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Alliance Pipeline L.P. v 4.360 Acres of Land

Case No. 13-1003 (C.A. 8, Mar. 24, 2014)

Leonard and Ione Smith (the Smiths) appeal from a district court order condemning portions of their property for the construction of a natural gas pipeline owned and operated by Alliance Pipeline, L.P. (Alliance), and granting Alliance immediate use and possession of the condemned land. Alliance brought the condemnation action against the Smiths’ property after obtaining a certificate from the Federal Energy Regulatory Commission (FERC) authorizing Alliance to condemn land along the route of its proposed pipeline. The Smiths assert that Alliance’s certificate is ineffective against them because Alliance failed to provide the Smiths with notice of its application for the certificate and because FERC failed to consider relevant state law in granting the certificate. The Smiths also assert that Alliance’s condemnation action runs afoul of state and federal procedural law. We affirm.

I.



Alliance operates an approximately 2300-mile network of oil and natural gas pipelines in the United States and Canada. In 2011, Alliance began plans to construct a 79-mile-long underground pipeline from a natural gas processing plant near Tioga, North Dakota, to an interconnection with Alliance’s main pipeline near Sherwood, North Dakota. There was at that time (and there continues to be) an oil boom in North Dakota, and occasionally oil prospectors would find reservoirs containing both petroleum and natural gas. The oil companies, having no pipeline capacity to ship the gas to major markets, would burn the gas at the source—a practice called “flaring.” Alliance sought to take advantage of this market inefficiency by shipping the otherwise wasted gas east to Chicago.

Anyone who wishes to construct a natural gas pipeline in the United States must first obtain a certificate of public convenience and necessity from FERC, the federal agency responsible for supervising and coordinating the production of energy in the United States. See 15 U.S.C. § 717f(c)-(e). Such a certificate also gives the recipient the authority to condemn land along the route of its pipeline under the power of eminent domain. See 15 U.S.C. § 717f(h). Alliance applied to FERC for a certificate of public convenience and necessity on January 25, 2012. FERC published notice of Alliance’s application in the Federal Register on February 7, 2012.
 

 

Judge(s): Roger Wollman
Jurisdiction: U.S. Court of Appeals, Eighth Circuit
Related Categories: Property
 
Circuit Court Judge(s)
Jane Kelly
James Loken
Roger Wollman

 
Trial Court Judge(s)
Daniel Hovland

 

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___________________________ has been superseded. see n. border pipeline co. v. 64.111 acres of land in will § 69-06-08-01). negotiation. see id. rather, the act simply states: in addition to right-of-way . . . it may acquire the same by the exercise probability that movant will succeed on the merits; and (4) the public interest.”). invocation of state law in its state court action for entry to survey does not necessitate (b), sets forth specific procedures for challenging a ferc order: that alliance was entitled to immediate use and possession. bringing this condemnation action. the smiths refer us specifically to north dakota order. . . . no proceeding to review any order of the commission shall there is no federal law that deals specifically with entries to survey property, so there thefederal energyregulatorycommission(ferc)authorizing allianceto condemn “[t]he practice and procedure [in a condemnation proceeding under this section] shall _______________________________ application as required by both the due process clause of the fifth amendment and the $3,000 per acre that alliance had agreed to deposit with the clerk of court. the negotiate with alliance, even after alliance’s attempts to follow up with the smiths. a ferc certificate to comply with relevant state procedural law in bringing that action. immediate use and possession of the condemned land. alliance brought the evidence in the light most favorable to the nonmoving party. hill v. walker, 737 f.3d for the district of north dakota - bismarck condemnation action. the natural gas act itself does not mention good-faith owned and operated by alliance pipeline, l.p. (alliance), and granting alliance be brought by any person unless such person shall have made eminent domain proceedings.” united states v. reynolds, 397 u.s. 14, 18 (1970). from hearing challenges to that order. see city of tacoma v. taxpayers of tacoma, may apply for a rehearing within thirty days after the issuance of such across their land and showed the smiths how it had calculated its offer, and it does the court belowdetermined that alliance’s pipeline would “fill acritical need” when any holder of a certificate of public convenience and necessity county, north dakota; leonard smith; ione smith ferc itself in a petition for rehearing within thirty days of the order’s issuance. if, alliance immediate use and possession of their land. we review this exercise of the bringing this condemnation action, and failed to comply with state law in initiating in support of their premise that state law is relevant in this federal the application of state law in this case. and ndcc § 32-15-22, which provides that a jury shall determine the value of notice is constitutionally required, we conclude that the smiths received notice -4- injunction. dakota administrative code (ndac) § 69-06-08-01. the smiths’ attack on the district court’s findings focuses primarily on § 717f(h), by failing to negotiate with them in good faith before bringing this district court thus considered all four of the dataphase factors in issuing its aside such order in whole or in part. ii. proceeding) can claim no such lack of notice. taken together, these events gave the 357 u.s. 320, 336 (1958). section 19 of the natural gas act, 15 u.s.c. § 717r(a)- mercexchange, l.l.c., 547 u.s. 388, 391 (2006). -10- (later renumbered 71.1), which “govern[s] proceedings to condemn real and personal the smiths, § 717f(h) requires a party who brings a condemnation action pursuant to land along the route of its proposed pipeline. the smiths assert that alliance’s property by eminent domain[.]” the advisory committee notes to rule 71.1 state that in negotiating the sale of an easement across the smiths’ land. sometime in february 2012, alliance representatives visited the smiths’ farm to ask irreparable harm to the movant; (2) the state of the balance between this harm and the published notice of alliance’s application in the federal register on february 7, address each challenge in turn. the smiths’ challenges to alliance’s ferc certificate now aside, we turn next at 17. the court also found that alliance had convincingly demonstrated its right to condemnation proceeding, the smiths seek to circumvent this exclusive review certificate is ineffective against them because alliance failed to provide the smiths filing of such petition such court shall have jurisdiction, which upon the condemnation action runs afoul of state and federal procedural law. we affirm. no. 13-1003 the smiths also argue that alliance’s invocation of state law in its state-court petition united states court of appeals affidavit of one of alliance’s employees was based on hearsay and that some of the of the dataphase analysis. in support of this challenge, the smiths renew many of scheme. recipient the authority to condemn land along the route of its pipeline under the leonard and ione smith (the smiths) appeal from a district court order1 moved for summary judgment and for immediate use and possession of the smiths’ transportation of natural gas, and the necessary land or other property, iv. register. perhaps the smiths, as an elderly couple in rural north dakota, should not 255, 261 (10th cir. 1989). by collaterally attacking the ferc order in this 1209, 1216 (8th cir. 2013). summary judgment is appropriate when there is “no alliance sought to take advantage of this market inefficiency by shipping the challenges (in other words, the challenges based on 18 c.f.r. § 157.6(d) and ndac filed: march 24, 2014 has abided by this covenant. alliance made the smiths an offer for an easement have taken effect.” 28 u.s.c. § 2072(b). thus, rule 71.1 displaces state procedural -5- the rule “affords a uniform procedure for all cases of condemnation invoking the dataphase sys., inc. v. c l sys., inc., 640 f.2d 109, 113 (8th cir. 1981) (“whether section 19 thus requires that any challenge to a ferc order first be brought before after rehearing, a party aggrieved by the order remains unsatisfied, that party may of unsupported allegationsthatalliancewill notsufferirreparable harmif not granted v. national power of eminent domain” and “supplants all statutes prescribing a different alliance pipeline l.p. not appear that the smiths ever made alliance a counteroffer or attempted to submitted: december 17, 2013 proceeding to enter and survey their land (who also represents the smiths in this appeal from united states district court duty to negotiate with the smiths in good faith. ____________ law in this condemnation proceeding. 1 f. supp. 2d 816, 822 (e.d. tenn. 1998), and kern river ga. transmission co. v. affected landowners suggests that most landowners found alliance’s damages smiths’ land for the construction of its pipeline. on april 13, 2012, alliance filed of ione and stepson of leonard, who lives next to the smiths and helps tend the against the smiths’ property. all three of these events occurred before the expiration (b) any party to a proceeding under this chapter aggrieved by an order finally, the smiths assert that alliance violated the natural gas act, 15 u.s.c. immediate use and possession of their land. the smiths assert, for example, that the pipelines in approving alliance’s application. these criteria are set forth in north the federal rules of civil procedure did not provide a specific framework for and the procedural propriety of alliance’s subsequent condemnation action. we clark county., nev., 757 f. supp. 1110, 1113 (d. nev. 1990), with maritimes & ne. their previous arguments. the smiths allege, for instance, that alliance did not before wollman, loken, and kelly, circuit judges. c. condemnation action against two parcels of land owned by the smiths. alliance -9- cnty., ill., 344 f.3d 693, 694 (7th cir. 2003); s. natural gas co. v. land, cullman second, the smiths assert that ferc failed to consider state criteria for the siting of procedure.” and congress has provided directly that “[a]ll laws in conflict with [the over the smiths’ claim that alliance denied them due process of law by failing to century code (ndcc) § 32-15-06(1), which imposes a duty upon the condemnor to power of eminent domain. see 15 u.s.c. § 717f(h). alliance applied to ferc for negotiate with a condemnee prior to bringing a condemnation action; ndcc § 31-15- federal rules of civil procedure] shall be of no further force or effect after such rules smiths were in poorhealth,alliancerepresentatives met with guysolemsaas,theson -7- conform as nearly as may be with the practice and procedure in similar action or -3- lastly, we address the smiths’argument that the district court erred in granting the smiths if alliance could purchase an easement across their land. because the v. cent. hanover bank & trust co., 339 u.s. 306, 314 (1950). in february 2012, convenience and necessity, and on october 16, 2012, alliance brought a ferc’s own landowner notice requirements, set forth in 18 c.f.r. § 157.6(d). filing of the record with it shall be exclusive, to affirm, modify, or set property to the compensation to be paid for, the necessary right-of-way alliance operates an approximately 2300-mile network of oil and natural gas a state court action to enter and survey the smiths’ property for purposes of its ferc of north dakota. must first obtain a certificate of public convenience and necessity from ferc, the of the right of eminent domain in the district court of the united states genuine dispute as to any material fact and the movant is entitled to judgment as a seek further review by appealing directly to a united states court of appeals within moreover, the fact that alliance was able to purchase easements from 90% of the condemn the smiths’ property and that any prejudice to the smiths could be offset by pipelines in the united states and canada. in 2011, alliance began plans to construct we need not determine whether § 19 would permit us to exercise jurisdiction i. condemn the smiths’ land. ____________ as severalothercourts have observed,however,§ 717f(h)’sstate-lawdirective dakota. the route of alliance’s proposed pipeline crossed the smiths’ property. b. north dakota. there was at that time (and there continues to be) an oil boom in federal agency responsible for supervising and coordinating the production of energy be charged with notice of the federal register. but their counsel in the state-court sufficient to support a finding that the district court abused its discretion in holding matter of law.” fed. r. civ. p. 56(a). in challenging the district court’s grant of lllllllllllllllllllll plaintiff - appellee iii. the smiths assert that the jury requirement set forth in ndcc § 32-15-22 alliance’s right to condemn the smiths’ property—the “success on the merits” prong gas to major markets, would burn the gas at the source—a practice called “flaring.” to serve them with a state-court summons and petition to enter and survey their smiths reasonable notice that alliance was applying to ferc for the right to a preliminary injunction should issue involves consideration of (1) the threat of the remainder of the smiths’ challenges to the district court’s finding consist calculations to be reasonable. we conclude, therefore, that alliance has satisfied any is nothing to preempt state law in such a proceeding. accordingly, alliance’s a. around the time ferc published notice of alliance’s application in the federal cannot be preempted by federal statute or rule because it vindicates their seventh an order issued by the commission in a proceeding under this chapter a certificate of public convenience and necessity on january 25, 2012. ferc the smiths are an elderly couple who own a farm near sherwood, north the honorable daniell.hovland,unitedstatesdistrictjudgeforthedistrict1 application. and on october 16, 2012, alliance brought this condemnation action -2- ____________ regulatory approval to negotiate shipping contracts. none of these allegations are for the eighth circuit commission be modified or set aside in whole or in part. . . . upon the id. courts are split as to whether § 717f(h) contains an implied requirement of good- range 85 west, renville county, north dakota; 4.675 acres of land, more or petroleum and natural gas. the oil companies, having no pipeline capacityto ship the 06(2)-(4), which govern appraisals and compensation in a condemnation proceeding; proceeding in the courts of the state where the property is situated[.]” according to harm to alliance could have been avoided had alliance waited until securing injury that granting the injunction will inflict on other parties litigant; (3) the on september 20, 2012, ferc granted alliance a certificate of public has now been resolved. we review the district court’s grant of summaryjudgment de novo, viewing the to construct, operate, and maintain a pipe line or pipe lines for the on april 13, 2012, alliance representatives visited the smiths again, this time we conclude that we lack jurisdiction to consider the smiths’ statutory initiating a condemnation action. in 1951, the supreme court adopted rule 71a condemnation action against the smiths’ property after obtaining a certificate from first, the smiths assert that alliance failed to provide them notice of its ferc a 79-mile-long underground pipeline from a natural gas processing plant near tioga, similar to those that attend a motion for a preliminary injunction. see n. border the judgment is affirmed. district court’s inherent equitable powers for abuse of discretion. see ebay inc. v. even if § 717f(h) does contain an implied covenant of good faith, however, alliance property. alliance asserted that it needed access to the smiths’ property to complete such order in the court of appeals of the united states . . . by filing in less, in the se/4 of section 30, township 163 north, range 85 west, renville relevant state law in granting the certificate. the smiths also assert that alliance’s lllllllllllllllllllll defendants - appellants 2012. to which such person, state, municipality, or state commission is a party of the thirty-day rehearing period provided by § 19, and all three occurred after or for the district in which such property may be located, or in the state we begin with the smiths’challenge to the ferc certificate, which is twofold. in the united states. see 15 u.s.c. § 717f(c)-(e). such a certificate also gives the for the transportation of natural gas and that a delay in access to the smiths’ land courts. condemning portions of their property for the construction of a natural gas pipeline issued by the commission in such proceeding may obtain a review of cnty., 197 f.3d 1368, 1372-73 (11th cir. 1999). congress amended § 717f to include alliance’s petition on may 15, 2012. of § 19 are exclusive.” williams natural gas co. v. city of oklahoma city, 890 f.2d north dakota, to an interconnection with alliance’s main pipeline near sherwood, faith negotiation. compare usg pipeline co. v. 1.74 acres in marion cnty., tenn., pipeline, l.l.c. v. decoulos, 146 f. app’x 495, 498 (1st cir. 2005) (per curiam). otherwise wasted gas east to chicago. 4.360 acres of land, more or less, in the s/2 of section 29, township 163 north, -6- summary judgment to alliance, the smiths attack both alliance’s ferc certificate “as the statutory language plainlystates,the special judicial review provisions condemned property based on a set of enumerated criteria. as we explain below, wollman, circuit judge. alliance visited the smiths’ farm to negotiate the purchase of an easement across the pipeline co. v. 86.72 acres of land, 144 f.3d 469, 471-72 (7th cir. 1998); see also was any doubt that alliance had the right to condemn the smiths’ property, that doubt north dakota, and occasionallyoil prospectors would find reservoirs containing both application for rehearing, a written petition praying that the order of the to enter and survey the smiths’ property estops alliance from arguing in this condemnation proceeding, the smiths cite 15 u.s.c. § 717f(h), which provides that when congress prescribes specific procedures for the review of an land. the district court granted both motions. see d. ct. order of nov. 26, 2012. ____________ (a) any person, state, municipality, or state commission aggrieved by condemnation action that state law does not apply. but as the smiths acknowledge, such court, within sixty days after the order of the commission upon the with notice of its application for the certificate and because ferc failed to consider subsection (h) in 1947. see pub. l. no. 80-245, 61 stat. 459 (1947). at that time, anyone who wishes to construct a natural gas pipeline in the united states cannot acquire by contract, or is unable to agree with the owner of could cost alliance as much as $540,000 per day. see d. ct. order of nov. 26, 2012, to the smiths’ allegation that alliance violated several state procedural rules in administrative order, courts outside the statutory review framework are precluded federal rule of civil procedure 71.1 preempts all of these state procedures. provide them notice of the ferc proceeding, did not negotiate in good faith before the considerations that attend a motion for immediate use and possession are smiths’ farm. solemsaas told alliance that neither he nor the smiths were interested -8- provide them with advance notice of its ferc application. assuming that such ___________________________ various field surveys required as part of its ferc application. the state court granted the condemnation action. our conclusions above foreclose these arguments. if there amendment right to a jury trial. but “there is no constitutional right to a jury in sixty days of ferc’s decision on rehearing. application to the commission for a rehearing thereon. . . . “reasonablycalculated . . . to apprise” themof alliance’s ferc application. mullane


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