RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 10a0319p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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AMERICAN ENERGY CORPORATION;
Plaintiffs-Appellants, --
CONSOLIDATED LAND COMPANY,
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No. 09-3864
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>
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v.
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Defendant-Appellee. -
ROCKIES EXPRESS PIPELINE LLC,
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Appeal from the United States District Court
for the Southern District of Ohio at Columbus.
No. 09-00284—Gregory L. Frost, District Judge.
Argued: August 5, 2010
Decided and Filed: September 29, 2010
Before: SUTTON and McKEAGUE, Circuit Judges; JONKER, District Judge.*
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COUNSEL
ARGUED: Mark S. Stemm, PORTER, WRIGHT, MORRIS & ARTHUR LLP,
Columbus, Ohio, for Appellants. Gregory D. Brunton, REMINGER CO., L.P.A.,
Columbus, Ohio, for Appellee. ON BRIEF: Mark S. Stemm, Alvin J. McKenna,
Robert J. Stalter, PORTER, WRIGHT, MORRIS & ARTHUR LLP, Columbus, Ohio,
for Appellants. Gregory D. Brunton, Paul N. Garinger, REMINGER CO., L.P.A.,
Columbus, Ohio, for Appellee. Vladimir P. Belo, BRICKER & ECKLER LLP,
Columbus, Ohio, for Amicus Curiae.
*
The Honorable Robert J. Jonker, United States District Judge for the Western District of
Michigan, sitting by designation.
1
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 2
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OPINION
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SUTTON, Circuit Judge. This is round three in a land-use dispute between two
coal companies and a pipeline company. Round one: over the coal companies’
objection, the pipeline company obtained an order from the Federal Energy Regulatory
Commission (FERC) permitting it to build a natural gas pipeline over the coal
companies’ mine, after which the coal companies appealed the order to the D.C. Circuit,
where it is now pending. Round two: the pipeline company filed a condemnation action
in federal court seeking a surface easement over the coal mine in return for
compensating the coal companies for the costs of the easement. Round three: the coal
companies filed an action in state court, later removed to federal court, to enjoin the
building of the pipeline and to recover tort damages from the pipeline company caused
by construction of the pipeline. In this last action, the subject of today’s appeal, the
district court granted the pipeline company’s motion to dismiss, holding that the
plaintiffs’ claims belonged before the courts handling the first two actions. We affirm.
I.
The FERC Proceeding. In 2007, the pipeline company filed an application with
FERC to build a natural gas pipeline from Missouri to eastern Ohio. Rockies Express
Pipeline LLC, Nos. CP07-208-000, CP07-208-001, 123 FERC ¶ 61234, 2008 WL
2224961, at ¶ 1 (FERC Certificate). At stake was a “certificate of public convenience
and necessity,” which is what an energy company needs to build a pipeline crossing state
lines. 15 U.S.C. § 717f(c). The coal companies opposed the certificate request, and
FERC permitted them to intervene in the proceeding. As the coal companies saw it, the
pipeline would interfere with their business and endanger their mining operations.
FERC nonetheless granted the certificate in 2008. FERC issued the certificate subject
to several conditions, one of which required the pipeline company to “collaborate with
[the coal companies] to develop a construction and operations plan” addressing “pipeline
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 3
integrity and operation” for the portion of the pipeline that runs over the mine. FERC
Certificate ¶ 97, Appendix E ¶ 147.
The pipeline company submitted the required “construction and operations plan”
and supplemental materials. The coal companies renewed their objections to the
proposed pipeline route. FERC approved the plan and notified the pipeline company
that it could begin constructing the pipeline. The coal companies requested a rehearing,
which FERC granted in part and denied in part on July 15, 2009. The coal companies
appealed FERC’s final order to the D.C. Circuit, where it is currently pending. See
Murray Energy Corp. v. FERC, No. 09-1207 (D.C. Cir. filed July 20, 2009).
The Federal Court Condemnation Action. A FERC certificate grants the holder
the right to acquire any portion of the necessary right of way by eminent domain when
the certificate holder cannot obtain permission through negotiations with the property
owner. 15 U.S.C. § 717f(h). On June 6, 2008, the pipeline company filed a
condemnation action in federal district court seeking to obtain easement rights along the
right of way needed to construct the pipeline. See Rockies Express Pipeline LLC v.
4.895 Acres of Land, More or Less, in Butler County, Ohio, No. 2:08-CV-554, R.2 (S.D.
Ohio June 6, 2008). The pipeline company eventually brought the coal companies into
the action as defendants, and that action remains pending in the District Court for the
Southern District of Ohio.
The Conversion Action. On April 10, 2009, the coal companies filed this action
in state court in Ohio. Four days later, the pipeline company removed the action,
involving diverse parties, to federal district court. The essence of the coal companies’
position is that they face injuries from the construction of the pipeline that neither their
FERC appeal nor the condemnation action can compensate. The district court disagreed,
granting the pipeline company’s motion to dismiss under Civil Rule 12(b)(6). This
appeal followed.
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 4
II.
The coal companies seek four types of relief: (1) a declaration that they have the
right to extract all of the mine’s coal without the pipeline company’s interference,
requiring the pipeline company to “determine” and “commit to implement and pay for”
those measures that “will eliminate the risk of imminent danger and disruptions” to
mining, R.3 ¶ A; (2) an injunction halting pipeline construction until the pipeline
company presents a mitigation plan adequate to avoid danger and disruptions; (3) an
injunction requiring the company to develop a mitigation plan; and (4) a finding that the
pipeline has converted the coal companies’ property under state law—by “wrongfully
interfer[ing] with [their] right to plan for [their] mining and [to] mine all of the coal,” id.
¶ 70—and an award of compensatory damages, id. ¶ D. We give fresh review to the
district court’s decision to dismiss these claims as a matter of law and treat all of the coal
companies’ factual allegations as true. Rossborough Mfg. Co. v. Trimble, 301 F.3d 482,
489 (6th Cir. 2002).
A.
We can make short work of the coal companies’ first three claims—all for
equitable relief of one sort or another. At the heart of these claims lies the belief that
FERC did not adequately consider the safety risks and business interruptions that the
coal companies would face from the pipeline—including the fear that the pipeline would
cause “imminent danger and disruptions” and “crippling financial losses.” R.3 ¶¶ 50,
56. These fears may or may not be well-founded, but one thing is clear: They are not
for us to resolve.
The Natural Gas Act sets forth a highly reticulated procedure for obtaining, and
challenging, a FERC certificate to build an interstate pipeline. A party aggrieved by
such an order may apply for rehearing before FERC. 15 U.S.C. § 717r(a). And no entity
may seek judicial review of a FERC order unless it first sought rehearing from the
agency. Id. Once FERC concludes the rehearing, the aggrieved party may petition for
review either in the D.C. Circuit or in the circuit where the natural gas company is
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 5
located or has its principal place of business—in this instance, the Third or Fifth Circuit.
15 U.S.C. § 717r(b); R.2 at 3 (the pipeline company is a Delaware LLC and has its
principal place of business in Texas). The relevant court of appeals thereafter has
“exclusive” jurisdiction “to affirm, modify, or set aside [FERC’s] order in whole or in
part.” 15 U.S.C. § 717r(b); see also 15 U.S.C. § 717r(d)(1). Exclusive means exclusive,
and the Natural Gas Act nowhere permits an aggrieved party otherwise to pursue
collateral review of a FERC certificate in state court or federal district court.
Yet it is precisely this exclusive jurisdiction that the coal companies wish to
sidestep. In the absence of their desired injunctive and declaratory relief, they say, the
pipeline will interrupt their mining business and create safety risks. FERC, however,
evaluated those same claims and same types of claims in its original order granting the
certificate. See FERC Certificate at ¶¶ 88–89 (addressing the coal companies’ concern
that the pipeline would cross the mine’s underground entrance), ¶ 91 (addressing the coal
companies’ concerns that the proposed pipeline will “present numerous dangers to the
pipeline’s integrity” and “will interfere with the ongoing and future extraction of
hundreds of millions of tons of coal”), ¶ 93 (addressing the steps the pipeline company
had taken to prevent safety hazards and reiterating the certificate’s requirements for
“Rockies Express to consult with the mining companies prior to the start of
construction” to ensure the route’s safety), Appendix E ¶ 147 (addressing the
requirement that the pipeline company collaborate with the coal companies to develop
a “construction and operations plan” that “address[es] the primary concern of
maintaining pipeline integrity and operation while not impeding the mining operation”).
More, FERC addressed some of these same concerns again in reviewing the coal
companies’ rehearing petition. See Rockies Express Pipeline LLC, No. CP07-208-005,
128 FERC ¶ 61045, 2009 WL 2049170, at ¶ 31 (“[The coal companies] argue that the
Commission erred in approving [the pipeline company’s certificate] . . . because the plan
is deficient, unsafe, and fails to protect [the coal companies’] mining operations.”), ¶ 71
(“We believe . . . that construction and operation of the REX-East pipeline, as
conditioned by our orders, will not constitute a significant safety risk.”). Proving that
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 6
FERC took the coal companies’ concerns seriously, it imposed an additional condition
on the pipeline company. To “ensure the safety of miners working” in the mine, FERC
required the pipeline company, prior to any surface blasting, to “provide the Commission
with proof that [the coal companies] and the Ohio Department of Natural Resources
Office of Mine Safety have received actual notice of” the pipeline company’s plans. Id.
¶ 85.
Now that FERC has issued its final order and now that the coal companies have
appealed that order to the D.C. Circuit, the matter lies within that court’s exclusive
jurisdiction. 15 U.S.C. § 717r; see also Williams Natural Gas Co. v. City of Oklahoma
City, 890 F.2d 255, 262 (10th Cir. 1989). The coal companies thus may not seek what
amounts to a second round of collateral review of FERC’s order here. See Williams
Natural Gas Co., 890 F.2d at 262.
Resisting this conclusion, the coal companies argue that the FERC case concerns
pipeline-construction matters while this one concerns post-pipeline-construction matters.
Coal Companies’ Br. at 13. That slices things too thinly—not unlike the Kentucky
woodsman who cut a plank so many times that it had just one side. A case concerning
construction matters may consider post-construction matters.
In truth, moreover, the coal companies do not argue to the contrary. In failing
to address post-construction safety, the coal companies say that the FERC order leaves
a “large hole in the FERC approval” that “threaten[s] [the coal companies] with
irreparable damages.” Id. at 13, 15. Yet the coal companies do not maintain that post-
construction-safety matters exceed FERC’s jurisdiction, only that FERC did not address
them adequately. However “large” or small the mine-safety “hole” left by the FERC
certificate, it remains a hole that must be filled or explained through the FERC
proceeding, which retains exclusive jurisdiction over the issue. See 15 U.S.C. § 717r.
Any problems with the FERC certificate must be addressed there.
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 7
B.
That leaves the coal companies’ final claim for relief—their request for money
damages for conversion. The question here is not whether FERC has jurisdiction over
these claims, which it does not. See 15 U.S.C. § 717f (giving FERC only the power to
grant certificates of public convenience and necessity, not the power to award related
damages). The question is whether these claims in one way or another are already
before the district court in the condemnation action provided by section 7(h) of the
Natural Gas Act. 15 U.S.C. § 717f(h).
No one doubts that the statutorily authorized condemnation action is designed
to compensate the coal companies for the losses caused by construction of the pipeline.
That is the point of the action: to allow the land to be put to a public purpose and to
compensate the landowner for the use. Ohio Valley Adver. Corp. v. Linzell, 152 N.E.2d
380, 384 (Ohio Ct. App. 1957) (“A land appropriation proceeding is . . . . an
appropriation of physical property in which the value of the various interests in the
property is determined and the proceeds applied accordingly.”); see U.S. Const. amend.
V. The concern, rather, is that some of the coal companies’ theories of damages may
exceed the jurisdiction of the condemnation action. We do not think so.
Federal courts entertaining FERC condemnation actions use “the law of the state
in which the condemned property is located”—Ohio—“in determining the amount of
compensation due.” Columbia Gas Transmission Corp. v. Exclusive Natural Gas
Storage Easement, 962 F.2d 1192, 1199 (6th Cir. 1992). Under Ohio law, the landowner
in an eminent domain action is entitled both to the value of the taken land and to
“damages” to the “residue” of the property. City of Norwood v. Forest Converting Co.,
476 N.E.2d 695, 700 (Ohio Ct. App. 1984). Damages to the residue compensate for
“any injury that may result to the remaining lands by reason of the construction of the
proposed improvement,” measured by the difference in the residue’s fair market value
before and after the taking. Id. A court determining fair market value should take into
consideration “every element that can fairly enter into the question of value.” Sowers
v. Schaeffer, 99 N.E.2d 313, 317 (Ohio 1951). That approach gives the court in the
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 8
condemnation action jurisdiction over this cause of action. Cf. Colo. River Water
Conservation Dist. v. United States, 424 U.S. 800, 817 (1976); Kerotest Mfg. Co. v. C-O-
Two Fire Equip. Co., 342 U.S. 180, 183–84 (1952); Smith v. SEC, 129 F.3d 356, 361
(6th Cir. 1997) (en banc).
That the coal companies place a “conversion” label on their claim for money
damages does not change matters. What is it about a “conversion” claim that lies outside
the scope of a condemnation action? If the condemnation action will compensate for
“any injury” to the residue, taking into account “every element” of the question of value,
it may entertain the damages theory presented.
The pipeline company, notably, does not dispute the point. At oral argument, it
acknowledged that the condemnation court may award damages for all of the coal
companies’ injuries, no matter the label given to the theory of relief. Oral Arg. at
39:17–39:57 (Court [to pipeline company’s counsel]: “You’re not conceding anything
in terms of the merits of any of these theories of relief, the amounts of damages, types
of damages. . . . But as a matter of jurisdiction—the power of Judge Frost in that other
action—he can consider them? He [just has to] deal with what the rules of law are with
respect to each theory?” Pipeline company’s counsel: “Yea, he can consider them.”).
And in its letter brief, it acknowledged the same thing.
All of this is not to reach the merits of the coal companies’ claim. Jurisdiction
over a cause of action is one thing; the merits of it are another. And most of the coal
companies’ contrary arguments merely conflate the distinction between a court’s
authority over a dispute and the proper resolution of that dispute. The district court has
authority to decide in the first instance whether the claims raise legally cognizable
injuries or whether they are “merely speculative or contingent.” Masheter v. Blaisdell,
282 N.E.2d 42, 45 (Ohio 1972). To the extent the coal companies believe that the
district court in the condemnation action has under-enforced Ohio law on this score, it
can appeal the decision to us. To the extent the coal companies believe that Ohio law
fails fully to compensate these injuries in violation of the Fifth (and Fourteenth)
Amendment, they can raise that claim in the district court and, if necessary, here. And
No. 09-3864 Am. Energy Corp. v. Rockies Express Pipeline LLC Page 9
to the extent any claims turn on speculative or future injuries, any order dismissing them
would be without prejudice to raising them when the claims ripen into concrete, present
injuries.
III.
For these reasons, we affirm.