Decided: March 25, 2013
The Fourth Circuit Court of Appeals affirmed the district court’s dismissal of Washington Gas Light Company’s (Washington Gas) claim and grant of summary judgment in favor of Prince George’s County (the County). The Court held dismissal of a mandatory referral claim was proper under the abstention rules of Burford and that summary judgment was proper because the two laws alleged did not preempt county zoning ordinances.
Washington Gas operates a natural gas substation in Prince George’s County, Maryland. In 2004, Washington Gas sought to expand the substation to include liquefied natural gas storage. Washington Gas requested approval for the expansion from the County, which denied it based on recently enacted county zoning plans that prohibited industrial use in the area of the substation. After the denial, Washington Gas filed a federal action against the County seeking a declaration that the County erroneously denied the company permission to proceed under Maryland’s mandatory referral statute; a declaration that the National Gas Pipeline Safety Act (PSA), Natural Gas Act (NGA), and state law preempt county zoning regulations; and, finally, an injunction prohibiting enforcement of the zoning plans. In an order dated February 9, 2009, the district court first dismissed the mandatory referral claim for failure to state a claim upon which relief could be granted and on Burford abstention grounds. The court stated that the mandatory referral law did not provide a state law cause of action or federal question, and federal adjudication of the issue would frustrate state efforts to establish coherent policies regarding zoning. On March 9, 2012, the district court granted summary judgment on the preemption claims and thus denied the request for an injunction. The court concluded that the PSA only applied to safety standards, so the County Zoning Plans were not preempted. Also, the NGA does not preempt because Washington Gas is a local distributor exempt from NGA regulation. Washington Gas appealed the dismissal based on Burford and the ruling that the PSA and NGFA do not preempt county zoning laws.
The Fourth Circuit first stated that Burford abstention is allowed where the federal forum would frustrate and intrude on a state’s complex administrative system. Maryland’s mandatory referral statute allowed for certain privately owned utilities to be exempt from zoning, but the County had ruled this did not apply to Washington Gas. Plaintiff argued the question was one of straightforward statutory construction. The Fourth Circuit disagreed, pointing out that it certified a question regarding the language in the statute to the Maryland Court of Appeals previously. The Court held that abstention is proper 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. When turning to preemption, the Court noted that the PSA seeks to prevent harm from underground pipelines, and that the PSA preempts state laws with regards to safety. However, the county zoning plans are not safety regulations. Furthermore, since Washington Gas could comply with both the PSA and zoning laws, the PSA does not preempt. Finally, the Court looked to provisions of the NGA that stated gas companies that deal in interstate commerce are subject to the NGA, while local distributors are subject to local regulations. Even though Washington Gas technically provides service to customers in numerous states, the NGA allows the Federal Energy Regulatory Commission to make a determination about companies whose service areas straddle stat lines. Here, the FERC had determined that Washington Gas was still a local provider. Therefore, Washington Gas is subject to local, not federal, regulation.