Yesterday, on behalf of our Owners’ Counsel of America colleagues, we filed this request asking the U.S. Court of Appeals to consider our amicus brief in support of the property owners in a natural gas act pipeline case.

The issue is what evidence the trier of fact in a compensation trial may consider about “stigma” damages resulting from a natural gas pipeline being located next to the remainder parcel. 

Rather than paraphrase the brief, here’s the summary of the argument: 

UGI Sunbury, LLC (“UGI”) condemned portions of privately-owned land to build its natural gas pipeline. Natural gas pipelines have made headlines nationwide recently due to safety concerns. In takings such as these, where only a portion of a parcel is condemned, severance damages are a fundamental component of just compensation, awarded for the injury posed to the remainder of the landowner’s property as a result of the taking of a portion of it.

As a particular form of severance damages, stigma is based on the likelihood that the condemnor’s use of the property taken—here, as a pipeline transporting explosive natural gas through the landowner’s property—will “create in the general public fears which make the property less desirable and thus diminish the market value of the [landowner’s] property.” United States v. Robertson, 354 F.2d 877, 881 (5th Cir. 1966). Specifically, stigma “has been recognized in a number of cases that the construction of a high pressure gas pipeline across a tract of land may have the effect of diminishing the market value of that portion of the remaining property which lies in close proximity to that pipeline, because of the dangerous potentialities of such line and the fear which prospective purchasers may have of such danger.”

Here, neither party used a sales comparison approach to calculate the post-taking value of the properties, which would include market stigma. See JA14 (Don Shearer, the landowners’ expert, could not locate comparable properties to compare to the condemned properties); JA 16 (UGI’s expert agreed: “Once again, like Mr. Shearer, [UGI’s] Mr. Gillooly could not find comparable post-taking properties.”). Lacking comparable properties by which to measure the market, both parties employed other valuation methods. Thus, the district court admitted and credited Mr. Shearer, who opined based upon his experience in appraising properties, together with his “damaged goods” theory, that the value of the remainder properties decreased as a result of the market stigma created by UGI’s pipeline.

UGI and its amici (Interstate National Gas Association of America (INGAA) and Marcellus Shale Coalition (MSC) assert that a calculation of stigma damages is admissible only if based upon a sales comparison analysis—more specifically, a paired sales analysis. They ask this Court to prohibit the trier of fact from considering the diminution in value brought on by the market’s reaction to an adjacent gas pipeline, where comparable sales data is not available. As will be demonstrated herein,  this stunning new rule is not only needlessly harsh, but stands in stark contrast to the host of jurisdictions which routinely consider evidence of stigma, as well as to this Court’s own recognition that “[e]xpert opinion testimony acquires special significance . . . where the sole issue is the value of condemned property.”

Br. at 2-5 (footnotes omitted).

Our Maryland colleague Diane E. Feuerherd undertook the heavy lifting on the brief. Stay tuned, we’ll keep following the appeal as it progresses. 

Owners’ Counsel of America’s Motion for Leave to File Brief Amicus Curiae, UGI Sunbury, LLC v. 1.74