Project Report:
Restraining Unlawful Private-Pipeline Condemnations
Purpose
- Investigates causes tending to destroy or impair the free-market system.

Summary

Increasingly, private corporations are using government power to take private property in order to construct pipelines to move commodities like oil or natural gas. Many of these projects, properly understood, are illegal—either because of the private nature of the pipeline project itself, or because the project provides landowners with insufficient due-process protections. Nonetheless, courts and legislatures more or less ignore these legal problems and allow private companies to steamroll property owners. The Institute for Justice proposes to help change that by filing amicus curiae briefs in strategically selected cases and engaging in limited and targeted educational efforts surrounding proposed changes to laws governing pipeline condemnations. We envision this project as a pilot program that would allow us to gauge the effectiveness of these tactics in combating the threat pipeline projects can pose to property rights.

Description

Taking advantage of the Natural Gas Act, private companies use the federal power of eminent domain to take private land, on which they construct natural-gas pipelines. Frequently, the courts that hear condemnations issue preliminary injunctions, granting the companies immediate possession of land without final judgment on the question of just compensation.

In the traditional eminent domain process, determining appropriate just compensation happens in a court of law. The court-ordered preliminary injunctions, however, enable the condemnor—in this case, the company—to proceed with a warped form of “quick-take” eminent domain, taking full power over the property at the beginning of the action without paying a single penny until the original property owner initiates and completes compensation litigation. As a result, families and business owners find their land is taken and lives disrupted by construction crews and legal battles with no compensation at all for months or sometimes years.

This practice is unlawful and seriously disadvantages property owners. Homeowners Lynda Like, Gary and Michelle Erb, and Stephen and Dorothea Hoffman of Lancaster County, Pennsylvania, know all too well the how pipeline condemnations can drastically alter one’s life and dreams about the future.

In February 2017, the Transcontinental Gas Pipe Line Company, LLC, filed condemnation actions against Lynda’s, the Erbs’, and the Hoffmans’ properties, requesting an injunction to gain immediate access to select properties. After their initial request was denied at the district court, Transcontinental moved for a preliminary injunction to take full control of all condemned properties, and in August 2017, they succeeded. To date, none of the homeowners has received any compensation for the property taken from them.

The property owners filed an appeal, arguing that the preliminary injunction was invalid because the Natural Gas Act delegates only the ordinary power of eminent domain to private companies after final judgment in a condemnation action—not the ability to take immediate possession of condemned property. But a panel of judges at the U.S. Court of Appeals for the Third Circuit rejected the landowners’ plea, holding that the district court could grant Transcontinential immediate possession of the properties.

The Institute for Justice is moving aggressively to ensure that property rights like those of Lynda and the Erb and Hoffman families are protected. When the families’ attorneys reached out to IJ for support in seeking further review in the case, we did not merely provide an amicus brief but instead agreed to take over the entire underlying appeal. In November 2018, we filed a motion for rehearing en banc at the Third Circuit. In that motion, IJ made it clear that the panel’s opinion against the property owners was erroneous and in light of its significance, the court should reconsider the case. The question of whether courts can grant condemnors immediate possession of property via preliminary injunction could be life-changing for families like those IJ is fighting on behalf of—and is the subject of an active split among the courts of appeal.

While getting the full court to consider the panel’s decision would be an exciting win for Lynda, the Erbs, and the Hoffmans, a preliminary denial opens up an important opportunity for appeal to the U.S. Supreme Court. The Third Circuit gave IJ that opportunity in December 2018, when it rejected IJ’s motion.

To establish that statutes authorizing the use of eminent domain must be strictly construed in favor of property owners, IJ is partnering with Lynda, Gary, Michelle, Stephen, and Dorothea to ask the highest court in the land to review the case. Our petition for certiorari, which will be filed in March 2019, will present the justices with an opening to hold that when exercising eminent domain, private companies must be limited to the powers Congress has actually delegated: taking property only after final judgment in a condemnation action.

Although representing Lynda, the Erbs, and the Hoffmans and developing a cert petition to the U.S. Supreme Court diverges from IJ’s original proposal to the Alex C. Walker Foundation, this is a major opportunity for progress. Going before the Supreme Court could mean turning past losses into a landmark victory that extends relief to countless property owners around the country.

IJ’s strategy developing a strong petition at the right time is evident: Not only does a circuit split exist on this issue, the appellate courts that have issued bad opinions related to the timing of property rights made very little effort to justify the idea that timing is non-substantive. Combined with the fact that the appellate courts have not acknowledged the rule that private delegations of the eminent-domain power must be strictly construed, our petition stands out among the thousands the Supreme Court receives each year.

If accepted, IJ could establish important precedent about limiting private delegations of the eminent-domain power. A victory in this case would protect the countless property owners nationwide from being victimized, ensuring that no one immediately loses their property or is forced to give up their right to full judicial review.

Rightly called a “despotic” power of government, eminent domain has been used to bulldoze private homes and businesses, sometimes uprooting entire neighborhoods, all to benefit politically powerful individuals and corporations. Over the past two decades, IJ has led the fight against eminent domain abuse, scoring courtroom victories across the country and creating a historic coalition that cut across the philosophical spectrum and resulted in greater protections for property owners through reformed laws and amended constitutions.

With the Foundation’s support, IJ is amplifying our efforts to take on the disturbing trend of condemnations for privately owned pipelines. Through this case, and our advocacy described below, IJ is seizing the opportunity to strike a major and quick blow to several of the key problems identified in our proposal, and ensure that property rights are protected.

Purpose

Property rights are fundamental to the free-market system. But increasingly, those rights are being undermined by condemnations for private pipelines, which frequently receive far less judicial scrutiny than other takings of private property.

Scope

There is significant existing legal advocacy against pipeline projects, but nearly all of it comes from the perspective of environmental-rights groups that want to stymie pipeline construction because they view pipelines as problematic from a wise use of resources perspective. Far too little attention and advocacy is dedicated to supporting the communities and individual property owners whose lives and businesses are upended. This project will be a pilot program of national and state-level advocacy designed to return property-rights protections to the localities and individuals who need it most.

Information Dissemination

If cert at the U.S. Supreme Court is granted, IJ will also grow our advocacy efforts by bringing this issue—and our arguments—to the forefront of public opinion. Placements in outlets such as SCOTUSBlog, The Wall Street Journal, USA Today, and The New York Times put a bright spotlight on IJ’s case currently before the Court. Before IJ took their cases all the way to the top of our nation’s legal system, our clients in these cases were victims whose constitutional rights went ignored. Today, they are the faces of the fight for freedom. This kind of media effort can bear fruit even when the Supreme Court does not take a case; to that end, IJ plans to aggressively promote the stories of the Erb family and the other victims of the pipeline taking both through a public-relations campaign and through an IJ-produced web video.

IJ is also making a strong case for greater property rights protections in legislatures and amongst policy organizations. Working with the Niskanen Center, IJ presented the legal implications of takings by private entities as well as potential policy solutions at two Capitol Hill briefings during the grant term. Both House and Senate staffers were informed about specific impacts and real world cases of unlawful pipeline condemnations, as well as the background on how eminent-domain power has expanded and is being unleashed by the private sector.

In December 2018, IJ was a featured speaker at a Continuing Legal Education event, at which we described in-depth the legal context of the fight being waged by Lynda, the Erbs, and the Hoffmans, and the protection of property rights as related to pipeline condemnations. At this event, IJ focused on the courts’ role and caselaw, and even secured an amicus brief in support of our petition before the U.S. Supreme Court by an attendee. The event further established IJ as the leader of returning property rights protections to victims of unlawful pipeline condemnations.

Finally, IJ played a significant role in legislative reform efforts. Before it was circulated on the Hill by our allies, IJ provided specific guidance on a proposed bill that would reform how the Federal Energy Regulatory Commission takes property owners’ rights into account during the eminent domain process. Because the constitutional issues addressed by the bill stem in large part from victories won in earlier IJ cases, IJ attorneys were able to provide critical expertise to the bill’s authors, resulting in a final draft that would make large strides towards remedying the most abusive practices in pipeline takings.

All the work described in this report was, as always, performed consistent with IJ’s tax status and applicable IRS regulations. Similarly, all Foundation funds were used in a manner consistent with the requirements of the grant agreement.

Amount Approved
$20,000.00 on 8/1/2018 (Check sent: 8/27/2018)


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Contacts


Beth Stevens
Institute for Justice

Posted 3/29/2018 5:33 PM
Updated   2/26/2019 1:47 PM



 
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