eminent domain even if

FERC grants MVP a Certificate; and

• MVP has violated the Virginia Plaintiffs’ Fifth

Amendment rights and their rights under

Article I, § 11 by engaging in unlawful takings of

private property.

App. 90

Respectfully submitted this 27th day of July, 2017,

ORUS ASHBY BERKLEY, JAMES T.

AND KATHY E. CHANDLER,

CONSTANTINE THEODORE AND

PATTI LEE CHLEPAS, MARTIN AND

DAWN E. CISEK, ROGER D. AND

REBECCA H. CRABTREE, ESTIAL

EARL ECHOLS, JR. AND EDITH FERN

ECHOLS, GEORGE LEE JONES,

ROBERT WAYNE AND PATRICIA ANN

MORGAN, MARGARET MCGRAW

SLAYTON LIVING TRUST, AND

THOMAS AND BONNIE B. TRIPLETT

Justin M. Lugar (VSB No. 77007)

GENTRY LOCKE

900 SunTrust Plaza

P.O. Box 40013

Roanoke, Virginia 24022-0013

(540) 983-9300

Fax: (540) 983-9400

jlugar@gentrylocke.com

Counsel for Plaintiffs

By: /s/

Of Counsel

App. 91

VERIFICATION

Pursuant to 28 U.S.C. § 1746, I declare, under penalty

of perjury, that the foregoing factual allegations are

true and correct to the best of my knowledge,

information and belief.

Kathy E. Chandler

/s/Kathy E. Chandler

Plaintiff

7/26/2017

Date

App. 92

Exhibit 1

UNITED STATES OF AMERICA88 FERC ¶ 61,227

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners:

James

J. Hoecker,

Chairman;

Vicky A. Bailey, William L.

Massey, Linda Breathitt,

and Curt Hébert, Jr.

Docket No. PL99-3-000

Certification of New Interstate

Natural Gas Pipeline Facilities

STATEMENT OF POLICY

(Issued September 15, 1999)

In the Notice of Proposed Rulemaking (NOPR) in

Docket No. RM98-10-0001 and the Notice of Inquiry

(NOI) in Docket No. RM98-12-000,2 the Commission

has been exploring issues related to the current policies

on certification and pricing of new construction projects

in view of the changes that have taken place in the

natural gas industry in recent years.

In addition, on June 7, 1999, the Commission held

a public conference in Docket No. PL99-2-000 on the

Notice of Proposed Rulemaking, Regulation of Short-term

Natural Gas Transportation Services, 63 Fed. Reg. 42982, 84

FERC ¶ 61,087 (1998).

Notice of Inquiry, Regulation of Interstate Natural Gas

Transportation Services, 63 Fed. Reg. 42974, 84 FERC ¶ 61,087

(July 29, 1998).

App. 93

issue of anticipated natural gas demand in the

northeastern United States over the next two decades,

the timing and the type of growth, and the effect

projected growth will have on existing pipeline

capacity. All segments of the industry presented their

views at the conference and subsequently filed

comments on those issues.

Information received in these proceedings as well as

recent experience evaluating proposals for new pipeline

construction persuade us that it is time for the

Commission to revisit its policy for certificating new

construction not covered by the optional or blanket

certificate authorizations.3 In particular the

Commission’s policy for determining whether there is

a need for a specific project and whether, on balance,

the project will serve the public interest. Many urge

that there is a need for the Commission to authorize

new pipeline capacity to meet the growing demand for

natural gas. At the same time, others already worried

about the potential for capacity turnback, have urged

the Commission to be cautious because of concerns

about the potential for creating a surplus of capacity

that could adversely affect existing pipelines and their

captive customers.

Accordingly, the Commission is issuing this policy

statement to provide the industry with guidance as to

how the Commission will evaluate proposals for

certificating new construction. This should provide

more certainty about how the Commission will

evaluate new construction projects that are proposed to

This policy statement does not apply to construction authorized

under 18 CFR Part 157, Subparts E and F.

App. 94

meet growth in the demand for natural gas at the same

time that some existing pipelines are concerned about

the potential for capacity turnback. In considering the

impact of new construction projects on existing

pipelines, the Commission’s goal is to appropriately

consider the enhancement of competitive

transportation alternatives, the possibility of

overbuilding, the avoidance of unnecessary disruption

of the environment, and the unneeded exercise of

eminent domain. Of course, this policy statement is not

a rule. In stating the evaluation criteria, it is the

Commission’s intent to evaluate specific proposals

based on the facts and circumstances relevant to the

application and to apply the criteria on a case-by-case

basis.

I. Comments Received on the NOPR

In the NOPR the Commission explained that it

wants to assure that its policies strike the proper

balance between the enhancement of competitive

alternatives and the possibility of over building. The

Commission asked for comments on whether proposed

projects that will establish a new right-of-way in order

to compete for existing market share should be subject

to the same considerations as projects that will cut a

new right-of-way in order to extend gas service to a

frontier market area. Also, in reassessing project need,

the Commission said that it was considering how best

to balance demonstrated market demand against

potential adverse environmental impacts and private

property rights in weighing whether a project is

required by the public convenience and necessity.

The Commission asked commenters to offer views

on three options: One option would be for the

App. 95

Commission to authorize all applications that at a

minimum meet the regulatory requirements, then let

the market pick winners and losers. Another would be

for the Commission to select a single project to serve a

given market and exclude all other competitors.

Another possible option would be for the Commission

to approve an environmentally acceptable right-of-way

and let potential builders compete for a certificate.

In addition, the Commission asked commenters to

consider the following questions: (1) Should the

Commission look behind the precedent agreement or

contracts presented as evidence of market demand to

assess independently the market’s need for additional

gas service? (2) Should the Commission apply a

different standard to precedent agreements or

contracts with affiliates than with non-affiliates? For

example, should a proposal supported by affiliate

agreements have to show a higher percentage of

contracted-for capacity than a proposal supported by

non-affiliate agreements, or, should all proposed

projects be required to show a minimum percent of nonaffiliate support? (3) Are precedent agreements

primarily with affiliates sufficient to meet the statutory

requirement that construction must be required by the

public convenience and necessity, and, if so, (4) Should

the Commission permit rolled-in rate treatment for

facilities built to serve a pipeline affiliate? (5) Should

the Commission, in an effort to check overbuilding and

capacity turnback, take a harder look at proposals that

are designed to compete for existing market share

rather than bring service to a new customer base, and

what particular criteria should be applied in looking at

competitive applications versus new market

applications? (6) Should the Commission encourage

App. 96

pre-filing resolution of landowner issues by subjecting

proposed projects to a diminished degree of scrutiny

where the project sponsor is able to demonstrate it has

obtained all necessary right-of-way authority?

(7) Should a different standard be applied to project

sponsors who do not plan to use either federal or stategranted rights of eminent domain to acquire right-ofway?

A. Reliance on Market Forces to Determine

Optimal Sizing and Route for New Facilities

PG&E, Process Gas Consumers (PGC), Tejas Gas,

Washington Gas, Columbia, Market Hub Partners, and

Ohio PUC agree that the Commission should continue

to let the market decide which projects to pursue.

PG&E states that the Commission should authorize all

projects that meet minimum regulatory requirements,

looking at whether the project will serve new or

existing markets, the firmness of commitments and

environmental and property right issues. PGC urges

the Commission to refrain from second guessing

customers’ decisions. Tejas suggests that the

Commission rely on the market to the maximum

extent; regulatory changes that affect risk/reward

allocation will increase regulatory risk and deter new

investment. Washington Gas suggests letting the

market decide on new construction with market based

rates subject only to environmental review and

landowner concerns. Columbia comments that it would

not be economically efficient to protect competitors

from the competition created by new capacity. Market

Hub Partners specifies that, when there is no eminent

domain involved, the focus should be on competition,

not protecting individual competitors from

App. 97

overbuilding. Ohio PUC supports authorizing all

applications for new capacity certification which meet

the minimum regulatory requirements. Ohio PUC does

not support approving a single pipeline’s application

while excluding all others.

The Regulatory Studies Program of the Mercatus

Center, George Mason University suggests allowing

projects to be proposed with no certification

requirements, but allowing competitors to challenge

the need. Investors would be at risk for all

investments. Tejas proposes holding pipelines at risk

for reduced throughput, thereby avoiding shifting the

risk to customers.

On the issue of overbuilding, Millennium, Enron,

PGC, Columbia, and Wisconsin PSC disagree with the

presumption that overbuilding must be avoided.

Millennium asserts that all competitive markets have

excess capacity. Enron urges the Commission to be

receptive to overbuilding in areas of rapid growth,

difficult construction, and environmental sensitivity.

PGC agrees that some capacity in excess of initial

demand may make environmental and economic sense

in that it will reduce the need for future construction,

but argues that the pipelines be at risk for those

facilities. Columbia alleges that the concern about

overbuilding is misguided. Wisconsin PSC contends

that concerns of overbuilding should not operate to

limit the availability of competitive alternatives to

customers currently without choices of pipeline

provider. Wisconsin PSC believes the elimination of the

discount adjustment mechanism and the imposition of

reasonable at risk provisions for new construction will

deter pipelines from overbuilding.

App. 98

On the other hand, UGI recommends that

overbuilding be minimized. UGI states that the

Commission should ensure a reasonable fit between

supply and demand. The Commission should limit

certification of new projects to ones which demonstrate

unmet demand or demand growth over 1-3 years.

Coastal stresses that competition should not be the

only or primary factor in deciding the public

convenience and necessity.

Amoco contends that, if the Commission chooses the

right-of-way, it will in many cases have chosen the

parties that will ultimately build the pipeline. Amoco

urges the Commission not substitute its judgement for

that of the marketplace unless there are overwhelming

environmental concerns. Tejas also objects to the option

of the Commission approving an environmentally

acceptable right-of-way and letting potential builders

compete for a certificate because it believes it would be

difficult for the Commission to implement.

Colorado Springs supports the concept of having the

Commission select a single project in a given corridor

rather than letting the market pick winners and losers.

PGC and Ohio PUC recommend that the

Commission authorize all construction applications

meeting certain threshold requirements, leaving the

market to decide winners and losers. PGC urge the

Commission to facilitate construction of new pipelines

that will increase the potential for gas flows. Under no

circumstances should the Commission deny a

certificate based on a complaint by an LDC or a

competing pipeline that new construction will hurt

their market position or ability to recover costs. The

App. 99

Commission should not afford protection to traditional

suppliers or transporters by constraining the

development of new pipeline capacity.

PGC believes that only in unusual situations, where

insuperable environmental barriers cannot be resolved

through normal mitigation measures, should the

Commission select an acceptable right-of-way. Ohio

PUC does not support approving a single pipeline’s

application while excluding all others. Ohio PUC

recommends having market forces guide construction

projects unless or until obvious shortcomings begin to

emerge. In such instances, the option of designating a

single right-of-way with competition for the certificate

could be used to spur needed construction.

B. Reliance on Contracts to Demonstrate Demand

A number of parties comment that there is no

reason to change the current policy regarding

certificate need (AlliedSignal, Millennium, Southern

Natural, Tejas, Williston, Columbia). National Fuel

Gas Supply believes the Commission should keep

shipper commitment as the test because it is more

accurate than market studies. National Fuel Gas

Supply further believes the Commission’s present

reliance on market forces to establish need, and its

environmental review process, form the best approach

to reviewing certificate applications. Foothills agrees,

but states that a new, flexible regulatory structure for

existing pipelines is needed. Indicated Shippers also

wants to keep the current policy, but stresses that

expedition in processing is needed to lower entry

barriers.

App. 100

Amoco, Consolidated Natural, and Columbia urged

the Commission to continue requiring sufficient

binding long-term contracts for firm capacity.

Millennium and Tejas stated that there is no need to

develop different tests for different markets. Columbia

also argued that there is no need to look behind

contracts. Williams argues that the Commission should

not second guess contracts or make an independent

market analysis. Williston alleges that reviewing the

firmness of private contracts is ineffectual and futile.

Market Hub Partners cautions the Commission not to

substitute its judgement for that of the marketplace.

PGC argues that there should be no change to

current policy where construction affects landowners.

Eminent domain is a necessary tool to delivering clean

burning natural gas to growing markets; no individual

landowners should be given a veto over pipeline

construction. PGC adds that the absence of prefiling

right-of-way agreements does not mean that a project

is less good or necessary or should be treated more

harshly. Southern Natural, Millennium, and National

Fuel Gas Supply agree that no market preference

should be given for projects that do not use eminent

domain. National Fuel Gas Supply agrees that such a

preference would tilt the power balance to landowners.

Millennium argues that the Commission should not

establish certificate preferences for pipelines that do

not require eminent domain; such preferences are not

needed because a pipeline that does not want to use

eminent domain can already build projects under

Section 311.

On the other hand, Amoco, El Paso/Tennessee,

ConEd, and Wisconsin PSC recommend modifying the

App. 101

current policy. El Paso/Tennessee recommend that the

Commission look behind all precedent agreements to

see if real markets exist. ConEd suggests considering

forecasts for market growth; if there is a disparity with

the proposal, the Commission should look at all

circumstances. Wisconsin PSC urges the Commission

to consider market saturation and growth prospects by

looking at market power (HHIs) and the degree of rate

discounting in a market. Amoco suggests that the

Commission analyze all relevant data. Peco Energy

believes the current Commission policy, which provides

for minimal market justification for authorizing

construction of incremental facilities, coupled with its

presumption in favor of rolled-in rate treatment, has

contributed to discouraging existing firm shippers from

embracing longer term capacity contracts.

Consolidated Natural recommends creating a

settlement forum for market demand and reverse open

season issues. Washington Gas urges the Commission

to adopt an open entry, “let the market decide” policy.

IPAA supports a need analysis focusing on the ability

of existing capacity to handle projected demand. IPAA

alleges that the overall infrastructure is already in

place to supply current demand projections.

Some commenters support a sliding scale approach

to determine need. ConEd states that the Commission

should determine need on a case-by-case basis, using

different standards for large or small projects. Enron

advocates use of a sliding scale, requiring more market

support for projects with more landowner and/or

environmental impact. Enron supports requiring no

market showing for projects using existing easements

or mutually agreed upon easements. Enron also

App. 102

suggests, in addition to requiring that at least 25% of

the precedent agreements supporting a project be with

non-affiliates, that the Commission relax its market

analysis if 75% or more of those agreements are with

non-affiliates. Enron would require more market data

for an affiliate-backed project. American Forest &

Paper would allow negotiation of risk if there is no

subsidy by existing customers. Sempra and UGI urge

the Commission to look at whether projects serve

identifiable, new or growing markets. NARUC states

that each state is unique and that the Commission

should consider those differences. Market Hub

Partners believes that a project which is at risk,

requires little or no eminent domain authority, and has

potential to bring competition to a market that is

already being served by pipelines and storage operators

with market power should be expedited.

The development in recent years of certificate

applicants’ use of contracts with affiliates to

demonstrate market support for projects has generated

opposition from affected landowners and competitor

pipelines who question whether the contracts represent

real market demand. ConEd, Ohio PUC, and Enron

believe that a different standard should be applied to

affiliates. ConEd argues that the at risk condition is

inadequate when a pipeline serves a market served by

an affiliate; risk is shifted. Ohio PUC states that

pipelines should shoulder the increased risk and that

the Commission should look behind contracts with

affiliates. Enron would require more market data for

affiliate-backed projects and would require that all

projects be supported by precedent agreements at least

25% of which are with non-affiliates.

App. 103

Nevertheless, most of the commenters support

applying the same standard to contracts for new

capacity with affiliates as non-affiliates. Amoco,

Coastal, Millennium, National Fuel, Southern Natural,

Tejas, Texas Eastern, Columbia, Market Hub Partners,

El Paso/Tennessee, and PGC all support applying the

same standard to affiliates as non-affiliates. Market

Hub argues that a contract is a contract; treating

affiliates differently would be in the interest of

incumbent monopolists. El Paso/Tennessee agree that

affiliate precedent agreements are sufficient as long as

they are supported by market demand. PGC agrees

that the same standard should apply as long as the

proposed capacity is offered on a non-discriminatory

basis to all in an open season. Amoco makes an

exception for marketing affiliates, arguing that they do

not represent new demand. Columbia also makes an

exception for affiliates that are created just to show

market for a project.

Other parties also offered comments on affiliate

issues. PGC recommends addressing affiliate issues on

a case-by-case basis. Exxon supports offering

comparable deals to non-affiliates. If there is

insufficient capacity, it should be prorated. AGA

supports prohibiting discount adjustments connected

with new construction by pipelines or affiliates.

National Fuel Gas Supply and Tejas support

permitting rolled-in rates for facilities to serve

affiliates. PGC argues that there should be no

presumption of rolled in rates for affiliates.

The commenters also express concern with the

current policy’s effect on existing pipelines and their

captive customers when the Commission approves

App. 104

pipeline projects proposed to serve the same market. In

those cases, they believe that need should be measured

differently by, for example, assessing the impact on

existing capacity or requiring a strong incremental

market showing and more scrutiny of the net benefits.

They urge the Commission to balance all the relevant

factors before issuing a certificate. A number of parties

argued that need should be measured differently when

a project is proposed to serve an existing market. UGI

urges requiring a strong market showing for such

projects. Coastal proposes that the Commission fully

integrate the standards announced by the courts4 with

its certificate construction policies, balancing all the

relevant factors including the ability of the existing

provider to provide the service. El Paso/Tennessee

would require more scrutiny of the net benefit. Sempra

would require that, prior to construction, all shippers

be given the opportunity to turn back capacity.

Similarly, Texas Eastern would require the pipeline to

use unsubscribed capacity before construction (e.g., a

reverse auction).

Other commenters oppose a policy requiring a

harder look at projects proposed to serve existing

markets. They maintain that market demand for

service in order to escape dependence on a dominant

pipeline supplier should be accorded the same weight

as demand by new incremental load growth. They

contend that the benefits of competition and potentially

lower gas prices for consumers should control over

claims that an existing pipeline needs to be insulated

Citing FPC v. Transcontinental Gas Pipeline Corp., 365 U.S. 1,

23 (1961) and Scenic Hudson Preservation Conference v. FERC,

354 F.2d. 608, 620 (2nd Cir. 1965)

App. 105

from competition because its revenues may decrease.

National Fuel Gas Supply, PGC, Florida Cities, Market

Hub Partners, and Southern Natural in particular

object to having different policies for new or existing

pipelines. National Fuel Gas Supply contends that

generally the policies on new construction and existing

pipelines should match. PGC opposes any policy that

protects incumbents by requiring a harder look at

projects proposed to serve existing markets rather than

new demand. Many existing markets have unmet

demand. Likewise, Florida Cities is concerned that the

NOPR is intended to elicit a new policy where the

import and influence of competition is downplayed to

minimize or eliminate the risk of unsubscribed capacity

on existing pipelines. Florida Cities supports pipelineon-pipeline competition as a primary factor in

determining which new capacity projects receive

certificate authority and are constructed. Florida Cities

believes that additional pipeline competition would

benefit customers and any generic policy that would

decrease or inhibit pipeline competition would not be in

the best interest of the consumers the Commission is

obliged to protect. Market Hub Partners urges the

Commission to attempt to limit market incumbents’

ability to forestall competition by defeating the efforts

of new market entrants to build or operate new

capacity. Market Hub Partners contend that

incumbents protest on the basis of project safety and

environmental concerns when they are primarily

concerned with their own welfare and market share.

Southern Natural contends the NGA does not permit a

rule disfavoring projects that enhance competitive

alternatives. Taking a harder look at competitive

proposals would effect a preference for monopoly,

App. 106

clearly not endorsed by the NGA or the Courts of

Appeal.

Wisconsin Distributor Group believes that

meaningful pipe-on-pipe competition can only exist

where there are choices among or between pipelines

and unsubscribed firm capacity exists. Wisconsin

Distributor Group argues the Commission should view

favorably new pipeline projects that propose to create

competition by introducing an alternative pipeline to

markets where no choices exist. Wisconsin Distributor

Group contends the Commission’s policy should not be

driven by self-protective arguments but by the need for

competitive alternatives. Wisconsin Distributor Group

supports the Commission’s analysis in Alliance and

Southern because it considers the benefits of

competition and potentially lower gas prices for

consumers as controlling over claims that an existing

pipeline needs to be insulated from competition

because its revenues may decrease. Market demand for

service in order to escape dependence on a dominant

pipeline supplier should be accorded the same weight

as demand by new incremental load growth.

UGI, Sempra, and El Paso/Tennessee would require

assessing the impact on existing capacity. Sempra

states that if existing rates are below the maximum

rate, new capacity may not be needed. Sempra adds

that the Commission should look at whether expansion

capacity can stand on its own without rolled-in

treatment. Texas Eastern believes the Commission

must consider how best to use existing unsubscribed

capacity and capacity that has been turned back to

pipelines.

App. 107

C. The Pricing of New Facilities

A number of commenters submit that the existing

presumption in favor of rolled-in rates for pipeline

expansions sends the wrong price signals with regard

to pricing new construction. They urge the Commission

to adopt policies such as incremental pricing for

pipeline projects or placing pipelines at risk for

recovery of the costs of construction. They submit that

such a policy would reveal the true value of existing

capacity and properly allocate costs and risks. A

number of parties also raised issues concerning rate

design in general, but the Commission is deferring for

now consideration of those kinds of issues which also

affect the Commission’s policies for existing pipelines

in order to focus on issues concerning the certification

of new pipeline construction.

AGA, ConEd, and Michigan Consolidated stress the

importance of ensuring the right price signals. AGA

urges the Commission to adopt policies that reveal the

true value of existing capacity. ConEd states that rate

policies should send proper price signals by properly

allocating costs and risks.

AGA contends that the Commission’s certification

policies should protect recourse shippers. AGA and

BG&E recommend that the Commission ensure that

pipelines are not able to impose the costs of new

capacity or the costs of consequent unsubscribed

existing capacity on recourse shippers. Amoco asserts

pipelines should be at risk for unsubscribed capacity.

Similarly, AGA and Philadelphia Gas Works urge the

Commission to ensure that pipelines are at risk for

unsubscribed capacity relating to construction projects

by the pipeline or its affiliate. However, Tejas believes

App. 108

that treatment of any under recovery must address the

unique circumstances of deepwater pipelines.

APGA argues that, if the Commission allows initial

rates based on the life of the contract rather than the

useful life of facilities, the Commission must at least

require a uniform contract with the same terms and

conditions for all customers involved in the expansion.

The Williams Companies recommend that all new

capacity be subject to market-based rates. The

Williams Companies argue that, for new capacity

priced on an incremental basis rather than a rolled-in

basis, competitive circumstances in the industry

support the use of market-based rates and terms of

service.

AlliedSignal contends depreciation should be based

on the life of the facilities not the life of a contract. If

the Commission were to promulgate a general rule, it

should state that depreciation rates for pipeline

facilities in rate and certificate cases should be set at

25 years unless factors are brought to the

Commission’s attention justifying a lesser or longer

time period. NGSA believes that the Commission’s

current depreciation methodology is appropriate.

NGSA also urges that the appropriate asset life of new

facilities be determined when the facilities are

constructed and adhered to for the life of the asset. On

the other hand, the Williams Companies point out that

market-based rates would negate the need for the

Commission to approve depreciation rates.

Coastal believes pipelines should have the flexibility

to address new facility costs in certificate applications

and in rate cases. The Commission should not establish

App. 109

hard and fast rules as to how a facility should be

treated in a pipeline’s rates over its entire life. Rather,

costs should be dealt with in accordance with

Commission policies from time to time in pipeline rate

cases.

Enron Pipelines contend that the rate treatment for

capacity additions should continue to be determined on

a case-by-case basis using the system benefits test.

Louisville contends that the Commission should

address the question of whether its pricing policies for

new capacity provide appropriate incentives at the

same time as it considers auctions and negotiated rates

and services and that all of these issues should be the

subject of a new NOPR.

PGC suggest that initial rates be based on a

presumed level of contract commitment (e.g., 80-90%)

so the pipeline bears the risks of uncommitted capacity

but reaps a reward if it sells at undiscounted rates.

Another option would be for the Commission to put at

risk only that portion of the proposed facilities for

which the pipeline has not obtained firm contracts of a

minimum duration. Where an existing pipeline

constructs new facilities, PGC support the

Commission’s current policy favoring rolled-in rates if

certain conditions are met.

Williston Basin argues that fixed rates for long-term

contracts would create a relatively risk-free contract for

shippers while creating a total-risk contract for

pipelines.

Arkansas, IPAA, Indicated Shippers, National Fuel

Gas Supply, NGSA, Peoples Energy, PGC, and the

Williams Companies support the Commission’s current

App. 110

policy with its presumption in favor of rolled-in pricing

for new capacity only when the impact of new capacity

is not more than a 5% increase to existing rates and

results in system-wide benefits. AGA, Amoco, IPAA,

Philadelphia Gas Works, PGC,

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