E-Alert Case Updates

Maryland Federal District Court Grants Plaintiff’s Summary Judgment Motion, Affording Right to Condemn Properties Pursuant to the Natural Gas Act, 15 U.S.C. § 717f(h).

Columbia Gas Transmission, LLC v. 370.393 Acres, More or Less in Baltimore County, Maryland Located on Parcel Identification Number 20-00-013434, Owned by Stephen A. Williams and Christine C. Williams, et al.
Civil Action No. 1:14-0469-RDB (Oct. 9, 2014)
by Jhanelle A. Graham, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.mdd.uscourts.gov/Opinions/Opinions/
Columbia%20Gas%20v.%20370%20MEMO%20AND%20ORDER.pdf

In Columbia Gas Transmission, the United States District Court for the District of Maryland was asked to decide one (1) of several cases initiated by Plaintiff, Columbia Gas Transmission, LLC (“Columbia Gas”), requesting land necessary for the construction of a natural gas pipeline in Baltimore County, Maryland. Pending before the district court was Columbia Gas’ Motion for Partial Summary Judgment, in which Columbia Gas sought an order confirming its right to condemn properties of the Defendants pursuant to the Natural Gas Act, 15 U.S.C. § 717f(h). After reviewing the parties’ submissions and oral arguments, the Honorable District Judge Richard D. Bennett granted Columbia Gas’s Motion for Partial Summary Judgment.

Plaintiff Columbia Gas Transmissions, LLC (“Columbia Gas”) was a natural gas company that sued multiple property owners (i.e., the Defendants), to obtain various easements and rights-of-way on their property to build a pipeline under the Natural Gas Act,15 U.S.C.A. § 717, et seq. Since the 1950s, Columbia Gas has operated a 26-inch gas pipeline (“Line MA”) in and around Baltimore. Line MA is currently the only pipeline providing gas to certain areas in Baltimore County. Line MA was constructed before federal pipeline safety standards were enacted in 1970, leaving the pipeline vulnerable to corrosion and failure. On November 21, 2013, the Federal Regulatory Energy Commission (“FERC”) granted a Certificate of Public Convenience and Necessity to begin a project involving the construction of a redundancy pipeline (“Line MB”) to serve Baltimore County in addition to Line MA. Line MB would be an approximately 21.1-mile pipeline that would be partially located on the properties in question, which were located in the middle of the linear 21.1-mile strip of land that Columbia Gas plans to use to construct its pipeline.

Columbia Gas sought to obtain certain temporary and permanent easements over the properties in order to complete successfully the construction of this project, and contacted the Defendants in an attempt to secure agreements granting Columbia Gas the requested easements. Defendants contended, however, that these interactions mainly consisted of simple form letters from Columbia Gas, and Defendants refused to agree to the terms offered. Specifically, Defendants were concerned about the nature and scope of the requested property rights, as well as the potential for damage to or decrease in value of their property. After these attempts to negotiate, Columbia Gas filed its Complaint in Condemnation and Motion for Partial Summary Judgment in the Maryland district court.

The district court began its analysis with Rule 56 of the Federal Rules of Civil Procedure, which provides that a court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c). In considering a motion for summary judgment, a judge’s function is limited to determining whether sufficient evidence exists on a claimed factual dispute to warrant submission of the matter to a jury for resolution at trial. Further, the court clarified that the Natural Gas Act, 15 U.S.C. 717 et seq., governs the process for siting and constructing natural gas pipelines. Under that Act, natural gas pipeline companies that have obtained a certificate of public convenience and necessity from the Federal Energy Regulatory Commission have the right to condemn property for the purposes of pipeline construction.

Turning to Columbia Gas’s Motion for Partial Summary Judgment, the court observed that before constructing a pipeline, Columbia Gas “must first obtain a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (‘FERC’), the federal agency responsible for supervising and coordinating the production of energy in the United States.” Alliance Pipeline L.P. v. 4.360 Acres of Land, More or Less, in S/2 of Section 29, Twp. 163 N., Range 85 W., Renville Cnty., N.D., 746 F.3d 362, 364 (8th Cir. 2014). After obtaining the FERC Certificate of public convenience and necessity, natural gas pipeline companies are granted the authority to condemn property for the purpose of constructing pipelines.

According to the district court, it was undisputed that Columbia Gas obtained a certificate of public convenience and necessity from FERC for the Line MB. Moreover, it was clear to the court that Columbia Gas and the remaining Defendants were unable to agree on the compensation to be paid for the easements. Although Defendants argued that Columbia Gas was not entitled to summary judgment with respect to their right to condemn, mainly based on their belief that Columbia Gas failed to engage in bona fide negotiations with the Defendants, the district court noted that the Natural Gas Act merely required that Columbia Gas be unable to come to an agreement—it did not require the condemnor to negotiate in good faith. See E. Tenn. Natural gas, LLC v. 1.28 Acres, Civ. A. No. 06-22 et al., 2006 WL1133874, at *29 (W.D. Va. Apr. 26, 2006) (“[N]othing in the [Natural Gas] Act or Federal Rules of Civil Procedure requires the condemnor to negotiate in good faith. All the Act requires is a showing that the plaintiff has been unable to acquire the property by contract or has been unable to agree with the owner of the property as to the compensation to be paid.”)

Finding that Columbia Gas had shown adequately an inability to agree on compensation, the district court held that Columbia Gas demonstrated all the negotiation that was required under the Natural Gas Act in order to obtain summary judgment with respect to its right to condemn the properties. The court also held that Defendants failed to identify a single right that was actually sought in Columbia Gas’s Complaint that exceeds the scope of the FERC Certificate. Accordingly, the court ruled that Defendants’ contention was of “no moment,” and Columbia Gas was entitled to summary judgment with respect to its right to condemn. For these reasons, the Maryland federal district court granted Columbia Gas’s Motion for Partial Summary Judgment.