North Dakota Court: Similar Sales Admissible to Determine “Just Compensation” for Eminent Domain

April 13, 2021

In WBI Energy Transmission, Inc. v. Easement and Right-of-Way Across, WBI Energy Transmission’s “Motion in Limine to Exclude Evidence or Testimony of Other Easement Transactions” was denied in a ruling filed April 1, 2021. The court held that similar transactions are admissible in a bench trial to determine “just compensation” for eminent domain.

WBI Energy is an interstate natural gas transmission, gathering and storage company operating under the jurisdiction of the Federal Energy Regulatory Commission. It holds a certificate of public convenience and necessity authorizing it to acquire and operate the interstate pipeline facilities previously owned and operated by Montana-Dakota Utilities. As a holder of this certificate, WBI Energy can acquire the requisite rights of way to construct, operate and maintain a pipeline for the transportation of natural gas “by the exercise of the right of eminent domain” when such rights of way cannot be acquired by contract.

Pursuant to Federal Rule of Civil Procedure 71.1 and the Natural Gas Act, WBI Energy brought an action seeking to “condemn permanent easements and temporary rights-of-way including workspace and access roads” across the defendants’ properties in McKenzie County, North Dakota, for the purpose of constructing, operating and maintaining approximately 12 miles of a 24-inch diameter pipeline from its existing Spring Creek Meter Station to the existing Cherry Creek Valve Setting.

In 2018, the court adopted a stipulation jointly filed by the parties and ordered that WBI Energy shall have immediate use and possession of the easements for the purpose of constructing a natural gas pipeline transportation system. As a result, the only issue remaining for trial was the amount of compensation WBI Energy owed to the defendants for the easements.

In its motion in limine, WBI Energy sought to exclude evidence and testimony at trial of other easement transactions to determine the compensation paid to the defendants for the taking. WBI Energy posited that the defendants could not introduce evidence of other pipeline easement sales to demonstrate market value of the easements in question. The defendants, on the other hand, contended that comparable easement sales are relevant to determine the market value of the easements in question and should be admissible at trial. The court accepted the defendants’ argument.

There are two, interrelated lessons to be learned from this ruling.

First and foremost, even outside of litigation, it is imperative to consider the creation of a “floor” amount in eminent domain negotiations, particularly when multiple property owners are involved. This becomes even more evident as additional property owners attempt to hold out until the end of the negotiation process for better compensation.

Second, within the scope of the litigation, it is essential to be prepared for the reality that courts will consider other related transactions relevant. Once that information is produced, opposing parties can use that information not only to usurp pretrial mediations, but also as potential admissible evidence at trial.