Third Circuit Confirms Right to Immediate Possession in Federal Condemnation Actions

November 2, 2018

On Oct. 30, the U.S. Court of Appeals for the Third Circuit issued a precedential opinion confirming what other federal courts already have made reasonably clear — that natural gas transmission companies operating under the Natural Gas Act (NGA) are entitled to “immediate possession” of property subject to federal condemnation proceedings. The Third Circuit held that although the NGA does not expressly provide for such a right, the District Court still had the authority to grant immediate possession in the form of equitable relief.

In Transcontinental Gas Pipe Line Company, LLC v. Permanent Easements for 2.14 Acres in Conestoga Township, Lancaster County, Pennsylvania, aggrieved landowners subject to takings for easements in connection with Transcontinental’s construction of an interstate natural gas transmission pipeline, challenged Transcontinental’s right to immediate possession prior to an award of “just compensation.” After filing its condemnation action in the U.S. District Court for the Eastern District of Pennsylvania, Transcontinental promptly moved for partial summary judgment on its right to condemn the properties and then sought an injunction for immediate possession in order to begin construction.

The Eastern District granted Transcontinental’s request for partial summary judgment, confirming Transcontinental’s right to condemn the subject properties. In so doing, the District Court rejected the landowners’ claims that they had not been afforded adequate due process and that Transcontinental had not satisfied certain conditions under its FERC certificate, which granted Transcontinental the authority to construct the pipeline.

The Eastern District also found that injunctive relief was proper pursuant to Rule 65 of the Federal Rules of Civil Procedure in the form of immediate possession. Transcontinental demonstrated a reasonable likelihood of success on the merits because, prior to filing its condemnation action, it satisfied the three conditions required to exercise its eminent domain rights under Section 717f(h) of the NGA: (1) It holds a FERC certificate of public convenience and necessity, (2) it was unable to acquire the easement through negotiation, and (3) the value of the property to be taken exceeds $3,000. It also met the three remaining factors necessary for the issuance of such relief.

The landowners appealed the Eastern District’s issuance of the injunction on constitutionality grounds, arguing that it amounted to a “quick take” condemnation, which the NGA does not afford and only Congress can provide. In affirming the Eastern District’s ruling, however, the Third Circuit rejected the notion that “Congress, in passing the NGA, intended to remove the judiciary’s access to equitable remedies to enforce an established substantive right.” The Third Circuit acknowledged that the NGA does not provide for “quick take” condemnation authority, which requires only a declaration of taking and an estimate of value, immediately vesting title in the condemner, but rather bestows only “standard” condemnation authority. Standard condemnation requires the complete adjudication of federal condemnation proceedings under Rule 71.1 of the Federal Rules of Civil Procedure, including determinations of the substantive right to condemn and an amount of “just compensation” for the taking.

However, the Third Circuit found that because Transcontinental “properly sought and obtained the substantive right to the property before seeking equitable relief” via summary judgment, and further satisfied the four factors necessary for such an award, injunctive relief in the form of immediate possession was appropriate. The court distinguished the cases cited by the landowners as involving companies that failed to obtain “the crucial substantive right to condemn” before seeking equitable relief.

Despite the lack of any express entitlement to immediate possession under the NGA, the Third Circuit pointed out: “Nothing in the NGA suggests either explicitly or implicitly that the rules governing preliminary injunctions should be suspended in condemnation proceedings.” In reaching its decision, the Third Circuit relied on the District Court’s inherent authority to otherwise afford ordinary equitable relief under Rule 65, even in the context of a condemnation action under the NGA and Rule 71.1, particularly as Rule 71.1 expressly provides that the other Rules of Federal Civil Procedure still apply. To the landowners’ concerns that their rights were not adequately protected through the issuance of the injunction, the Third Circuit noted that proceeding under Rules 65 and 71.1, as Transcontinental did, actually affords landowners greater protections than those associated with “quick take” procedures, given the multiple layers of proof involved. (The company also would be liable for trespass if it failed to compensate the landowners for the taking within a reasonable time, and bonds are required in advance of immediate possession for that reason.)

The Third Circuit concluded: “As the preliminary injunction was permitted by the Rules, permitted by the NGA, and did not amount to a grant of ‘quick take’ eminent domain power in either name or substance, the court did not usurp legislative power or otherwise overstep the boundaries of its judicial power. … [T]he NGA’s grant of standard condemnation powers to natural gas companies does not preclude federal courts from granting equitable relief in the form of a preliminary injunction when gas companies have obtained the substantive right to condemn and otherwise qualify for equitable relief.”

From a procedural perspective, this decision confirms that obtaining summary judgment on the question of condemnation authority is the critical first step before moving to secure immediate possession by way of an injunction. As the Third Circuit stated, “Without having that right in substantive law determined, the company could not invoke equity.” More broadly, this ruling should help alleviate any concerns for interstate natural gas transmission companies seeking immediate possession in federal courts, which so frequently is necessary to keep projects on unavoidably tight construction schedules.