A recent decision could eventually have big implications for gas companies in eminent domain proceedings, at least in states within the Fourth Circuit.

On February 5, 2019, the Fourth Circuit Court of Appeals issued its opinion in Mt. Valley Pipeline, LLC v. 6.56 Acres,[1] rebuffing a concerted attempt by numerous landowner counsel to attack the Court’s 2004 ruling in East Tennessee Natural Gas Co. v. Sage.[2] In Sage, the Fourth Circuit determined that although the Natural Gas Act does not have a provision for immediate possession, that federal courts can grant immediate possession by preliminary injunction using the court’s equitable powers.

The issue of whether federal courts can grant quick take to gas companies by court order is highly disputed and has resulted in a split among the circuits.

In Mt. Valley Pipeline, LLC v. 6.56 Acres, the landowners argued that East Tennessee Natural Gas Co. v. Sage was wrongly decided. The landowners argued that courts could not grant possession as an equitable remedy through preliminary injunction because the Natural Gas Act does not expressly allow for immediate possession. The landowners argued that the district courts could only grant a gas company access after eminent domain proceedings were complete with just compensation calculated and paid, even though the Fourth Circuit already rejected this argument in Sage.

The facts of Mountain Valley are similar to most cases involving gas companies taking right of way by eminent domain. First, the Federal Energy Regulatory Commission (FERC) approved Mountain Valley’s application to construct a natural gas pipeline throughout Virginia and West Virginia. In order to construct and maintain that pipeline, Mountain Valley would need to access thousands of private properties, where the pipeline would be buried. Accordingly, the FERC also allowed Mountain Valley to obtain easements through eminent domain if the company could not obtain them through private agreements with landowners.

After Mountain Valley successfully obtained most of the easements it needed through private agreements, the company initiated eminent domain proceedings for the remaining easements, and moved for preliminary injunctions for immediate possession pursuant to Sage. Mountain Valley prevailed, and this gave the company immediate access and possession of the easements allowing the company to avoid construction delays. In its decision, one district court estimated that the eminent domain process could take longer than three years to complete! This would have delayed construction, pushing Mountain Valley outside of FERC’s construction deadline.

Although the Fourth Circuit denied all of the landowners’ arguments in Mountain Valley, the opinion contains one line that likely ensures we will see this sort of challenge continue, and which landowners’ counsel will probably be pointing to in future challenges like this one. The Fourth Circuit noted that

To the extent that Sage could be read otherwise, we take this opportunity to clarify that while the balance of equities may often tip in favor of the pipeline company in the context of Natural Gas Act condemnations, such an outcome is by no means guaranteed or automatic.

[1] Mt. Valley Pipeline, LLC v. 6.56 Acres, 2019 U.S. App. LEXIS 3549 (4th Cir. 2019).

[2] East Tennessee Natural Gas Co. v. Sage, 361 F.3d 808 (4th Cir. 2004).

P.S. Although we have published this under my byline, this piece was co-authored by our intern here at RightofWay.law, Hannah E. Fruh.