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NE Hub Partners, L.P. v. CNG Transmission Corp.

ELR Citation: 31 ELR 20433
Nos. No. 00-3387, 239 F.3d 333/(3d Cir., 01/29/2001)

The court holds that a natural gas storage facility operator may go forward with its federal preemption action against a state environmental agency in which it seeks a declaratory judgment enjoining the agency from revisiting its issuance of various state permits to the operator. After the operator's application to the Federal Energy Regulatory Commission (FERC) to construct the facility was challenged by competing operators, FERC examined 30 issues raised by the concerned parties. While these FERC proceedings were ongoing, the operator applied for and received the necessary state permits from the state environmental agency. FERC subsequently decided to issue the operator a certificate of public convenience and necessity. The competitors then appealed the issuance of the state permits, raising the same 30 issues that had been advanced before FERC. The operator, therefore, filed a complaint in federal district court claiming that the Natural Gas Act preempted the state review process and sought to enjoin the state agency from revisiting the permit review process. The district court dismissed the claim as unripe, and the operator appealed.

The court first holds that the operator's challenge to the state review process is ripe for review. The operator claims that the state permit process with respect to the 30 issues is preempted but that the state environmental agency will continue with that process unless enjoined. In these circumstances, the operator's and the state's interests could hardly be more adverse. Thus, without a declaratory judgment, the state agency's process of reviewing the permit will continue, and that process itself is the alleged harm. Although the agency has not stated whether it will review the 30 issues, it has not disclaimed the right to review them and, therefore, its interests continue to be adverse to those of the operator. Additionally, a declaratory judgment in this case would conclusively establish whether the state agency may base its permit decision on a consideration of the 30 issues. There is no need for additional factual discovery as the issue of whether the state proceedings are preempted is a legal one. Moreover, the operator would suffer a hardship were a declaratory judgment not issued. Further, the state regulatory process may be preempted by conflict with federal law, as well as by field occupation. In addition, by bringing this action, the operator did not circumvent FERC's rehearing process. Therefore, after declining to review the preemption argument, the court remanded the issue to the district court.

The full text of this decision is available from ELR (24 pp., ELR Order No. L-328).

Counsel for Appellant
Walter A. Bunt Jr.
Kirkpatrick & Lockhart
1500 Oliver Bldg., Pittsburgh PA 15222
(412) 355-6500

Counsel for Appellee
Stanley R. Geary
Buchanan & Ingersoll
One Oxford Center
301 Grant St., 20th Fl., Pittsburgh PA 15219
(412) 562-8800