Notice & Comment

D.C. Circuit Review – Reviewed: The D.C. Circuit’s Spoils of War

In a week when our attention was focused on the atrocity of Putin’s invasion of Ukraine, the D.C. Circuit handed down an opinion that hearkens back to Hitler’s effort to destroy Europe. In the consolidated case of David De Csepel v. Republic of Hungary (20-7047) and In re: Republic of Hungary (20-8001), Judges Tatel and Pillard (Judge Jackson was part of the panel but not the opinion because of her nomination to the Supreme Court), addressed for the third time a family’s decades-long effort to recover a valuable art collection seized by the Hungarian government and its Nazi collaborators during the Holocaust. The Court affirmed the district court’s determination that, although the Republic of Hungary might be immune from suit under the Foreign Sovereign Immunity Act (FSIA), Hungarian National Asset Management, Inc. is not because it is an agency or instrumentality of Hungary that engages in commercial activity by managing companies and owning property. The Court also held that FSIA does not require the family to first seek relief in the courts of Hungary. FSIA establishes comprehensive standards regarding immunity, but it says nothing about prudential exhaustion of foreign remedies.

That same day, the D.C. Circuit breathed new life into claims by university students who were forced to switch to remote learning during the COVID-19 pandemic. In Shaffer et al. v. George Washington University and Qureshi et al. v. American University, students at American University and George Washington University sought reimbursement of tuition and fees that they agreed to pay for an in-person learning experience – not an on-screen education. In an opinion written by Senior Judge Edwards and joined by Judge Millett (Judge Jackson was on the panel, too), the panel agreed with the district court that there was no express contractual term providing for in-person learning but revived the students’ implied contract claims, noting, “the universities cite nothing in their historical courses of dealings with their students to suggest that they have retained unfettered rights to shut down on-campus educational activities and use online learning in its place after students have paid tuition for traditional on-campus courses.” The panel also revived the D.C. consumer protection claims brought by only the students at American. Forgive my speculation here and without suggesting that Senior Judge Edwards is anything but impartial in his judgments, I’m imagining that Senior Judge Edwards’s current experience as a master teacher at NYU informed his analysis here.

The D.C. Circuit reissued an opinion from last December. As my colleague Seth Davis previously reported, Newman v. FERC was argued on September 10, 2021 and initially decided on December 28, 2021. In Newman, Judge Pillard, joined by Chief Judge Srinivasan and Senior Judge Randolph, vacated and remanded two FERC decisions. The panel concluded that FERC “inconsistent[ly]” interpreted its own regulation when issuing opinions that approved formula rates produced by intervenor Potomac-Appalachian Transmission Highline (PATH). According to the panel, FERC should not have allowed PATH’s formula rates to include over $6 million in public relations and advocacy activities because those expenditures already belonged to a separate account not recoverable from ratepayers.

On March 9, 2022, the Court issued an amended opinion that clarifies the scope of the Court’s vacatur and remand. In the reissued opinion, the Court replaced phrases to qualify its statements. See Order (2), (3), (4), (5). The Court also made two more significant changes. First, the order specified what “portions” of FERC’s two opinions the Court vacated. Order (6) (vacating only the portions that “authorized PATH to book the disputed expenditures in accounts other than” the account that the expenditures actually belonged). Second, to clarify that the Court did not simply “vacate FERC’s contrary orders,” the Court made clear that, on “remand,” FERC must “direct the proper accounting, recoverability, and ratemaking remedy regarding the more than $6 million PATH spent for public relations and advocacy activities.” Order (1).

In Process and Industrial Developments Limited v. Federal Republic of Nigeria, a panel that included Judge Henderson (who authored the opinion), and Judges Millet and Walker, affirmed the district court’s jurisdiction to consider a London arbitration tribunal’s award of $10 billion against Nigeria for breach of a natural gas supply and processing agreement. The district court held that Nigeria had waived its sovereign immunity by joining the New York Convention. The panel based its conclusion instead on the arbitration exception in the FSIA. Petitioner’s contract with Nigeria contained an arbitration clause, the London arbitration tribunal had issued an award, and all three nations with an interest in the award (the United States, home of the petitioner; the United Kingdom, home of the tribunal; and Nigeria) were member states of the New York Convention. The Court rejected Nigeria’s argument that the arbitration exception did not apply because a Nigerian court had set the award aside, explaining that circuit precedent provides that the validity of an award is a merits issue and not jurisdictional.

In Food & Water Watch v. FERC, the Court remanded a decision of FERC that authorized a new natural gas pipeline and compressor station in an opinion written by Chief Judge Srinivasan and joined by Judges Millet and Katsas. Two environmental groups—Food & Water Watch and Berkshire Environmental Action—challenged FERC’s Order. The Court rejected all but one of the challengers’ arguments. The Court accepted Food & Water Watch’s argument that FERC failed to properly consider the downstream environmental effects of the additional natural gas capacity and ruled that FERC was required to conduct an additional assessment to quantify the downstream effects or explain why it could not do so. But the Court’s reversal may have limited effect on the project. As it turns out, the new pipeline was only two miles long and the new station didn’t take much time to construct. By the time the matter made it to the D.C. Circuit, the challenged project was, in the words of the Court, “now either mid-construction or operational.” For that reason, the panel exercised its discretion to remand without vacatur and thus avoid an unnecessary disruption.

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