Here's how the Pennsylvania Supreme Court stated the issue in Hughes v. UGI Storage Co., No.J-69A-2021 (Nov. 29, 2021):
In these consolidated appeals, we consider the Commonwealth Court’s holding that, to be held liable for damages under Pennsylvania’s inverse condemnation statute, an entity must be clothed with the power of eminent domain – not only in a general sense, in that it must be a governmental or quasi-public entity to which condemnation powers may be delegated – but also, the entity must be invested with eminent domain authority specific to the property in issue.
Slip op. at 1.
If all you need to know is "what did the court answer?" you can stop right here: the court held that UGI Storage did not need to have been delegated the power of eminent domain, nor must it be delegated the power to take the property at issue, in order to be (potentially) liable for inverse condemnation under Pennsylvania law.
For more details on why, we recommend you read the entire 26-page opinion, even though the way the inverse claim arose is a bit convoluted. The short story: UGI was going to acquire underground natural gas storage fields, and made known what appeared to be its intention to obtain the necessary private property. It obtained FERC certification. There seems to be some question of whether it really intended to, or how much it accomplished, but eventually the actual owners of these properties sued UGI for inverse condemnation in a Pennsylvania court, alleging that UGI's "securing of FERC certification ... constituted a de facto taking of Plaintiff's oil, gas, and mineral rights." Slip op. at 10.
The trial court agreed that a taking had occurred, and continued with the valuation process. But UGI objected, asserting that it was not authorized by FERC to use the plaintiffs' property to store natural gas. UGI also argued that it does not possess the power to condemn, and therefore cannot be liable for inverse condemnation. The trial court agreed. Slip op. at 14. The intermediate appeals court split, and remanded the case to gather further evidence on the scope of the property allegedly acquired. On remand, the trial court doubled-down on its earlier no-eminent-domain-power-means-no-inverse ruling, and back up to the court of appeals they all went.
The divided appeals court affirmed that to be liable in inverse, a defendant must have the property-specific power of eminent domain. No inverse, but hey, try tort! Slip op. at 19 ("The majority concluded with a comment that the landowner might not be without a remedy, as they could perhaps pursue causes of action in tort.").
The Pennsylvania Supreme Court's analysis starts at page 21. The court focused on the definition in the eminent domain code of three terms. First, "condemn," which the court noted means "to 'take, injure or destroy property by authority of law for a public purpose.'" Slip op. at 22. Second, the court looked at the definition of "acquiring agency," and concluded that no part of the definition relates exercise of the power of such an agency to specific property. Finally, the court concluded that the statute references inverse condemnation as a "condemnation," which the legislature described as the taking, injuring, or destroying property by authority of law for a public purposes. In doing so, the court noted, the legislature "said nothing about a power of eminent domain." Slip op. at 23. All the inversely condemning authority needs is the authority of law and a public purpose:
The plain terms of the enactment, therefore, support Appellants’ position, or in other words, the statute simply does not signify a requirement of a property-specific power of eminent domain.
Slip op. at 23. The court also noted decisions such as Nollan, where "the Supreme Court hasn't parsed through whether or not each offending agency has a power of eminent domain." Slip op. at 24. The court concluded:
we do not presently discern a constitutional requirement that a quasi-public entity alleged to have invoked governmental power to deprive landowners of the use and enjoyment of their property for a public purpose must be invested with a power of eminent domain in order to be held to account for a de facto condemnation.The Eminent Domain Code says so, of course, of both public and quasi-public entities, see 26 Pa.C.S. §103 (definitions of “condemn” and “acquiring agency”), and this case does not call for us to resolve any incongruities between the Legislature’s prescription that the statute provides an exclusive procedure to secure a remedy and federal constitutional takings jurisprudence. Rather, for present purposes, we merely adopt a plain-meaning interpretation of the Eminent Domain Code – which, as between the competing positions before us, is the one most consonant with constitutional norms – and we hold that a public or quasi-public entity need not possess a property-specific power of eminent domain in order to implicate inverse condemnation principles.
Slip op. at 25 (footnote omitted).
The entire opinion is worth a read.
Hughes v. UGI Storage Co., No. J-69A-2021 (Pa. Nov. 29, 2021)
