MD Public Service v. United States , 290 F.3d 734 ( 2002 )


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  •                            PUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    BALTIMORE GAS AND ELECTRIC              
    COMPANY,
    Plaintiff,
    MARYLAND OFFICE OF PEOPLE’S
    COUNSEL,
    Intervenor/Plaintiff,
    and
    MARYLAND PUBLIC SERVICE
    
    COMMISSION,
    Intervenor/Plaintiff-Appellant,            No. 01-1792
    v.
    UNITED STATES OF AMERICA; LOUIS
    CALDERA, Secretary of the Army,
    Defendants-Appellees,
    and
    ENRON FEDERAL SOLUTIONS,
    INCORPORATED,
    Intervenor/Defendant.
    
    Appeal from the United States District Court
    for the District of Maryland, at Baltimore.
    Andre M. Davis, District Judge.
    (CA-00-2599)
    Argued: January 22, 2002
    Decided: May 31, 2002
    Before WIDENER, MICHAEL, and TRAXLER, Circuit Judges.
    2      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
    Dismissed by published opinion. Judge Michael wrote the opinion, in
    which Judge Widener and Judge Traxler joined.
    COUNSEL
    ARGUED: Susan Stevens Miller, General Counsel, PUBLIC SER-
    VICE COMMISSION OF MARYLAND, Baltimore, Maryland, for
    Appellant. Larry David Adams, Assistant United States Attorney,
    Baltimore, Maryland, for Appellee. ON BRIEF: Stephen M. Schen-
    ning, United States Attorney, Baltimore, Maryland, for Appellee.
    OPINION
    MICHAEL, Circuit Judge:
    In this action the Maryland Public Service Commission (PSC)
    seeks to challenge the U.S. Army’s solicitation of bids for the right
    to purchase and operate the electricity and natural gas distribution
    systems at Fort Meade, which is located in the State of Maryland.
    Specifically, the PSC claims that the Army violated procurement laws
    in failing to provide in its solicitation that any successful bidder
    would be required to submit to the PSC’s regulatory jurisdiction. The
    district court held that such a provision was not required in the solici-
    tation, and the PSC appeals. We do not reach the merits. Rather, we
    conclude that the PSC lacks standing because it is not an "interested
    party" under the statute that governs bid protest actions, 
    28 U.S.C. § 1491
    , which was enacted as part of the Administrative Dispute Res-
    olution Act of 1996 (ADRA). The appeal is therefore dismissed for
    lack of jurisdiction.
    I.
    In 1997 Congress passed a law authorizing the Secretary of a mili-
    tary department to privatize utility systems on military bases and
    other installations. See National Defense Authorization Act for Fiscal
    Year 1998, Pub. L. No. 105-85, § 2812(a), 
    111 Stat. 1629
     (1997)
    (codified at 
    10 U.S.C. § 2688
    ). Thereafter, the Department of Defense
    BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE             3
    issued Reform Initiative Directive #49, which directs (subject to cer-
    tain exemptions) the various military departments to privatize the
    electric, natural gas, water, and wastewater treatment systems on their
    bases or installations. The directive allows for an exemption when
    privatization would be uneconomical or would raise unique security
    concerns. In March of 2000 the Army issued a solicitation for bids on
    a contract to purchase and operate the electricity and natural gas dis-
    tribution systems at Fort Meade. The Baltimore Gas & Electric Com-
    pany (BG&E) filed a protest to the solicitation with the U.S. General
    Accounting Office (GAO), arguing that the Army’s solicitation had
    to be amended to require that any bidder have franchise rights and a
    utility license issued by the PSC. After being denied relief in the
    administrative process, BG&E filed this action seeking declaratory
    and injunctive relief under the ADRA, specifically, 
    28 U.S.C. § 1491
    ,
    in the United States District Court for the District of Maryland. At the
    time the suit was filed, federal district courts and the Court of Federal
    Claims had concurrent jurisdiction to hear challenges to federal
    agency bid solicitations. See Administrative Dispute Resolution Act
    of 1996, Pub. L. No. 104-320, § 12(a), 
    110 Stat. 3870
     (codified at 
    28 U.S.C. § 1491
    ).
    BG&E argued in district court, as it had before the GAO, that the
    Army must include in its solicitation the requirement that a bidder
    fully comply with state utility regulations, including state licensing
    requirements, and submit to the regulatory jurisdiction of the PSC.
    Because BG&E was the only utility licensed by the PSC to offer elec-
    tric and gas service in the Fort Meade area, a declaration to this effect
    would have limited the Army to awarding any privatization contract
    for Fort Meade to BG&E. The PSC and the Maryland Office of Peo-
    ple’s Counsel intervened in the case on the side of BG&E, and an out-
    fit called Enron Federal Solutions, Inc. intervened on the side of the
    Army. In a thorough opinion the district court determined that the
    Army had reasonably interpreted federal law when it decided not to
    require bidders on privatization contracts to obtain state franchise
    rights and submit to PSC jurisdiction. Baltimore Gas & Elec. Co. v.
    United States, 
    133 F. Supp. 2d 721
     (D. Md. 2001). The district court
    added in a footnote that it was "highly doubtful" that the PSC had
    standing under the ADRA to contest the Army’s solicitation, but the
    court was able to avoid the question of the PSC’s standing because
    4      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
    another party, BG&E, had presented "all of the issues necessary . . .
    to a decision." 
    Id.
     at 727 n.8.
    BG&E has not appealed the district court’s decision, but the PSC
    appeals insofar as the decision provides that the Army need not
    require bidders to submit to PSC jurisdiction. Because the PSC is the
    only appellant, we must confront the question that the district court
    did not have to decide, namely, whether the PSC has standing under
    the ADRA to challenge the Army’s bid solicitation.
    II.
    Only an "interested party" has standing under the ADRA to bring
    an action to challenge a bid solicitation by a federal agency. 
    28 U.S.C. § 1491
    (b)(1). The question, then, is whether the PSC is an interested
    party in connection with the Army’s bid solicitation to privatize elec-
    tric and gas utility services at Fort Meade. The ADRA does not define
    "interested party," and until recently the scope of the term was not
    clear in the primary venue for ADRA bid protest cases, the Court of
    Federal Claims. In some cases that court had relied on the definition
    of "interested party" provided in the Competition in Contracting Act
    (CICA), 
    31 U.S.C. § 3551
    (2), which limits an interested party to "an
    actual or prospective bidder or offeror whose direct economic interest
    would be affected by the award of the contract or by failure to award
    the contract." See, e.g., Redland Genstar, Inc. v. United States, 
    39 Fed. Cl. 220
    , 230 n.5 (1997) (looking to § 3551 for guidance in inter-
    preting § 1491). In other cases the Court of Federal Claims had read
    the term "interested party" broadly to include any party that would
    have standing under the Administrative Procedure Act (APA) to chal-
    lenge agency action. See, e.g., American Fed. of Gov’t Employees,
    AFL-CIO v. United States, 
    46 Fed. Cl. 586
    , 595 (2000), aff’d on alter-
    nate grounds, 
    258 F.3d 1294
     (Fed. Cir. 2001); ATA Defense Indus. v.
    United States, 
    38 Fed. Cl. 489
    , 494 (1997) (suggesting broad reading
    in dicta). Last year, the United States Court of Appeals for the Federal
    Circuit resolved the issue, at least for the Federal Circuit, and held
    that an interested party under § 1491 is limited to an "actual or pro-
    spective bidder or offeror" as provided in CICA § 3551(2). American
    Fed. of Gov’t Employees, AFL-CIO v. United States, 
    258 F.3d 1294
    ,
    1302 (Fed. Cir. 2001) (American Federation).
    BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE               5
    We are especially interested in the Federal Circuit’s views on the
    "interested party" standing requirement because a sunset provision in
    the ADRA gives that court exclusive appellate jurisdiction over all
    ADRA cases filed on or after January 1, 2001. The case before us
    today was filed before the sunset date, and if the PSC has standing,
    we have jurisdiction over the appeal. See Pub. L. No. 104-320,
    § 12(e). It is useful nevertheless to understand how and why we are
    coming to the end of our jurisdiction over ADRA cases. Prior to 1997,
    jurisdiction over disputes arising out of the solicitation of bids for fed-
    eral contracts was split between federal district courts and the Court
    of Federal Claims, with the former having jurisdiction over all bid
    protests and the latter having jurisdiction only over pre-award pro-
    tests. See Impresa Construzioni Geom. Domenico Garufi v. United
    States, 
    238 F.3d 1324
    , 1331-32 (Fed. Cir. 2001) (explaining pre-1997
    jurisdiction). In the ADRA of 1996, which became effective on
    December 31, 1996, Congress granted concurrent jurisdiction over all
    federal bid solicitation disputes, whether pre-award or post-award, to
    federal district courts and the Court of Federal Claims. See id.; Pub.
    L. No. 104-320, §§ 12(a), (b). However, a sunset provision in the
    ADRA provided that unless Congress acted, the jurisdiction of the
    district courts would terminate on January 1, 2001, and all ADRA
    cases thereafter would be filed in the Court of Federal Claims. Pub.
    L. No. 104-320, § 12(d). Congress included the sunset provision (1)
    to address the problem of forum shopping among the district courts
    and the Court of Federal Claims and (2) to provide "national unifor-
    mity in resolving [federal bid solicitation] disputes." 142 Cong. Rec.
    S11848 (daily ed. Sept. 30, 1996) (statement of Sen. Cohen). Con-
    gress has not acted to extend district court jurisdiction, and thus fed-
    eral bid solicitation disputes may now be filed only in the Court of
    Federal Claims. This means that appellate jurisdiction over ADRA
    cases filed on or after the sunset date, January 1, 2001, now falls
    exclusively in the Court of Appeals for the Federal Circuit. Thus, as
    soon as the ADRA cases filed in district courts before the sunset date
    are worked through the pipeline, the Federal Circuit will be hearing
    all appeals in ADRA cases. In light of the Federal Circuit’s soon to
    be exclusive role in these cases, it makes sense for us to adopt that
    circuit’s interpretation of the term "interested party" if there is a sound
    basis for doing so.
    The ADRA confers standing on "an interested party objecting to a
    [bid] solicitation by a Federal agency," 
    28 U.S.C. § 1491
    (b)(1), but
    6      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
    the statute does not give any further definition of the term "interested
    party." The Federal Circuit was called upon to clarify the meaning of
    the term in American Federation. The court began its analysis by rec-
    ognizing that there are two plausible interpretations of the term "inter-
    ested party." American Federation, 
    258 F.3d at 1299
    . The first
    interpretation is that the term encompasses any party who satisfies the
    APA’s requirement for standing, specifically, "[a] person . . .
    adversely affected or aggrieved by agency action." 
    5 U.S.C. § 702
    .
    The second (and more restrictive) interpretation is that "interested
    party" should be construed in accordance with the CICA, a statute
    that is related to the ADRA. The CICA defines "interested party" to
    mean "an actual or prospective bidder or offeror whose direct eco-
    nomic interest would be affected by the award of the contract or by
    failure to award the contract." 
    31 U.S.C. § 3551
    (2). Because "the
    plain language of [
    28 U.S.C. § 1491
    (b)(1)] does not resolve [the]
    issue" about the meaning of "interested party," the Federal Circuit
    "look[ed] to the legislative history of [the statute] for an indication of
    congressional intent." American Federation, 
    258 F.3d at 1299
    .
    The court explained that the legislative history of the ADRA "indi-
    cates that Congress intended [in 
    28 U.S.C. § 1491
    (b)(1)] to confer on
    the Court of Federal Claims jurisdiction previously exercised only by
    district courts under [Scanwell Labs., Inc. v. Shaffer, 
    424 F.2d 859
    (D.C. Cir. 1970)]." Id. at 1300. Under Scanwell the district courts had
    exercised jurisdiction over both pre-award and post-award protests to
    federal bid solicitations and had used the APA standard of review. Id.
    Thus, the Federal Circuit reasoned that when Congress indicated
    through legislative history its intent to confer Scanwell jurisdiction on
    the Court of Federal Claims, Congress meant for the Court of Federal
    Claims to have jurisdiction over both pre- and post-award protests and
    to judge them under the APA standard of review. Indeed, the ADRA
    expressly provides that bid challenges are to be reviewed under the
    APA standard of review, see 
    28 U.S.C. § 1491
    (b)(4), the same stan-
    dard applied under the district courts’ Scanwell jurisdiction. What was
    less clear, the Federal Circuit explained, was whether Congress’s ref-
    erence to Scanwell implied that it "intended to expand the class of
    parties who can bring bid protest actions in the Court of Federal
    Claims." American Federation, 
    258 F.3d at 1300
    . (In pre-1997 cases
    the Court of Federal claims had only permitted disappointed bidders
    to bring suit. 
    Id. at 1298
    .) On the one hand, because "[t]he vast major-
    BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE               7
    ity of cases brought [in district courts] pursuant to Scanwell were
    brought by disappointed bidders," the court suggested that "Congress
    may have intended the [Court of Federal Claims] to exercise jurisdic-
    tion over disputes brought by disappointed bidders only." 
    Id. at 1301
    .
    "On the other hand, because Scanwell itself is based on the APA,
    Congress could have intended to give the Court of Federal Claims
    jurisdiction over any contract dispute that could be brought under the
    APA. Because the language of 
    5 U.S.C. § 702
     is quite broad [it refers
    to persons ‘adversely affected or aggrieved by agency action’], parties
    other than actual or prospective bidders might be able to bring suit."
    
    Id.
     (footnote omitted). The court concluded that the former, more lim-
    ited interpretation of the statute was preferable in light of the principle
    that "waivers of sovereign immunity, such as that set forth in
    § 1491(b)(1), are to be construed narrowly." Id. The court also
    observed that this more limited interpretation is consistent with state-
    ments in the legislative history that the ADRA would permit "‘a con-
    tractor [to] challenge a Federal contract award.’" Id. at 1301-02
    (quoting 142 Cong. Rec. S11848 (daily ed. Sept. 30, 1996) (statement
    of Sen. Cohen) (emphasis added)).
    Finally, the Federal Circuit observed that while Congress does not
    spell out the meaning of the term "interested party" in the ADRA,
    Congress’s use of that particular term does provide some guidance.
    Specifically, in drafting § 1491(b)(1), Congress did not adopt the
    APA’s standing requirements by reference or use the broader standing
    language of the APA. Id. at 1302. Rather, Congress chose the term
    "interested party," the same term given a more limited definition in
    the CICA, 
    31 U.S.C. § 3551
    (2). According to the Federal Circuit, "the
    fact that Congress used the same term in § 1491(b) as it did in the
    CICA suggests that Congress intended the same standing require-
    ments that apply to protests brought under the CICA to apply to
    actions brought under § 1491(b)(1)." Id. at 1302. In contrast, when
    Congress intended to import APA doctrines into the ADRA, it did so
    explicitly; specifically, when it came to providing for the standard of
    review in bid protest cases under the ADRA, Congress explicitly pro-
    vided that the APA standard of review would apply instead of the
    more narrow standard of review that the Court of Federal Claims had
    employed prior to the ADRA. Id. at 1300, 1302. Congress’s failure
    in the ADRA to explicitly invoke APA doctrines with respect to
    8      BALTIMORE GAS & ELECTRIC v. MARYLAND PUBLIC SERVICE
    standing supports the inference that the APA standing test does not
    apply to the ADRA.
    The Federal Circuit’s analysis is sufficiently persuasive for us to
    adopt it. We therefore "construe the term ‘interested party’ in
    § 1491(b)(1) in accordance with the CICA, and hold that standing
    under § 1491(b)(1) is limited to actual or prospective bidders or offer-
    ors whose direct economic interest would be affected by the award of
    the contract or by failure to award the contract." Id. at 1302.
    This brings us to the question of whether the PSC qualifies as an
    interested party under the definition that we adopt today. That ques-
    tion is easily answered. The PSC, of course, does not claim that it
    ever attempted (or intended) to submit a bid to purchase and operate
    the Fort Meade electric and gas utility distribution systems. Rather,
    its interest in the solicitation is based solely on its desire as a state
    regulatory body to assert jurisdiction over the private entity that will
    eventually provide utility services at Fort Meade. Whatever the
    importance of the PSC’s interest in protecting its regulatory jurisdic-
    tion, the PSC is not "an actual or prospective bidder or offeror" on the
    Army’s solicitation. 
    31 U.S.C. § 3551
    (2). As a result, the PSC is not
    an interested party under 
    28 U.S.C. § 1491
    (b)(1), and it lacks standing
    to bring a bid protest action. Because the PSC lacks standing to bring
    this action, it likewise lacks standing to appeal the district court’s
    judgment. Accordingly, the appeal is dismissed for lack of jurisdic-
    tion.
    DISMISSED