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.

IJ Clients Gary and Michelle Erb
Gary and Michelle Erb teamed up with IJ and petitioned the U.S. Supreme Court to get justice for property owners nationwide who are finding their rights violated by private pipeline companies.

Description

Pipeline companies can help create an essential part of America’s energy infrastructure, but as private companies, their power is supposed to be limited. When the Federal Energy Regulatory Commission (FERC) authorizes a project and awards a company a permit—and therefore also delegating the power of eminent domain—the court sets “just compensation” for the land which must be paid to the property owner.

However, the power of pipeline companies to take people’s private property is anything but limited: It is a power that is systematically abused by pipeline companies across the nation. The rules surrounding pipeline condemnations are staggeringly unfair, even compared to ordinary condemnations. Private companies have been allowed to take land before any court has ever ruled on the legality of the taking—and they have routinely condemned private land for projects that may never come to fruition. What’s more, courts allow pipeline condemners to seize land by preliminary injunction, taking immediate possession without providing the owners with immediate payment.

All of this makes for an uphill battle. But recent months have given us some cause for hope—legislatively, judicially, and in the court of public opinion.

The cause for legislative hope comes in the form of a comprehensive report from the House Oversight Subcommittee on Civil Rights and Civil Liberties. In its report, the Subcommittee detailed the ways in which natural-gas pipeline condemnations violate individual rights. Prior to publication, legislative staffers asked IJ about the pressing constitutional issues facing Americans that they could actually do something about. IJ highlighted the use of eminent domain for natural-gas pipelines (which are regulated at the federal level through the Federal Energy Regulatory Commission, or FERC) as a major concern.

In addition to introducing this unlawful practice to the subcommittee, IJ played a substantial role in making it possible for Congress to launch an investigation in February 2020. We helped connect witnesses to the staff members facilitating the investigation and identified legal filings of interest. After a thorough investigation, the subcommittee released its official findings, which confirmed FERC’s pipeline approval process “unjustly tramples on the rights of private landowners.”

This assertion—and the Subcommittee’s enthusiastic cooperation with IJ—signals a major victory in our fight. Within just two years of launching this program with the Walker Foundation’s support, IJ has captured Congress’ attention on a little-known but egregious abuse of power. This report is not itself legislative reform, but it sets the stage for future legislative reform and greater attention to the rights of individual landowners who find themselves in the crosshairs of private pipeline companies.

Hope also came on the judicial front. Condemnations for pipeline construction are authorized by the issuance of a FERC certificate authorizing the pipeline’s construction. Federal courts have long held that (unlike in ordinary condemnations) a property owner cannot challenge the legality of a pipeline condemnation in the condemnation case itself. Instead, the property owner can only challenge FERC’s authorization of eminent domain by filing an appeal from FERC’s grant of the underlying certificate.

But for years, FERC has stymied any judicial review of its certificates authorizing pipeline construction by issuing “tolling orders.” These orders purport to grant a property owner’s petition to reconsider a certificate but grant it solely for the purpose of further consideration. In other words, FERC issued certificates, but then announced that it was thinking about whether those certificates were properly granted. These orders had the effect of making it impossible to appeal the certificates (which were, after all, not “final”), while still allowing the certificates to be used to initiate condemnations. Landowners had no opportunity to challenge the legality of the project for which their land was being taken.

This longstanding practice came to a screeching halt in July 2020 when the D.C. Circuit sitting en banc overturned the precedent that had authorized these tolling orders in the first place. In a case brought by a group of Pennsylvania landowners (whom IJ represented in a parallel challenge with the Walker Foundation’s support), the D.C. Circuit held that federal law cannot allow FERC to play this sort of shell game to prevent judicial review of its certificates. A concurring opinion by Judge Thomas Griffith went a step further, noting that eliminating the “tolling orders” did not eliminate the full range of potential property rights abuses caused by pipeline condemnations. The opinion also made it clear that courts should stand ready to protect against these abuses.

Finally, the announced cancellation of the Atlantic Coast Pipeline project provided a concrete illustration of one of the major dangers IJ has long warned about in the context of pipeline condemnations: condemning land for projects that are never built. In an ordinary public works project, condemnation is the last step—engineers design a road, a town council or state department of transportation approves the route of the road, and once everything is in place, land is condemned to build a road. But federal natural gas pipelines allow companies to take land well before they receive approval to build from the federal or state entities that have veto power over the pipeline. The result is condemnations filed for nothing—a problem viscerally illustrated by the Atlantic Coast Pipeline, which was actively condemning land as recently as a month before its financial backers announced they were abandoning the project. We expect this illustration of our argument to carry powerful weight in future judicial and legislative discussions.

In addition to these three major developments, IJ has continued our litigation and amicus efforts. In March 2019, IJ submitted a cert petition to the U.S. Supreme Court on behalf of homeowners Gary and Michelle Erb. Our petition challenged the widespread practice of pipeline companies paying property owners like Gary and Michelle long after having persuaded federal courts to give them immediate possession of land.

The laws in place are designed to protect Americans—and ensure they are compensated justly for the land they worked hard to own. But each time courts ignore these limits, property owners have their land taken away by preliminary injunctions and many don’t see a single dime for years. In their May 2019 decision declining our petition, the U.S. Supreme Court left this process, which systematically disadvantages property owners, in place.

But as IJ and the Alex C. Walker Foundation understand, defending property rights is a marathon, not a sprint. That’s why we continued and will continue to fight in court on behalf of courageous property owners like Gary and Michelle who are ready and willing to stand up against this growing, national abuse.

In 2019, IJ filed two amicus, or “friend of the court,” briefs. One such brief, which we submitted to the U.S. Supreme Court, joined IJ allies at the Owners Counsel of America, Cato Institute, and Penneast New Jersey Property Owners. In it, IJ supported homeowner Karolyn Givens’ petition asking the high court to reverse a 4th Circuit Court of Appeals ruling that confirmed quick-take possession by a private company of her land.

IJ’s brief argued that by improperly issuing preliminary injunctions that allow immediate possession of property, circuit courts are disadvantaging Americans and blatantly ignoring their right to just compensation. But while this case, Givens v. Mountain Valley Pipeline, LLC, could have been one avenue to prevent further abuses of quick-take eminent domain, the U.S. Supreme Court rejected Karolyn’s challenge in October 2019.

During the grant term, IJ also laid the groundwork to attack unlawful private pipeline condemnations at the state level. In May 2019, we filed an amicus brief in Morello v. Seaway Crude Pipeline Company, LLC at the Texas Supreme Court.

As you may recall, in this high-profile case, a pipeline company sought to exercise the government’s eminent domain power to condemn a new piece of land, thereby avoiding the terms of its original agreement with a property owner.

IJ’s amicus drew upon our post-Kelo work, disputing the idea that private companies can use eminent domain to get out of voluntary, contractual agreements. Using the expertise we have gained successfully advocating against eminent domain abuse in 44 states, IJ put the practice of condemning more land to dodge restrictions on trial. Unfortunately the state supreme court declined to hear the case.

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

One critical piece of IJ’s successful public interest litigation and advocacy is our ability to shape institutional messages. Through our communications strategy, IJ simplifies and disseminates complex issues to the mainstream media and evolving news outlets, securing not only features that describe our work and clients with wide audiences, but also generates greater public support for our cause.

One such feature includes broadcast coverage of IJ’s Givens brief in FOX News affiliate, WFXR. Reaching nearly 5,000 Americans in southwest Virginia, this single feature touched on both our arguments and the background of Karolyn’s case.

As you know, the leading publication covering energy and environmental news, E&E News, has featured IJ’s work in this area repeatedly over the past few years, including twice during the grant term. But we also shared our fight with non-professional audiences through IJ’s own forum at the Forbes site.

IJ also used our unique expertise to publicize important developments in pipeline condemnations that might otherwise have escaped general notice. In August 2019, we published an article in Forbes discussing a D.C. Circuit Court of Appeals’ decision rejecting Gary and Michelle’s challenge of a pipeline company’s FERC certificate (a second lawsuit arising from the same pipeline project as the case in which IJ represented them). The Forbes piece, while detailing a disappointing opinion, noted one justice’s powerful comments. Under court precedent, Judge Patricia Millett was compelled to vote with her colleagues; but in her concurrence, she slammed FERC, using phrases such as “Kafkaesque regime” and “bureaucratic purgatory” to describe these schemes. (Judge Millett’s opinion foretold the full D.C. Circuit rehearing the case en banc and adopting her arguments in holding that these tolling orders were unlawful, as detailed above.)

It is increasingly important for IJ’s public education campaigns to also target the legal world. Attorneys and judges oftentimes rely on our expertise and public comments to understand the stakes of our issues and what decisions and opinions would best protect Americans’ constitutional rights. During the grant term, IJ utilized our Short Circuit podcast to reach this audience.

Short Circuit, IJ’s biweekly podcast and weekly newsletter, discusses a selection of important or controversial decisions from federal courts of appeal. With over 3,000 newsletter subscribers and each podcast being downloaded over 1,500 times by legal practitioners, court clerks, judges, and academics, Short Circuit has a remarkable reach to some of the most important actors in the legal landscape.

In one issue, IJ detailed a just compensation case out of the 11th Circuit. Our analysis, which was also published in Reason Magazine, described a Lake County, Florida, couple’s successful fight taking on a pipeline company’s easement of their property. And with this story, IJ introduced a new audience of both Short Circuit subscribers and Reason readers to the threat of unlawful pipeline condemnations.

For our policymaker and congressional staff audiences, IJ’s focus for the remainder of the grant term continues to be educational: highlighting the real-world impact eminent domain takings for pipelines have and how abusive practices can best be rolled back to empower Americans nationwide.

All activity described in this report was performed consistent with the Institute for Justice’s nonprofit status, IRS regulations, and our agreement with the Walker Family Foundation.

Project Link ij.org/issues/private-property/eminent-domain/

Amount Approved
$20,000.00 on 7/1/2019 (Check sent: 7/12/2019)


  Related Organizations
Institute for Justice  



The Erb Family
The Erb family joined with IJ to fight against unlawful private pipeline condemnations

Attachments
The Erb Family
IJ Clients Gary and Michelle Erb
An aerial view of Gary and Michelle Erbs’ farm and the pipeline that now stretches across their land—land taken by a private pipeline company.

Address
901 N Glebe Rd #900
Arlington, VA 22203


Phone
(703) 682-9320 ext 233
(703) 682-9321 (fax)

Contacts


Beth Stevens
Institute for Justice

Posted 3/29/2019 10:33 AM
Updated   8/12/2020 10:10 AM



 
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