Wednesday, February 19, 2014

What is "just compensation" for a pipeline taking?

What rights do landowners have when a pipeline company takes part of their property by eminent domain? As I mentioned on Monte Belmonte's show on the River, although federal law governs the taking itself, state law determines the meaning of "just compensation." What, then, is "just compensation" for an easement over part of your land?

Here in Massachusetts the courts start their analysis with the applicable statute, M.G.L.c.79, s.12, which provides that in the case of a partial taking the assessment shall include "damages to the part not taken." So the landowner needs to show the diminution in the fair market value of the whole parcel (both the taken part and the remaining part). In other words, what would a hypothetical willing buyer pay for the property as a whole after it had been on the market for a reasonable length of time. At this point readers may wonder how a judge would arrive at that hypothetical buyer's price. The following case provides some guidance.

When the United States District Court for the District of Massachusetts considered this issue, it decided to take into account several factors, including (1) "stigma," i.e public fear of potential hazards (even exaggerated fears based on misinformation) and (2) the possible additional construction expenses and the "administrative hassle" of having to abide by the company's rules. The figure the judge ordered was far in excess of what the company deemed reasonable, so the company appealed. But the Court of Appeals for the First Circuit affirmed the judge's decision. Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land in Haverhill, 195 F.Supp.2d 314 (D.Mass. 2002) aff'd 318 F.3d 279 (1st Cir. 2003).

What does this mean for landowners in Berkshire and Franklin Counties whose properties the underground pipeline might cross? When preparing for the eminent domain case, they should make sure their attorneys have garnered abundant evidence of how the taking will diminish the fair market value of their property, including photographs and testimony from expert and lay witnesses alike. In putting their evidence together they should bear in mind that the court should take into account the "stigma" and "hassle" factors.

If you have questions about what might constitute "stigma" and "hassle," please feel free to post a comment/call/email.

Monday, February 17, 2014

New Pipeline in the Pipeline for Western Massachusetts: Federal Law

According to TV and print media, a new natural-gas pipeline might soon stretch 250 miles across northern Massachusetts, winding its way under a dozen or so towns in Berkshire and Franklin Counties.

The extension depends on several factors, including whether the pipeline owner (Tennessee Gas Pipeline Company) will get federal approval for its expansion plans. Although the pipeline might stay within the limits of current utility easements, some property-owners may be wondering what happens if the company ends up needing more land. This is one of those rare occasions when the law provides a short, clear answer: eminent domain.

Although the project would generate hundreds of construction jobs, a unanimous Bay State welcome seems unlikely. Environmentalists will point to the impact of fossil fuels on the climate and perhaps abutters will raise concerns about possible leaks and explosions. Some property-owners might be inclined to hold out, for reasons of high-mindedness or high expectations. Whatever their differences of opinion and interest, proponents and opponents alike should note that a federal law, the Natural Gas Act, gives pipeline owners an important advantage: if the company and the landowner cannot reach agreement the company can simply take the land, exercising a power usually reserved to governments as opposed to private actors. Here is a link to the relevant provision of the statute: 15 U.S.C. §717f(h).

In enacting this statute, Congress created a comprehensive national framework. So claims and objections based on state laws – even on state constitutions – cannot stand in the way of a natural-gas pipeline. 

The company cannot engage in any takings quite yet. First it has to obtain a certificate of “public convenience and necessity” from the Federal Energy Regulatory Commission. But potential holdouts, beware:  From that point onward, armed with its certificate, Tennessee Gas Pipeline Company would have the right to take what it needs by eminent domain.