inversecondemnation.com

Space Still Available For ALI-CLE Eminent Domain Conference, Nashville Jan 23-25, 2020

If you get this, you need to attend the 37th Annual ALI-CLE Eminent Domain & Land Valuation Litigation Conference, January 23-25, 2020, in Nashville.

And if you don't get this, you need to attend more. 

Register here. 

What's At 712 4th Street, S.W., Washington DC? Your Invite To The 2020 ALI-CLE Eminent Domain Conference (Jan 23-25, Nashville)

Don't Miss Out: Join The "Big Guns" And Secure Your Space At ALI-CLE's Upcoming Eminent Domain & Land Valuation Litigation Conference (Jan 23-25, 2020, Nashville)

We were not as creative as our colleague Paul Henry (see below), but our Planning Co-Chair Joe Waldo and I wanted to personally invite you to join the "big guns" in our area of law at the 37th Annual ALI-CLE Eminent Domain and Land Valuation Litigation Conference, January 23-25, 2020, in Nashville, Tennessee.

We've assembled an excellent faculty, and an agenda that covers the hot topics of the day. Go here to view the complete faculty list and agenda. Water rights, Knick, appraisal, ethics, civil rights, and a whole lot more in three days of the longest (and we think best) conference in our area of law. Also, for those new to the field, Andy Brigham and Jack Sperber are again leading their "Eminent Domain 101" program. A great way to learn the topic, or for experienced lawyers to get a quick refresher on the basics. Your registration allows free movement between all sessions and all tracks, so you can choose your menu ala carte.  

Of course, we're doing more than simply "talking shop," and we shall have our usual full slate of networking events, thanks to some very generous sponsors. Our faculty and attendees are well-known for being some of the friendliest and most welcoming in the business. And this is Nashville, and all that entails.

Register now. Spaces are already filling up. We are already at 25% higher registrations than at this point last year for the 2019 Palm Springs conference. The past few years have either sold out or come close, and the hotel block isn't unlimited. We want you with us, so sign up now!

Register Now! ALI-CLE Eminent Domain And Land Valuation Litigation Conference (Nashville, Jan 23-25, 2020)

Registration underway, so come join us! Agenda full of hot topics in takings and appraisal law! The best national faculty! Renew friendships, and make new colleagues! And Nashville! 

Download the brochure and make your plans for January. (Don't wait, we've sold out the past three years.)

ALI-CLE Eminent Domain & Land Valuation Litigation Conference - Jan 23-25, 2020, Nashville

Cert Denied (Again) In Quick-Take-By-Injunction Pipeline Case

One should never be surprised, we suppose, when the Supreme Court denies a cert petition due to the daunting statistics, but we really thought that maybe the third time was a charm for the quick-take-by-preliminary-injunction issue, and that the Givens petition had a real chance. The petition was strong, the issue (in our opinion) was compelling: can private pipeline companies obtain immediate precondemnation possession of land and start construction of a pipeline even though the Natural Gas Act delegates to them only the straight-takings power?  

Alas no, the Court today issued an Order declining to review the case (and gazillions of others). The circuit split is the Seventh vs everyone else, but apparently the Supreme Court is more interested in ensuring the circuits are consistent than it is about separation of powers issues, and making sure that the "despotic power" is wielded carefully, especially when it is private for-profit pipelines doing the taking. 

But it took more than 30 years for the court to wake up to Williamson County's problems, and as a colleague pointed out today, we're already more than halfway there on this issue.

So as always, stay tuned. 

What A Difference The Defendant Makes: The Federal Courts Finally Locate A Natural Gas Act Preliminary Injunction They Don't Like

Today's post is kind of long, but we think the opinion is well worth your time. 

NGA Preliminary Injunctions

Regular readers know that we've made no secret of our disapproval of the prevailing practice in federal courts of using preliminary injunctions to allow private for-profit pipelines to grab immediate pre-condemnation possession of property using the Natural Gas Act's delegated federal power of eminent domain, even though everyone agrees the NGA delegates only the straight (slow) taking power. 

Save the Seventh Circuit, every other federal appeals court that has considered this practice has figuratively shrugged its shoulders, rejecting arguments made by the property owners that this exceeds the powers which Congress delegated in the NGA, and violates separation of powers and basic eminent domain principles. The courts of appeals simply pay no mind. And two cert petitions have been denied, and one more is teed up. 

But yesterday, the Third Circuit (one of those circuits that recently OK'd the use of preliminary injunctions to obtain pre-condemnation possession) finally found a case where it held for the property owner.

What's Different About This Case?

What was the difference in In re PennEast Pipeline Co., LLC, No. 19-1191 (Sep. 10, 2019) that made the difference in result? After all, the basic setup was the same: a private pipeline company, exercising the straight takings eminent domain power delegated to it by the NGA, filed condemnation actions against owners, and after obtaining summary judgment under the three statutory prerequisites in the NGA, sought and obtained preliminary injunctions from the district court allowing the pipelines to take possession immediately. Same as it ever was.  

But here, rather than affirming, the Third Circuit vacated the district court's injunction and its judgment. You see, in the earlier cases, private owners were the defendants. But here, the State of New Jersey was the property owner / condemnee. It or one of its agencies either owned outright several of the parcels to be condemned, or held easements on others.

And, as you know, the general rule is that states cannot be sued in federal court. Eleventh Amendment, sovereign immunity, and all that. In accepting New Jersey's arguments and dismissing the eminent domain actions, the Third Circuit panel detailed (35-page opinion, no dissent) why Congress in the NGA may have delegated one of its sovereign powers (eminent domain) to private for-profit entities, but it did not delegate the separate power to override the states' immunity from being sued in federal court. 

Con Law Mavens, Read On

There's a lot there for you Eleventh Amendment and Con Law mavens, and we won't go through the court's analysis in detail. Suffice it to say that it is not entirely disagreeable to our thinking. But, eminent domain mavens, there are things there for you, too.

Because we thought that in going through all the reasons Congress didn't allow private pipelines to haul states into federal court, the Third Circuit backhandedly validated many of the points we and others have been making about why Congress didn't delegate the quick-take power to private pipelines in the NGA, either, and thus courts should not do it by injunction. 

Sidebar: No, These Weren't "Orders of Condemnation"

Before we get into some of those reasons, a sidebar comment: in reciting the proceedings below, the Third Circuit noted that the district court "granted PennEast's request for orders of condemnation." Slip op. at 10. Wait a minute. Everyone agrees that the NGA only delegates to these pipelines the straight takings power (the argument in the preliminary injunction cases acknowledges that, but also posits that neither did Congress withdraw district courts' usual equitable power to issue injunctions to preserve the status quo if the plaintiff is likely to win eventually). And in a straight taking, no "order of condemnation" issues until the court has adjudicated the final compensation owed, the pipeline has agreed to pay that amount, and has actually paid. Title transfers. Only then is the property condemned.

As the Supreme Court held, "the taking in a condemnation suit under this statute takes place upon the payment of the money award by the condemnor." Danforth v. United States, 308 U.S. 271, 284 (1939). In short, until payment of the final adjudicated compensation that is owed, the lawsuit is simply "a means by which the sovereign may find out what any piece of property will cost." Id. 

This wasn't a dispostive point in the case, and we highlight it only to illustrate our sense that the courts are really lost in the wilderness in eminent domain, not truly understanding the way takings are supposed to work. These are not your ordinary civil lawsuits. They are not in rem proceedings, despite the way federal cases are styled ("U.S. v. 12345 Acres," for example). And final compensation has not been determined. But here we have the district court ordering that final judgment will be entered when (more correctly "if") court adjudicates compensation, ordering transfer of title at that time, and prematurely issuing "orders of condemnation." See District Court Order at 49. 

Why Don't Courts View The Delegation of the Sovereign Power of Eminent Domain to For-Profit Pipelines Through The Same Lens As Delegation of The Power to Sue in Federal Court? 

Back to our story.

First, the court noted that were it to recognize the ability of private pipelines to override states' immunity to federal court lawsuits that would undermine the "accountablity" that underlies all government actions. If you don't like what the government is doing, go petition, go vote. But here, New Jersey can't do that because the condemnor isn't a government subject to such things:

[F]undamental differences between suits brought by accountable federal agents and those brought by private parties militate against concluding that the federal government can delegate to private parties its ability to sue the States.

Slip op. at 16-17. 

True, but we ask: why doesn't this same vibe apply to the feds delegating the sovereign power of eminent domain to private pipelines? No transparency, no political reckoning mechanism in private NGA takings generally, either. 

Second, the court noted that Congress did not delegate to private pipelines the power to sue states in federal court, because the interest the pipelines are pursuing in these cases are their own private interests, not the interest of the United States. See slip op.at 18 ("Courts of Appeals have been similarly skeptical that the federal government can delegate to private parties its exemption from state sovereign immunity -- even when the private party seeks to assert the interests of the United States, rather than the party's own.").

Is it just the way we're reading it, or does this acknowledge that these NGA takings are predominately for private benefit, and not for the public at large? As the court noted, "there are meaningful differences between suits brought by the United States, an accountable sovereign, and suits by private citizens." Slip op. at 20. Pipeline companies, after all, make no promises to "take Care that the Laws be faithfully executed." Id. We ask: why is that any different when it is the sovereign power of eminent domain being exercised? What checks are there on the private condemnor's self-interested motivations? See also slip op. at 26 (detailing the private benefits the pipeline gains by NGA takings). None, as far as we can tell.

So the elephant in the room that is lurking, unanswered in the Third Circuit's opinion, is whether there's a difference when Congress delegates its sovereign ability to sue states in federal court, and when it delegates its sovereign power to take private property? The court acknowledged that "[t]hose considerations are clearly in play in the eminent domain context." Id. It noted:

There, the condemning party controls the timing of the condemnation actions, decides whether to seek immediate access to the land, and maintains control over the action through the just compensation phase, determining whether to settle and at what price. The incentives for the United States, a sovereign that acts under a duty to take care that the laws be faithfully executed and is accountable to the populace, may be very different than those faced by a private, for-profit entity like PennEast, especially in dealing with a sovereign State. In other words, the identity of the party filing the condemnation action is not insignificant.

Slip op. at 20-21. But the court never closed the circle, and only considered these concerns when a state is a defendant, never explaining why it has been perfectly ok when the condemnee is one of us little people, and not a state government. 

Third, we have argued that if pipeline companies want to obtain immediate possession in NGA cases, they should go to Congress and amend the law to include the quick-take power. That argument thus far has fallen on unlistening ears. But in this case, the Third Circuit proclaimed that "[t]here is a way that Congress can subject the States to suits by private parties. It can abrogate the sovereign immunity of the States." Slip op. at 21. What's not good for the goose is apparently very good for the gander. 

Finally, we end on this note. We thought the states were immune from being sued in federal court for retrospective damages. A federal court still has jurisdiction to order prospective equitable relief against a state official as long as the suit does not interfere with the state's treasury (or at least that is how we generally recall what is a very nuanced doctrine). How is a lawsuit to "find out what any piece of property will cost" where the state is supposed to be fully indemnified for any loss, so the impact to the state's fisc is, theoretically, a wash, fall within that doctrine? 

Don't get us wrong. We're not suggesting that the Third Circuit should not have concluded that the pipeline could not step into Congress' shoes and sue New Jersey in federal court. We're only wishing that the same concerns that animated the court's decision were viewed as applying with equal force when it isn't a government on the target end of the taking. 

--------------------

One final note on the quote from footnote 7 of the court's opinion that we included at the very start of this post. To anyone who questions whether property owners subject to these NGA preliminary injunctions are being seriously deprived of their property rights as a consequence, you need only to read the footnote. 

In re PennEast Pipeline Co., LLC, No. 19-1191 (3d Cir. Sep. 10, 2019) 

 

Whose House? Our House. D.C. Circuit: Pipeline Taking For Partial Export May Not Be A Public Use (For US Public)

A great result for colleague Carolyn Elefant, who represents property owners in a case and issue we've been following. 

This is one of those Natural Gas Act pipeline cases. Not on the issue of immediate-possession-by-injunction (we'll have the latest development in that chapter very soon), but on the administrative law side, involving FERC's approval of a certificate of public convenience. That, as you know, is the trigger to a private pipeline exercising the NGA's delegated power of eminent domain, because it effectively settles the question of whether the takings are for a public use or purpose. Also, as you know, an agency's decision is, generally speaking, subject to a highly deferential judicial standard of review under the APA: a certificate may only be set aside "if it is arbitrary and capricious or otherwise contrary to law." Slip op. at 9.  

Thus, the property owners had a daunting task when they argued that FERC didn't do it right, and the certificate should be set aside. They made several arguments, but the one that stuck out the most to us was the question of exactly what is the "public" that supports a determination that a pipeline is for a public use or purpose? Here, FERC concluded that the agreements the pipeline company already had made to distribute the gas to be transported (a total of 805k dekatherms per day) was sufficient to support a determination of public use or purpose. But, the owners argued, a large percentage of that (42%) would be going to -- the horror! -- Canada, and FERC never reached any conclusion whether the remaining gas for distribution in the U.S. would support a finding of public use. 

This is an argument that has been made in several cases in multiple jurisdictions. Some courts, like Kentucky's, define the "public" as the public which the jurisdiction serves. In the Bluegrass Pipeline case, for example, the court of appeals held that a natural gas pipeline which went through Kentucky, but did not have any offramps for the natural gas in Kentucky -- was not "in public service" as required by that state's eminent domain statutes. A Pennsylvania court adopted a similar rationale (even though it held a private pipeline could exercise eminent domain power because it planned gas offramps in Pennsylvania). 

The D.C. Circuit agreed with the property owners that the issue was more "Our House" than "We Are the World."

The panel first concluded that an owner whose property is subject to a pipeline's acquisition has Article III standing to administratively challenge FERC's issuance of a certificate. "The law of our circuit is clear that a landowner is injured in fact when she is put to the choice of having to either reach an agreement with a pipeline seeking to access her property or have her property condemned." Slip op. at 8 (emphasis original). The court rejected the pipeline's argument that the owners lost their standing and were no longer injured because "since oral argument, Petitioners and Nexus executed easement agreements that settled the issue of compensation for Nexus's takings," which resulted in the dismissal of the eminent domain actions in district court." They still had been subject to making that choice of sell "voluntarily" or have it taken.   

On the merits, the court concluded that the owners' argument about what public supports the question of public use "raises legitimate questions, which the Commission has heretofore failed to adequately answer." Slip op. at 12. FERC "never considered whether the public benefits of the Nexus pipeline would outweigh its adverse impacts if it were only subscribed for 625,000 dth/day (a substantial decrease from the analyzed 805,000 dth/day), we may affirm its finding of public convenience and necessity only if the Commission's inclusion of the export precedent agreements in its analysis was proper." Id. 

The court didn't reach a conclusion on whether the inclusion by FERC of the Canada-bound gas was proper, because "the Commission never explained why it is lawful to credit demand for export capacity in issuing a Section 7 certificate to an interstate pipeline." Id. All FERC did in response to the owners' objections was to do what agencies in these kind of cases usually do: repeat what it found (that 805k dth/day was enough because hey, some part of it would be going to the U.S.), and rely on the deferential standard of review. 

The D.C. Circuit did not accept that argument, concluding that under the NGA, FERC may issue a certificate for the transport of gas in interstate commerce, and "we have explicitly refused to 'interpret 'interstate commerce'' within the context of the Act 'so as to include foreign commerce.'" Slip op. at 13 (citations omitted). 

The panel similarly rejected FERC's argument that the certificate also took care of the Public Use Clause challenge:

Furthermore, in that single case, the Commission relied on the inadequate explanation that such a circumstance does not present a Takings Clause problem because: once the Commission determines that a pipeline is required by the public convenience and necessity, Section 7 authorizes the certificate holder to exercise the right of eminent domain, and “Congress did not suggest that there was a further test . . . such that certain certificated pipelines furthered a public use . . . while others did not.” Id. ¶¶ 31-32. This reasoning begs the unanswered question of whether – given the fact that Section 7 authorizes the use of eminent domain – it is lawful for the Commission to credit precedent agreements for export toward a finding that a pipeline is required by the public convenience and necessity.

When pressed on this issue at oral argument, the Commission again did not explain why it is lawful to credit precedent agreements for export in issuing a Section 7 certificate for the construction and operation of an interstate pipeline. See Oral Arg. 16:45-28:10. Rather, the Commission repeated that, in approving Nexus’s application, it was “looking at the benefits to the domestic markets.” Oral Arg. 27:34-39. As we have explained, this statement has no explanatory value with respect to the question of why it is lawful for the Commission, as it did here, to predicate a Section 7 finding of need for an interstate pipeline on a pipeline’s precedent agreements for export.

Slip op. at 13-14 (footnotes omitted).

The court remanded the case to FERC "for further explanation of why -- under the [NGA], the Takings clause, and the precedent of this Court and the Supreme Court -- it is lawful to credit precedent agreements with foreign shippers serving foreign customers toward a finding that an interstate pipeline is required by the public convenience and necessity under Section 7 of the Act." Slip op.at 14-15. Judge Rogers concurred, hinting to the pipeline and FERC that on remand, they should consider arguing that the gas that is slated to go to Canada really might not be really going to Canada because the agreements with the Canadian distributors allowed for U.S. use. 

This is a significant win for property owners, because it requires FERC to determine whether the U.S. public would benefit from a pipeline. But before you get too giddy with the result, check out page 22 of the slip opinion where the court cautioned, "we remand without vacatur, because we find it plausible that the Commission will be able to supply the explanations required, and vacatur of the Commission's orders would be quite disruptive, as the Nexus pipeline is currently operational." Slip op. at 22. Yeah, it's already been built. 

In case you were wondering why Judge Millett of the same court (but not on this panel) recently concluded that this is a process that keeps property owners "in seemingly endless administrative limbo while energy companies plow ahead seizing land and constructing the very pipeline that the procedurally handcuffed homeowners seek to stop."

City of Oberlin v. Fed. Energy Reg. Comm'n, No. 18-1248 (D.C. Cir. Sep. 6, 2019)

 

Here's The Agenda And Faculty For The 2020 ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Nashville, Jan 23-25, 2020

You overwhelmingly asked for Nashville, and we're bringing it to you!

Get ready, and hold your place now: here's the list of programs and speakers for the 36th Annual ALI-CLE Eminent Domain and Land Valuation Litigation Conference, to be held at the Downtown Nashville Hilton, January 23,- 25, 2020. Two-and-a-half days with top-notch national faculty (lawyers from both sides, judges, legal scholars, appraisers, relocation experts, and others).  

Early registration and group rates are available now. 

Here are just some of the programs:

• Featured Presentation: Property Rights as Civil Rights: Seeking Justice Though the Fourth and Fifth Amendments. Hon. Jonathan Apgar, Jamila Johnson, Alan Ackerman. Moderator: Leslie Fields.
• Making Sense of the New Rules After Knick v. Township of Scott: Where Do I Go, What Do I Do? David Breemer, Smitha Chintamaneni, Professor Bethany Berger. Moderator: Professor Steven Eagle.
• When A River Runs Thought It: Water Rights and Takings. Nancie Marzulla, Hertha Lund, and Charles McFarland. 
• Passive Takings by Government Inaction. Professor Christopher Serkin.
• Show, Don't Tell: The Dos and Don'ts of Demonstrative Evidence. John Murphy, Jeffrey Hamill.
• Is Close Enough Good Enough? Establishing the Date of Valuation in Direct and Inverse Cases. Neil Olson, Bill Ryan.
• Creative Approaches to Solving Difficult Appraisal Problems, Edward Burg, Bob Grace, MAI, Michael Rikon. Moderator: Joseph Waldo. 
• All You Need is Love: New Frontiers in Alternative Dispute Resolution in Eminent Domain. Cortney Young, Dwight Merriam.
• Road Warriors: Building and Trying an Eminent Domain Case From Your Laptop. Paul Henry, Jody McSpadden.
• Special Benefits: The Givings Clause? Heather Cunningham, Randy Smith.
• How To Try and Settle Pipeline Cases. Thomas Peebles, Melissa Glassman.
• Going Where No Court Has Gone Before: The Tension Between the Courts and Appraisal Methodology. Kevin Walsh, Kannon Conway. 
• Responding to Project Changes: Valuing a Taking When Government Action Changes or is Ongoing. Meghan Largent, W. Andrew Gowder. 
• Responding to the Abuse of Motions in Limine. Anthony Della Pelle, Williams James (invited)

There's also an Ethics program. For that, we are doing something a little different this year, with a special don't-miss presentation, "Surviving the Daily Fistfight: Finding Your Resilience When Every Day is a Battle" with Clint Schumacher, Christian Torgrimson, and Michael Ryan. 

And for those new to the field, or old hands who would like a refresher course, there's the "101" track on Thursday, going through an eminent domain case from A to Z. 

And this isn't the complete list, and there's more on relocation, regulatory takings from both sides of the case, effective strategies to determine unity of lands, fixtures, national updates for eminent domain and regulatory takings, and the "open mike" National Forum (where practitioners from around the nation share their issues and cases).

Look for the complete brochure shortly on the Conference web page on the ALI-CLE site.

And of course, there's Nashville. We're right around the corner from all that the town has to offer. Music City, USA. Hot chicken. The Grand Ole Opry. Country Music Hall of Fame. The Hermitage. 

So make your flight and hotel reservations now. Don't miss out. The attendance at the last several conferences has been record-setting, and the conference block at the hotel has sold out.

Join us - old friends and new colleagues! 

Get Ready: The 2020 ALI-CLE Eminent Domain And Land Valuation Litigation Conference Agenda Coming Soon

The final agenda and faculty list will soon be officially published, but we wanted to give you a preview of what is in store at the ALI-CLE Eminent Domain and Land Valuation Litigation Conference, January 23-25, 2020, at the Nashville Hilton (downtown, just a few steps away from everything that Nashville has to offer). 

Don't miss out: in recent years, we've been at-or-near capacity, and the conference hotel has even sold out a couple of times. Visit the ALI-CLE website to register and hold your space. 

Here are some of the things we'll be discussing: 

• Making Sense of the New Rules After Knick v. Township of Scott: Where Do I Go, What Do I Do?
• The Missing Link in Valuing Fixtures
• When a River Runs Through it: Water Rights and Takings
• Responding to Project Changes: Valuation When Government Action is Ongoing
• Property Rights as Civil Rights: Seeking Justice Through The Fifth Amendment
• Special Benefits: The Givings Clause?
• How To Try and Settle Pipeline Cases
• And, of course Ethics. 

Many of our expert faculty are returning, but we're also featuring many new presenters who have never been on our dais before. And a mix of perspectives and backgrounds: property owners' counsel, condemning agency lawyers, public interest, judges, and legal scholars. Plus a chance to meet your colleagues from across the country. Make connections, and see old friends. 

Early bird registration underway here. See you there. 

Tuesday Takings Round-Up: Alien Takings; Zombies; Kelo, Philippines-Style; Kafka

Here's what we are reading this Tuesday:

• Could Eminent Domain Be The Zombie Mall Slayer? (Barista's note: any time we see use of the eminent domain power bandied about as the solution to problems other than the lack of roads and post offices, we get nervous.)
• RTC: Eminent domain can be delegated to private entities - Kelo isn't just a U.S. thing. A story from the Republic of the Philippines.
• How the Storm Area 51 phenomenon could be an alien benefit to family that once owned the land - we're not saying it was aliens...but it was aliens. A story of the "Area 51" taking, where the owners are represented by our colleague Autumn Waters.
• Georgia colleagues Christian Torgrimson and Daniel Peterson write about Knick: The Eminent Domain Consequences of a U.S. Supreme Court Ruling.
• From the "be careful what you sue for" department: Maui County’s appeal is not to ‘gut’ the Clean Water Act (Maui's mayor responds to claims that the County's present refusal to settle the CWA lawsuit brought by the plaintiffs now being considered by SCOTUS is a betrayal of principles.)
• Judge Attacks “Kafkaesque Regime” That Lets Pipeline Companies Seize Land With Eminent Domain - more on Judge Millett's concurring opinion in which she points out the bizarre situation property owners find themselves in in Natural Gas Act Takings. Our take on the issue here.
• U.S. Supreme Court Seems Poised To Erode Separation of Powers - retired Chief Judge of the New York Court of Appeals Sol Wachtler writes about his view of the border wall.
• In a Bankruptcy Sale, 'Takings' Claims Kick in Early - about the recent Federal Circuit opinion holding that a takings claim accrues for purposes of the commencement of the statute of limitations even before a property owner is actually injured.

Check them out.

Law 608: Eminent Domain And Property Rights - Season 2

We're about to get underway with the fall semester at William and Mary Law School, where we're again teaching an upper-division course, Eminent Domain and Property Rights. 

We've more than doubled the size of last year's enrollment, so it looks like the word is getting out. We cover not only eminent domain and just compensation, but takings (yes, we have a lot of new materials to cover there), civil forfeiture, a small bit of crossover with land use, local government, and related, property rights as civil rights, how property law is discussed in the public sphere, due process, and how to lawyer up these cases. And in early October, the opportunity to have some of the nation's best property law scholars "guest lecture" during the Brigham-Kanner Property Rights Conference. Here's the official description:

Property rights and the sovereign's power of eminent domain have been essential components of Anglo-American law for centuries, and the protection of the right of private property ownership is one of the foundations on which the U.S. Constitution, the Bill of Rights, and the post-Civil War Amendments are built. This course will introduce students to the practical lawyering and analysis necessary for eminent domain practice, including the nuts and bolts of takings practice as well as the study of recent (and ongoing) U.S. Supreme Court cases. In addition, this course will focus on the history, policy, and, to some extent, the politics of property rights, eminent domain law, and related legal topics. We will examine how the right of private property was developed in common and constitutional law, the relationship of property rights to other civil rights and the sovereign's power to take land, the role of federal and state courts in protection of property rights, how private property squares with environmental law, and the proper 'place' of property rights in the modern administrative state. Course materials will be cases and selected portions of books and journal articles, and other materials which will be made available. Grading will be based on a take home paper and class participation.

Students: it's not too late to join (add/drop will commence soon after the first day of classes). We can't promise that you will gain instant knowledge of the subjects, but can guarantee a rewarding semester taking a deeper dive, coming out of it in December with a greater appreciation of this area of law, and a working understanding of what it takes to actually practice.   

New SCOTUS Amici Brief (OCA, NJ Prop Owners, IJ, Cato): Quick-Take-By-Injunction Scheme Shows Complete Lack Of Respect For The Law

Here's the amici brief we're filing today on behalf of the Owners' Counsel of America, New Jersey property owners subject to natural gas pipeline takings, the Institute for Justice, and the Cato Institute, in support of a cert petition which is challenging the federal courts of appeals which have upheld giving prejudgment possession of property to a private pipeline condemnor once a district has ruled in favor of the pipeline that it qualifies under the three predicates in the Natural Gas Act, 15 U.S.C. § 717f(h). . 

The issue is one we've covered before (in our amicus in support of an earlier petition on the same issue), but there are some new twists which make this case especially ripe for SCOTUS review. 

First, this isn't some isolated problem, but of nationwide concern. This is at least the third cert petition recently on this subject. The problem isn't going away.

Second, as D.C. Circuit Judge Millett pointed out last week, between administrative delays in FERC and the district courts' routine grants of these immediate possession preliminary injunctions, property owners are being run through what she describes as a "scheme," a "Kafkaesque regime," and "a bureaucratic purgatory that only Dante could love." (Strong letter to follow.) While FERC delays and delays review, the pipeline runs over to the district court and obtains an injunction that allows it to obtain possession and start building. Then, when FERC gets around to actually reviewing the propriety of the taking, its a done deal. 

Third, as one commentator noted, the D.C. Circuit isn't likely to do anything about the long-standing precedent that allows FERC to avoid the 30-day time window for it to act on a petition. Instead, it has administratively expanded the 30-days by "tolling" what the commentator refers to as "placeholder actions" which signal that FERC intends to act substantively on the petition (but actually does not). Thirty days isn't a realistic time to review petitions, and instead of asking Congress to amend the statute, FERC is simply amending the statute by admin rule. With the D.C. Circuit unlikely to overrule the case approving this procedure (despite Judge Millett's call to do so), the only avenue which property owners have to challenge the scheme is the Supreme Court in these injunction cases. 

Finally, the Supreme Court has recently recognized that this is a problem of constitutional magnitude. In Knick, the majority held that "a property owner has a claim for a violation of the Takings Clause as soon as a government takes his property for public use without paying for it." Knick v. Township of Scott, 139 S. Ct. 2162, 2170 (2019). Injunctions are not the "reasonable, certain, and adequate" right to just compensation the Court acknowledged comply with the Fifth Amendment. Deviation from that constitutional process for the sake of convenience or expedience is lawlessness. 

Here's a summary of our brief's argument:

The process by which private pipeline companies are seizing property nationwide under the power of eminent domain while at the same time avoiding judicial review of public use challenges in FERC was recently described as “a Kafkaesque regime,” and “a bureaucratic purgatory that only Dante could love.” Allegheny Defense Project v. Fed. Energy Reg. Comm’n, ___ F.3d ___, 2019 U.S. App. Lexis 23147 (D.C. Cir. Aug. 2, 2019) (Millett, J., concurring). With judicial acquiescence, pipeline companies are hijacking the constitutional eminent domain process, shortcutting the critical protections by which the Constitution keeps “government’s most awesome grant of power” in check.

These injunctions cannot be viewed in isolation, but as part of an overall scheme in which precondemnation possession in district courts and the start of construction goes hand in glove with routine administrative delays, resulting in land being literally bulldozed before it is condemned, the owners’ legal objections rendered pointless, and the pipeline a fait accompli. See id. at *19 (Millett, J., concurring).

Only this Court can resolve the “quagmire . . . that walls homeowners off from timely judicial review of [FERC]’s public-use determination, while allowing eminent domain and functionally irreversible construction to go forward [that] is in substantial tension with statutory text and runs roughshod over basic principles of fairness.” Id.

This case and others nationwide only add to the burdens which property owners already suffer.

Br. at 6-7 (footnote omitted). 

Stay tuned, there will be more. 

Brief of Amici Curiae Owners' Counsel of America, NJ Property Owners, Institute for Justice, and Cato Insti...

Waiting For FERC: DC Circuit OK's Pipeline Approval, Over Salty Concurring Opinion

You remember Samuel Beckett's classic absurdist play, Waiting for Godot. Two guys spend the entire time waiting for another guy (you know who) to show up, but he never does. There are nearly endless interpretations of its meaning (if any), but everyone pretty much agrees that it is at least about the nature of life and its existential meaningless, while both characters and the audience all wait for something that we know will never happen. 

The U.S. Court of Appeals' recent decision in Allegheny Defense Project v FERC, No. 17-1098 (Aug. 2, 2019), might instead be called Waiting for FERC, because when you read through it (especially the concurring opinion by Judge Millett, which contains some very tart language (to what some have speculated is her own per curiam opinion)), you get the sense that the challengers to the pipeline are a lot like Vladimir and Estragon who spend two-plus hours waiting for nothing. Or like the refugees stuck in Casablanca, who wait, and wait, and wait. The challengers in this case an others are stuck in their own form of Purgatory -- never getting review and never quite losing but never winning until it was too late, all while the train continues to barrel down the track away from them. 

You are by now familiar with the background of how private pipelines are able under the federal Natural Gas Act to exercise eminent domain. The pipeline seeks a certificate of public convenience and necessity from the Federal Energy Regulatory Commission. Administrative review leads to FERC approval for construction, and under the NGA the pipeline may exercise eminent domain if the three criteria set out in 15 U.S.C. § 717f(h) are met (as we argued in our amicus brief in a recent case, meeting these three criteria merely recognize a pipeline's standing to prosecute a straight-taking case).  

Objectors may challenge the certificate via FERC's administrative process, and "[u]ntil the Commission disposes of that rehearing petition, the agency action is not final for purposes of judicial review." FERC has 30 days to act, or the administrative review petition is deemed denied. Environmental laws must also be complied with. 

Transco obtained a certificate. The challengers timely filed a review petition and asked for a stay of construction. FERC granted rehearing within the required 30-days, but that rehearing was limited to "further consideration." So it wasn't a substantive win for the objectors, merely a further delay.

In the meantime, a district court granted a preliminary injunction allowing Transco to enter private property and start to build. Readers of this blog understand that this is an ongoing issue, one subject to three recent cert petitions, most recently this one. Then, before FERC dealt with the administrative review petition, it "issued an order authorizing Transco to begin construction of the Project." Slip op. at 5. The objectors filed a review petition of that order, and like the prior approval, FERC beat the 30-day deadline and "granted" it for the limited purpose of further consideration. More than nine months later, FERC denied the initial review petitions. 

But by then, construction was already underway and had been for more than three months. And then three months later, FERC denied the challenge to the order authorizing construction (more than six months after the construction had actually started). Fait accompli.

You know the rest of the story. The D.C. Circuit reviews administrative appeals with a highly deferential standard, and this case was no different. Read pages 7 through 10 if you want the details.

The panel also rejected a due process argument, which asserted that FERC's authorization of construction while the challengers' initial petitions were pending denied them property. The court concluded that there is no property interest in an Environmental Assessment, the Pennsylvania Constitution, or the NGA's review procedures. (Compare M.A.K. Inv. Grp., LLC v. City of Glendale, 889 F.3d 1173 (10th Cir 2018) (city's blight designation deprived plaintiff of property right in judicial review)). 

But even if there is a property right at stake, the Waiting for FERC process does not violate due process under circuit precedent which holds that "as long as FERC's public-convenience-and-necessity determination is not legally deficient, it necessarily satisfies the Fifth Amendment's public-use requirement." Slip op. at 12 (citing Midcoast Interstate Transmission, Inc. v. FERC, 198 F.3d 960 973 (D.C. Cir. 2000)). 

Game, set, but not quite match. 

As noted above, Judge Millett wrote a separate concurring opinion, which contains all sorts of evocative language, and sets up what looks like a pretty decent en banc petition or even SCOTUS review if en banc gets nowhere. 

As for the Homeowners’ due-process claim, I recognize that circuit precedent ties my hands. But the Commission has twisted our precedent into a Kafkaesque regime. Under it, the Commission can keep homeowners in seemingly endless administrative limbo while energy companies plow ahead seizing land and constructing the very pipeline that the procedurally handcuffed homeowners seek to stop. The Commission does so by casting aside the time limit on rehearing that Congress ordered—treating its decision as final-enough for the pipeline companies to go forward with their construction plans, but not final for the injured landowners to obtain judicial review. This case starkly illustrates why that is not right.

Concurring op. at 1. 

We recommend you read all of her concurrence. It details why landowners object to these things (The Hoffmans’ house is tucked among “rolling hills” on their property—a home designed to be so private that it could not be seen from the road. They built their lives there, among “lots of wildlife,” including the scores of deer and turkeys they fed each day. Both families cherished the quiet, secluded nature of the places where they chose to live."), it notes how the objectors met every deadline, and how they "fought hard before the Commission to preserve their land."

But instead of getting a hearing, they get played:

The upshot of the Commission’s self-help was that its continued inaction on rehearing—the non-finality of the Certificate Order—jurisdictionally locked the Homeowners out of federal court.

Concurring op. at 3. Even though the FERC order was not enough to trigger judicial review, it was enough for Transco to run over to district court and obtain a preliminary injunction to enter the land and start building. Id. ("While non-final for the Erbs and Hoffmans, the Commission’s order was still final enough for Transco to prevail in an eminent domain action in a Pennsylvania federal district court and to acquire the needed easements over the Erbs’ and Hoffmans’ land.").

The objectors could do nothing but wait. "What chumps!" in Chief Justice Roberts' words.

There's a lot more which is why we suggest you read it all. FERC issues the tolling orders as "boilerplate," as Judge Millett noted, and she described the process as "a bureaucratic nightmare only Dante could love." Concurring op. at 17. There's also a strong statement about why property rights and due process were ignored here. 

All teed up for further review. This one isn't over by a long shot.  

More on the decision: "D.C. Circuit ruling 'first glimmer of hope' for landowners" from Energy Wire, and "FERC tolling scheme a 'quagmire,' judge says; calls for en banc overhaul" from Reuters.  

Allegheny Defense Project v. FERC, No. 17-1098 (D.C. Cir. Aug. 2, 2019)

Capt Henry Orders You To Boldly Go To The 2020 ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Nashville, Jan. 23-25, 2020

Recently, we requested crowdsourcing of this year's "come to the ALI-CLE Eminent Domain Conference video." Instead of doing the video ourselves, we asked folks to "please send a short clip of you and/or your colleagues telling us why you think the Eminent Domain and Land Valuation Litigation Conference is the place to be in January. Humor welcome, but not required."

Our friend and colleague, St. Louis' Paul Henry, has answered the call, admirably. Paul, as you may remember, is famous for his presentation a couple of years ago at the Conference about "Everything About Eminent Domain I Need To Know I Learned From Star Trek." Which he gave in a Starfleet captain's uniform. Brave man. Readers know that we dig Star Trek. But we are not that brave, so bravo, Paul.  

See if you don't agree that Paul has now raised the video bar. 

For the rest of you: the challenge has been thrown down, so its time to step up. Send yours, now. 

Get Ready - ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Nashville Jan. 23-25, 2020

Details soon. In the meantime, get your earlier registration discount.

In Federal Natural Gas Act Takings By Private Condemnors, Just Compensation Is Determined By State Law (Incorporated Into Federal Common Law)

There's a bit of Inception-level dream-within-a-dream stuff in the U.S. Court of Appeals for the Third Circuit's opinion in Tennessee Gas Pipeline Co. LLC v. Permanent Easement for 7.053 Acres, No. 17-3700 (July 23, 2019), because the court held in takings by a private condemnor exercising the delegated power of eminent domain under the federal Natural Gas Act, the governing rules about just compensation are provided by federal common law. But "[b]ecause federal law does not supply a rule of decision on this precise issue, we must fill the void with a common law remedy. In doing so, we opt to incorporate state law as the federal standard." Slip op. at 3.  

So the applicable federal common law of just compensation incorporates state law. Got it. 

Here, the fight was over "consequential damages" which the property owner incurred as a result of the pipeline taking, such as professional fees and development costs. Pennsylvania eminent domain law recognizes a right to recover such costs as part of just compensation. Federal eminent domain does not. And here, the amount was pretty significant: one million dollars. The District Court concluded federal law provided the rule of decision. 

Third Circuit, 2-1 held otherwise. Although the NGA says that state "practice and procedure" incorporates a state's eminent domain process, it does not expressly incorporate the governing substantive law of just compensation (and besides, Federal Rules of Civil Procedure 71.1 supersedes the "thousand flowers of thought" procedures, and created a uniform federal eminent domain process). 

Pennsylvania's just compensation law differs from the Fifth Amendment "floor" in two ways (recall that federal just comp standards are merely a minimum requirement, and state law may recognize more. First, in partial takings both federal and Pennsylvania law use the "before and after" method which looks at the fair market value of the property before the taking and after. "But fair market value appears to be a more inclusive concept under Pennsylvania law. In contrast to the federal rule regarding partial takings, the recoverable market value under Pennsylvania law appears to include any benefits to the value of the remaining property as a result of the taking." Slip op. at 10. 

The second way in which Pennsylvania law differs from federal compensation law is the above-mentioned consequential damages, and the recover of profession fees.  

The Third Circuit majority agreed with the District Court that federal common law of just compensation applied:

where federal law governs a controversy but there is no federal rule of decision on a particular matter, a federal court must fill the void through common lawmaking, either by fashioning a uniform, national rule or by incorporating state law as the federal standard.

Slip op. at 12-13. But that is not the end of the inquiry, because the applicable federal common law incorporates state substantive just compensation law. 

There are a lot of reasons why, and we recommend you read the opinion, especially focusing on pages 15 onward for the details: federalism, the fact that a private condemnor is doing the taking here (and this isn't an essential government function that would call for a uniform national rule of compensation), the NGA's silence, and more. This part of the opinion is fascinating, and a good read. Have at it.

One judge disagreed (so we think we have not seen the end of this case or issue). Judge Chargares would have concluded that this is a federal taking, thus federal substantive law applies. None of that dream-within-a-dream incorporation stuff! See Dissent at 1 ("I believe that the standard by which we measure just compensation due for an exercise of the Fifth Amendment eminent domain power is the same regardless of whether it is the Government or a Government-delegatee that exercises that power.").

We've been down this path recently, over in the Eleventh Circuit. There, the court is considering the same issue, in that case whether Florida's attorneys fee shifting rule (under that state's "full compensation" imperative) are recoverable in a private NGA taking in federal court. Our brief in which we argued that the right to recover fees is one of the owner's property rights and therefore cannot be ignored because state law defined property in federal eminent domain cases, is available here. The Fifth and the Sixth Circuit agree, too. 

Stay tuned, as always. 

Tennessee Gas Pipeline Co., LLC v. Permanent Easement for 7.053 Acres, No. 17-3700 (3d Cir. July 23, 2019)

Cases And Links From Today's Eminent Domain And Pipelines Conference (Houston)

I am grateful that planning chairs Justin Hodge and Jeremy Baker invited me to their conference. A room full of experts. Here are the links to the cases and other items I spoke about:

• Knick v. Township of Scott: initial thoughts on what might be a dawning "golden age" of property cases
• Knick, Entirely in Memes
• Givens v. Mountain Valley Pipeline, LLC (SCOTUS considering whether private pipeline condemnor can use a Rule 65 preliminary injunction to get quick-take by another name)
• Cert Denied In Immediate-Possession-By-Injunction Case (But There's One More In The Pipeline)
• Bump Stocks and Takings
• Is Seizing Prescription Drugs for Use as Evidence a Taking?
• Barboan: Eminent Domain and the Taking of Indian Property
• Colorado (Carousel Farms): A Lot Of Private Benefit Today Does Not Overcome Smattering Of Possible Public Future Benefit
• Protip for Megaproject - How to Not Name Your Project
• All Your Race Are Belong To Us: Baltimore Is Taking The Preakness Stakes (We're Serious)
• Ninth Circuit Denies En Banc Review In Case Upholding "Core" and "Fundamental" Property Rights, But Two Trump Judges Dissent
• Say What? Montana Supreme Court: Gov't Occupying Property Under Claim Of Right Is Only A Tort, Not A Taking; Tort vs "taking" - Montana, California (wildfire liability)
• Frozen: "Necessity" In Eminent Domain Can Mean Mere Convenience (Or Anything Else The Condemnor Says)
• New Cert Petition: Fifth Amendment Requires California To Spread The Cost Of Wildfire Inverse Condemnations To Ratepayers
• How Is "The Public" Defined When It Comes To Special Damages?
• Ninth Circuit: Inverse Condemnation Plaintiff Must "Share The Pain" - City Can Shed Obligation To Pay Just Compensation In Bankruptcy, Which Is "Purely A Monetary Claim"
• How Is "The Public" Defined When It Comes To Special Damages?
• We Are The World: Iowa SCT Finds Dakota Access Pipeline Will Promote The Public Convenience For Iowa, Even If Iowans Don't Get Any Of The Pipeline's Oil
• Are Pipelines For The Public's Benefit? If So, What Public?
• "Doggone stinky" government action, but no property right in use of land
• Ninth Circuit: "fundamental" attributes of property may be immune from state law changes
• Property rights in a "clean and healthy environment" - Hawaii vs. DC Cir (Pennsylvania law)
• PruneYard Undone: California's Union Easement - Which Invites Labor Organizers To Enter Private Property - Isn't A Physical Taking
• Oregon App: Physical Inverse Condemnation Claim Is Ripe From The Moment Of Occupation
• 11th Cir: City Inviting Public To Access Beach Across Private Land Is Inverse Condemnation
• Federal Circuit: Restoration Of Foreign Govt's Sovereign Immunity For Terrorist Acts Isn't A Physical Taking Of Victim's Money Judgment

And finally, this. Our single Powerpoint slide today.  Because there are some days you just feel like the odd person out. 

Guest Post: Senator Is Wrong About Knick Ruling

Back to Knick for a bit. Our colleague Dwight Merriam has penned a response to a recent op-ed by U.S. Senator Sheldon Whitehouse (D - RI).

The good senator, if you weren't aware, was also the guy who argued and lost the Palazzolo case all the way back in 2001. Apparently, he's still sore about that, because in response to Knick, he wrote, "'Knick'-Picking: Why a Recent Supreme Court Ruling Signals a New Day," in which he argued that the decision "is a gift for big-money developers and regulated industries." (Neither Ms. Knick nor Mr. Palazzolo is or were a big-money developer or a regulated industry, in case you were wondering.)

Merriam doesn't see it the same way as the august senator. In "Senator is Wrong About 'Knick' Ruling," he sets the record straight (originally published at law.com). 

* * * *

Senator Whitehouse Is Wrong, Knick Was Correctly Decided and the Sky Is Not Falling

Senator Sheldon Whitehouse in his recent broadside on these pages, “'Knick'-Picking: Why a Recent SCOTUS Ruling Signals a New Day”, goes off the rails in claiming that the U.S. Supreme Court’s decision in Knick v. Township of Scott is the product of five conservative justices ganging up to ignore legal precedent so as to impose their agenda and of “dark money” funding a shadowy coalition of groups bent on remaking the Court and influencing it to their ends.

The plain fact is that Williamson County v. Hamilton Bank (1985), the decision the Court overruled in Knick, was wrongly decided in the first instance and has proved utterly unworkable. This is not a conservative or liberal issue. It is a question of Constitutional interpretation. The Fifth Amendment to the U.S. Constitution provides that no one should have their “private property be taken for public use, without just compensation.” What Knick does is protect that right by opening the door to the federal courts.

The legal construct that Williamson County created was that a person’s property could not be deemed “taken” by the government and a claim for compensation justiciable in federal court until they had subjected themselves to a long process in state court to see if the government can be forced to pay something for the rights it invaded. 

In the case of Rose Mary Knick, what her town did was pass a law that said anyone during daylight hours could enter her private farmland where she lives alone to access an old, hardly recognizable small private gravesite 300 yards into her property. Under the doctrine of Williamson County Mrs. Knick hadn’t lost anything, at least not yet, even though strangers might wander across her property for years while she sought relief in a state court. Until she was done in state court, her case was not “ripe” for federal court.

What Knick does is make clear that the taking of Mrs. Knick’s property interest occurred the moment the town ordered her to open her private property to the public and on that day she ought to have the right to go to federal court to get relief from the violation of her rights under the federal Constitution. Where else should a property owner be able to get relief under the Bill of Rights than in federal court? 

The Court made a mistake in 1985 in Williamson County. The Court corrected it in Knick, plain and simple. Instead of maligning the majority, we ought to commend them for stepping up and admitting there was error and, that as a practical matter, Williamson County had created a procedural nightmare. 

Yes, this was a big victory for property rights advocates, but it is not an issue of political and social philosophy, and right versus left. Prof. Daniel R. Mandelker, Washington University School of Law, has taught land use law for seven decades and is revered by government lawyers and planners. He is, in his own words, a “police power hawk.” He believes in comprehensive government planning and tough regulation to promote the public good, including affordable housing, historic preservation, and environmental protection. He has argued for reversal of the Williamson County ripeness rule for more than three decades and he joined in an amicus brief in Knick urging the Court to overrule it. Prof. Mandelker lent his voice and reputation to the cause, uninfluenced by “dark money.” [Barista's note: here's the brief which Dwight references, filed on behalf of Professor Mandelker by Michael Berger.]

No doubt property owners will be emboldened by this decision and more takings cases will be filed in federal court encompassing a wider range of infringement of private property rights. But the Knick situation, as so many others like it, was entirely avoidable. The town could have negotiated to acquire an easement from Mrs. Knick and paid fair value for it. If she would not agree, and the town felt strongly enough about it and could prove in court that having the access was a public use, it could have used its eminent domain power to take the easement, paying just compensation at the time of the taking.

Finally, no one need fear that federal courts will be deciding garden variety, local zoning disputes for two reasons. First, the federal courts are courts of limited jurisdiction and generally have no right to decide issues of state law, unless they elect do so under the doctrine of pendant jurisdiction. Second, many takings claims going to federal court are going to be free of state claims because the property owners will not challenge the legality of the offending local regulation or decision, instead suing only to get paid for what has been taken.

Let’s move on.

* * * *

As for us, we hope the Senator is right on one of his predictions: that Knick represents a "new day" for property owners. Just not in the way he anticipates. 

Guest Post: Senator is Wrong About Knick Ruling

New Cert Petition: Private Pipeline's Preliminary Injunction In Natural Gas Act Taking Created New Substantive Rights

Here's the latest cert petition about an issue we've been following closely. Givens v. Mountain Valley Pipeline, LLC, No. ___ (July 3, 2019)

As regular readers understand, several federal courts of appeals recently have upheld giving prejudgment possession of property to a private pipeline condemnor once a district has ruled in favor of the pipeline that it qualifies under the three predicates in 15 U.S.C. § 717f(h).

These courts conclude that summary judgment -- which recognizes that a private pipeline company with a FERC certificate may exercise eminent domain power under the NGA -- is enough to also grant the pipeline possession of the land now, even though the NGA does not delegate the quick take power. In our view, these injunctions grant pipelines a substantive right and are an usurpation of Congress' power to determine how the delegated eminent domain power gets exercises. The courts, however (with the exception of the Seventh Circuit) seem to assume that, oh well, the pipelines are going to get the property, so there reason to not give them possession now by granting a Rule 65 injunction, even though that radically alters the status quo.  

This is the third petition filed on this issue lately (we filed this amici brief supporting the second). This one seeks review of the Fourth Circuit's Mountain Valley Pipeline opinion. We couldn't summarize the case and issues better than a recent piece in E&E News by Pamela King, "Landowners ask justices to nix companies' 'quick take' power."

Unlike standard eminent domain proceedings, which require just compensation in exchange for acquiring land, immediate possession or "quick take" power allows developers to take private property months or years before paying.

Although Congress did not convey quick-take authority to pipeline developers in the Natural Gas Act, several appellate courts have interpreted the law to allow those firms to take property to build their projects before landowners ever receive a dime.

We recommend reading the entire piece. Recently, we also recorded a podcast with two of the major players in this and similar cases ("Podcast Now Available: Is “Possess Now, Pay Later” Constitutional in Private Pipeline Takings?"). 

Here's the Question Presented in Givens:

Through the Natural Gas Act (“NGA”), 15 U.S.C. §717 et seq., Congress delegates the federal power of eminent domain to private pipeline companies to build interstate pipelines. Because the Act contains no quick-take provision, courts agree that the Act itself gives a pipeline company only the “straight” power of condemnation. This means the condemnor may take ownership and possession of the land after the trial on just compensation by paying the amount of the final judgment.

The Fourth Circuit and other courts of appeals nevertheless hold that district courts may issue preliminary injunctions granting immediate possession based on the prediction that the pipeline company will ultimately take the land under the NGA. In contrast, the Seventh Circuit holds that preliminary injunctions must be based on the parties’ substantive rights at the time the injunction issues. And because neither state law nor federal statute gives a pipeline company any substantive right to pretrial possession, an injunction granting immediate possession exceeds federal judicial power.

The question presented is: whether district courts have power, before the trial on just compensation, to issue a preliminary injunction granting immediate possession of property to a pipeline company in a condemnation proceeding under the Natural Gas Act.

As noted above, we filed a brief in support of one of the earlier petitions on the same subject, so stay tuned. 

Petition for a Writ of Ceritorari, Givens v. Mountain Valley Pipeline, LLC, No. ____ (July 3, 2019)

Podcast Now Available: Is “Possess Now, Pay Later” Constitutional in Private Pipeline Takings?

Here's the recording of last week's Federalist Society teleforum on the issue "Is 'Possess Now, Pay Later' Constitutional in Private Pipeline Takings?" 

 

Stream it or download it here:

 

Here's the summary of the podcast:

The U.S. Supreme Court will soon consider the third of several petitions for certiorari asking it to review a question which has split the lower federal courts: whether district courts have the power under the Federal Rules of Civil Procedure to issue preliminary injunctions in takings under the Natural Gas Act which allow private pipeline condemnors to obtain immediate possession of property, even though Congress has withheld the federal “quick take” power in the NGA.

The Third, Fourth, Ninth, and Eleventh Circuits have concluded that simply because Congress did not delegate to private pipeline condemnors the quick take authority—the power to obtain immediate title and possession of condemned property upon a deposit of estimated compensation—neither did it withhold from federal courts their usual equitable powers to issue injunctions. The Seventh Circuit concluded otherwise: that because private pipeline condemnors were not delegated the quick take power in the NGA, possession must wait until the court adjudicates the final compensation owed, and the pipeline condemnor exercises its option and makes that payment. This Term, the Court declined to review two of the three petitions, but the issue is one that is not going away.

Featuring:

Chris Johns, Partner, Johns & Counsel PLLC

Jeffrey A. Simmons, Partner, Foley & Lardner LLP

NY Court of Appeals Considering Whether A Pipeline Can Take Property For A Project That Can't Legally Be Built

Here's a case that's pending in the New York Court of Appeals that has been briefed and is awaiting argument. 

In Natural Fuel Gas Supply Corp. v. Schueckler, No. 17-02021 (Nov. 9, 2018), the Appellate Division answered this question:

This appeal therefore presents a novel question of condemnation law: can a corporation involuntarily expropriate privately-owned land when the underlying public project cannot be lawfully constructed?

Slip op. at 1. 

The court stated it clearly: "We answer that question firmly in the negative."

Like many projects, in order to be built this natural gas pipeline had a long and complex checklist. It needed approvals of FERC -- a certificate of public convenience -- under the Natural Gas Act. And certain approvals under the federal Clean Water Act. Which in turn meant it needed state enviro checkoffs, here a water quality certificate from a New York agency. It also needed to acquire the needed property, either by negotiation or by eminent domain (in this case, condemnation under state law). Under New York's eminent domain law, if a condemnor obtains a certificate of public convenience, it is exempt from the usual process of proving public use and purpose. 

FERC ok'd the pipeline and granted the certificate of public convenience. But it wasn't an unconditional certificate. It was, by law, subject to all those other things we mentioned above. It was the water quality certificate from the State of New York that proved to be the hangup. After it applied for -- but before it actually obtained -- that certificate, the pipeline began condemnation proceedings in a New York court to take the property.

But "[s]hortly after petitioner commenced the vesting proceeding, however, the New York State Department of  Environmental Conservation (DEC) denied petitioner's application for a WQC. Slip op. at 5. Oops. "The WQC application, held the DEC, 'fails to demonstrate compliance with New York State water quality standards.'" Id. The pipeline objected, naturally. It sought judicial review of the denial. That challenge remains pending. But if the denial of the enviro certificate is "ultimately upheld, the pipeline cannot be built." Id. 

Back in the eminent domain case, the property owners objected to the taking. The pipeline doesn't have a valid certificate of public convenience, they asserted. The New York Supreme Court (the trial division - yeah, we watch Law and Order (dun-dun) so we know that the "supreme" court is that state's general jurisdiction trial court) disagreed, and "authorized the acquisition of the easements necessary for the construction and operation of the pipeline." Slip op. at 7. As we wrote about a separate pipeline case, many courts view eminent domain as inevitable, and are not bothered terribly by the details.

The Appellate Division (4-2) reversed ("firmly" as the majority noted above). As long as FERC's certificate of public convenience was subject to conditions, and those conditions are not met, the attempted taking lacks proof of a public use or purpose because the pipeline is not exempt from the usual requirement to establish a public use. 

Although it is true that a federal commission issued a certificate of public necessity approving petitioner’s pipeline project, the certificate nevertheless authorized construction of the pipeline “subject to” various conditions, including, as discussed above, the State’s issuance of a WQC. “ ‘[S]ubject to’ . . . language means what is says: no vested rights are created . . . prior to” the occurrence of the condition to which the instrument is subject (Moran v Erk, 11 NY3d 452, 456 [2008]). Thus, when the State denied the very permit upon which petitioner’s authority to construct the pipeline was conditioned, petitioner – by definition – lost its contingent right to construct the public project[.]

Slip op. at 8.  

Conditions unsatisfied means no valid FERC certificate. No FERC certificate means no exemption from the usual showing of public use or purpose. The majority rejected the pipeline's argument that a valid and fully realized FERC certificate was not a condition precedent to taking property, and was only needed to start actual construction. That "entire line of argument is a non sequitur." Slip op. at 8. Nor did the court accept the pipeline's argument that a fully vested FERC certificate wasn't needed to start taking the property:

Rather, the lodestar of petitioner’s eminent domain power is the public project authorized by the certificate (see Transportation Corporations Law § 83). The certificate, in other words, simply authorizes the public project, and the power of eminent domain stands or falls with that project as a necessary ancillary to its implementation (see generally NY Const, art 1, § 7 [a]). Thus, when the public project cannot be legally completed, any eminent domain power in connection with that project is necessarily extinguished.3 To say otherwise would effectively give a condemnor the power to condemn land in the absence of a public project, and that would violate the plain text of the State Constitution.

Slip op. at 9. 

The court also rejected the old "well, they're going to be compensated for it so what's the problem" argument as "entirely besides the point." Id. "in a constitutional order such as ours, jealous as it is of the right to own property and do with it as one pleases, only a viable public project can force respondents to surrender their rights in their land." Id. If only the federal courts of appeals understood that!

The dissenters pointed out that a later-filed order seemed to moot the objections (appellate procedure mavens, take note and compare page 10 of the dissent with the second paragraph of footnote 2 of the majority opinion on page 6): "in an order issued August 6, 2018 ... the DEC waived its WQC certification authority under section 401 of the Clean Water Act. Thus, as things now stand, the DEC's denial of the WQC is no longer an impediment to construction of the pipeline." Dissent at 10. Amazing things happen when you have the agency in your hand, no? The court should take judicial notice of that bit of administrative sleight of hand because it makes the you-don't-have-a-valid-FERC-certificate argument irrelevant, according to the dissent.   

After all that, the New York Court of Appeals agreed to review the issue. The briefs have been filed, and we're awaiting oral argument.

• Pipeline's opening brief
• Schueckler's answering brief
• Pipeline's reply
• the Record on Appeal, if you want to take a deep dive

So stay tuned, everyone. We'll keep following along (even if the pipeline asks to dismiss for appellate mootness, a motion we would not be surprised to see). 

National Fuel Gas Supply Corp. v. Schueckler, No. 17-02021 (N.Y.A.D. Nov. 9, 2018)

Mark Your Calendars: Federalist Society Teleforum On Preliminary Injunctions In Natural Gas Act Takings: Is "Take Now, Pay Later" Unconstitutional? (Friday, June 21, 2019)

The details are yet to be posted on the web, but mark your calendars now for an upcoming (two weeks from today, on Friday, June 21, 2019) Federalist Society teleforum, produced by the Environmental and Property Rights Practice Group, about an issue that we've been following that is the subject of at least three recent cert petitions (two denied, one on the way): whether federal courts can issue preliminary injunctions in takings under the Natural Gas Act which allow private pipeline condemnors to obtain immediate possession of property, even though Congress has withheld the federal quick take power in the NGA.

Stay tuned for the details which will be posted soon. Our speakers will be Chris Johns (Texas) who is preparing the forthcoming petition, and Jeffrey Simmons (Wisconsin), who will present the condemnors' viewpoint.  We'll be moderating the program. 

Details on the way. 

Links From Today's Portland Eminent Domain Conference

Here are the links to the cases which were not in your materials. Theme of the day: amateurs! 

Our thanks to colleagues Jill Gelineau and Paul Sundermier for asking us to present. It was good to see our Oregon friends again. 

• All Your Race Are Belong To Us: Baltimore Is Taking The Preakness Stakes (We're Serious)
• Ninth Circuit Denies En Banc Review In Case Upholding "Core" and "Fundamental" Property Rights, But Two Trump Judges Dissent
• Say What? Montana Supreme Court: Gov't Occupying Property Under Claim Of Right Is Only A Tort, Not A Taking; Tort vs "taking" - Montana, California (wildfire liability)
• Shaka, When The Walls Fell: Yes, Knick Will Be About Takings, But It Will Be More About Federalism
• Cert Denied In Immediate-Possession-By-Injunction Case (But There's One More In The Pipeline)
• Frozen: "Necessity" In Eminent Domain Can Mean Mere Convenience (Or Anything Else The Condemnor Says)
• New Cert Petition: Fifth Amendment Requires California To Spread The Cost Of Wildfire Inverse Condemnations To Ratepayers
• How Is "The Public" Defined When It Comes To Special Damages?
• Ninth Circuit: Inverse Condemnation Plaintiff Must "Share The Pain" - City Can Shed Obligation To Pay Just Compensation In Bankruptcy, Which Is "Purely A Monetary Claim"
• How Is "The Public" Defined When It Comes To Special Damages?
• We Are The World: Iowa SCT Finds Dakota Access Pipeline Will Promote The Public Convenience For Iowa, Even If Iowans Don't Get Any Of The Pipeline's Oil
• Are Pipelines For The Public's Benefit? If So, What Public?
• "Doggone stinky" government action, but no property right in use of land
• Ninth Circuit: "fundamental" attributes of property may be immune from state law changes
• Property rights in a "clean and healthy environment" - Hawaii vs. DC Cir (Pennsylvania law)
• PruneYard Undone: California's Union Easement - Which Invites Labor Organizers To Enter Private Property - Isn't A Physical Taking
• Oregon App: Physical Inverse Condemnation Claim Is Ripe From The Moment Of Occupation
• 11th Cir: City Inviting Public To Access Beach Across Private Land Is Inverse Condemnation
• Federal Circuit: Restoration Of Foreign Govt's Sovereign Immunity For Terrorist Acts Isn't A Physical Taking Of Victim's Money Judgment

And no, it's not raining.

We Are The World: Iowa SCT Finds Dakota Access Pipeline Will Promote The Public Convenience For Iowa, Even If Iowans Don't Get Any Of The Pipeline's Oil

Here's one we've been waiting to drop for a while, on an issue we wrote about earlier this week.

In Puntenney v. Iowa Utilities Board, No. 17-0423 (May 31, 2019), the Iowa Supreme Court -- taking a different view than Kentucky -- held that a pipeline which runs through Iowa, but which does not have any "offramps" for oil in Iowa, will nonetheless promote the public convenience and necessity" for the people of Iowa.

The court's reasoning boils down to this: a pipeline is a "traditional" public use.

The court first adopted Justice O'Connor's Kelo dissent (along with the reasoning of Hathcock, Norwood, and SWIDA), concluding that economic development alone does not qualify as a public use under the Iowa Constitution:

Like our colleagues in Illinois, Michigan, Ohio, and Oklahoma, we find that Justice O’Connor’s dissent provides a more sound interpretation of the public-use requirement. If economic development alone were a valid public use, then instead of building a pipeline, Dakota Access could constitutionally condemn Iowa farmland to build a palatial mansion, which could be defended as a valid public use so long as 3100 workers were needed to build it, it employed twelve servants, and it accounted for $27 million in property taxes.

Slip op. at 31. So far, so good. 

But then the other shoe fell:

Having said that, this case is not that one. Instead, this case falls into the second category of traditionally valid public uses cited by Justice O’Connor: a common carrier akin to a railroad or a public utility. See Kelo, 545 U.S. at 498, 125 S. Ct. at 2673. This kind of taking has long been recognized in Iowa as a valid public use, even when the operator is a private entity and the primary benefit is a reduction in operational costs.

Slip op. at 31-32. This pipeline is like a railroad: privately owned, but with public benefit.

Which raised a second issue: doesn't the lack of an actual use of the pipeline or its oil by Iowans mean there's no public use? The court concluded that whether oil flowed to Iowans wasn't the right question. Instead of looking at whether the pipeline or oil would be used by Iowa's public, the court only examined whether any Iowans would benefit from it. Having framed the issue that way, you know the answer: we all benefit from lower gas prices. Yes, there's private benefit flowing from the pipeline (I'll say), but "the record indicates that it also provides public benefits in the form of cheaper and safer transportation of oil, which in a competitive marketplace results in lower prices for petroleum products." Slip op. at 33.

In short, a remote connect-the-dots benefit (which Iowans share with anyone anywhere who puts gas in their tank who might conceivably benefit from a cheaper oil supply) overcomes the lack of any direct use of the property taken or the project which it now occupies, by Iowans.  

We Are The World...

Kentucky and West Virginia courts have reached the opposite conclusion, but Ohio and Illinois go the other way. 

The court also rejected other sundry public use and necessity arguments. See slip op. at 19-21.

The court's ruling also means that the decision whether there's a public use sufficient to support an exercise of eminent domain may be exercised by the Iowa Utilities Board when it decides whether to issue a certificate of public convenience.

Finally, a procedural note. The court rejected Dakota Access's claim that because the pipeline was already built and the oil already flowing, the appeal was moot. Slip op. at 17. While dismantling the pipeline (were the owners to have prevailed) "would not be feasible," the IUB could impose conditions or restrictions on the pipeline. Thus, any ruling could do something. And that's enough to render the appeal not moot.

Two thoughts on this. First, what conditions could the IUB impose to remedy a private benefit taking other than to not take the property? Force the pipeline to build an oil offramp in Iowa (for processing at a nonexistent Iowa refinery)? We're not sure. Second, the mootness argument, although rejected by the court, shows how the build-first-worry-later approach whipsaws property owners by making these situations fait accompli. An owner can't stop a project while the wheels of justice turn, and when the appeals court gets around to deciding, the owner is forced to spend time and fees pushing back on arguments that oh well, it's too late to do anything about it. 

Read the briefs and view the oral argument video here. More on the case here ("Dakota Access pipeline was justified in using eminent domain, Iowa Supreme Court rules") from the Des Moines Register. 

Puntenney v. Iowa Utilities Board, No. 17-0423 (Iowa May 31, 2019)

Are Pipelines For The Public's Benefit? If So, What Public?

An issue we've been tracking for a while -- are takings for pipelines for the public's benefit? -- raises another question: how is "the public" defined?

Some courts, like Kentucky's, define the public as the public which the jurisdiction serves. In the Bluegrass Pipeline case, for example, the court of appeals held that a natural gas pipeline which went through Kentucky, but did not have any offramps for the natural gas in Kentucky -- was not "in public service" as required by that state's eminent domain statutes. A Pennsylvania court adopted a similar rationale (even though it held a private pipeline could exercise eminent domain power because it planned gas offramps in Pennsylvania).

And in City of Oberlin v. FERC, No. 18-1248, the U.S. Court of Appeals for the D.C. Circuit recently heard oral arguments about whether FERC can consider benefit to the non-US public when it approves a natural gas pipeline. (Listen to the arguments above.) There's also a case pending in the Iowa Supreme Court. 

All that is background to today's links:

• Export pipelines new front in eminent domain fights ("Taking gas and using it for export doesn’t benefit American consumers in any way. The only benefit is to the private corporations profiting from this” said David Bookbinder, an attorney with the Niskanen Center, a libertarian think tank in Washington, who is following the case. “Any of the LNG projects being built in Texas and anywhere else where a pipeline is being built, this (issue) is going to be raised.") - Houston Chronicle
• How eminent domain is blighting farmers in path of gas pipeline (Becky Crabtree, a resident of Lindside, West Virginia, was one of the plaintiffs in the lawsuit whose property was also taken by the pipeline.“MVP had installed the pipeline across our land without paying us a dime,” said Crabtree, a retired teacher.She described how a sinkhole opened in her backyard and the value of her property declined to the point where its virtually unsellable. “The land we had purchased for homesites for our children now has a 42in natural gas pipeline under it or near it. The site and our existing home are in the incineration zone should there be a leak and explosion,” she said.) - The Guardian
• Don't cut Iowa out of the U.S. energy boom (an oped from lawprof James Coleman: "Iowa has far more to gain than lose from American energy markets. Now would be the worst possible time to cut itself off from its neighbors who are its best energy customers. The Iowa Supreme Court must take care not to squander Iowa’s opportunity to be the spark of a new energy revolution.") - Des Moines Register
• Energy and Eminent Domain, 104 Minn. L. Rev. ___ (forthcoming 2019) (a scholarly article by Professor Coleman and lawprof Alexandra Klass: "We suggest ways for policymakers, advocates, and others to reconsider the role of Kelo-style arguments in the context of energy transport projects and enact reforms that will allow critical energy projects to be built in a manner that better accommodates impacted communities and provides additional procedural rights and compensation for landowners.") - SSRN

Cert Denied In Immediate-Possession-By-Injunction Case (But There's One More In The Pipeline)

This morning, the Supreme Court declined to review a case we've been following, Like v. Transcontiental Gas Pipe Line Co., No. 18-1206. 

This is the one in which landowners are challenging the district court's issuance of an injunction in a Natural Gas Act taking which allow a private condemnor to obtain immediate possession of the land being condemned even though the Natural Gas Act does not delegate to pipeline condemnors the quick-take power. We filed this amici brief in support of the property owner. 

The game is still afoot for several reasons, even though this is the second case presenting the same issue that the Court declined to review. First, the issue isn't going away; there is at least one more case in the petition pipeline, involving the Mountain Valley pipeline. Second, other courts get it, why doesn't the Supreme Court? And finally, there's Knick. That case hinges on the vibe that condemnors don't need to provide compensation at the time of the taking -- an issue also in play in these cases -- and by the time the Mountain Valley petition is filed in July, the Court will very likely have decided Knick.

So don't change the channel just yet. 

Frozen: "Necessity" In Eminent Domain Can Mean Mere Convenience (Or Anything Else The Condemnor Says)

North Dakota, as you might expect, can be cold in the winter. So cold that railroad switches need to be heated, else they get... frozen. The railroad uses refillable propane tanks, but these need to be refilled from time to time. And North Dakota is so cold in the winter that sometimes, the propane trucks can't get to the tanks to refill them. Frozen switches. 

Enter MDU, the Montana-Dakota Utilities Company. The railroad asked MDU to install a natural gas pipeline, "believing that natural gas by pipeline would increase reliability and decrease the cost associated with heating the switch." The cheapest and most practical place to locate this pipeline was on Behm's land: "MDU claimed that other routes for the pipeline would be too expensive or might in the future require modification or removal of the pipeline. 

Behm didn't see it that way. He objected, asserting the taking was not for public use because it was to benefit the railroad and only the railroad. The trial court agreed, although it couched its ruling in terms of "necessity." The court held the taking was authorized by the statute which permits takings for gas pipelines, "but that a taking of Behm's property was not necessary for the public use." The pipeline would benefit a single user, the railroad. And the railroad could continue to heat its switch by propane, or the utility could choose another route for the pipeline. It would just be a hassle, and "[t]he location of the proposed pipeline further stretches the meaning of necessity to mean mere convenience to MDU." 

In Montana-Dakota Utilities Co. v. Behm, No. 20180321 (May 16, 2019), the North Dakota Supreme Court disagreed. The necessity of the taking, the court held, is "limited to the question of whether the taking of the particular property sought to be condemned is reasonably suitable and usable for the authorized public use." Slip op. at 3. Unless there's proof of bad faith or fraud that is (and we all know how often a property owner can prove that to a court's satisfaction). The court rejected the property owner's argument that the North Dakota "adopt an expanded judicial review of the necessity of taking." Slip op. at 3. It did so in two steps.

First, the court agreed that the question of public use is ultimately a judicial one, but affirmed that the court's review is highly deferential. Here, it meant that the use on which the trial court should have focused on was MDU's use as a pipeline, not the railroad's use of the gas in the pipeline to heat its switch:

MDU’s proposed pipeline to supply natural gas to BNSF for the purpose of heating the railroad switch is for a public use because MDU is a public utility, even though the portion of the pipeline at issue here is intended to serve only a single customer.

Slip op. at 5.  

Having disposed of the challenge to the public use of the taking, the court turned to the necessity question. It concluded the trial court applied the wrong standard. The Supreme Court rejected a California decision which held that necessity doesn't mean  mere convenience. Slip op. at 6 (citing Spring Valley Water-Works v. San Mateo Water-Works, 28 P. 447, 449 (Cal. 1883)). 

The MDU easement, the court concluded, was not for its mere convenience. It didn't already own adjacent land so Behm's land was as good as any other. And the governing standard sets a very low bar: necessity only asks if the property is "reasonably suitable and usable" for the purpose for which it is being taken. Was Behm's land suitable for a pipeline? For sure.   

Behm's suggestion that there were two better routes for the pipeline were met by the usual judicial response: deference to the condemnor. "Ultimately, it appears the district court substituted its judgment for that of the condemning authority." Slip op. at 8. 

Read the briefs and listen to the oral argument recording here. 

Montana-Dakota Utilities Co., v. Behm, No. 20180321 (N.D. May 16, 2019)

Friday Reading: Pipeline Injunctions, Justifying Kelo, And Maui Groundwater Case

Here's what we're reading today, in between real work:

• "Rural families' eminent domain fight arrives at high court" from Pamela King at E&E News, about this case we've been following. Injunctions and "take first, pay later." 
• "John Paul Stevens Is Still Trying To Defend the Kelo Debacle" from Damon Root at Reason. We only note that Kelo is so correct that a majority of states repudiated it; surely a resounding confirmation of its correctness, Justice Stevens.  
• "Groundwater case makes strange bedfellows" from Ellen Gilmer at Greenwire. About the amici lineup in a Maui case now being considered by SCOTUS, about whether groundwater is subject to Clean Water Act jurisdiction. An issue the plaintiffs in that case are now so skittish of, they (and the County) are now desperately trying to settle it before the Court makes a decision. 

AZ App: Private Utility Does Not Effect A Taking "until after trial and payment"

The Arizona Court of Appeals' opinion in Arizona Electrical Power Cooperative v. DJL 2007 LLC, No. 1 CA-CV 16-0097 (May 9, 2019), is about the date of valuation in eminent domain, but beyond that is interesting to us because it sheds light on a case we've been following about natural gas pipelines and the use of the federal courts' injunction power to effect immediate possession. 

In the Arizona case, the owner purchased land from the BLM subject to the private electric company's 30-year easement on which it had installed high-voltage transmission lines. The grant of easement expired in 2011, but the electric company did not remove the lines. In 2014, it instituted an eminent domain action to condemn the easement. 

The trial court rejected the utility's request for immediate possession. Instead, it granted a preliminary injunction allowing the utility to continue to operate and maintain the transmission lines.

The parties disputed the date of valuation. The owners asserted "the land should be valued as of the date the court eventually enters the final order of condemnation." Slip op. at 4. The utility argued the date of valuation was the date of the taking -- the date the 30-year easement expired and it began occupying the property without a legal right to do so. The court accepted neither argument, instead concluding the date of valuation was the date the summons issued in the utility's eminent domain lawsuit.

The court of appeals sided with the owner, rejecting the utility's argument that the property was physically taken on the date it began holding over when its easement expired. Like many jurisdictions, Arizona's eminent domain code designates the date of summons as the date of valuation. "But if the summons is remote in time from the take and the value of the property has changed in the interim, the value of the property on the date of the taking must control." Slip op. at 6. 

The court concluded that if it was the government -- and not a private utility with the delegated power of eminent domain -- then yes, the date of the physical occupation would be the date of the taking. "But the Arizona Constitution imposes additional limitations on the exercise of eminent domain by a private corporation (like Southwest Transmission) that preclude a taking by occupation." Id. 

The court relied on the provision in the Arizona Constitution which recognizes that private entities may exercise eminent domain power, but which also notes that the appropriation cannot take place until compensation as been ascertained and paid:

and no right of way shall be appropriated to the use of any corporation other than municipal, until full compensation therefor be first made in money, or ascertained and paid into court for the owner, ... which compensation shall be ascertained by a jury, unless a jury be waived ....

Slip op. at 7 (citing Ariz. Const. art. 2, § 17). 

The Arizona Supreme Court has held (Hughes Tool) that this provision prohibited a private entity exercising eminent domain from obtaining prejudgment possession, because it requires the "advance jury determination of damages." Slip op. at 8. Just as the private condemnor could not obtain immediate possession in that case, the electric company could not take the property by physical occupation here. 

As a private corporation, Southwest Transmission cannot take possession of property as a condemnor until after trial and payment of just compensation. See Hughes Tool, 91 Ariz. at 160. To hold otherwise would, in effect, allow the result that Hughes Tool reversed: a private corporation could achieve the same result as an order for immediate possession (even though § 12-1116 is unavailable) by simply entering the property during the pendency of the condemnation action.

Slip op. at 8-9. The court further noted, "in straight-condemnation proceedings under federal law, the date of the taking is similarly the date the government tenders payment after final judgment on just compensation." Slip op. at 10 (citing Kirby Forest
Indus., Inc. v. United States, 467 U.S. 1 (1984)). This is the issue in the Natural Gas Act condemnations in the case we referenced at the start of this post. If the Arizona Court of Appeals gets this, why can't the federal courts?

But what about the fact that the electric company continued to physically occupy the property after the expiration of its legal right to do so? It didn't do so in its capacity as a condemnor, held the court. Slip op. at 10.

"Instead, Southwest Transmission simply became a hold-over tenant on that date, and under the right-of-way clause [in the Arizona Constitution], could not take Landowners' property in a constitutional sense until after trial and payment." That, not the date of the occupation or the date of summons, is the date of the taking and hence the date of valuation. 

Arizona Electrical Power Cooperative v. DJL 2007 LLC, No. 1 CA-CV 16-0097 (Ariz. Ct. App. May 9, 2019)

SCOTUS Reply Brief Clears Up Misconception About Eminent Domain Actions

Here's the Reply Brief in a case which we've been following (and in which we filed this amici brief). This is the one in which landowners are challenging the district court's issuance of an injunction in a Natural Gas Act taking which allow a private condemnor to obtain immediate possession of the land being condemned even though the Natural Gas Act does not delegate to pipeline condemnors the quick-take power.

The Reply responds to the Brief in Opposition, and argues:

These decisions conflict with the basic structure of eminent domain, which grants condemnors the power to buy land by force—not occupy it by federal injunction. The decisions let pipeline companies exercise a formidable power that Congress has not given them. And for landowners in the path of pipeline projects, the decisions create grave burdens to which no other federal condemnee is subjected. Because only this Court can correct the circuit courts’ mistaken course, the petition should be granted.

The Reply echoes a point we've been making about the nature of eminent domain actions -- that no "merits" determination is possible until the court adjudicates final compensation: 

As described in the petition, the final judgment in a condemnation action is not an order transferring property from A to B; rather, it is an order authorizing A to purchase (or acknowledging that A has purchased) property from B. Pet. 15–16. While it is common to refer to condemnations as “takings,” a straight-condemnation action does not let the condemnor “take” anything. Instead, the action creates an “option to buy the property at the adjudicated price.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 4 (1984).

Reply Br. at 3. As our amici brief put it: "in straight-takings cases like these, the merits question is whether the condemnor has title, which can only happen here once Transcontinental exercises its option to buy. That, in turn, can only come after the court finally determines the amount of compensation. And that has not yet happened." Amici Br. at 12. 

Yes, compensation need not be provided at the same time as the taking (an issue which is going to be the critical component of the Supreme Court's regulatory takings decision in the Knick case) but there's a huge difference between the taking which the Natural Gas Act authorizes (title transfer upon payment of compensation), and district courts using their Rule 65 injunction power to give private pipelines possession now. 

This is the final brief at the petition stage, so now we wait. 

Reply Brief for Petitioners, Like v. Transcontinental Gas Pipe Line Co., LLC, No. 18-1206 (May 2, 2019)

BIO In "Take-First-Pay-Later" Natural Gas Act Condemnation

Here's the Brief in Opposition, in Like v. Transcontinental Gas Pipe Line Co., LLC, No. 18-1206 (Apr. 17, 2019), the case which we've been following (and in which we filed this amici brief). 

This is the case in which landowners are challenging the district court's issuance of an injunction in a Natural Gas Act taking which allow a private condemnor to obtain immediate possession of the land being condemned even though the Natural Gas Act does not delegate to pipeline condemnors the quick-take power.

Here's the Question Presented as framed by the pipeline: 

Whether the decision of the court below affirming the issuance of an injunction granting possession of specific rights of way on each of the Petitioners’ properties by the district court under the Natural Gas Act, after a two day hearing, and after the district court granted partial summary judgment and determined that Transco had the authority to condemn the rights of way under the Natural Gas Act, conflicts with the decisions of this Court or the Seventh Circuit’s decision in Northern Border Pipeline Co. v. 86.72 Acres of Land, 144 F.3d 469 (7th Cir. 1998).

Compare how the Petitioners put it:

Notwithstanding the Act’s limited delegation, are district courts empowered to enter preliminary injunctions giving private companies immediate possession of land before final judgment in Natural Gas Act condemnations?

Stay tuned for the Petitioners' reply.

Barista's note: the other petition raising the same issue (against the same private condemnor) is set for conference at the Court on April 26, 2019, after the pipeline waived its right to respond. 

Brief in Opposition, Like v. Transcontinental Gas Pipe Line Co., LLC, No. 18-1206 (Apr. 17, 2019)

New SCOTUS Amici Brief In Pipeline Case: Courts Keep Using "Order of Condemnation." We Do Not Think It Means What They Think It Means

Here's the amici brief of the Owners' Counsel of America; New Jersey, Virginia, and West Virginia property owners; Cato Institute, and NFIB Small Business Legal Center which urges the Supreme Court to grant cert in a case we've been following for a while.  

As regular readers understand, several federal courts of appeals recently have upheld giving prejudgment possession of property to a private pipeline condemnor once a district has ruled in favor of the pipeline that it qualifies under the three predicates in 15 U.S.C. § 717f(h). These courts conclude that summary judgment grants a pipeline a "substantive" right, and therefore there's no reason to not give it possession now by granting a Rule 65 injunction. 

But a close read of the language of section 717f(h) shows it is only about whether a private pipeline company may institute an eminent domain lawsuit to take property. In other words, whether it has standing:

When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That the United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.

Our brief argues that summary judgment on these three factors does not grant a "substantive" right in these type of condemnations. Rather, the substantive right is ownership of the property, which will not be finally determined until a final adjudication of compensation. These courts' faulty reasoning is highlighted by their conclusion that summary judgment was an "order of condemnation." 

The panel, however, wrongly concluded the district court’s grant of summary judgment was a “merits” determination. Pet. App. 13. It also mischaracterized the district court’s summary judgment order as an “order of condemnation.” Id. at 22. As outlined earlier, in straight-takings cases like these, the merits question is whether the condemnor has title, which can only happen here once Transcontinental exercises its option to buy. That, in turn, can only come after the court finally determines the amount of compensation. And that has not yet happened. An “order of condemnation” is the document by which the court transfers title to the condemnor after payment of the final adjudicated compensation.

Br. at 12. For an overall flavor of the brief, here's the Summary of Argument:

The unstated premise at the heart of the reasoning by the Third Circuit and the other courts which adhere to the same approach is that, once initiated, a Natural Gas Act condemnation is all but inevitable.[4] Because the pipeline company will eventually obtain the property after it pays the adjudicated compensation, the reasoning goes, what’s the harm in giving it possession now? Once the pipeline company obtains summary judgment on the three predicates that a private condemnor must satisfy to institute an eminent domain action under section 717f(h) of the NGA, it’s all over but the shouting because the summary judgment order resolved the substantive issues.

There are several fundamental problems with this approach: most critically, a misunderstanding about what the “substantive” rights are in an eminent domain action. The substantive right at stake in all federal takings, these included, is ownership of the property. And in straight takings, ownership and title are transferred to the plaintiff only after it agrees to pay the adjudicated price and exercises its option to buy at that price. Only then, and after the owner either is provided with compensation or has an irrevocably vested right to recover it, may the condemnor obtain possession. The Third Circuit concluded the district court’s summary judgment order granted Transcontinental a substantive right to Petitioners’ properties. But the summary judgment order did no such thing. It merely determined Transcontinental could be a straight taking plaintiff-condemnor and maintain a federal condemnation lawsuit. Any protections in the preliminary injunction process are hollow substitutes for the usual constitutional safeguards, because here, Transcontinental unquestionably retained the ability to walk away if it did not like the adjudicated compensation eventually established by the trial court.

By virtue of these injunctions, Transcontinental possesses both its cake (prejudgment possession of the properties), and the ability to eat it (the option to not buy if it doesn’t like the final price).

-----------------------------------

4.  This issue is not isolated. Besides the Third Circuit, the Fourth, Sixth, and Eleventh Circuits have recently considered the same issue. See Mountain Valley Pipeline, LLC v. 6.56 Acres of Land, No. 18-1159 (4th Cir. Feb. 5, 2019); Nexus Gas Transmission, LLC v. City of Green, Ohio, No. 18-3325 (6th Cir. Dec. 7, 2018); Transcontinental Gas Pipe Line Co., LLC v. 6.04 Acres, more or less, No. 16-17503 (11th Cir. Dec. 6, 2018). Nor is the issue going away. A separate petition seeking this Court’s review of the Eleventh Circuit’s opinion has been filed, see Goldenberg v. Transcontinental Gas Pipe Line Co., LLC, No. 18-1174 (Mar. 6, 2019), and others may soon be forthcoming in the other cases.

Check it out.

Follow along on the Court's docket here. 

Brief Amici Curiae of Owners' Counsel of America, et al., Like v. Transcontinental Gas Pipe Line Co., LLC,...

Materials And Links From Today's Austin Eminent Domain CLE

Great crowd today in Austin for CLE International's Eminent Domain seminar, co-chaired by our colleagues Chris Clough, Sejin Brooks, and Christopher Oddo. We spoke about "National Trends and Developing Issues in Eminent Domain." 

Here are the cases I referred to which are not included in your written materials:

• "Doggone stinky" government action, but no property right in use of land. 
• Ninth Circuit: "fundamental" attributes of property may be immune from state law changes
• Property rights in a "clean and healthy environment" - Hawaii vs. DC Cir (Pennsylvania law)
• Sixth Circuit: "forced pooling" statute isn't a taking
• "Bad faith" as a way to challenge a taking
• Violet Dock Port: for "unique" property, the Louisiana Supreme Court concludes that fair market value isn't the only measure of just compensation. Replacement cost evidence is admissible
• NJ Appellate Division: "take now, decide later" will not support redevelopment necessity. Unless there's "linkage" 
• Does the takings clause require compensation for the taking of use, or of value? 
• Does the takings clause protect investment expectations, or current profitability?
• Donuts and loss of business goodwill in eminent domain
• The Uniform Relocation Act and the Pirate's code
• Kansas relocation: owner who voluntarily sold entitled to benefits if there's evidence of an intent to condemn 
• Why do lower courts continue to dis Palazzolo? see also Indiana
• Tort vs "taking" - Montana, California (wildfire liability), 
• Ninth Circuit (2-1): inverse condemnation judgment which has not been reduced to judgment can be discharged in bankruptcy 
• Antrim Truck Centre - the Supreme Court of Canada on circuitry of access and "injurious affection"

Another Cert Petition Challenging Quick-Take-By-Injunction In Gas Pipeline Takings

Here's the cert petition filed recently in yet another case (seeking review of the Eleventh Circuit's opinion) which challenges a federal court issuing an injunction in a Natural Gas Act taking allowing a private condemnor to obtain immediate possession of the land being condemned, even though the NGA does not delegate to pipeline condemnors the quick-take power. 

You know where we are on this issue. If not, check out our amicus brief which we filed in the Third Circuit which has the details of why we think this is wrong. 

There's another cert petition on the same issue pending, and another likely coming.

Here's the Question Presented:

The Court has long emphasized the strict construction of condemnation statutes, especially as against corporate delegates of this sovereign power. By the plain, undisputed terms of the Natural Gas Act, 15 U.S.C. § 717f(h), a pipeline company obtains title and any incident rights of possession in property it seeks to condemn only upon entry of judgment and payment of compensation in such an action. A growing number of Circuits have nevertheless upheld grants of full possession to pipeline companies at the outset of these actions through mandatory preliminary injunctions— the Seventh Circuit has demurred. In this case, the Eleventh Circuit further expanded the reach of these injunctions in holding that a pipeline company need not even pay estimated just compensation, by posting a cash bond, before obtaining possession. As a result, Petitioners have now been deprived of their property without any compensation for over two years, even as Respondent profits from its use—pumping as much as 44.8 million cubic feet of natural gas through it every day. This case thus raises an important and frequently recurring issue never addressed by the Court as to the constitutional limits of equitable procedures in eminent domain actions at law.

The specific question presented is:

Whether a judicially-conferred right of possession to a pipeline company before judgment and without compensation in a Natural Gas Act taking improperly invades the exclusive authority of Congress to legislate how eminent domain is exercised and violates the just compensation clause.

Follow along on the Supreme Court's docket here. Stay tuned. 

Petition for Writ of Certiorari, Goldenberg v. Transcontinental Gas Pipe Line Co., LLC, No. 18-1174 (Mar. 6...

Audio: Readings From "The Habit of Turning The World Upside Down"

Last week, author Howard Mansfield joined us at the William and Mary Law School for two sessions about his recently-published book, "The Habit of Turning the World Upside Down - Our Belief in Property and the Cost of That Belief."  His book is about property, property rights, and what he has discovered about how these ideas are processed by the American psyche.

The first session was open to the entire student body, faculty, and public, and the highlight was Mr. Mansfield reading some of his favorite passages from his book. The second session was a student-only chat about some of the themes that he emphasizes. 

If you were not able to join us in-person, listening will be able to give you a sense of why we think this book is a timely rumination on what "property" means, both good and not-so-good. 

If you can't stream the audio above, download the mp3 file here. 

New Cert Petition: No "Take-First-Pay-Later" In Natural Gas Act Condemnations

Here's the cert petition we've been waiting to drop.

If you follow this blog, you know we are all over the issue of the quick-take-by-injunction scheme that private condemnors have cooked up, and which a majority of federal courts go along with. 

Here's the issue: can a private condemnor exercising the delegated eminent domain power under the Natural Gas Act may obtain prejudgment possession of the property to be condemned by way of a preliminary injunction, when Congress has not delegated the ability to obtain prejudgment possession? 

Knowing nothing else, you might think the obvious answer was "no." When Congress doesn't delegate the power to obtain prejudgment possession, the courts can't grant prejudgment possession. But a host of federal appeals courts have held otherwise. Recently, the Fourth, Sixth, and Eleventh Circuits have joined the Third Circuit in allowing a NGA condemnor to obtain prejudgment possession of property, even though Congress did not delegate the quick-take power in the NGA. These courts agree that there was no Congressional delegation of the quick-take power. But, they reason, that doesn't mean that federal courts cannot grant immediate prejudgment possession under their equitable power to issue Rule 65 preliminary injunctions. Congress didn't expressly prohibit injunctions. 

Only the Seventh Circuit has taken a different -- and we believe correct -- approach: because the NGA only delegates the straight-taking power (in other words, possession only follows after determination of compensation, payment, and transfer of title to the condemnor), a Rule 65 injunction cannot compel more than that. (The Ninth Circuit almost gets it right, but still fails to apply the correct reasoning.) 

The majority of the circuits, by contrast, are of the opinion that the "substantive" right in a straight-takings case is the question of a private pipeline company's right to take, and thus if the pipeline obtains summary judgment under the NGA's three-part test (see 15 U.S.C. § 717f(h)), then the case is all over but the shouting, and there's no reason not to give the pipeline possession of the property, even if compensation has not been determined, has not been paid, and title has not passed from the owner to the condemnor. The Third Circuit denied en banc review (we filed an amicus brief), as has the Fourth Circuit recently (we also filed an amicus brief in that case).

In our view, those courts have gotten it wrong. The substantive rights in an straight-taking eminent domain case are not embodied in the three statutory factors which a pipeline must show in order to institute a condemnation case. Those only go to its standing as the plaintiff/condemnor. Rather, the substantive right in these cases is ownership, and the adjudicated amount of just compensation which must be actually paid by the condemnor.  Only then does title transfer from the owner to the condemnor, and only then does the condemnor obtain the "substantive" right to possession. 

The critical indicator of this is the fact that until title transfers, a straight-taking condemnor is free to walk away and to not take the property, if it doesn't like the price which the court determines it must pay. We think the Supreme Court in Kirby Forest Industries, Inc.  v. United States, 567 U.S. 1 (1984) got it right when it held that in straight-takings, the condemnor has the "option" to buy the condemned property at the adjudicated price, but is under no obligation to do so. 

But the process which the courts have endorsed allows pipelines to possess both the cake (pre-compensation possession), and the ability to eat it (the option to walk away in the future). In the meantime, the injunction has ousted the owners from possession, and taken their right to exclude others without any compensation whatsoever.

Thus, the first cert petition in these cases is now teed up, and the Institute for Justice has stepped in to represent the property owners. The Question Presented:

The Natural Gas Act (15 U.S.C. § 717f(h)) delegates to certain private companies the ordinary eminent domain power: that is, the power to bring a condemnation lawsuit and then buy land at an adjudicated price after final judgment. The Act does not delegate the separate power to take immediate possession of land.

Notwithstanding the Act’s limited delegation, are district courts empowered to enter preliminary injunctions giving private companies immediate possession of land before final judgment in Natural Gas Act condemnations?

Are we going to be filing an amicus in support? Oh yes. 

Petition For a Writ of Certiorari, Like v. Transcontinental Gas Pipe Line Co., No. _____ (U.S. Mar. 13, 201...

Upcoming 3/13/2019 Book Talk: Turning the World Upside Down: Property Rights, Pipelines, and Emergencies - A Conversation With Howard Mansfield

If you are in the Williamsburg, Virginia area next week Wednesday, March 13, 2019, please hold the lunch hour (12:50-1:50pm, Room L127) on your calendar to come join us for a session with Howard Mansfield, author of the recently-published book "The Habit of Turning the World Upside Down - Our Belief in Property and the Cost of That Belief."

In November, we chatted with Mr. Mansfield, and this semester are basing a seminar on property rights at the William and Mary Law School on the book. Well worth reading. Here's the printable flyer. 

His book is about property, property rights, and what he has discovered about how these ideas are processed by the American psyche. He will be speaking about how property fits with the culture—the competing narratives attached to the notion of ownership—and the often-contradictory way in which we view the idea of property and possession, illustrated by the issues burned into the headlines: pipelines, adaptation to climate change, the border wall, and cultural rights.

No charge. Public welcome. Light lunch served. Books available for purchase.

RSVP if you would like to attend. 

Sponsored by the 2019 Brigham-Kanner Property Rights Conference (Oct. 3-4, 2019), Waldo & Lyle (Norfolk, Virginia), and Damon Key Leong Kupchak Hastert (Honolulu, Hawaii). 

Come join us for an interesting hour. 

Flyer for March 13, 2019 Howard Mansfield book talk, William and Mary Law School

New Amicus Brief: Private Natural Gas Act Condemnors Can't Use Rule 65 Injunctions To Short-Circuit The Straight Takings Process

Here's the motion and proposed amicus brief we filed earlier this week, in a case we've been following about natural gas pipelines, eminent domain, and immediate possession.

As we noted here, a panel of the U.S. Court of Appeals for the Fourth Circuit recently concluded that a private condemnor under the Natural Gas Act could obtain immediate possession of property it is in the process of condemning, even though the NGA does not delegate the quick take power. All three judges concluded that this case is "on all fours" with the Fourth Circuit's earlier decision in East Tennessee Nat. Gas Co. v. Sage, 361 F.3d 808 (4th Cir. 2004), which held that even though Congress did not delegate the quick take power in the NGA, a preliminary injunction under Rule 65 of the Federal Rules of Civil Procedure could achieve the same result, and thus there was no running room.

The property owners asked for rehearing or rehearing en banc, and we thought this would be a good opportunity for us to chime in and point out some of the fundamental misunderstanding which the Fourth Circuit panel was under (they are not alone: most, but not all, federal circuits which have considered the issue have gone down the same erroneous path). 

The crux of these courts' analysis is that once a private pipeline condemnor secures summary judgment on the three predicates in 15 U.S.C. § 717f(h), it has a "substantive" right, and therefore there's no reason to give it possession now by granting a Rule 65 injunction.

But check out the language of section 717f(h), which in our view talks only about whether a private pipeline company may institute an eminent domain lawsuit to take property. In other words, has standing:

When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That the United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.

But the court held, in short, that because the condemnation of the property becomes inevitable upon the granting of summary judgment, why wait until final compensation is calculated and paid to transfer possession, even though Congress did not delegate the quick take power in the statute?

But is the condemnation inevitable? After all, everyone agrees that in the NGA, Congress delegated only the straight taking power to pipeline companies. Which means that under the process envisioned by the statute, possession should not pass to the condemnor until title passes. And that doesn't happen in straight takings until the court establishes the amount of compensation that is to be paid, and that compensation is actually paid.

Our brief argues that the "substantive" right in these type of condemnations is the passing of title to the condemnor, not the granting of summary judgment on the issue of whether the plaintiff has standing to bring the condemnation lawsuit:   

There are several fundamental problems with the panel’s analysis. Most critically, the district courts’ summary judgment orders did not confer a substantive right on MVP. The courts merely determined MVP could be a straight taking plaintiff-condemnor. The substantive rights in all federal takings are the transfer of title. Only then, and after the owner either is provided with compensation or has an irrevocably vested right to obtain it, may the condemnor obtain possession. Any protections in the preliminary injunction process are pale substitutes for these constitutional safeguards.

So now we wait. More, as this case progresses, and the issue develops. 

Motion for Leave to File Brief Amicus Curiae in Support of Appellant's Motion for Rehearing and Rehearing

Fourth Circuit Panel Sticks With Sage: Natural Gas Act Condemnor Given Immediate Possession Even Though No Grant Of Quick Take Power In The Statute

We suppose we should not be too surprised by the U.S. Court of Appeals for the Fourth Circuit's panel opinion in Mountain Valley Pipeline, LLC v. 6-56 Acres, No. 18-1159 (Feb. 5, 2019), which concluded, like the Third, Sixth, and Eleventh Circuits did recently, that a private condemnor may obtain immediate possession of property that it may condemn, even though Congress did not delegate the quick take power to those private condemnors in the Natural Gas Act.

After oral argument, we had a faint hope that the panel might see things differently. See "4th Cir Judge In Pipeline Arguments: "Condemnation is one of those monarchy things" - Is Immediate Possession Unconstitutional When Congress Has Not Delegated That Power To A Pipeline?"

But alas no, it was not to be. All three judges concluded that this case is "on all fours" with the Fourth Circuit's earlier decision in East Tennessee Nat. Gas Co. v. Sage, 361 F.3d 808 (4th Cir. 2004), which held that even though Congress did not delegate the quick take power in the NGA, a preliminary injunction under Rule 65 of the Federal Rules of Civil Procedure could achieve the same result, and thus there was no running room. Like the other courts which have analyzed the issue (incorrectly, in our view), the Fourth Circuit panel concluded that the pipeline company's summary judgment on the three predicates under the statute, means that the pipeline has what the courts call the "substantive" right to condemn. 

We've been down this path before -- our latest was a rebuffed effort to get the Third Circuit to hear the same issue en banc -- and we won't go over the argument in detail. Suffice it to say that our Third Circuit amicus brief gets to what we think is the core of the way the courts should look at this: 

The panel’s rationale not only violates the well-worn rule of statutory interpretation of eminent domain statutes (they must be liberally read in favor of the property owner, and strictly construed against the condemnor), but also reflects a fundamental misunderstanding of the eminent domain power, and process. Federal statutory takings become inevitable only when title transfers. And only then can the condemnor get possession. Here, by contrast, the panel acknowledged that title would not transfer until the end of the case, but nonetheless allowed possession.

In short, the "substantive" right here isn't the power to institute a condemnation action. That is the only thing which a private NGA condemnor meeting the statute's three-part test gets. No, the substantive right is the actual taking of the property, which can only occur in these cases when title transfers. And that only can happen upon the condemnor's exercise of its option to buy (after the court establishes the price), the actual payment, and the transfer of title.

The property owners in the Fourth Circuit were under no illusions that they are fighting an uphill battle, given Sage.

Now that the latest panel has ruled, will we see more, such as an en banc petition to revisit Sage, or even a cert petition if that gets nowhere?  

Mountain Valley Pipeline LLC v. 6.56 Acres of Land, No. 18-1159 (4th Cir. Feb. 5, 2019)

Wish You Were Here: Links From Day 1, 2019 ALI-CLE Eminent Domain And Land Valuation Litigation Conference

Here is our annual "proof of life" photo, taken from the dais during the opening session, to prove that all 250 of us were in the room for the ALI-CLE Eminent Domain Conference, and not out on a Palm Springs golf course (it is 72º and sunny, so a golf course would not be a bad place to be).  

Here are the links from our talk this morning (along with Amy Boulris) about the latest issues to watch in eminent domain:

• NJ Appellate Division: "take now, decide later" will not support redevelopment necessity. Unless there's "linkage." 
• Louisiana Court of Appeals with two points for condemnors: (1) don't name your project the "Megaproject," and (2) don't let your Executive Director testify that but for the Megaproject needing the property, the local government would not have condemned it. If you do, don't be surprised the court views the taking with a jaundiced eye.
• Quick takes by Rule 65 preliminary injunctions: Third Circuit joins the growing circuit split on whether private condemnors under the federal Natural Gas Act can acquire early possession of property, even though Congress in the NDA did not delegate the condemnors the Quick Take power. Our amicus brief which details why we think this is wrong. 
• In these federal takings, does state or federal law provide the rule of decision on compensation (and damages)?
• Violet Dock Port: for "unique" property, the Louisiana Supreme Court concludes that fair market value isn't the only measure of just compensation. Replacement cost evidence is admissible.
• "Property" rights in a clean and pure environment. The Hawaii Supreme Court concludes the state constitution's provision gives right to a due process property right. But the D.C. Circuit concludes that Pennsylvania's similar constitutional provision does not give rise to an enforceable right, because you can't exclude others from a clean environment.
• The Uniform Relocation Act and the Pirate's Code: (the URA is merely "guidelines," and does not give rise to a private right of action by a property owner). 
• Who gets paid: owner at time the court issues order of possession, or the owner at the time the condemnor actually possessed? If you said the former, you'd agree with the Nevada Supreme Court. 

Here are some other cases we didn't have time to cover, but which you may find of interest:

• Ninth Circuit (2-1) concludes that inverse condemnation judgment which has not been reduced to judgment can be discharged in bankruptcy. 
• Virginia Supreme Court: the term "and" really means "or" in Virginia's precondemnation entry statute. 
• Iowa Supreme Court considering whether the PUC's determination of public convenience also determines whether a taking is for public use. 

Below is a "reverse" view of the opening session, taken from the audience's perspective. Great crowd, a record number (again). 

Finally, if you are here attending, please stop me and say hello. 

ALI-CLE Palm Springs (72º, Sunny) Here We Come

If you didn't register to attend the 36th Annual ALI-CLE Eminent Domain and Land Valuation Litigation Conference later this week in Palm Springs, California, well then, shame on you!

According to the National Weather Service, while you and the rest of the country is freezing, we'll be enjoying the balmy desert climes, and discussing the topics we love: eminent domain, redevelopment, relocation, regulatory takings, trial and appeal strategies, doctrinal changes on the horizon, hot topics (border wall, pipelines, wildfires, and flooding), and others. 

Featuring a national faculty (many new to the ALI-CLE dais), and attendees from the entire spectrum of practice, academia, and the bench. 

If you are not joining us, be sure to follow along on the blog (we will post updates daily), and on Twitter (@invcondemnation, @ALI_CLE #EminentDomain2019). And plan on joining us in 2020, when we'll be in a new city (by popular demand!). And if you have topics or speakers to propose, start thinking about those as well. 

Hot (Eminent Domain) Topics, Cool Jazz

Don't Miss the 2019 Eminent Domain Litigation Conference from American Law Institute CLE on Vimeo.

Check out this sound blurb, produced by the good media folks at ALI-CLE, about the upcoming Eminent Domain and Land Valuation Litigation Conference. (And no, we didn't record this in a jazz club; although I wish we had.)

There's still time to register, and come and join us in Palm Springs. 

"Eminent Domain Just Compensation Act" - Withdrawing The Quick Take Power From Border Wall Takings - What Is It Good For?

We have mostly avoided the most recent kerfuffle about the southern border wall (or fence, take your pick) for a few reasons.

First, the signal-to-noise ratio is pretty bad at the moment, and that usually isn't a good predictor for rational conversation. Second, others are covering the subject much better than we ever could. See Professors Gerald Dickinson, and Ilya Somin, for example. Third, yet other experts are going to be covering this topic at the upcoming ALI-CLE Eminent Domain and Land Valuation Litigation Conference in Palm Springs (Jan 24-26, 2019), and we can get the critical information downloaded to our brain from those right on the front lines. And finally, we've been tied up getting ready for a very important appellate oral argument which the Hawaii Supreme Court is hearing today. Actual work calls! 

But we just couldn't resist when this item crashed our Twitter feed.

U.S. Representative Justin Amash (R-MI) introduced a bill (the "Eminent Domain Just Compensation Act") (he should get points for avoiding the cutesy names that they give too much legislation these days). He says the point of the bill is "to ensure private property owners are fairly compensated if the federal government takes their land for border security or enforcement activities."

So we read the bill. (not such a big deal, since it is only 2 pages long.) It appears to propose two things. First, it will withdraw the power of the AG to institute a condemnation for the border wall and delegates it instead to the DHS Secretary. Second, and most critically, it withdraws the quick take power, something we thought was going to be an important piece of any wall-related takings.    

A few thoughts:

• We thought that the Fifth Amendment already "ensure[s] private property owners are fairly compensated if the federal government takes their land for border security or enforcement activities" (or anything else). You mean that isn't the way it already works and you need a statute? Say it ain't so, Joe! 
• Any thoughts whether withdrawing the quick take power will make it more likely that a condemnor's position on what constitutes just compensation in any particular case will improve? Will this bill mean only that maybe the feds will be more willing to talk turkey and settle quicker if a landowner has the ability to dig his heels in and slow down possession that is supposed to come only after payment of final compensation and title transfer? 
• Why only border takings? Why not pipelines, too? Are only borderland farmers and ranchers getting leveraged by quick takes out of their due compensation? Not in our view. 
• And finally, the lack of Congressional quick take power in NGA pipeline cases sure hasn't stopped federal judges from uniformly giving pipelines immediate possession anyway in those cases, so what makes anyone think that won't happen here, too? 

Let's follow along and see what happens. 

H.R. ___ Eminent Domain Just Compensation Act

Space Remaining Is Limited - Register Now For ALI-CLE Eminent Domain And Land Valuation Litigation Conference (Palm Springs, Jan. 24-26, 2019)

We're almost there, but we still have room remaining. At the 2018 Conference in Charleston, we both sold out the registrations and the conference hotel, so we planned ahead for the upcoming 2019 Conference in Palm Springs at the Renaissance Palm Springs Resort. 

Register here. You will also be able to download the print brochure (above), or find out more details about the agenda and faculty on line. As always, we have assembled a great faculty -- many of them new speakers -- on the hottest topics in eminent domain and takings law: pipelines, jury presentations, challenging the take, an update on the most important decisions of 2018, pre-condemnation planning (from both the condemnor and property owner perspective), the border wall, and relocation. 

And of course, ethics and the "101" track for those new to the field, or experienced lawyers who would like a refresher on the basics. And these featured presentations:

• JFK: The Assassination, the Zapruder Film, and Just Compensation - Judge Andrew Edison and Justin Hodge
• Keynote Address - Property Rights: Foundation for a Free Society – President W. Taylor Reveley (College of William and Mary, Emeritus)
• Tips and Traps for the New Eminent Domain Lawyer –Andrew Brigham, Thor Hearne, Justin Hodge, Mikaela Rivera, Jack Sperber, and Joseph Suntum
• Earth, Wind, (Water), and Fire: A Report From te Front Lines of the Flood and Wildfire Inverse Cases –Thor Hearne, Professor Shelley Saxer, and Edwin Smith
• Responding to Misconceptions and Urban Legends About Eminent Domain in Popular Media – Andrew Gowder, Mark Murakami and Kelly Sheeran

As always, there are sponsored receptions and other networking events so you can meet your colleagues from across the nation. 

We have already exceeded the conference room block at the Renaissance (which means there are still rooms available at the conference hotel, just not at the discounted conference rate). But fear not: ALI has secured three overflow room blocks at nearby hotels (our Conference is in downtown Palm Springs), so there are many options for lodging remaining. ALI has also booked the very largest conference facilities, so registrations is still ongoing, and we likely will not sell out like in Charleston. 

But you never know. This program is growing in popularity and attendance, with each year exceeding the last. So don't delay, make your hotel booking now, and register to come join us in January. 

Op-Ed: Border Wall "Eminent Domain Fight Could Take Years." Or Could It?

Pitt lawprof Gerald S. Dickinson has written an interesting op-ed in the Washington Post, "The biggest problem for Trump's border wall isn't money. It's getting the land." The sublede poses an interesting thought: "Eminent domain fights could take years."

Which raises the question, could it? 

Yes, it might, as Professor Dickinson notes. There's the preliminaries, things like environmental and regulatory review. Negotiating with the property owners (if the feds either are required, or want, to go that route). There's the special issue of the feds condemning lands occupied by tribes. 

But what about the biggest issue: are the feds going to use straight taking, or quick take (Declaration of Taking Act)? If the latter, any fights about compensation could get kicked down the road, and seizure of property -- and construction -- would not have to wait. 

We posted on this a while back ("Eminent Domain and the Border Fence"), and we provided some thoughts for the big Pro Publica story on the border wall earlier this year ("'Abuse, Mistakes and Unfairness' In Border Wall Eminent Domain (But It's Not Just Happening There)"). 

If the feds go the quick take route, there doesn't seem like a lot that could be done to slow-walk building of the wall. You only need to look to the ongoing pipeline cases to see examples of how certain strategies may work or not work when employed against a condemnor who is allowed to take immediate possession (even though they don't have quick take power!). 

Professor Dickinson says he's in the process of writing another op-ed on the quick take power. We'll look forward to reading that when published, too. 

CA11 Adds To Circuit Split: Private Pipeline Condemnor Can Get Immediate Possession, Even Though Natural Gas Act Doesn't Delegate Quick Take Power

Here's the Eleventh Circuit's opinion in a case that adds to a circuit split (CA7 vs others) about whether a private condemnor, exercising the delegated federal power of eminent domain for a pipeline corridor under the Natural Gas Act, can obtain pre-judgment possession of the property, even though the NGA does not delegate the power to do so.

The Eleventh Circuit, like the Third and Fourth Circuits, concludes that the lack of delegation from Congress isn't a problem, because, hey, Congress didn't say that federal courts couldn't exercise their "equitable" powers under Fed. R. Civ. P. 65, and issue injunctions to reach the same result.

We won't go into the detail of the panel opinion (it pretty much tracks the other federal courts which have, for decades, been approaching this the wrong way). Nor shall we go into detail about why these courts are wrong, because we did so, in part, in our recent amicus brief in the Third Circuit.

As we wrote, these injunctions are all based on the false notion that a straight condemnation, once instituted, is inevitable. The Achilles' Heel of the Eleventh Circuit's analysis (and that of other courts which adopt the same rationale) is that a determination that a pipeline company can exercise eminent domain power under the NGA (aka the "right to condemn") means that the pipeline is going to "win" so why not give it possession now:

... once a pipeline company’s right to condemn a particular piece of property has been finally determined, a preliminary injunction is an appropriate vehicle to grant “some or all of the substantive relief sought in the complaint,”)...

Slip op. at 43.  

Wrong! A determination that a pipeline has met the three-part test in 15 U.S.C. § 717f(h) merely means that it has standing as a plaintiff to institute a straight taking, and may exercise the delegated power to condemn. It emphatically does not mean that it can front-load the "substantive" right sought by the complaint: acquisition of the defendant's property for just compensation. Because these are acknowledged straight takings, the acquisition (title transfer) can only come after a final determination of just compensation, followed by the pipeline company's determination that it wants to pay that price whatever it might be, followed in turn by actual payment. Only then does the "substantive" right -- title to the property -- transfer from the defendant to the pipeline company. No sooner.

We think this is as plain as day, and for the life of us cannot figure out why most federal courts don't want to get that. Maybe it is because they think -- like many judges -- that eminent domain cases are all but over once they are started, and that since the land will be taken anyway, why wait. 

But that overlooks the central point: that there's nothing that presently guarantees that the land will be taken.

Stay tuned, there will be more. 

Transcontinental Gas Pipe Line Co., LLC v. 6.04 Acres, No. 16-17503 (11th Cir. Dec. 6, 2018) 

CA6 Joins The Growing Circuit Split On Natural Gas Act Immediate Possession Injunctions

As we just detailed, the Eleventh Circuit joined the Third and Fourth (contra the Seventh) Circuits in concluding that a lack of Congressional delegation of quick take power to private pipeline condemnors in the Natural Gas Act does not stand in the way of a federal district court issuing an injunction to affect immediate pre-title transfer of property.

Read our amicus brief in the Third Circuit en banc process for why this is wrong.

Here is where the Sixth Circuit reveals its fundamental misunderstanding of eminent domain:

On appeal, Landowners do not dispute that Nexus holds a FERC certificate, that the 1.4-acre tract of land is necessary to build and maintain the pipeline, and that the parties have been unable to negotiate a voluntary easement by contract. This case appears to present a question not of whether Nexus has the statutory right to condemn Landowners’ property, but only of when it may exercise that right. While that distinction may be significant in other cases, it is not here. The alleged harms resulting from the district court’s injunction, discussed below, do not depend on the timing of Nexus’s possession. Declining to issue an injunction would serve little purpose other than to delay Nexus’s access to the property and increase the cost of completing the project. The district court properly used its injunctive power to avoid that outcome. See McGirr, 891 F.3d at 614 (“The preliminary injunction serves an important purpose—to allow a victory by [the plaintiffs] to be meaningful.”) (citation and internal quotation marks omitted).

Slip op. at 6 (emphasis original). 

Sorry, that is flat-out wrong. Yes, the pipeline has met the three parts of 15 U.S.C. § 717f(h). but that only means that the pipeline is the proper plaintiff. It does not mean that the pipeline will eventually "access the property" (so why not give it to it now), as the opinion asserts. 

No, access to the property can only come in straight takings after title transfers. And that can only come after a determination of the final compensation owed, and the plaintiff's exercise of the option to buy at that established price. Which may never happen. What "delays Nexus's access to the property" is the NGA itself. 

Why has nearly every court overlooked that fundamental bit of eminent domain law? Has no one read Kirby Forest Industries? 

Nexus Gas Transmission, LLC v. City of Green, No. 18-3325 (6th Cir. Dec. 7, 2018) (unpub.) 

In Federal Pipeline Takings, Does The State's Law Of Just Compensation Govern?

The U.S. Court of Appeals for the Third Circuit recently heard oral arguments (stream above, or download the mp3 here), in a case involving an issue we briefed recently in another circuit: whether state or federal law governs the determination of Just Compensation in federal court Natural Gas Act takings.

Now, you might automatically assume that because the case is in federal court under federal law, that federal standards for Just Compensation (and not the law of the state in which the property is located) provides the rule of decision. But it is not that simple. 

Short answer to the question posed by our title: no, the state's law of just compensation does not govern. But the state's law of property does govern.

Thus, we think that which law governs compensation in federal condemnations is determined by the law of the state. After all, the particular "sticks" in the owner's bundle of rights is determined by state law -- as is the relevant, if hypothetical, market on the date of valuation -- and if those sticks result in more compensation than the baseline required by the Just Compensation Clause, then so be it. After all, the standard for Fifth Amendment Just Compensation is the "full and perfect equivalent" for the property taken. That, we think, is dependent on how a state defines property interests, and their use and value. 

Even if this results in verdicts that are not uniform nationally regarding the exact amount of compensation, it is a uniform national rule that property is defined by state law, and Just Compensation depends on what is property. The federal interest is not in defining the property taken, but in ensuring the owner receives the equivalent in cash of the value of whatever state law defines as a property interest.

Thus, because the Fifth Amendment requires compensation for all property taken (as mostly defined by state law), the district court was wrong when it ignored Pennsylvania's property law. 

Check out the briefing here: 

• Brief of Appellant (property owner)
• Brief for Appellee (pipeline company)
• Reply Brief (property owner) 

We shall continue to follow this issue. In the meantime, read more about the oral arguments  ("Public Interest of Pipeline Takes Focus in Damages Spat ") from Courthouse News Service. 

Audio: Our Interview With Author Howard Mansfield - "The Habit of Turning The World Upside Down - Our Belief in Property and the Cost of That Belief"

Earlier this week, we spoke to Howard Mansfield, author of the recently-published book "The Habit of Turning the World Upside Down - Our Belief in Property and the Cost of That Belief."

His book is about property, property rights, and how these ideas are processed by the American psyche. But instead of the usual scholarly (and very often dry) treatment of these topics that we might expect – especially those of us in the legal and academic world – Mr. Mansfield takes a slightly different approach. He relates stories of how property fits in with the culture – the different and often competing narratives that are attached to the notion of property – and the often-contradictory way in which we in the United States view the idea of ownership and possession.

Listen to our interview above (Sound Cloud stream), or if that does not work for you, stream it below or simply download the mp3 here.

A great read, and a perfect gift for those on your holiday lists.