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US Supreme Court declines to take case on eminent domain practice for gas pipelines

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US Supreme Court declines to take case on eminent domain practice for gas pipelines

Highlights

Petition challenged use of preliminary injunctions for fast access

Case involved Transco's 1.7 Bcf/d Atlantic Sunrise

Washington — Landowners' arguments that pipeline companies improperly gain quick access to properties well ahead of compensating owners will not get a hearing before the US Supreme Court.

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The high court on Tuesday declined to take up a case brought by landowners whose properties were condemned to allow for construction of Transcontinental Gas Pipe Line's 1.7 Bcf/d Atlantic Sunrise Project.

At issue is one of a series of cases that challenged implementation of eminent domain powers under the Natural Gas Act and which, if successful, could have affected pipeline projects' ability to meet in-service schedules. Federal appeals court rulings thus far generally have favored current practices, but another appeal arising from the Mountain Valley Pipeline project is expected.

In Lynda Like, et al., v. Transcontinental Gas Pipe Line (18-1206), landowners asked the high court to overturn a 3rd US Circuit Court of Appeals ruling that upheld a district court's preliminary injunction that allowed the pipeline company to take immediate possession of property before a final judgment on the NGA condemnation.

FREQUENT USE OF INJUNCTIONS

The landowners argued the case had important implications because "over the past 20 years, district courts have entered hundreds of preliminary injunctions granting private companies immediate possession of thousands of acres of private land." In this case, they argued that 18 months after the preliminary injunction, the petitioners had yet to receive compensation.

District courts have created a system that is "far harsher and far more burdensome to property owners than any process actually authorized by Congress," they argued. Injunctions rearrange who can do what with the property and when, they said.

Transco, in a brief to the Supreme Court, emphasized that the process it followed has been approved by courts of appeals in the 3rd, 4th, 6th, 8th, 9th and 11th circuits.

It pointed to the 3rd Circuit finding that the NGA does not preclude federal courts from granting equitable relief in the form of a preliminary judgment when the gas companies have obtained a substantive right to condemn and otherwise qualify for equitable relief.

Only after the district court granted summary judgment in Transco's favor did it grant injunctive relief, it said. It countered argument that the practice amounted to a "quick take," citing the 3rd Circuit finding that the preliminary injunction merely hastened the enforcement of an existing substantive right.

In addition, it said a 7th circuit ruling involving Northern Border Pipeline, cited by petitioners, was distinguishable because it involved gas companies that failed to obtain the right to condemn before seeking a preliminary injunction, the 3rd Circuit found.

IMPLICATIONS FOR PROJECTS

With this attempt over, another Supreme Court challenge addressing the use of preliminary injunctions is likely to arise from a petition rejected by the 4th Circuit involving MVP, said Christopher Johns of Johns and Counsel, who represented the landowners in that case.

Howard Nelson, attorney and shareholder with Greenberg Traurig in Washington, said it was not surprising the Supreme Court declined to take up the case, given that five other circuits came to the same conclusion and, in his view, the 7th Circuit did not appear to be an exception.

"If the [Supreme] Court had accepted [the petition for certiorari] and ultimately reversed, such a ruling would either delay projects because pipelines wouldn't be able to build until after the condemnation proceeding concluded, or more likely would have increased landowners' leverage to demand higher compensation because such delay would impose greater costs on the pipeline," he said.

There would be substantial delays and costs if the courts were to stop issuing preliminary injunctions, added Clay Massey, a partner at Alston & Bird. Because building a pipeline is a linear process, if a property cannot be accessed, construction has to stop or equipment would have to move to another property. "Any of those options carry substantial costs" that cannot be recovered, he said.

Carolyn Elefant, an attorney representing landowners in the Like case, said most landowners tend to settle once the Federal Energy Regulatory Commission certificate is issued, because they are able to negotiate more favorable terms and conditions than they would once the condemnation goes to court. Whether a project is slowed could depend on the status of other permits needed for construction, she said.

-- Maya Weber, maya.weber@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com