Pipeline Easements and Issues
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The document discusses the complexities surrounding eminent domain powers exercised by public utilities, particularly in the context of pipeline projects such as the Keystone and Penn East pipelines. It outlines the statutory grants, regulatory approvals, and challenges related to property acquisition, compensation, and the public use doctrine. Additionally, it highlights the differences between federal and state legal frameworks impacting eminent domain actions and the valuation issues stemming from partial takings and public perception.
![Public Utilities and Eminent Domain Power
1. Statutory Grant
2. Requires Administrative/Regulatory Approval
a) Application for certificates shall be made in writing to the Commission, be
verified under oath, and shall be in such form, contain such information, and
notice thereof shall be served upon such interested parties and in such manner
as the Commission shall, by regulation, require. Natural Gas Act (NGA), 15
U.S.C. 717F(h)
b) The power of condemnation shall not be used or enforced by any such public
utility . . . [e]xcept where a governmental agency having jurisdiction has granted
the utility the permission to take or acquire property or any interests for the
utility's purposes the power of condemnation shall not be used or enforced by
any public utility until and unless such utility shall have applied to the Board of
Public Utility Commissioners. . . . N.J.S.A. 48:3-17.7.
3. Limited Authority
4. Prior Public Use Doctrine
Public Utilities can exercise eminent domain](https://image.slidesharecdn.com/pipelineeasementsandissuespresentation2017-190418142458/85/Pipeline-Easements-and-Issues-4-320.jpg)
Pipeline Easements and Issues
- 1. METRO NEW JERSEY CHAPTER OF THE APPRAISAL INSTITUTE 81st Annual Princeton Conference – April 28, 2017 “Pipeline Easements and Issues” Victor D. DiSanto, MAI - Moderator Sterling, DiSanto & Associates Michael J. Ash, Esq. DeCotiis, Fitzpatrick, Cole & Giblin, LLP Anthony F. DellaPelle, Esq., CRE McKirdy & Riskin, PA Maurice Stack, MAI, CRE, FRICS Stack, Coolahan & Stack
- 2. HISTORY •Public utilities are required infrastructure •Older developed areas require upgrades/expansion •Newer developing areas need services •Local agencies can be condemnors AND condemnees HOT ISSUES 1. Keystone Pipeline 2. Wind Farms 3. Solar Farms 4. Gas Pipelines 5. Water Rights
- 3. Public Utilities and the Eminent Domain Power 1. Statutory Grant a) Natural Gas Act (NGA), 15 U.S.C. 717F(h) b) New Jersey -- N.J.S.A. 48:3-17.7 c) Local authorities normally created by state legislation 2. Requires Administrative/Regulatory Approval 3. Limited Authority 4. Prior Public Use Doctrine Public Utilities can exercise eminent domain
- 4. Public Utilities and Eminent Domain Power 1. Statutory Grant 2. Requires Administrative/Regulatory Approval a) Application for certificates shall be made in writing to the Commission, be verified under oath, and shall be in such form, contain such information, and notice thereof shall be served upon such interested parties and in such manner as the Commission shall, by regulation, require. Natural Gas Act (NGA), 15 U.S.C. 717F(h) b) The power of condemnation shall not be used or enforced by any such public utility . . . [e]xcept where a governmental agency having jurisdiction has granted the utility the permission to take or acquire property or any interests for the utility's purposes the power of condemnation shall not be used or enforced by any public utility until and unless such utility shall have applied to the Board of Public Utility Commissioners. . . . N.J.S.A. 48:3-17.7. 3. Limited Authority 4. Prior Public Use Doctrine Public Utilities can exercise eminent domain
- 5. Public Utilities and Eminent Domain Power 1. Statutory Grant 2. Requires Administrative/Regulatory Approval 3. Limited Authority a) Limited to designated area and properties. b) Subject to restrictions imposed by statute and/or regulation • Must compensation precede the taking? • Is preliminary entry authorized? c) Consideration of jurisdictional issues for regional, interstate and international projects 4. Prior Public Use Doctrine Public Utilities can exercise eminent domain
- 6. Public Utilities and Eminent Domain Power 1. Statutory Grant 2. Requires Administrative/Regulatory Approval 3. Limited Authority 4. Prior Public Use Doctrine a) The general rule is that a private company that has been authorized to exercise general eminent domain powers cannot do so on land that has already been devoted to public use. State Highway Commission v. Hoester, 362 S.W. 2d 519 (Mo. 1962) b) See U.S. v. Carmack, 329 U.S. 230 (1946), which contains dictum suggesting that eminent domain authority delegated to private entities (such as utility companies) is limited and therefore subject to a more stringent standard of review than similar delegations to governmental actors. c) Examples and exceptions : • Will a balancing test be used? See Texas Eastern v. Wildlife Preserves, Inc., 225 A. 2d 130 (N.J. 1966) • Water company’s rights not exclusive. City of Raton v. Raton Ice Co. 191 P. 518 (N.M. 1920) Public Utilities can exercise eminent domain
- 7. Choice of Forum 1. Federal Law and Court – Penn East a) Federal Statute authorizing project and condemnation b) Regulatory process through FERC c) Federal court and jurisdiction d) Disclosure requirements e) Litigation process – no jury trial and different procedures 2. State Law and Court – South Jersey Gas a) State statutes authorizing project and condemnation b) Regulatory process through BPU c) State court and procedures d) Safeguards to property owners through Eminent Domain Act Public Utilities and Eminent Domain Power
- 8. 1.Federal Law and Court – Penn East a) Federal Statute authorizing project and condemnation 1. Natural Gas Act (NGA), 15 U.S.C. 717f(c)– authorizes the “construction or extension of facilities…for the transportation of in interstate commerce of natural gas 2. Pipeline company must demonstrate actual need for project through contracts with shippers and customers 3. Must receive Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission (FERC) 4. 15 U.S.C. 717F(h) – provides authorization for acquisition of property by condemnation b) Regulatory process through FERC c) Federal court and jurisdiction d) Disclosure requirements e) Litigation process – no jury trial and different procedures Public Utilities and Eminent Domain Power
- 9. 1.Federal Law and Court – Penn East a) Federal Statute authorizing project and condemnation b) Regulatory process through FERC 1. Pre-Filing – public informational hearings with public comment and input from property owners and government stakeholders 2. Environmental Review – NEPA/EIS - due diligence including: route studies; field surveys; wetlands delineations and alternatives/benefits analysis 3. FERC Certificate – approves a 50 foot Right-of-Way and facilities for project, authorizes condemnation, includes conditions on construction 4. Post-Certificate Proceedings – Application for FERC re-hearing in federal court c) Federal court and jurisdiction d) Disclosure requirements e) Litigation process – no jury trial and different procedures Public Utilities and Eminent Domain Power
- 10. 1.Federal Law and Court – Penn East a) Federal Statute authorizing project and condemnation b) Regulatory process through FERC c) Federal court and jurisdiction 1. Condemnation in Federal Court – US District Court of NJ 2. FERC Certificate Pre-Empts State and local regulations including zoning 3. Construction and Operation in accordance with Pipeline and Hazardous Materials Safety Administration d) Disclosure requirements e) Litigation process – no jury trial and different procedures Public Utilities and Eminent Domain Power
- 11. 1.Federal Law and Court – Penn East a) Federal Statute authorizing project and condemnation b) Regulatory process through FERC c) Federal court and jurisdiction d) Disclosure requirements 1. Offer letter required – no duty to negotiate in good faith in most jurisdictions including NJ a) No requirement for appraisal b) No minimum of 14 days for negotiations c) No survey required 2. Public Purpose if Property is Within FERC Certificated route e) Litigation process – no jury trial and different procedures Public Utilities and Eminent Domain Power
- 13. Tract HUD 98.3
- 14. 1.Federal Law and Court – Penn East a) Federal Statute authorizing project and condemnation b) Regulatory process through FERC c) Federal court and jurisdiction d) Disclosure requirements e) Litigation process – no jury trial and different procedures 1. Notice of Condemnation , Complaint, and Order of Taking 2. No “quick take” – motion for summary judgment or preliminary injunction depending on jurisdiction 3. Valuation Litigation a) Burden of Proof is on Property Owner b) Jury trial, bench trial, or Commissioners’ Hearing c) Federal Substantive Law applies – Yellow Book Public Utilities and Eminent Domain Power
- 15. Penn East Pipeline Status: Final Environmental Impact Statement Approved by FERC on 4/7/17
- 16. 2. State Law and Court – South Jersey Gas 1. State statutes authorizing project and condemnation a. N.J.S.A. 48:3-17.6 2. Regulatory process through BPU 3. State court and procedures 4. Safeguards to property owners through Eminent Domain Act Public Utilities and Eminent Domain Power
- 17. 2. State Law and Court – South Jersey Gas 1. State statutes authorizing project and condemnation 2. Regulatory process through BPU a. Regulated Utility files a Petition for acquisition of properties in furtherance of a new project b. BPU holds public hearings, accepts briefs, discovery, and hears testimony from the petitioner, the Board’s staff, and often the Division of Rate Counsel (N.J.A.C. 1:1-16.3) c. BPU or OAL makes a determination of necessity that an acquisition is “reasonably necessary” 3. State court and procedures 4. Safeguards to property owners through Eminent Domain Act Public Utilities and Eminent Domain Power
- 18. 2. State Law and Court – South Jersey Gas 1. State statutes authorizing project and condemnation 2. Regulatory process through BPU a. Regulated Utility files a Petition for acquisition of properties in furtherance of a new project b. BPU holds public hearings, accepts briefs, discovery, and hears testimony from the petitioner, the Board’s staff, and often the Division of Rate Counsel (N.J.A.C. 1:1-16.3) c. BPU or OAL makes a determination of necessity that an acquisition is “reasonably necessary” 3. State court and procedures 4. Safeguards to property owners through Eminent Domain Act Public Utilities and Eminent Domain Power
- 19. 2. State Law and Court – South Jersey Gas 1. State statutes authorizing project and condemnation 2. Regulatory process through BPU 3. State court and procedures a. Acquisitions in accordance with Eminent Domain Act b. Good faith negotiations i. Property owner has right to accompany appraiser ii. Must have appraisal report iii.No “take it or leave it” offers iv.At least 14 days of negotiations c. Complaint is filed in County where property is located 4. Safeguards to property owners through Eminent Domain Act Public Utilities and Eminent Domain Power
- 20. 2. State Law and Court – South Jersey Gas 1. State statutes authorizing project and condemnation 2. Regulatory process through BPU 3. State court and procedures 4. Safeguards to property owners through Eminent Domain Act a. Good Faith Negotiations b. Limitations on Exercise of Eminent Domain by Private Corporations i. No statutory right to preliminary entry ii. No statutory right to “quick take” – possession only after deposit of Commissioners’ award c. Right to jury trial on just compensation Public Utilities and Eminent Domain Power
- 21. South Jersey Gas Pipeline Status: Approved By BPU and Pinelands Commission; Under challenge By Sierra Club
- 22. Valuation Issues 1. Partial Takings a) Value of property actually acquired. b) Easements and the “bundle of rights” c) Difference between property value “before and after “taking. d) Route selection and location of taking within remainder of properties can be critical e) Just compensation vs. public relations f) Question: Is a property with a sewer or gas connection more valuable, or does the easement burden devalue the property? Consider project influence implications. 2. View 3. Fear Public Utilities and Eminent Domain Power
- 23. 1. Partial Takings 2. View a) Requires at least partial taking - PSE & G v. Oldwick Farms, 308 A. 2d 362 (N.J. App. Div. 1973). b) Compare loss of view vs. loss of visibility. Keinz v. State, 156 N.Y.S. 2d 505 (N.U. 1956)(damages may be awarded when owner’s view out from property has been impaired but not when visibility into property is diminished) 3. Fear Public Utilities and Eminent Domain Power Valuation Issues
- 24. 1. Partial Takings 2. View 3. Fear • Appeal of Giesler, 622 A. 2d 408 (Pa. 1993)(despite lack of scientific evidence that electric lines may create health risk , public perception is relevant in determining damages) • Criscuola v. Power Auth. 621 N.E. 2d 1195 (N.Y. 1993)(public fear and subjective believes of buyers regarding power lines is irrelevant unless objective market evidence exists ) Public Utilities and Eminent Domain Power Valuation Issues
- 25. NJTA v. 100 West Manor Way
- 26. NJTA v. 100 West Manor Way
- 27. NJTA v. 100 West Manor Way
- 28. Nobody wants them: But everyone is unhappy when: