THACKER, Circuit Judge:
Appellant Washington Gas Light Company ("Washington Gas") operates a natural gas substation on Chillum Road in Prince George's County, Maryland ("Chillum Site"). Beginning in 2004, Washington
Thereafter, Washington Gas filed a federal action seeking: (1) a declaration that the County erroneously denied Washington Gas permission to proceed under 28 Md.Code Ann. § 7-112 (the "mandatory referral statute"); (2) a declaration that the Natural Gas Pipeline Safety Act ("PSA"), Natural Gas Act ("NGA"), and state law preempt the County Zoning Plans; and (3) an injunction prohibiting the County from enforcing the allegedly preempted County Zoning Plans.
The district court initially dismissed the mandatory referral claim for failure to state a claim upon which relief could be granted and, in the alternative, on Burford abstention grounds. In a subsequent order, the district court granted summary judgment in favor of the County on the state and federal preemption claims, thus denying Washington Gas's request for declaratory and injunctive relief.
Washington Gas appeals the district court's order, dated February 9, 2009, dismissing the mandatory referral claim and the district court's subsequent order, dated March 9, 2012, granting summary judgment on the federal preemption claims.
Therefore, the district court's judgment, as set forth in its February 9, 2009 and March 9, 2012 orders, is affirmed.
Washington Gas distributes natural gas to retail customers in the Washington, D.C. area, including portions of Maryland and Virginia. Currently, Washington Gas operates a natural gas substation at the Chillum Site. The Chillum Site was initially approved for natural gas storage and compression in 1933. The scope of Washington Gas's operations at the Chillum Site has expanded, with County permission, on several occasions since that time. Specifically, in 1955, the County granted Washington Gas permission to construct a branch headquarters at the Chillum Site. Then, in 1975 and again in 1982, the County permitted Washington Gas to construct additional office and storage space there.
Washington Gas began seeking approval to add LNG storage tanks to the Chillum Site in 2004. In pursuit of this proposed expansion, Washington Gas initially sought to invoke the mandatory referral statute, Md.Code Ann., Land Use §§ 20-301-20-307 (Lexis 2012).
However, on March 23, 2006, during the pendency of the zoning proceedings, the County adopted the County Zoning Plans. The County Zoning Plans, known as the West Hyattsville District Overlay Zone ("WHDOZ") and the Transit District Development Plan ("TDDP"), were aimed at maximizing "transit-oriented development" in the area around the West Hyattsville Metro Center. The County Zoning Plans prohibited all industrial usage in that area, which included the Chillum Site. Based on this enactment, the County denied Washington Gas zoning approval on August 24, 2006.
Thereafter, Washington Gas appealed to the County Council, which denied the appeal. Washington Gas then appealed the denial to the Circuit Court for Prince George's County, Maryland, which dismissed the appeal on ripeness and exhaustion grounds.
As the state and county proceedings were ongoing, Washington Gas also appeared before the Maryland Public Service Commission ("MDPSC") in two separate matters relevant to the proposed expansion. First, in November 2005, Washington Gas wrote a letter to the MDPSC requesting regulatory approval for the proposed expansion. In particular, Washington Gas requested the MDPSC to certify that the proposed expansion complied with Maryland's regulations governing thermal radiation and vapor exclusion zones.
Second, in November 2008, Washington Gas initiated MDPSC review of its annual Gas Portfolio Plan, a required annual presentation in which a public utility details how it intends to meet customer demand over the next five years. This review is conducted pursuant to the MDPSC's rate regulation authority as set forth in Md. Code Ann., Pub. Util. § 4-402 (2012). As the district court noted, these annual reviews are limited to rate regulation and, therefore, "[t]hey are not general reviews of all aspects of public utilities in Maryland and do not include thorough reviews of a public utility's conformity with local land use plans." J.A. 1041. The proposed expansion was discussed during that review. However, because the proposed expansion, even if authorized by the County, would
Following completion of the zoning proceedings and the ensuing state appeal, Washington Gas brought this federal action on April 16, 2008 in United States District Court for the District of Maryland. The initial complaint was amended on July 18, 2008 (the "first amended complaint"). The first amended complaint sought (1) a declaration that Maryland's mandatory referral procedure applies to the LNG project (the "mandatory referral count"); (2) a declaration that the PSA, the NGA, and Maryland state law preempt the County Zoning Plans; and (3) an injunction preventing the County from enforcing the County Zoning Plans.
The County filed a motion to dismiss the first amended complaint for failure to state a claim upon which relief could be granted and, in the alternative, to abstain from asserting jurisdiction over the case. Washington Gas filed a motion for summary judgment. Prior to holding a hearing on these motions, the district court issued a memorandum opinion on January 30, 2009, outlining the various issues before the court and expressing tentative opinions as to how it would resolve those issues.
First, as to the County's motion to dismiss, the district court indicated it would likely deny that motion, except with respect to the mandatory referral count. On that count, the district court indicated it would likely grant the County's motion to dismiss for failure to state a claim on which relief could be granted because "there is no state law cause of action delineated, and certainly no federal question involved." J.A. 281.
As to the County's motion to abstain, the district court indicated it would likely deny that motion, again with the exception of the mandatory referral count. On that count, the district court indicated that it would abstain from deciding the issue because "[f]ederal adjudication [of the mandatory referral count] would disrupt state efforts to establish a coherent policy regarding zoning procedures and the state mechanisms for land use planning." J.A. 288.
Finally, as to Washington Gas's summary judgment motion, the district court indicated it would likely deny that motion in full, as there still remained issues of fact relevant to state and federal preemption.
The district court then conducted a hearing on these motions on February 10, 2009. Later that day, the court entered an order granting the County's motion to dismiss and the County's motion to abstain as to the mandatory referral count; denying the County's motions to dismiss and to abstain as to the other counts in the first amended complaint; and denying the entirety of Washington Gas's motion for summary judgment. In so doing, the district court expressly adopted its reasoning articulated in its prior memorandum opinion. The district court then granted Washington Gas leave to file another complaint (the "second amended complaint").
The second amended complaint, filed on February 24, 2009, contained all of the original claims, excluding the mandatory referral count, and added a few factual allegations. Notably, the second amended complaint alleged, for the first time, that Washington Gas is an interstate pipeline under the PSA and that it was subject to regulation by the Federal Energy Regulatory Commission ("FERC") under the NGA.
Washington Gas then filed a second motion for summary judgment, which the district
On March 28, 2011, Washington Gas filed its third — and final — amended complaint (the "third amended complaint"). In the third amended complaint, Washington Gas averred that, even assuming it is not an interstate pipeline, the County Zoning Plans are still preempted by the NGA, the PSA, and state law.
Thereafter, the County filed a counter-claim seeking a declaration that neither federal nor state law preempted the County Zoning Plans. The parties then filed cross motions for summary judgment. By a memorandum opinion dated March 9, 2012, the district court granted the entirety of the County's motion and denied the entirety of Washington Gas's motion. The district court rejected Washington Gas's argument that the PSA comprehensively regulates LNG facility siting, concluding instead that the PSA's preemptive effect only extends to safety standards. Because the district court also found that the County Zoning Plans were not, in fact, safety standards, the court concluded the County Zoning Plans are not preempted by the PSA. Additionally, the district court concluded, because Washington Gas is a local distributor of natural gas exempt from regulation under the NGA, the NGA does not preempt the County Zoning Plans. Washington Gas timely appealed.
Washington Gas appeals the district court's February 9, 2009 order arguing that the district court erred in abstaining from deciding the mandatory referral count under Burford. Washington Gas also appeals the district court's March 9, 2012 order arguing (1) the PSA impliedly preempts the County Zoning Plans because they are, in fact, safety regulations; and (2) the NGA impliedly preempts the County Zoning Plans by granting exclusive authority to the MDPSC.
We review the district court's decision to abstain under Burford for abuse of discretion. See MLC Auto., LLC v. Town of S. Pines, 532 F.3d 269, 280 (4th Cir. 2008).
We review de novo the district court's award of summary judgment to the County on Washington Gas's federal preemption claims. See Nat'l City Bank of Indiana v. Turnbaugh, 463 F.3d 325, 329 (4th Cir.2006). Summary judgment is appropriate where "the evidence shows that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law." Id.; see also Fed. R.Civ.P. 56(a). Because the facts here are undisputed, this case presents only questions of law.
The district court abstained from resolving Washington Gas's mandatory referral
Id. (quoting New Orleans Pub. Serv. Inc. v. Council of New Orleans, 491 U.S. 350, 361-63, 109 S.Ct. 2506, 105 L.Ed.2d 298 (1989) ("NOPSI")).
Ordinarily, federal courts have an "`unflagging obligation to exercise their jurisdiction.'" MLC Auto., 532 F.3d at 280 (quoting Deakins v. Monaghan, 484 U.S. 193, 203, 108 S.Ct. 523, 98 L.Ed.2d 529 (1988)). Thus, abstention "remains the exception, not the rule." Id. (quoting NOPSI, 491 U.S. at 359, 109 S.Ct. 2506). However, abstention's "importance in our system of dual sovereignty cannot be underestimated." Id. (internal quotation marks omitted). Thus, federal courts must "exercise their discretionary power with proper regard for the rightful independence of state governments in carrying out their domestic policy." Burford, 319 U.S. at 318, 63 S.Ct. 1098 (internal quotation marks omitted).
In concluding that Burford abstention was warranted here, the district court indicated:
J.A. 288-89.
As noted, Maryland's mandatory referral statute exempts certain public utility projects from local zoning review. In particular, this statute enumerates the public entities to which it applies, including "a publicly owned or privately owned public utility." See Md.Code Ann., Land Use § 20-301 (Lexis 2012). Washington Gas argues that, as a privately owned public utility, mandatory referral plainly applies to its proposed expansion. Washington Gas further argues that the district court abused its discretion in abstaining under Burford because the issue involves, "a straightforward question of statutory construction" and, therefore, "an adjudication of the issue does not disrupt a coherent state policy with respect to a matter of substantial public concern." Br. of Appellants 35.
The County counters that Washington Gas's reading of the statute is overly simplistic and that it ignores other language in the mandatory referral statute
Moreover, the County points out that, in PAHO, we certified a similar question to the Maryland Court of Appeals. Specifically, in PAHO, an international organization sought to construct its headquarters in Montgomery County, Maryland, notwithstanding local zoning restrictions that would have prohibited that use. Before this court, the organization argued that it was exempt from local zoning under the mandatory referral statute. Rather than construe the mandatory referral statute, this Court certified the question to the Maryland Court of Appeals. Thus, in the present case, the County argues that our decision to certify a question to the Maryland Court of Appeals in PAHO demonstrates that the construction of Maryland's mandatory referral statute is a difficult and important issue of state law and, accordingly, that issue should be decided by the state.
Notably, "cases involving questions of state and local land use and zoning law are a classic example of situations where Burford should apply." MLC Auto., 532 F.3d at 282 (internal quotation marks omitted). While zoning and land use cases do not automatically warrant Burford abstention, in cases where "plaintiffs' federal claims stem solely from construction of state or local land use or zoning law, not involving the constitutional validity of the same and absent exceptional circumstances ..., the district courts should abstain under the Burford doctrine to avoid interference with the State's or locality's land use policy." Id.
In this case, resolution of Washington Gas's mandatory referral count turns on whether Maryland's mandatory referral statute should have been applied. That question turns entirely on the meaning of the phrase "privately owned public utility" as it is used in Maryland's mandatory referral statute. Thus, Washington Gas's mandatory referral claim turns entirely on the construction of state or local land use law. In these circumstances, precedent dictates that Burford abstention is appropriate.
Under the Supremacy Clause of the United States Constitution, federal law is "the supreme Law of the Land." U.S. Const. art. VI, cl. 2. Accordingly, "state law that conflicts with federal law is `without effect.'" See AES Sparrows Point LNG, LLC v. Smith, 527 F.3d 120, 125 (4th Cir.2008) (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992)). In determining whether a state law is preempted, "we are guided first and foremost by the maxim that `the purpose of Congress is the ultimate touchstone in every pre-emption case.'" Epps v. JP Morgan Chase Bank, N.A., 675 F.3d 315, 322 (4th Cir.2012) (quoting Wyeth v. Levine, 555 U.S. 555, 564, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009)).
Preemption generally occurs in one of three circumstances. First, a federal law preempts state law when Congress expressly declares its intention that state law be preempted. See Epps, 675 F.3d at 322; see also Cipollone, 505 U.S. at 517, 112 S.Ct. 2608. Second, a federal law impliedly preempts state law when Congress has occupied the field by "regulating
With these general preemption principles in mind, we turn first to the question of whether the PSA preempts the County Zoning Plans.
The PSA's stated purpose is to "provide adequate protection against risks to life and property posed by pipeline transportation and pipeline facilities" by empowering the Secretary of Transportation to "prescribe minimum safety standards for pipeline transportation and for pipeline facilities." 49 U.S.C. § 60102(a)(1)-(2) (2006). Accordingly, the PSA generally authorizes the Secretary of Transportation to prescribe and enforce minimum safety standards for locating new LNG facilities and for the design, installation, construction, inspection, and testing of those facilities. See 49 U.S.C. § 60103(a)(b) (2006).
However, under the PSA, the Secretary of Transportation may not "prescribe or enforce safety standards for an intrastate pipeline facility or intrastate pipeline transportation to the extent that the safety standards and practices are regulated by a State authority ... that submits to the Secretary annually a certification for the facilities and transportation...." 49 U.S.C. § 60105(a) (2006). In Maryland, the MDPSC is the authorized state authority that submits the required annual certifications to the Secretary of Transportation. See MD Code Ann., Public Util. § 11-202(a) (Lexis 2010).
The PSA contains an express preemption provision, which states, in relevant part:
49 U.S.C. § 60104(c) (2006). Accordingly, we have held that the PSA expressly preempts state and local law in the field of safety. See, e.g., Tenneco Inc. v. Pub. Serv. Comm'n of W. Va., 489 F.2d 334, 336 (4th Cir.1973) ("The [PSA's] text, its legislative history, administration implementation, and judicial interpretation, attest to federal preemption of the field of safety with respect to the establishment and enforcement of standards regulating the interstate transmission of gas by pipeline.")
Washington Gas argues that the PSA preempts the County Zoning Plans expressly, impliedly, and by conflict. We disagree on all counts. As noted, the PSA expressly preempts the field of pipeline safety. See 49 U.S.C. § 60104(c). Here, however, because the County Zoning Plans are not safety regulations, they do not come within the express preemption provision
Id. In light of these goals, it is clear that the County Zoning Plans are primarily local land use regulations as opposed to safety regulations.
In Texas Midstream Gas Servs. v. City of Grand Prairie, 608 F.3d 200 (5th Cir. 2010), the Fifth Circuit reached a similar conclusion on analogous facts. There, a gas company sought to construct an interstate natural gas pipeline facility in Grand Prairie, Texas. Under Grand Prairie's zoning regulations, the facility would have needed to comply with a 300 foot "setback" requirement under which all facilities needed to be set back at least 300 feet from a nearby road. The gas company sought a declaration that the setback requirement was preempted by the PSA arguing, as Washington Gas does here, that the PSA broadly preempts the siting of natural gas facilities. The Fifth Circuit disagreed, holding that the PSA's preemptive effect is limited to the field of pipeline safety and that the setback requirement was not a safety standard but, rather, was primarily aimed at developing "neighborhood" aesthetics in the area. See Texas Midstream, 608 F.3d at 211 ("[T]he setback requirement primarily ensures that bulky, unsightly, noisy compressor stations do not mar neighborhood aesthetics.")
Washington Gas attempts to distinguish Texas Midstream by arguing that, in that case, the local regulation did not completely prohibit the company from siting the proposed facility in its preferred location, whereas, in this case, the County Zoning Plans would completely prohibit Washington Gas from using its preferred location. This is a distinction without a difference. Logically, the power to impose a zoning requirement includes the power to preclude any proposed usage of the zoned area that cannot comply with such requirement. Thus, the fact that the County Zoning Plans arguably have a more significant effect on Washington Gas than the setback requirement did on the regulated utility in Texas Midstream is of no moment here.
Washington Gas also argues that the County Zoning Plans are "safety regulations in disguise" and, therefore, are preempted by the PSA. Rep. Br. of Appellants 13. The district court properly rejected this argument. At their core, the County Zoning Plans are local land use provisions designed to foster residential and recreational development. Even assuming safety concerns played some part
Washington Gas next argues that, through the PSA, Congress "comprehensively" addresses the siting of LNG facilities and, therefore, the PSA and the regulations adopted thereunder impliedly preempt the County Zoning plans. Br. of Appellants 24. We reject this argument. Because the County Zoning Plans are beyond the scope of the PSA's express preemption provision, it is unlikely that they are impliedly preempted. See, e.g., Coll. Loan Corp. v. SLM Corp., 396 F.3d 588, 596 n. 5 (4th Cir.2005) ("Because Congress deemed it necessary to specifically preempt certain state laws, it is clear that Congress could not have intended the [Higher Education Act] to so `occupy the field' that it would automatically preempt all state laws." (quoting Cipollone, 505 U.S. at 517, 112 S.Ct. 2608)).
Even if we were to find that the PSA has preemptive effect beyond the express preemption provision discussed in 49 U.S.C. § 60104(c), we would not conclude that Congress intended the PSA to occupy the field of natural gas facility siting. Specifically, the PSA expressly circumscribes the Secretary of Transportation's role in this area, indicating, "[t]his chapter does not authorize the Secretary of Transportation to prescribe the location or routing of a pipeline facility." 49 U.S.C. § 60104(e) (2006).
Finally, we reject Washington Gas's argument that the PSA preempts the County Zoning Plans by conflict. Conflict preemption exists where a state statute "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Chi. & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317, 101 S.Ct. 1124, 67 L.Ed.2d 258 (1981). Here, the County Zoning Plans do not stand as an obstacle to the accomplishment of the full purposes of Congress, because, as noted above, Congress' purpose in enacting the PSA was to create federal minimum safety standards on all natural gas pipeline facilities. See 49 U.S.C. § 60102(a). Because the County Zoning Plans are not safety standards, they do not stand as an obstacle to the accomplishment of this purpose.
Moreover, Washington Gas has repeatedly indicated that there are alternative locations, albeit more costly, that it could use for the proposed expansion. While Washington Gas objects to the use of these alternatives based on the cost, this objection is of no constitutional significance. See Texas Midstream, 608 F.3d at 211 ("[Texas Midstream] raises the prospect that an operator of a compressor station may have to acquire more land to comply with both requirements. This may cost [Texas Midstream] money, but it does not thwart the full purposes and objectives of Congress." (internal citations and quotation marks omitted)). Thus, Washington Gas could comply with both statutes simultaneously if it so chooses. Therefore, there is no conflict between the PSA and the County Zoning Plans.
The NGA was designed to ensure that natural gas consumers have access to an
However, the NGA only regulates the interstate natural gas industry. Specifically, 15 U.S.C. § 717(b) further indicates, "[FERC's authority] shall not apply to any other transportation or sale of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas." Thus, as the Supreme Court has held, the NGA "expressly carves out a regulatory role for states ... providing that the States retain jurisdiction over intrastate transportation, local distribution, and distribution facilities, and over `the production or gathering of natural gas.'" Northwest Cent. Pipeline Corp. v. State Corp. Comm'n of Kansas, 489 U.S. 493, 507, 109 S.Ct. 1262, 103 L.Ed.2d 509 (1989) (quoting 15 U.S.C. § 717(b)).
Notably, not all natural gas companies whose operations cross state lines are considered "interstate" for purposes of the NGA. Specifically, 15 U.S.C. § 717f(f)(1)-(2) (2006) provides:
15 U.S.C. § 717f(f)(1)-(2). Accordingly, natural gas companies operating pursuant to a service area designation under this section are permitted to "enlarge or expand facilities to supply market requirements without further Commission approval." Washington Gas Light Co., 74 FERC ¶ 61,048, at p. 61,106 (Jan. 22, 1996).
On appeal, Washington Gas argues that the NGA transfers jurisdiction over the enlargement or expansion of Washington Gas's facilities to the MDPSC and that this delegation of authority preempts the County Zoning Plans.
Congress confirmed this reading in the legislative history to a recent amendment to § 717f(f).
S.Rep. No. 100-486, at 2 (1988) (emphasis supplied), reprinted in 1988 U.S.C.C.A.N. 2692, 2692-93.
Based on this designation, the parties agree that FERC lacks jurisdiction over the proposed expansion at the Chillum Site. However, Washington Gas argues that § 717f(f) transfers jurisdiction over the enlargement or extension of its facilities to the MDPSC and that this transfer of jurisdiction preempts the County Zoning Plans. However, the plain language of § 717f(f) does not support this assertion.
Specifically, § 717f(f)(1) governs the expansion of natural gas facilities and provides that, if FERC has designated a service area, a natural gas company operating pursuant to that designation may expand its facilities without further FERC authorization. Notably, however, this section does not address which, if any, other regulatory bodies actually exercise such authority. Rather, § 717f(f)(1) operates negatively as exemption from FERC regulation, not as a positive grant of authority to the MDPSC.
Similarly, Washington Gas's interpretation is unaided by § 717f(f)(2). Section 717f(f)(2) expressly applies to the transportation of natural gas and provides that regulation of transportation services by a § 717f(f) designee is "subject to the exclusive jurisdiction of the State commission in the State in which the gas is consumed." 15 U.S.C. § 717f(f)(2). Thus, while § 717f(f)(2) grants the MDPSC exclusive jurisdiction to regulate a part of Washington Gas's operations, it does so only insofar as transportation is concerned. However, this is a case about facility expansion, not transportation. Thus, § 717f(f)(2)'s grant of exclusive jurisdiction to the MDPSC to regulate Washington Gas's transportation activities is not relevant to the question of whether the NGA preempts the County Zoning Plans.
In arguing that the NGA vests the MDPSC with exclusive jurisdiction over the expansion of Washington Gas' facilities, Washington Gas appears to conflate the two provisions of § 717f(f). However, this is not appropriate. As the district court held, these two provisions, separated by an "and," regulate entirely different areas of the natural gas industry: transportation and siting. Thus, the fact that § 717f(f)(2) vests exclusive jurisdiction over transportation in state public service commissions does not imply that Congress intended to do the same thing for siting in § 717f(f)(1).
Moreover, the only authority Washington Gas cites in support of its interpretation is Appalachian Power Co. v. Public Serv. Co. of W. Va., 812 F.2d 898 (4th Cir.1987). In Appalachian Power, we held that the Federal Power Act preempted the West Virginia Public Service Commission's attempt to regulate an agreement among several utility companies engaged in the transmission of energy in interstate commerce. However, because Appalachian Power did not involve FERC regulation under the NGA and because the regulated entities in Appalachian Power were engaged in interstate commerce, Washington Gas's reliance on Appalachian Power in the present matter is misplaced.
Finally, Washington Gas asserts that this court should follow the United States District Court for the District of Rhode Island's approach in Algonquin LNG v. Loqa, 79 F.Supp.2d 49 (D.R.I.2000), and conclude that the NGA does, in fact, preempt the County Zoning Plans. Washington Gas's reliance on Algonquin is misplaced. In that case, the operator of an interstate natural gas pipeline facility sought a declaration that a Providence, Rhode Island ordinance requiring the operator to obtain local zoning approval for a proposed modification was preempted by the NGA and the PSA. The district court agreed, holding, "[t]hese statutes, together with the regulations promulgated pursuant to them, establish a comprehensive scheme of federal regulation that the Supreme Court has said confers upon FERC exclusive jurisdiction over the transportation and sale of natural gas in interstate commerce." Algonquin, 79 F.Supp.2d at 51. Accordingly, the Algonquin court held that the city zoning ordinance was preempted.
In summary, we conclude that (1) the district court properly abstained from deciding the mandatory referral count based on Burford abstention; (2) the PSA does not preempt the County Zoning Plans because the PSA only preempts safety regulations and the County Zoning Plans are not safety regulations; and (3) the NGA does not preempt the County Zoning Plans because the NGA only preempts state and local laws governing interstate natural gas operations and, per the NGA, Washington Gas is a local distribution company. Therefore, the judgment of the district court is
AFFIRMED.
