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.

Pipeline
Pictures from the pipeline that threatened former IJ clients Gary and Michelle Erb's private property in Pennsylvania.

Description

Most pipeline companies are private entities, and, 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 delegates 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.

Since our last report in January, IJ tackled the first issue—courts ruling on the legality of a condemnation—by filing an amicus brief in the U.S. Supreme Court case PennEast Pipeline Company, LLC v. State of New Jersey. Should the Supreme Court rule in line with our argument, it would score an impactful victory for property owners across the nation. The case concerns whether a private pipeline company can sue a state over the taking of public land. Initially, IJ did not intervene because a ruling that prevents pipeline companies from condemning public land will incentivize the companies to target private land. And a ruling in favor of the government would also expand state immunity, making it more difficult to hold the government accountable in certain situations where it has violated property rights. Neither outcome aligns with IJ’s principles or mission.

But the U.S. Solicitor General, in its amicus brief supporting New Jersey, put forward a new argument: Under the Natural Gas Act, anyone who has had land condemned (whether a state or a private citizen) cannot make an argument to defend their land unless they challenge the condemnation certificate immediately. In other words, as soon as you are notified, you must challenge the condemnation without any further development. Pipeline companies are notorious for taking land without providing payment or ever even developing the pipeline for which they took the land. This abuse does not occur immediately but unfolds over time as it becomes more and more apparent to the property owner. Under the Solicitor General’s theory, unless you challenge a condemnation right away, abuse that develops later cannot be challenged. Private property owners essentially must have a crystal ball to predict the future. If a property owner does not challenge the condemnation immediately, no court can weigh in on the legality of the condemnation, and property owners are out of luck. Again, this is the argument that the Solicitor General asserted when the case reached the Supreme Court.

IJ’s amicus brief was crucial in this case because it provided the only thorough discussion of the government’s jurisdictional argument (which the parties addressed only briefly). And at the end of June, the Supreme Court delivered a victory for IJ’s position. The court rejected the government’s attempt to establish a rule that would have robbed property owners of the ability to raise objections to the taking of their property. Instead, the court wrote in line with our amicus brief, that property owners are free to “assert[ ] a defense against the condemnation proceedings initiated” by private pipeline companies wielding the federal government’s power of eminent domain. Ultimately, the federal government’s arguments in this case were sweeping, dangerous, and wrong, and the federal government’s loss is a win for property rights everywhere.

IJ addressed the second issue—pipeline companies taking land without providing compensation or developing a pipeline—by providing testimony before Congress in early May. IJ was invited to provide testimony at the House Oversight Committee’s hearing about land condemnation levied by pipeline companies. IJ attorney Sam Gedge testified at the hearing and emphasized important points concerning pipeline condemnations generally and the threat they pose to property owners. Specifically, Sam highlighted how pipeline companies can exploit the Natural Gas Act to take land first and pay later. Even worse, too often, these companies not only do not provide payment but also never build the pipeline for which the land was taken. The power these pipeline companies wield is unparalleled—even when the government seizes land it must provide a prompt assessment of and payment for the land. Our testimony stressed the serious threat this power poses to property owners and revealed the absurdity underlying it.

Through our testimony, IJ also detailed how, unfortunately, constitutional precedent established since the 1880s grants power to these companies. Congressman Jamie Raskin directly asked Sam what solutions Congress should pursue to curb this abusive power. In response, Sam provided two practical steps Congress could take to protect property owners and reel in private pipeline companies’ power. First, Congress should improve the procedure that pipeline companies must follow to notify property owners of land condemnation. Currently, companies often wait to notify landowners, meaning they do not even know their property is threatened. Second, our testimony urged Congress to realign the payment and possession dynamic that exists between pipeline companies and property owners. These companies should not be allowed to take land first and pay later. A more fitting process would mirror how the government must promptly provide compensation for condemned land.

In response to our testimony, the committee specifically asked IJ to draft and share legislative language that would address the issues raised. The request for our insight demonstrates that IJ is regarded as a premier defender of property rights, particularly concerning eminent domain abuse. Furthermore, IJ’s testimony and expertise represent our ability to appeal to and rally policymakers on both sides of the political aisle around an issue. A Republican committee member invited IJ to provide testimony, and a Democratic committee member agreed with much of our testimony and asked us for the legislative language.

As we described in previous reports, many hoped-for developments on the litigation and congressional fronts concerning pipeline condemnations were stymied by the pandemic. But IJ’s leadership over the past few months has served an important role in ensuring that this abuse against private property does not go unchallenged. Our amicus brief highlighted an issue of the utmost importance in the case before the Supreme Court. And IJ’s testimony before Congress united bipartisan support against the unparalleled power pipeline companies wield and proposed solutions to remedy this threat against private property rights.

IJ's Amicus Brief Cover
IJ filed an amicus brief in the U.S. Supreme Court case PennEast Pipeline Company, LLC v. State of New Jersey. The Court ultimately ruled in favor of IJ's position.

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 features that not only describe our work and clients with wide audiences but also generate greater public support for our cause.

IJ’s work since our last report in January has generated significant media coverage and support for our efforts. Eight outlets released pieces referencing our pipeline and eminent domain work more broadly. The Property Rights and Pipeline Center—an organization committed to ending the use of eminent domain for oil and gas pipelines—cited IJ as an expert on property rights and pipeline issues. The organization directed visitors to our website for “a good overview of property rights and/or pipeline issues.” Similarly, the Minnesota Law Review released a publication on energy and eminent domain in which the journal cited IJ as an important group that successfully brought issues concerning eminent domain to the public eye.

E&E News also covered pipeline condemnations and eminent domain abuse—specifically, the case in which IJ filed an amicus brief—in January and February articles. The first piece introduced IJ Senior Attorney Robert McNamara as a legal expert concerning these issues. The follow-up piece again quoted Robert, as the article discussed the Supreme Court’s decision to hear the case in April.

Our amicus brief in the PennEast case garnered significant media coverage. SCOTUSblog, a website that covers the Supreme Court for the public, linked to our amicus brief online. The website also featured the PennEast case as the petition of the week, driving more attention to the case. A February article at ReThink Energy NJ covered IJ’s brief and outlined our argument. Likewise, Bloomberg Law released a detailed piece on both the case and our amicus brief. The piece stresses that our argument highlights the potential threat a victory for the government in this case would pose to property owners. And Reason covered IJ’s amicus brief in an article online, highlighting the key issues and ultimately agreeing with the argument we put forth. Finally, IJ released a press release about our amicus brief that we sent to 308 media contacts.

Media features that cite IJ demonstrate our ability to reach various audiences and cement support on important issues such as property rights, eminent domain, and pipeline condemnations. IJ’s media presence shares our messaging with the public to raise awareness of these issues while rallying and cementing support for our mission.

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


Gary and Michelle Erb partnered with IJ to fight against unlawful private pipeline condemnations.

Attachments
IJ's Amicus Brief Cover
Pipeline
Former IJ Clients

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Phone
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(703) 682-9321 (fax)

Contacts


Beth Stevens
Institute for Justice

Posted 3/29/2019 10:33 AM
Updated   6/30/2021 1:57 PM



 
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