The United States Court of Appeals for the Ninth Circuit has affirmed dismissal of a lawsuit brought in 2012 by the City and County of San Francisco (San Francisco) to challenge PHMSA’s oversight of State enforcement of pipeline safety standards before and after the San Bruno pipeline incident in 2010.  Specifically, in its lawsuit San Francisco took issue with PHMSA’s approval of the California Public Utilities Commission (CPUC) certification to regulate intrastate pipelines in California and the Agency’s disbursement of federal funds to the CPUC to carry out its pipeline safety program in compliance with its certification.  The Ninth Circuit opinion affirms the District Court’s ruling in the case that the federal Pipeline Safety Act (PSA or the Act) citizen suit provision does not authorize mandamus-type citizen suits against PHMSA, and that any decision by the Agency to refrain from reviewing or rejecting a State’s certification to regulate its intrastate pipelines or to fund a State pipeline safety program is not subject to judicial review.

Under the PSA, states may assume regulatory jurisdiction over most intrastate pipelines within their borders if they certify to PHMSA that they have adopted the minimum federal safety standards and are enforcing them in accordance with PSA requirements.  49 U.S.C. § 60105.  A state assumes jurisdiction over its intrastate pipelines upon submitting a certification to PHMSA, but the Agency may decide subsequently to reject the certification if it determines that a state authority is not enforcing federal safety standards to its satisfaction.  49 U.S.C. § 60105(f).  PHMSA is also authorized to provide funding to cover up to 80% of a state’s costs in carrying out its safety program, but it may withhold funds when the Agency decides that the state is not carrying out its program satisfactorily.  49 U.S.C. § 60107(b). 

San Francisco invoked the citizen suit provision in the PSA to challenge PHMSA’s acceptance of CPUC’s certification and its continued funding of the CPUC pipeline safety program.  It also invoked the Administrative Procedure Act (APA), claiming that Agency had “unlawfully withheld” action by failing to decide whether CPUC adequately enforced federal pipeline standards and that the Agency acted “arbitrarily and capriciously” by approving CPUC’s certification and by providing them with federal funding.  5 U.S.C. § 706(1); (2)(A).  

In affirming the trial court’s dismissal of San Francisco’s claims, the Ninth Circuit ruled that: (1) the PSA citizen suit provision does not authorize mandamus-type citizen suits against the Agency in its capacity as a regulator; and (2) San Francisco’s APA claims were not cognizable, as they concerned actions that are “committed to agency discretion by law.”  5 U.S.C. 701(a)(2).  According to the Ninth Circuit opinion, the PSA citizen suit provision only provides a remedy for substantive violations of the Act or regulations promulgated under it and may not be invoked to compel PHMSA to perform its regulatory duties.  As for the APA claims, the Ninth Circuit likened PHMSA’s decision not to reject a state’s certification to a decision by the Agency to refrain from taking enforcement action, which is not subject to judicial review under established case law.  It confirmed that PHMSA’s grant of funds to a state to support its regulatory oversight program is similarly unreviewable.

While the Ninth Circuit denied relief to the plaintiffs in the case, it did observe that the City and County of San Francisco had presented “very troubling allegations” about PHMSA’s approach to monitoring CPUC regulation of intrastate pipelines.  CPUC has come under scrutiny in the past year after allegedly inappropriate ex parte communications between the Commission and regulated utilities came to light, prompting proposal of state legislation that would set stricter rules for such communications.  It remains to be seen whether San Francisco will seek review of the Ninth Circuit decision in the U.S. Supreme Court.  Challenging agency action is difficult enough, as the courts typically grant deference to an administrative agency’s exercise of discretion.  A challenge based not on an agency’s action – but rather an agency’s failure to act – is even more difficult.  For that reason, this result is not entirely unexpected.