Monday, February 24, 2014

Columbia Gas flexes federal muscle to take easements.

The Federal Government has sanctioned an attack by a private natural gas provider on the property rights of residents in Harford and Baltimore Counties. In three federal lawsuits, the Columbia Gas Transmission, LLC has sued to take easements from the owners of 76 Acres of land in order to place a 26 inch pipeline, temporary licenses to sink "boreholes,"  and easements over an additional 560 acres of land, including land protected by Maryland State Conservation Easements.

The lawsuits were filed in January and February of 2014, and many of the named defendants may not yet know they have been sued.

What does Columbia want?

The Federal Energy Regulatory Commission (commonly known as "FERC") granted Columbia permission to conduct a multi-million dollar project intended to upgrade an existing natural gas pipeline in Maryland.  From FERC's order on the application
...the proposed project will disturb approximately 305.4 acres of land.
These acres are comprised of 50' to 60' strips of land, temporary wells, and access roads throughout Baltimore and Harford County. 

Can Columbia force landowners to give up rights in land?

Yes. FERC's Order grants the authority to Columbia.  The law requires that Columbia first attempt to negotiate purchase of an easement or license in the land from the landowner.  If negotiations are not successful (the owner either wants too much, or Columbia offers too little), the law permits Columbia to use the power of eminent domain to take what it needs.  Here is an excerpt from the controlling Federal Act:

15 U.S.C. Sec. 717h:
(h) Right of eminent domain for construction of pipelines, etc.
When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated: Provided, That the United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.

Who can Columbia sue?

Anyone with an interest in the land over which the easement or license is sought must be named as a defendant in the lawsuit.  This is because Columbia is attempting to take a valuable property right, and so all persons holding an interest in the land are entitled to contest the taking, and to share in money paid by Columbia.  Here is an excerpt from the court rule describing who must be included in the lawsuit:

Rule 71.1
 (3) Parties. When the action commences, the plaintiff need join as defendants only those persons who have or claim an interest in the property and whose names are then known. But before any hearing on compensation, the plaintiff must add as defendants all those persons who have or claim an interest and whose names have become known or can be found by a reasonably diligent search of the records, considering both the property's character and value and the interests to be acquired. All others may be made defendants under the designation “Unknown Owners.”

What must a defendant do in response to the lawsuit?

The court rules require very specific things from a defendant.  And if they are not done, on time, then a defendant loses the right to raise certain legal issues, or to contest Columbia's methods of valuation.  Another excerpt from Rule 71.1 describing an defendant's obligations after being served with the initial complaint follow:
 e) Appearance or Answer.
(1) Notice of Appearance. A defendant that has no objection or defense to the taking of its property may serve a notice of appearance designating the property in which it claims an interest. The defendant must then be given notice of all later proceedings affecting the defendant.
(2) Answer. A defendant that has an objection or defense to the taking must serve an answer within 21 days after being served with the notice. The answer must:
(A) identify the property in which the defendant claims an interest;
(B) state the nature and extent of the interest; and
(C) state all the defendant's objections and defenses to the taking.

And from the same rule, the following describes the bad things that happen if a timely response is not made by a defendant:

(3) Waiver of Other Objections and Defenses; Evidence on Compensation. A defendant waives all objections and defenses not stated in its answer. No other pleading or motion asserting an additional objection or defense is allowed. But at the trial on compensation, a defendant—whether or not it has previously appeared or answered—may present evidence on the amount of compensation to be paid and may share in the award.

What happens in the case?

The court will issue a scheduling order.  The order will have deadlines for discovery (where both sides share information about the legal issues and facts, including competing estimates of value).  The schedule will provide for status and settlement conferences with the court (or a federal magistrate judge), and for the filing of motions (where the parties argue that a decision can be made without need for a trial).

Who makes the decisions?

The federal judge will decide the facts and the law in the case. But the judge has the option to defer decision of the compensation issue to a "tribunal." That is just a fancy way of describing a panel of three experts put together to hear that one issue.  The judge may also permit the compensation question to be answered by a jury (if a party makes a timely jury demand).  Here is an excerpt from Rule 71.1 describing the trial:

(h) Trial of the Issues.
(1) Issues Other Than Compensation; Compensation. In an action involving eminent domain under federal law, the court tries all issues, including compensation, except when compensation must be determined:
(A) by any tribunal specially constituted by a federal statute to determine compensation; or
(B) if there is no such tribunal, by a jury when a party demands one within the time to answer or within any additional time the court sets, unless the court appoints a commission.

What happens after trial?

All cases have rights of appeal to the next court up the chain of command.  In this instance, that may include the United States Court of Appeals for the Fourth Circuit.

What steps should I take, now?

If you are named as a defendant in any eminent domain action, including these three filed by Columbia, you should:
  1. Consult with a lawyer of your choice.  Among the things you should discuss with counsel is whether you have a title insurance policy.  Some modern title insurance policies (sometimes called "enhanced policies") have language that would require the insurance company to hire a lawyer for you, at no cost and expense to you.
  2. File a timely response. Above all, don't miss the 21 day deadline! Bad things will happen if you do! Even after you submit a title insurance claim, keep an eye on the calendar.  Until the insurer actually notifies you that it has accepted your claim and engaged a lawyer, you are on your own to meet the court's deadlines.

What is an easement or license?

If Columbia is successful, by negotiation or final judgment, it will obtain a right to use a portion of the landowner's property. Columbia will not become an "owner" of the land, only an entity entitled to use the land for a specific purpose.

The landowner keeps ownership, and the quantity of land in his deed is not diminished.

Consider for a moment the power lines and towers you have observed crossing many farms as you drive down a highway. The utility company that owns those lines has a recorded document that describes what it can do within that easement. For example, it will have the written rights to fix and repair the power lines and towers, and it will have rights to drive equipment along the power lines to get access.  It will also have a wide "danger easement" that can be up to 100 feet on either side of the power lines. Within the danger zone, a utility has the right to trim or fell trees that might damage lines or towers. The utility work crews are on the easement every day, and over the course of a year, the landowner may hardly notice they have visited, at all.

Something to think about.

The FERC decision authorizing Columbia's land grab is on appeal. The immediate question, then, is whether Columbia has the right to file these lawsuits at this time. This is an issue that might be raised by preliminary motion.

Another question is whether Columbia has brought all necessary parties to the lawsuits. For example, mortgage lenders have liens on real property, and may arguably be required defendants in these cases.  And assuming each defendant has one loan secured by each parcel of property, the answer to this question could double the number of defendants.  More importantly, there may be leases, assignments of profits and rents, and mortgage documents in the land records that may require an owner to turn over or share any money paid by Columbia to third parties. That would certainly make them necessary parties to the lawsuit.  This is another issue that could be raised by preliminary motion.

And finally, how much time and effort does a landowner want to invest in this fight? Short of defeating Columbia's rights completely, which will require a long and costly fight, the real focus should be on the amount of compensation and the fine print detail of the proposed easement or license.

It is your land.  Protect it, fight for it, and if Columbia must have an easement, maximize your payment.