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.

Erbs' property.jpg
Erbs' property in Lancaster County, PA. To date the Erbs have not received compensation for property taken from them.

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 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 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 have 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 Transcontinental immediate possession of the properties.

The Institute for Justice moved aggressively to try to ensure that the property rights of Lynda and the Erb and Hoffman families were 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 have been an exciting win for Lynda, the Erbs, and the Hoffmans, a preliminary denial opened 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 partnered with Lynda, Gary, Michelle, Stephen, and Dorothea to ask the highest court in the land to review the case. Our petition for certiorari, which we filed in March 2019, presented 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.

While our petition was pending before the Court, IJ applied pressure in the court of public opinion. We produced two videos in-house that featured Gary and Michelle Erb sharing their story and highlighted the importance for courts to engage and strictly construe the use of eminent domain in pipeline projects. Our videos, which were viewed nearly 6,000 times in five months, also announced IJ’s appeal and directed the audience back to our online resources.

One such resource is an April 2019 press release in which IJ notified reporters and the general public about the more than 200 eminent domain decisions where federal courts granted pipeline companies immediate possession of land. The release also included information on the 38 quick-take injunctions granted in the past five years in the Erb family’s home state of Pennsylvania.

Although the High Court regrettably declined to review our case, we remain undeterred. During the grant term, IJ filed an amicus brief in the high-profile Morello v. Seaway Crude Pipeline Company, LLC case described in our proposal. IJ’s amicus drew upon our post-Kelo theory, clearly communicating the broader principle that private entities cannot use eminent domain to get out of free-market transactions.

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 cuts across the philosophical spectrum and resulted in greater protections for property owners through reformed laws and amended constitutions.

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

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

IJ is bringing this issue—and our arguments—to the forefront of public opinion. Before IJ took the Erbs’ case all the way to the top of our nation’s legal system, our clients were victims whose constitutional rights were ignored. And though the Supreme Court did not take up the case, our media strategy—which included publishing and promoting our videos and news releases—helped propel this issue.

Fourteen placements in outlets such as The Wall Street Journal and the Associated Press put a bright spotlight on our case in Pennsylvania. In one IJ-authored Forbes piece, we referenced a federal judge’s August 2019 opinion blasting the Federal Energy Regulatory Commission (FERC) for creating a “seemingly endless limbo” that traps property owners. The judge continued that FERC “twist[s] our precedent into a Kafkaesque regime,” and her rebuke demonstrates the growing movement of courts that are listening to IJ’s arguments.

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 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.

In March 2019, IJ Senior Attorney and lead on our Pennsylvania petition Robert “Bob” McNamara was featured on The Federalist Society’s live Pipeline Energy Infrastructure Legal Challenge teleforum. On the call, Bob provided law students and other attendees with an in-depth look into ongoing state cases and the federal process of condemnations.

Bob’s presentation addressed the fundamental concerns for due process FERC’s condemnation notices pose, as well as the relevant caselaw from the Second and Tenth Circuit appellate courts. But as he describes in the talk, the most troubling problem with federal pipeline condemnations is the actual manner through which land is transferred: When courts enter into a preliminary injunction, giving pipeline companies immediate possession of land, it creates the worst of both worlds for property owners. Americans like Lynda, the Erbs, and the Hoffmans lose their land early into litigation and don’t get a single dollar of compensation until final judgment months, or even years, later.

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 FERC 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)


  Related Organizations
Institute for Justice  

Gary and Michelle Erb partnered with the Institute for Justice to challenge the widespread practice of private pipeline companies persuading federal courts to give them immediate possession of Americans' land and pay for it later.

Posted 3/29/2018 5:33 PM
Updated   8/26/2019 3:29 PM



 
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