Sabal Trail Transmission, LLC v. 3.921 Acres of Land in Lake County Florida et al

Filing 23

ORDER denying 15 Defendant Sunderman Grove Inc.'s Motion to Dismiss Under Rule 12(b) for Lack of Subject-Matter Jurisdiction. Signed by Judge James S. Moody, Jr on 5/12/2016. (LN)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
OCALA DIVISION

SABAL TRAIL TRANSMISSION,
LLC,
Plaintiff,
v.

Case No: 5:16-cv-178-Oc-30PRL

3.921 ACRES OF LAND IN
LAKE COUNTY, FLORIDA,
SUNDERMAN GROVES, INC.,
AND UNKNOWN OWNERS, IF ANY,
Defendants.
________________________________/

ORDER
THIS CAUSE comes before the Court upon Defendant Sunderman Groves, Inc.’s
Motion to Dismiss Under Rule 12(b) for Lack of Subject-Matter Jurisdiction (Doc. 15) and
Plaintiff Sabal Trail Transmission, LLC’s (“Sabal Trail”) response in opposition (Doc. 21).
The Court, having reviewed the motion and response, and being otherwise fully advised in
the premises, concludes that Defendant’s motion should be denied. 1
BACKGROUND
On February 2, 2016, the Federal Energy Regulatory Commission (“FERC”) issued
an order which, among other things, granted to Sabal Trail a Certificate of Public
Convenience and Necessity (“FERC Certificate”) under the Natural Gas Act (“NGA”), 15
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The Court is aware of Federal Rule of Civil Procedure 71.1(e)(3)’s prohibition on objections raised outside
of an answer. But because Defendant also raised this objection in its answer and the challenge is to the Court’s subject
matter jurisdiction, the Court did not strike the motion as improper.

U.S.C. § 717f. (Doc. 1, Ex. 4). The FERC Certificate authorizes Sabal Trail to construct
and operate 516.2 miles of a natural gas pipeline and related facilities across Alabama,
Georgia, and Florida. (Doc. 1 at 3). The NGA grants private natural gas companies the
power of eminent domain where they hold a FERC certificate and either cannot acquire the
property through contract, or are unable to agree with the owner of the property on the
amount of compensation to be paid for the necessary right-of-way. § 717f(h). “Once a
[certificate of public convenience and necessity] is issued by the FERC, and the gas
company is unable to acquire the needed land by contract or agreement with the owner, the
only issue before the district court in the ensuing eminent domain proceeding is the amount
to be paid to the property owner as just compensation for the taking.” Maritimes & Ne.
Pipeline, LLC v. Decoulos, 146 F. App’x 495, 498 (1st Cir. 2005); Millennium Pipeline
Co., LLC v. Certain Permanent & Temp. Easements, 777 F. Supp. 2d 475, 479 (W.D.N.Y.
2011), aff’d 552 F. App’x 37 (2d Cir. 2014).
Relying on the FERC Certificate, Sabal Trail filed a complaint under Federal Rule
of Civil Procedure 71.1 against Defendant, owner of the subject property, to take the
easements necessary to complete the project. (Doc. 1). By its motion to dismiss, Defendant
first argues that Sabal Trail elected to proceed under Florida eminent domain law in
negotiations, so it is precluded from bringing its claim in federal court under Rule 71.1 and
the NGA. (Doc. 15 at 9-17). Second, Defendant argues that the Court lacks subject matter
jurisdiction over this action and the related actions because the FERC certificate is not final
due to pending requests for rehearing—including a request made by Sabal Trail—before
the FERC. (Doc. 15 at 17-25).
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DISCUSSION
1. Election to Proceed Under Florida Law and Resulting Choice of Forum
Under § 717f(h), a holder of a certificate of public convenience and necessity is
authorized to exercise the right of eminent domain in either “the district court of the United
States for the district in which such property may be located, or in the State courts.”
According to Defendant, Sabal Trail elected to proceed under the color of Florida law by
exercising rights granted under Florida law to survey Defendant’s property. (Doc. 15 at
11). As such, Defendant contends that Sabal Trail should not now be able to bring this
eminent domain action in federal court.
Florida Statute § 361.05 authorizes a natural gas company, like Sabal Trail, to use
the eminent domain provisions of Chapters 73 and 74, Florida Statutes, to
lay its pipelines and works; to cause such examinations and surveys for the
proposed pipelines to be made as shall be necessary for the selection of the
most advantageous routes; to enter upon any land, public or private,
necessary to the business contemplated in its charter; to construct its
pipelines across, over, under, along, and upon any stream of water,
watercourse, canal, lake, bay, gulf, road, street, highway, railroad, and
transmission line; to take from any land most convenient to its pipelines and
works, any timber, stone, earth, water, or other material which may be
necessary to the construction, operation, keeping in repair, or preservation of
its pipelines, works, and improvements, upon making due compensation
according to law to private owners, with such reservation, if any, of oil, gas,
and mineral rights as those owners may determine.
(Emphasis added). Thus, under Florida law, the right to eminent domain is accompanied
by a right to survey. A similar right to survey does not exist under federal law.
Defendant alleges that Sabal Trail’s representatives contacted private owners as far
back as 2013 requesting survey access and limited rights of entry to cause examinations
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and surveys citing Florida Statute § 361.05. (Doc. 15 at 14-15). When negotiating with
these property owners, including Defendant, Sabal Trail did not inform them whether it
would proceed under federal or state law. (Id. at 15; Doc. 19 at 2-4). Defendant asserts
that by exercising the right to survey under Florida law and by informing property owners
that it was operating under the color of state law, Sabal Trail made a choice to proceed in
state court and this Court therefore lacks subject matter jurisdiction over Sabal Trail’s
eminent domain complaint. (Doc. 15 at 17).
In support of this unusual conclusion, Defendant cites Transcontinental Gas Pipe
Line Corp. v. 65.47 Acres of Land, 778 F. Supp. 239 (E.D. Penn. 1991).

In

Transcontinental, the pipeline company first filed a condemnation action in state court,
and, after the state court action failed to progress to the pipeline company’s satisfaction, it
filed a condemnation action in federal court. Id. at 240. The court in Transcontinental
concluded that although the NGA allowed a pipeline company a choice of forum, the
choice was mutually exclusive. Id. at 241. Stated differently, the court concluded that
because the pipeline company chose to proceed in state court, the federal court was divested
of jurisdiction over the action under the NGA. Id. Sabal Trail contends, and Defendant
does not dispute, that Sabal Trail never filed a condemnation case in state court.
Transcontinental is therefore inapplicable to the present case.
Sabal Trail’s decision to avail itself of the Florida law right to survey does not
constitute a binding choice of forum. As Defendant points out, federal law does not provide
a right to survey, so there exists no conflict between state law and federal law that would
require Sabal Trail to avail itself of a specific forum. The Eighth Circuit in Alliance
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Pipeline L.P. v. 4.360 Acres of Land, 746 F.3d 362 (8th Cir. 2014), addressed practically
this very question in deciding whether state law should apply to a federal condemnation
proceeding, concluding that a pipeline company’s “invocation of state law . . . for entry to
survey does not necessitate the application of state law [in a federal condemnation
proceeding].” If invoking the right to survey under state law does not constitute a binding
choice of law, it certainly does not constitute a binding choice of forum. Common sense
dictates that reliance upon state law does not require a party to file an action in state court
and certainly would not divest a federal court of jurisdiction over an action.
Defendant argues that the concepts of estoppel and equity should require Sabal Trail
to bring this condemnation case in state court. But neither equitable estoppel nor equity
require such a result because Sabal Trail’s reliance on Florida Statute § 361.05 to conduct
surveys was not contrary to or inconsistent with its subsequent decision to file this action
in federal court.
In summary, Sabal Trail’s invocation of the right to survey under Florida law does
not divest this Court of jurisdiction over this matter.
2. Ripeness
Currently, there are four requests for rehearing pending before the FERC regarding
the FERC Certificate, including a request filed by Sabal Trail. (Doc. 15, Exs. D, G). The
rehearing requests are currently under consideration by the FERC. 2 (Doc. 15, Ex. F). Also,
§ 717r(b) permits review of FERC orders by an appropriate circuit court. Because motions
2

The FERC order granting the rehearing states that the requests for rehearing were “granted for the limited
purpose of further consideration, . . . [so that the] timely-filed rehearing requests will not be deemed denied by
operation of law.” (Doc. 21, Ex. 2).

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for rehearing are being considered by FERC and the FERC Certificate is potentially subject
to review by an appropriate circuit court, Defendant argues that Sabal Trail’s claims are
not ripe and this Court lack’s subject matter jurisdiction.

(Doc. 15).

Defendant’s

contention, however, is without merit and overwhelmingly refuted by the many courts that
have previously addressed this issue.
The FERC’s regulations explicitly provide that its “orders are effective on the date
of issuance.” 18 C.F.R. § 385.2007(c). The FERC Certificate, issued on February 2, 2016,
became final on that date. More important, a request for rehearing has no effect on the
finality of an order absent a stay issued from the FERC. Specifically, § 717r(c) states: “The
filing of an application for rehearing . . . shall not, unless specifically ordered by the
[FERC], operate as a stay of the [FERC]’s order. The commencement of [appellate
proceedings] shall not, unless specifically ordered by the court, operate as a stay of the
[FERC]’s order.” Here, several parties specifically requested a stay from the FERC, and
the request was denied. (Doc. 15, Ex. D). Without a stay, the FERC Certificate is final
and enforceable.
In the recently-decided case of Constitution Pipeline Co., LLC v. A Permanent
Easement for 2.40 Acres, No. 3:14-cv-2046 (NAM/RFT), 2015 WL 1638211, at *3
(N.D.N.Y Feb. 24, 2015), the court concluded that a motion for rehearing that was not
accompanied by a stay from the FERC did not affect the court’s obligation to enforce a
FERC certificate. Accord Steckman Ridge GP, LLC v. An Exclusive Natural Gas Storage
Easement Beneath 11.078 Acres, No. 08-168 et al., 2008 WL 4346405, at *3 (W.D. Penn.
Sept. 19, 2008) (concluding that a request for rehearing absent a stay does not affect the
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finality of an order from the FERC); Tenn. Gas Pipeline Co. v. Mass. Bay Transp. Auth., 2
F. Supp. 2d 106, 109 (D. Mass. 1998) (concluding that a FERC certificate is final and
binding unless a stay is issued by the FERC); Ecee, Inc. v. Fed. Power Comm’n, 526 F.2d
1270, 1274 (5th Cir. 1976) (“A complete resolution of matters before an administrative or
judicial tribunal does not wait for finality until an appeal is decided; it is final unless and
until it is stayed, modified, or reversed.

. . . In the absence of a stay, [FERC’s

predecessor’s] orders are entitled to have administrative operation and effect during the
disposition of the proceedings.”). Defendant has presented no authority to the contrary.
Because the FERC has not issued a stay, the FERC Certificate is final and binding
and Sabal Trail’s condemnation case is ripe. Thus, the Court has subject matter jurisdiction
to enforce the FERC Certificate.
CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED:
1. Defendant Sunderman Grove Inc.’s Motion to Dismiss Under Rule 12(b) for
Lack of Subject-Matter Jurisdiction (Doc. 15) is DENIED.
DONE and ORDERED in Tampa, Florida, this 12th day of May, 2016.

Copies furnished to:
Counsel/Parties of Record

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