Elawyers Elawyers
Ohio| Change

MD Public Service v. United States, 01-1792 (2002)

Court: Court of Appeals for the Fourth Circuit Number: 01-1792 Visitors: 4
Filed: May 31, 2002
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT BALTIMORE GAS AND ELECTRIC COMPANY, Plaintiff, MARYLAND OFFICE OF PEOPLE’S COUNSEL, Intervenor/Plaintiff, and MARYLAND PUBLIC SERVICE COMMISSION, Intervenor/Plaintiff-Appellant, No. 01-1792 v. UNITED STATES OF AMERICA; LOUIS CALDERA, Secretary of the Army, Defendants-Appellees, and ENRON FEDERAL SOLUTIONS, INCORPORATED, Intervenor/Defendant. Appeal from the United States District Court for the District of Maryland, at Baltimor
More
                           PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


BALTIMORE GAS AND ELECTRIC              
COMPANY,
                         Plaintiff,
MARYLAND OFFICE OF PEOPLE’S
COUNSEL,
              Intervenor/Plaintiff,
                and
MARYLAND PUBLIC SERVICE
                                        
COMMISSION,
      Intervenor/Plaintiff-Appellant,            No. 01-1792
                 v.
UNITED STATES OF AMERICA; LOUIS
CALDERA, Secretary of the Army,
              Defendants-Appellees,
                and
ENRON FEDERAL SOLUTIONS,
INCORPORATED,
              Intervenor/Defendant.
                                        
           Appeal from the United States District Court
            for the District of Maryland, at Baltimore.
                  Andre M. Davis, District Judge.
                           (CA-00-2599)

                      Argued: January 22, 2002

                       Decided: May 31, 2002

 Before WIDENER, MICHAEL, and TRAXLER, Circuit Judges.
2      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
Dismissed by published opinion. Judge Michael wrote the opinion, in
which Judge Widener and Judge Traxler joined.


                              COUNSEL

ARGUED: Susan Stevens Miller, General Counsel, PUBLIC SER-
VICE COMMISSION OF MARYLAND, Baltimore, Maryland, for
Appellant. Larry David Adams, Assistant United States Attorney,
Baltimore, Maryland, for Appellee. ON BRIEF: Stephen M. Schen-
ning, United States Attorney, Baltimore, Maryland, for Appellee.


                              OPINION

MICHAEL, Circuit Judge:

   In this action the Maryland Public Service Commission (PSC)
seeks to challenge the U.S. Army’s solicitation of bids for the right
to purchase and operate the electricity and natural gas distribution
systems at Fort Meade, which is located in the State of Maryland.
Specifically, the PSC claims that the Army violated procurement laws
in failing to provide in its solicitation that any successful bidder
would be required to submit to the PSC’s regulatory jurisdiction. The
district court held that such a provision was not required in the solici-
tation, and the PSC appeals. We do not reach the merits. Rather, we
conclude that the PSC lacks standing because it is not an "interested
party" under the statute that governs bid protest actions, 28 U.S.C.
§ 1491, which was enacted as part of the Administrative Dispute Res-
olution Act of 1996 (ADRA). The appeal is therefore dismissed for
lack of jurisdiction.

                                   I.

   In 1997 Congress passed a law authorizing the Secretary of a mili-
tary department to privatize utility systems on military bases and
other installations. See National Defense Authorization Act for Fiscal
Year 1998, Pub. L. No. 105-85, § 2812(a), 111 Stat. 1629 (1997)
(codified at 10 U.S.C. § 2688). Thereafter, the Department of Defense
       BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE             3
issued Reform Initiative Directive #49, which directs (subject to cer-
tain exemptions) the various military departments to privatize the
electric, natural gas, water, and wastewater treatment systems on their
bases or installations. The directive allows for an exemption when
privatization would be uneconomical or would raise unique security
concerns. In March of 2000 the Army issued a solicitation for bids on
a contract to purchase and operate the electricity and natural gas dis-
tribution systems at Fort Meade. The Baltimore Gas & Electric Com-
pany (BG&E) filed a protest to the solicitation with the U.S. General
Accounting Office (GAO), arguing that the Army’s solicitation had
to be amended to require that any bidder have franchise rights and a
utility license issued by the PSC. After being denied relief in the
administrative process, BG&E filed this action seeking declaratory
and injunctive relief under the ADRA, specifically, 28 U.S.C. § 1491,
in the United States District Court for the District of Maryland. At the
time the suit was filed, federal district courts and the Court of Federal
Claims had concurrent jurisdiction to hear challenges to federal
agency bid solicitations. See Administrative Dispute Resolution Act
of 1996, Pub. L. No. 104-320, § 12(a), 110 Stat. 3870 (codified at 28
U.S.C. § 1491).

   BG&E argued in district court, as it had before the GAO, that the
Army must include in its solicitation the requirement that a bidder
fully comply with state utility regulations, including state licensing
requirements, and submit to the regulatory jurisdiction of the PSC.
Because BG&E was the only utility licensed by the PSC to offer elec-
tric and gas service in the Fort Meade area, a declaration to this effect
would have limited the Army to awarding any privatization contract
for Fort Meade to BG&E. The PSC and the Maryland Office of Peo-
ple’s Counsel intervened in the case on the side of BG&E, and an out-
fit called Enron Federal Solutions, Inc. intervened on the side of the
Army. In a thorough opinion the district court determined that the
Army had reasonably interpreted federal law when it decided not to
require bidders on privatization contracts to obtain state franchise
rights and submit to PSC jurisdiction. Baltimore Gas & Elec. Co. v.
United States, 
133 F. Supp. 2d 721
(D. Md. 2001). The district court
added in a footnote that it was "highly doubtful" that the PSC had
standing under the ADRA to contest the Army’s solicitation, but the
court was able to avoid the question of the PSC’s standing because
4      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
another party, BG&E, had presented "all of the issues necessary . . .
to a decision." 
Id. at 727
n.8.

   BG&E has not appealed the district court’s decision, but the PSC
appeals insofar as the decision provides that the Army need not
require bidders to submit to PSC jurisdiction. Because the PSC is the
only appellant, we must confront the question that the district court
did not have to decide, namely, whether the PSC has standing under
the ADRA to challenge the Army’s bid solicitation.

                                  II.

   Only an "interested party" has standing under the ADRA to bring
an action to challenge a bid solicitation by a federal agency. 28 U.S.C.
§ 1491(b)(1). The question, then, is whether the PSC is an interested
party in connection with the Army’s bid solicitation to privatize elec-
tric and gas utility services at Fort Meade. The ADRA does not define
"interested party," and until recently the scope of the term was not
clear in the primary venue for ADRA bid protest cases, the Court of
Federal Claims. In some cases that court had relied on the definition
of "interested party" provided in the Competition in Contracting Act
(CICA), 31 U.S.C. § 3551(2), which limits an interested party to "an
actual or prospective bidder or offeror whose direct economic interest
would be affected by the award of the contract or by failure to award
the contract." See, e.g., Redland Genstar, Inc. v. United States, 
39 Fed. Cl. 220
, 230 n.5 (1997) (looking to § 3551 for guidance in inter-
preting § 1491). In other cases the Court of Federal Claims had read
the term "interested party" broadly to include any party that would
have standing under the Administrative Procedure Act (APA) to chal-
lenge agency action. See, e.g., American Fed. of Gov’t Employees,
AFL-CIO v. United States, 
46 Fed. Cl. 586
, 595 (2000), aff’d on alter-
nate grounds, 
258 F.3d 1294
(Fed. Cir. 2001); ATA Defense Indus. v.
United States, 
38 Fed. Cl. 489
, 494 (1997) (suggesting broad reading
in dicta). Last year, the United States Court of Appeals for the Federal
Circuit resolved the issue, at least for the Federal Circuit, and held
that an interested party under § 1491 is limited to an "actual or pro-
spective bidder or offeror" as provided in CICA § 3551(2). American
Fed. of Gov’t Employees, AFL-CIO v. United States, 
258 F.3d 1294
,
1302 (Fed. Cir. 2001) (American Federation).
       BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE               5
   We are especially interested in the Federal Circuit’s views on the
"interested party" standing requirement because a sunset provision in
the ADRA gives that court exclusive appellate jurisdiction over all
ADRA cases filed on or after January 1, 2001. The case before us
today was filed before the sunset date, and if the PSC has standing,
we have jurisdiction over the appeal. See Pub. L. No. 104-320,
§ 12(e). It is useful nevertheless to understand how and why we are
coming to the end of our jurisdiction over ADRA cases. Prior to 1997,
jurisdiction over disputes arising out of the solicitation of bids for fed-
eral contracts was split between federal district courts and the Court
of Federal Claims, with the former having jurisdiction over all bid
protests and the latter having jurisdiction only over pre-award pro-
tests. See Impresa Construzioni Geom. Domenico Garufi v. United
States, 
238 F.3d 1324
, 1331-32 (Fed. Cir. 2001) (explaining pre-1997
jurisdiction). In the ADRA of 1996, which became effective on
December 31, 1996, Congress granted concurrent jurisdiction over all
federal bid solicitation disputes, whether pre-award or post-award, to
federal district courts and the Court of Federal Claims. See id.; Pub.
L. No. 104-320, §§ 12(a), (b). However, a sunset provision in the
ADRA provided that unless Congress acted, the jurisdiction of the
district courts would terminate on January 1, 2001, and all ADRA
cases thereafter would be filed in the Court of Federal Claims. Pub.
L. No. 104-320, § 12(d). Congress included the sunset provision (1)
to address the problem of forum shopping among the district courts
and the Court of Federal Claims and (2) to provide "national unifor-
mity in resolving [federal bid solicitation] disputes." 142 Cong. Rec.
S11848 (daily ed. Sept. 30, 1996) (statement of Sen. Cohen). Con-
gress has not acted to extend district court jurisdiction, and thus fed-
eral bid solicitation disputes may now be filed only in the Court of
Federal Claims. This means that appellate jurisdiction over ADRA
cases filed on or after the sunset date, January 1, 2001, now falls
exclusively in the Court of Appeals for the Federal Circuit. Thus, as
soon as the ADRA cases filed in district courts before the sunset date
are worked through the pipeline, the Federal Circuit will be hearing
all appeals in ADRA cases. In light of the Federal Circuit’s soon to
be exclusive role in these cases, it makes sense for us to adopt that
circuit’s interpretation of the term "interested party" if there is a sound
basis for doing so.

   The ADRA confers standing on "an interested party objecting to a
[bid] solicitation by a Federal agency," 28 U.S.C. § 1491(b)(1), but
6      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
the statute does not give any further definition of the term "interested
party." The Federal Circuit was called upon to clarify the meaning of
the term in American Federation. The court began its analysis by rec-
ognizing that there are two plausible interpretations of the term "inter-
ested party." American 
Federation, 258 F.3d at 1299
. The first
interpretation is that the term encompasses any party who satisfies the
APA’s requirement for standing, specifically, "[a] person . . .
adversely affected or aggrieved by agency action." 5 U.S.C. § 702.
The second (and more restrictive) interpretation is that "interested
party" should be construed in accordance with the CICA, a statute
that is related to the ADRA. The CICA defines "interested party" to
mean "an actual or prospective bidder or offeror whose direct eco-
nomic interest would be affected by the award of the contract or by
failure to award the contract." 31 U.S.C. § 3551(2). Because "the
plain language of [28 U.S.C. § 1491(b)(1)] does not resolve [the]
issue" about the meaning of "interested party," the Federal Circuit
"look[ed] to the legislative history of [the statute] for an indication of
congressional intent." American 
Federation, 258 F.3d at 1299
.

   The court explained that the legislative history of the ADRA "indi-
cates that Congress intended [in 28 U.S.C. § 1491(b)(1)] to confer on
the Court of Federal Claims jurisdiction previously exercised only by
district courts under [Scanwell Labs., Inc. v. Shaffer, 
424 F.2d 859
(D.C. Cir. 1970)]." 
Id. at 1300.
Under Scanwell the district courts had
exercised jurisdiction over both pre-award and post-award protests to
federal bid solicitations and had used the APA standard of review. 
Id. Thus, the
Federal Circuit reasoned that when Congress indicated
through legislative history its intent to confer Scanwell jurisdiction on
the Court of Federal Claims, Congress meant for the Court of Federal
Claims to have jurisdiction over both pre- and post-award protests and
to judge them under the APA standard of review. Indeed, the ADRA
expressly provides that bid challenges are to be reviewed under the
APA standard of review, see 28 U.S.C. § 1491(b)(4), the same stan-
dard applied under the district courts’ Scanwell jurisdiction. What was
less clear, the Federal Circuit explained, was whether Congress’s ref-
erence to Scanwell implied that it "intended to expand the class of
parties who can bring bid protest actions in the Court of Federal
Claims." American 
Federation, 258 F.3d at 1300
. (In pre-1997 cases
the Court of Federal claims had only permitted disappointed bidders
to bring suit. 
Id. at 1298.)
On the one hand, because "[t]he vast major-
       BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE               7
ity of cases brought [in district courts] pursuant to Scanwell were
brought by disappointed bidders," the court suggested that "Congress
may have intended the [Court of Federal Claims] to exercise jurisdic-
tion over disputes brought by disappointed bidders only." 
Id. at 1301.
"On the other hand, because Scanwell itself is based on the APA,
Congress could have intended to give the Court of Federal Claims
jurisdiction over any contract dispute that could be brought under the
APA. Because the language of 5 U.S.C. § 702 is quite broad [it refers
to persons ‘adversely affected or aggrieved by agency action’], parties
other than actual or prospective bidders might be able to bring suit."
Id. (footnote omitted).
The court concluded that the former, more lim-
ited interpretation of the statute was preferable in light of the principle
that "waivers of sovereign immunity, such as that set forth in
§ 1491(b)(1), are to be construed narrowly." 
Id. The court
also
observed that this more limited interpretation is consistent with state-
ments in the legislative history that the ADRA would permit "‘a con-
tractor [to] challenge a Federal contract award.’" 
Id. at 1301-02
(quoting 142 Cong. Rec. S11848 (daily ed. Sept. 30, 1996) (statement
of Sen. Cohen) (emphasis added)).

   Finally, the Federal Circuit observed that while Congress does not
spell out the meaning of the term "interested party" in the ADRA,
Congress’s use of that particular term does provide some guidance.
Specifically, in drafting § 1491(b)(1), Congress did not adopt the
APA’s standing requirements by reference or use the broader standing
language of the APA. 
Id. at 1302.
Rather, Congress chose the term
"interested party," the same term given a more limited definition in
the CICA, 31 U.S.C. § 3551(2). According to the Federal Circuit, "the
fact that Congress used the same term in § 1491(b) as it did in the
CICA suggests that Congress intended the same standing require-
ments that apply to protests brought under the CICA to apply to
actions brought under § 1491(b)(1)." 
Id. at 1302.
In contrast, when
Congress intended to import APA doctrines into the ADRA, it did so
explicitly; specifically, when it came to providing for the standard of
review in bid protest cases under the ADRA, Congress explicitly pro-
vided that the APA standard of review would apply instead of the
more narrow standard of review that the Court of Federal Claims had
employed prior to the ADRA. 
Id. at 1300,
1302. Congress’s failure
in the ADRA to explicitly invoke APA doctrines with respect to
8      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
standing supports the inference that the APA standing test does not
apply to the ADRA.

   The Federal Circuit’s analysis is sufficiently persuasive for us to
adopt it. We therefore "construe the term ‘interested party’ in
§ 1491(b)(1) in accordance with the CICA, and hold that standing
under § 1491(b)(1) is limited to actual or prospective bidders or offer-
ors whose direct economic interest would be affected by the award of
the contract or by failure to award the contract." 
Id. at 1302.
   This brings us to the question of whether the PSC qualifies as an
interested party under the definition that we adopt today. That ques-
tion is easily answered. The PSC, of course, does not claim that it
ever attempted (or intended) to submit a bid to purchase and operate
the Fort Meade electric and gas utility distribution systems. Rather,
its interest in the solicitation is based solely on its desire as a state
regulatory body to assert jurisdiction over the private entity that will
eventually provide utility services at Fort Meade. Whatever the
importance of the PSC’s interest in protecting its regulatory jurisdic-
tion, the PSC is not "an actual or prospective bidder or offeror" on the
Army’s solicitation. 31 U.S.C. § 3551(2). As a result, the PSC is not
an interested party under 28 U.S.C. § 1491(b)(1), and it lacks standing
to bring a bid protest action. Because the PSC lacks standing to bring
this action, it likewise lacks standing to appeal the district court’s
judgment. Accordingly, the appeal is dismissed for lack of jurisdic-
tion.

                                                           DISMISSED

Source:  CourtListener

Can't find what you're looking for?

Post a free question on our public forum.
Ask a Question
Search for lawyers by practice areas.
Find a Lawyer