Pipeline Company Didn’t “Waive” Preemption Defense by Executing Franchise Agreement with City of Seattle

Toward the end of this opinion (in which the 9th Circuit forbids the City of Seattle from regulating the Olympic Pipeline), there’s an obscure but interesting holding which should be a note of caution to public owners transacting with federally regulated entities such as pipelines: executing a franchise agreement (and thereby agreeing to submit to safety measures & oversight in the agreement) does not constitute a waiver of the federally-regulated entity’s right to assert a preemption defense in the event the city seeks to enforce the agreement. The 9th Circuit reasoned that preemption is not a personal defense capable of waiver, but rather a power of the federal government.
This preemption twist needs to be kept in mind in planning major projects where federally-regulated entities are involved, as they can apparently seek to avoid certain contractually assumed liabilities or obligations under a preemption defense.