In March a group of Pennsylvania landowners from Lancaster County asked the U.S. Supreme Court to hear a case in which they say they’ve been screwed over by Atlantic Sunrise Pipeline, that the pipeline should not have had the right to use eminent domain to build the pipeline before the matter of compensation was fully adjudicated (see PA Landowners Beg US Supreme Court to Hear Atlantic Sunrise Case). Williams, via their Transco subsidiary, responded and asked the Supremes to toss the case entirely (see Williams Asks U.S. Supreme Court to Toss Atlantic Sunrise Case). Do Lancaster County landowners have a legitimate beef?
The landowners say all of the courts hearing their case (all of which ruled against them) were wrong–that Atlantic Sunrise, part of Transco Pipeline, should not have been able to use eminent domain to build the pipeline before settling in court how much money the landowners would get for having their land “taken” for the project.
Of course, the landowners’ land wasn’t actually taken. The landowners can still do pretty much whatever they want on the land under which the pipeline sits. The only two things they can’t do is build a structure directly over top of the pipeline, or plant trees over it. They can, if they want, plant a garden, crops, graze farm animals–or anything else not restricted (no buildings, no trees).
What happens in these cases is that landowners who don’t want the pipeline refuse to negotiate with the company building it (Williams in this case). So Williams was forced to seek “eminent domain” condemnation of the property, which is allowed under federal law. Determining a fair price for the land, which will always be lower than if the landowner had negotiated in the first place, takes time. And lawyers. And surveyors. And researchers. And and and. In order to actually get the pipeline built in this century, the courts allowed the pipeline to commence construction while a new/separate case about how much the landowners will be compensated works its way through the court system–which can take years.
Associated Press wrote a tearjerker story about how Williams is screwing landowners by not paying them up front when using eminent domain. We’ve seen the story running in a number of newspapers. Let’s let them take their best shot. Here’s the argument in favor of landowners who claim Williams should not have built the pipeline until they got paid:
Much to Gary Erb’s chagrin, a natural gas pipeline now cuts across his 72-acre homestead in Conestoga Township, Pennsylvania.
To his even greater chagrin, he remains unpaid for the 6 acres (2.4 hectares) of land that were taken from him under eminent domain to build the pipeline.
With the help of a Virginia-based legal group, he is petitioning the U.S. Supreme Court to end what he and his lawyers say has become a common practice in the pipeline industry: taking the land first, and paying later.
“They’re making millions in profit, and we still haven’t gotten a dime,” Erb said in a phone interview. “They’re exploiting a broken system.”
There have been more than 200 instances of courts granting pipeline companies immediate possession of land, while at the same time deferring the issue of how much the property owners will be paid for it, said Robert McNamara, an attorney for the Institute for Justice, a libertarian public interest law firm based in Arlington that is representing Erb and others in similar situations.
Those cases have occurred in Alabama, Florida, Georgia, Illinois, Maryland, Montana, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia, McNamara said.
The pipeline affecting Erb was built by Tulsa, Oklahoma-based energy company Williams, which constructed the Atlantic Sunrise project to expand its pipeline network and carry gas fracked from the Marcellus shale formation in northeastern Pennsylvania to the Mid-Atlantic region and beyond.
Similar projects have sprung up across the country as fracking technology has allowed natural gas to be extracted in an economically efficient manner.
McNamara acknowledged that federal law gives energy companies the ability to invoke eminent domain to build pipelines. But the Natural Gas Act, the law that governs the land seizures, provides no mechanism for companies to take possession of the land without first negotiating a price with the landowner.
Pipeline companies have gotten around this by obtaining preliminary injunctions from judges, allowing the companies to take the land immediately and pay later. McNamara said this amounts to what is known as a “quick take” provision under the law, which he said is allowed in some types of eminent domain cases, but not pipeline cases.
When judges defer the decision on payment, it deprives landowners of any leverage they might have in negotiations, not to mention delaying the payment, sometimes for years, McNamara said.
In court papers, Williams’ lawyers said that because pipeline construction is complex, delays associated with negotiating price can knock projects off schedule. The company also argued that because the land seizures, known as condemnations, are essentially a foregone conclusion, there is no real harm to the landowners in delaying the payments, as long as the pipeline company puts up an appropriate bond to ensure the payment will occur.
An appeals court has ruled in favor of the company. The court noted that Williams had set aside a sizable amount of money in escrow to be used for condemnation payments. It also ruled that using a preliminary injunction to take land immediately does not amount to an illegal “quick take.”
But McNamara said state courts in the past decade have strengthened property owners’ rights in eminent domain cases. It remains to be seen if federal courts will join the trend. Though the Supreme Court turns down most of the petitions it receives, McNamara is hopeful it will take this case.
In Virginia, pipeline companies building the Atlantic Coast and Mountain Valley pipelines have similarly been able to take land needed for construction before paying for property, said Chris Johns, a Texas-based lawyer who represents some of the affected landowners.
Erb bought his land in Pennsylvania in 2008 and built his dream home. The woods provided a prime spot for deer hunting, and he hoped that as his children had families of their own, they would build their own homes on the land.
When he received notice from the Williams company in 2015 that his land had been selected for a pipeline route, he hoped to negotiate with them to have the route track an existing transmission line. He said they refused, and also would not agree to preserve a tree where he had built a hunting stand.
The underground pipeline was completed in October. In the process, the bedding site used by deer disappeared, along with acres of trees.
Erb declined to say how much the company offered for his land, but he said it was inflexible on the price and insinuated that it would not be in his interest to pursue it in court. Now he’s looking to sell the property.
The company declined to discuss the specifics of its negotiations with Erb, but issued a statement saying that “access to inexpensive, domestic natural gas is a huge benefit to all people, especially the economically disadvantaged.”
As for the price, the company said in its statement that its goal is to ensure landowners are “promptly compensated for the pipeline easement.”
“We do our best to reach an agreement through negotiation. Entering into a valuation process through the courts is always a last resort,” the statement said.*
Did AP convince you? We understand that the threat of using eminent domain gives a pipeline company like Williams a really big stick when it comes to negotiating price. We also know that landowners who engage with pipeline companies early, and in good faith, often get a favorable price. And we know that if landowners had the bigger stick, some of them would try to block the pipeline.
We have to confess we remain unconvinced by the AP story that Mr. Erb (and others) has been screwed by Williams.
Chances are the case, waiting for a decision by the Supremes as to whether or not they will hear it, will likely not get heard. The Supreme Court gets roughly 8,000 requests each year and hears around 80 of them.
*Associated Press (May 2, 2019) – Property owners protest pipeline procurement process
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