Northern Natural Gas Company v. Tract No. 1062710 et al

Filing 691

MEMORANDUM AND ORDER granting 532 Motion for Partial Summary Judgment. The court determines that the date of taking of the defendant property (except for the Zink 1A well) was March 30, 2012, when Northern perfected a right to possession of the property. As for the Zink 1A well, the date of taking will be the date compensation is paid for that property. Signed by District Judge Monti L. Belot on 7/2/2013. (alm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

NORTHERN NATURAL GAS COMPANY,

)
)
Plaintiff,
)
)
v.
)
)
APPROXIMATELY 9117 ACRES IN PRATT, )
KINGMAN, AND RENO COUNTIES,
)
KANSAS, AND AS FURTHER DESCRIBED
)
HEREIN;
)
)
TRACT NO. 1062710
)
CONTAINING 80.00 ACRES MORE OR
)
LESS, LOCATED IN KINGMAN COUNTY,
)
KANSAS, AND AS FURTHER DESCRIBED
)
HEREIN; ET AL.,
)
)
Defendants.
)
)

CIVIL ACTION
No.

10-1232-DWB-MLB

MEMORANDUM AND ORDER
This condemnation matter is before the court on Northern’s
Motion for Partial Summary Judgment (Doc. 532). The motion seeks a
determination of the “date of taking” of the defendant property. The
defendants

have

filed

a

number

of

responses

and

other

briefs

addressing the issue. (Docs. 529, 530, 534, 535, 536, 548, 579, 580,
581). Northern has filed a reply. (Doc. 590).
I. Background
Northern’s motion argues that the date of taking was – with one
exception - March 30, 2012, when Northern perfected a right to take
physical possession of the defendant property by posting security and
providing notice to landowners. (Doc. 532 at 1).1
1

The one exception is the Zink 1A (or A1) well, which was not
included in the injunction giving Northern immediate possession of the
property being condemned. Northern argues the date of taking of this

Some of the defendants argue any determination of a date of
taking

is

premature

or

is

otherwise

inappropriate

for

summary

judgment. Alternatively, they suggest a multitude of possible dates,
including:
- the date Northern actually took possession of surface property
and, for property not yet actually possessed, the date title will pass
to Northern (Mereis group - Doc. 529);
- the date producing wells were shut in (Dec. 15, 2010) as a
result of the injunction obtained by Northern in Case No. 08-1405
(Pratt Well Service group - Doc. 530);
- the date the complaint was filed in this action (July 16,
2010) (Five Star - Doc. 535);
- for producing Viola leases, the last date of production before
the wells were shut in, and for other properties the date “as of which
Northern’s action reduced the value of those properties or, if the
value has not been reduced, the date of Northern’s possession or the
first day of trial.” (L.D. group Producer-Defendants - Docs. 536,
580);2
- for property Northern has not yet entered, the date of trial,
and for property Northern has already entered or used, the date of
Northern’s actual entry onto the land or its use of the subsurface
(Huff Group - Docs. 534 & 579); and
well will be the date just compensation is ultimately paid.
2

Producer-defendants specifically identify several alternate
dates of taking: (1) June 2, 2010, the date of the FERC order; (2)
sometime between July 2010 and February 2011, when the producers were
forced to shut in their wells; and (3) no later than December 22,
2010, the date of Judge Brown’s order enjoining further production
from the subject formations. (Doc. 580 at 22-24).
-2-

- for productive leases, the date wells were shut in by order
of the court; for surface interests being used by Northern, the date
of the court order allowing Northern a right of entry; for subsurface
formations

used

by

Northern

the

date

Northern

penetrated

those

formations; and for non-productive leases or surface property not yet
used by Northern, the date of the June 2, 2010 FERC Order (Hudson
Group - Doc. 548).

II. Uncontroverted Facts
Northern operates the Cunningham Storage Field, an underground
natural gas facility within the meaning of the Natural Gas Act, 15
U.S.C. § 717a. The storage field was constructed and is operated
pursuant to one or more Certificates of Public Convenience and
Necessity granted by the Federal Energy Regulatory Commission (FERC).
As of March 16, 2007, the field was certificated to occupy a total of
26,240 acres, or 41 square miles.
In 2004, Northern filed the first of several lawsuits against
the present producer-defendants. In that case, Northern sued for
conversion based on a claim that Nash Oil & Gas’s first two Viola
wells in the area were producing storage gas. The district court
granted summary judgment to Nash on statute of limitations grounds
and, alternatively, on collateral estoppel grounds. The Tenth Circuit
affirmed based on the statute of limitations without reaching the
collateral estoppel issue. Northern Nat. Gas Co. v. Nash Oil & Gas,
Inc., 526 F.3d 626 (10th Cir. 2008).
In March of 2007, Northern asked FERC to expand the storage
field boundaries by 4,800 acres, citing storage gas migration. FERC
-3-

allowed Northern to expand the field by 1,780 acres in October 2008.
In December of 2008, Northern filed a complaint against oil and
gas producers operating wells in the general vicinity (i.e., within
2-6 miles) of the storage field. In that “damage case” (Northern Nat.
Gas Co. v. L.D. Drilling, Inc., et al., 08-1405 (U. S. Dist. Ct., D.
Kan.)), Northern claimed three defendant producers (Nash Oil & Gas,
VAL Energy, and L.D. Drilling) were causing storage gas to migrate
from the storage field and were converting it. Northern also claimed
unjust enrichment, nuisance, and civil conspiracy, among other things.
(Case

08-1405,

Doc.

1).

The

defendants

counterclaimed

against

Northern. The defendant producers continued to operate and produce gas
after the complaint was filed.
In December of 2009, Northern filed an action in Pratt County
(Kansas) District Court against two gas purchasers – ONEOK and Lumen
– claiming they were indirectly converting Northern storage gas by
purchasing it from Nash, VAL, and L.D. Drilling. Some of the producers
were brought in to the case as third-party defendants. On April 15,
2010, Judge Schmisseur of the Pratt County District Court granted
summary judgment for the producers, finding that Northern lost title
to its migrating storage gas once it went beyond the “adjoining
property.” The ruling was based on K.S.A. § 55-1210, which provides
in part that if storage gas migrates from an underground storage field
to adjoining property that has not been condemned or otherwise
purchased, the injector shall not lose title if it can prove the gas
was originally injected into the storage field. The court concluded
that the statute, by implication, retains the common law rule of
capture if storage gas migrates beyond the adjoining property, with
-4-

that term construed by the Kansas courts to mean a one-mile section
of land next to any section containing a storage field.3 Because the
producers’ wells were two or more miles from the then-certified
boundaries of the Cunningham storage field, the court concluded
Northern lost title to any storage gas produced by the defendants and
hence there was no conversion.
On June 2, 2010, FERC granted Northern’s application for an
additional Certificate of Public Convenience and Necessity. This
certificate authorized Northern to expand the buffer zone of the
storage field by 12,320 acres, via condemnation, to include the area
where the defendant producers were operating. On July 16, 2010,
Northern

initiated

the

instant

case

by

filing

a

complaint

for

condemnation of the property. (Doc. 1). The interests to be taken
pertain primarily to the Viola and Simpson formations underlying the
identified property.
Meanwhile, after Northern obtained the FERC certificate, it
asked the Pratt County district judge to reconsider his summary
judgment

ruling.

He

declined

to

do

so,

although

he

said

the

circumstances could be different with respect to storage gas migrating
after June 2, 2010, the date of the FERC certificate. But because the
producers’ gas proceeds were being held in suspense as a result of the
litigation, he found Northern would not be harmed while the matter was
3

See Williams Nat. Gas Co. v. Supra Energy, Inc., 261 Kan. 624,
931 P.2d 7 (1997). Williams found the right in §55-1210(c)(2) to test
wells on adjoining property was not unconstitutionally vague. It said
the trial court’s conclusion that a one-mile section of land was
adjoining property “conforms to our holding in State, ex rel., v.
Bunton, 141 Kan. 103, Syl. ¶1, 40 P.2d 326 (1935), where ‘adjoining’
had its ‘usual and ordinary meaning, that of being contiguous or
touching.’”
-5-

appealed. Northern appealed the summary judgment ruling and the case
was transferred to the Kansas Supreme Court.
In December of 2010, U.S. District Judge Wesley Brown granted
a preliminary injunction in the 2008 damage case. (08-1405, Doc. 420).
He found Northern was likely to prevail on its nuisance claim, which
alleged that production from defendants’ wells in the expansion area
constituted an unreasonable interference with Northern’s use and
enjoyment of the storage field. The preliminary injunction, which took
effect on February 24, 2011, required the defendant producers to cease
further production of natural gas from 25 specified Viola wells in the
expansion area. (08-1405, Doc. 420 at 28-39). The three producers
involved in the damage case (Nash, VAL, and L.D. Drilling) shut in
their subject wells on or before the required date. Nash had already
shut in its wells in July 2010 because it was not receiving any
revenue from them. The gas proceeds had been held in suspense since
October 2010 as a result of the Pratt County litigation. Some of the
producers

appealed

Judge

Brown’s

ruling

and

the

Tenth

Circuit

subsequently upheld the issuance of the preliminary injunction.
Northern Nat. Gas Co. v. L.D. Drilling, Inc., 697 F.3d 1259 (10th Cir.
2012).
On March 15, 2011, Judge Brown entered an order in this case
confirming Northern’s authority to condemn the property listed in the
complaint. (Doc. 183). Northern amended its complaint on June 15,
2011, adding certain interests to be taken to implement a water
injection program. It then filed a supplemental motion to confirm its
condemnation authority. It also moved for an order granting “immediate
possession of the Interests To Be Taken and the Interests To Be Taken
-6-

to Implement Water Injection Program” and for preliminary access to
the property to be taken. (Doc. 203).
On

March

13,

2012,

the

undersigned

judge

adopted

Judge

Bostwick’s Report and Recommendation to grant the foregoing motions.
The court’s order provided that upon the posting of appropriate
security and notice, Northern was granted the right of immediate
possession of the interests to be taken and immediate access to the
property to be taken. (Doc. 464).

Northern posted the required

security on March 26, 2012, (Doc. 470), and gave notice to interest
owners on March 30, 2012.
In September of 2011, while Northern’s motion for immediate
access was pending, L.D. Drilling gave notice of its intent to
recomplete

the

Zink

1A

well

uphole

in

the

Lansing-Kansas

City

formation and to plug off the Viola and Simpson formations. (Doc.
340). Northern immediately sought a temporary restraining order to
prevent

the

recompletion.

(Doc.

341).

Finding

no

showing

of

irreparable harm, Judge Brown denied the motion for TRO and, shortly
thereafter, L.D. Drilling completed the Zink 1A in the Kansas City
Lansing (Swope Layer). (Doc. 353). Oil was produced and first sold
from the recompleted well on October 3, 2011. L.D. Drilling has
continued to produce oil from the Swope Layer and as of June 6, 2013,
has produced a cumulative total of 2,677 barrels of oil from the Zink
1A. (Doc. 675-1). After this well was recompleted, Northern withdrew
its request for immediate possession of the Zink 1A well.
On March 15, 2013, the Kansas Supreme Court affirmed Judge
Schmisseur’s ruling that there was no conversion of the storage gas
and remanded for further proceedings to resolve any issues relating
-7-

to the period after the June 2, 2010 FERC certificate. Northern
Natural Gas Co. v. ONEOK Field Svcs. Co., 296 P.3d 1106 (Kan. 2013).

III. Summary Judgment Standard
The rules applicable to summary judgment are well-known and are
only briefly outlined here. Federal Rule of Civil Procedure 56(c)
directs the entry of summary judgment in favor of a party who “show[s]
that there is no genuine issue as to any material fact and that the
moving

party

is

entitled

to

a

judgment

as

a

matter

of

law.”

Fed.R.Civ.P. 56(c). An issue is “genuine” if sufficient evidence
exists so that a rational trier of fact could resolve the issue either
way and an issue is “material” if under the substantive law it is
essential to the proper disposition of the claim. Adamson v. Multi
Community Diversified Svcs., Inc., 514 F.3d 1136, 1145 (10th Cir.
2008). Rule 56 permits a party to move for summary judgment with
respect to a claim or defense or a part of a claim or defense. Fed.
R. Civ. P. 56(a).

IV. Discussion
Overview of takings and dates of taking.
The Takings Clause of the Fifth Amendment provides: “[N]or shall
private property be taken for public use, without just compensation.”
U.S. Const. amend. V. This means the taking of private property for
public use, by or under the authority of the federal Government,4
gives rise to a claim for just compensation. It does not prevent the
4

Northern’s complaint for condemnation is based on eminent domain
authority granted by the Natural Gas Act, 15 U.S.C. § 717(h).
-8-

Government from interfering with property rights but mandates that it
pay

compensation

when

it

does

so.

It

is

designed

to

keep

the

Government from “forcing some people alone from to bear public burdens
which, in all fairness and justice, should be borne by the public as
a whole.” Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 537 (2005).
In most cases “just compensation” means the fair market value of the
property on the date it is appropriated. Kirby Forest Indus., Inc. v.
United States, 467 U.S. 1, 10 (1984). The owner is “entitled to
receive ‘what a willing buyer would pay in cash to a willing seller’
at the time of the taking.”5
Identification of the date of taking is thus essential in
determining the amount of compensation to which the owner is entitled.
Kirby Forest, 467 U.S. at 11. The date of taking ordinarily fixes the
date for valuation of the property and imposes an obligation on the
Government to pay interest on that value until just compensation is
ultimately paid to the property owner.6 United States v. Dow, 357 U.S.
17,

22 (1958). If disbursement is delayed, the owner is entitled to

interest “sufficient to ensure that he is placed in as good a position
pecuniarily as he would have occupied if the payment had coincided
with the appropriation.” Kirby Forest Indus., Inc. v. United States,
467 U.S. 1, 10 (1984) [cite omitted]. Moreover, if there is a delay
between the date of valuation and the date the property is actually

5

Other measures are used when fair market value is too difficult
to find or when its application would result in manifest injustice to
the owner or public. Kirby Forest, 467 U.S. at 10, n.15.
6

The date of taking is also significant because the owner as of
that date, rather than the owner at an earlier or later time, is the
one entitled to compensation. Dow, 357 U.S. at 20-21.
-9-

taken, the property owner may seek a modification of the award to
ensure that just compensation is paid. Kirby Forest, 467 U.S. at 17.
There are two principal statutory methods by which the United
States takes private property. See Kirby Forest, 467 U.S. at 3-5.7
First, in a “straight condemnation,” it files a complaint identifying
the property to be taken, followed by a trial to determine the amount
of

compensation

due

the

owner.

A

judgment

determining

just

compensation gives the Government an option to buy the property at the
determined price. If it exercises the option, it tenders payment to
the owner, and at that point title and the right to possession vest
in the United States. If it decides not to exercise the option, it can
move for dismissal of the action. The date of taking in a straight
condemnation is the date on which the United States tenders payment
to the landowner. Kirby Forest, 467 U.S. at 11.
The second principal method of appropriating property is under
a statute authorizing the Government to file a declaration of taking
within a condemnation proceeding. When this “quick take” method is
invoked, it requires the Government to deposit the estimated value of
the property into court, with the funds then available to the property
owner. Title and the right of possession vest immediately in the
United States. See 40 U.S.C. § 3114. The exact value of the land is
later determined at trial, with the owner awarded any difference
between the adjudicated value and the amount already received, plus

7

Two lesser-used methods also exist. One is a direct
Congressional exercise of the power of eminent domain. In the other,
the United States physically enters the property without court
authority and ousts the owner, giving the owner a right to bring an
adverse condemnation action. Kirby Forest, 467 U.S. at 4-5.
-10-

interest. Kirby Forest, 467 U.S. at 4-5.
This action by Northern is a straight condemnation proceeding
pursuant to the Natural Gas Act, 15 U.S.C. § 717(h). The NGA does not
include

a

quick-take

provision

authorizing

a

non-governmental

condemnor to immediately take property by filing a declaration of
taking. But courts have allowed non-governmental condemnors to seek
injunctive relief for immediate possession of the property if they can
show that a threat of irreparable harm and other circumstances warrant
such relief. See E. Tennessee Natural Gas Co. v. Sage, 361 F.3d 808
(4th Cir.), rehearing denied, 369 F.3d 357 (4th Cir.), cert. denied
sub nom. Goforth v. E. Tenn. Natural Gas Co., 543 U.S. 978 (2004). The
court did so here, relying on Sage and its progeny in issuing a
preliminary injunction that gave Northern immediate possession of the
property. As such, the circumstances of this case do not fall squarely
within the takings discussed by the Supreme Court in the context of
straight condemnations and quick-take proceedings. Those decisions
nevertheless provide some guidance on the date of taking.
In cases where the Government is not in possession of the
property when it files a declaration of taking, it is the filing of
the declaration that constitutes the taking of the property. Dow, 357
U.S. at 23. But where the Government has already entered into
possession

when

it

files

a

declaration,

the

(earlier)

date

of

possession controls: “The usual rule is that if the United States has
entered into possession of the property prior to the acquisition of
title, it is the former event which constitutes the act of taking.”
Dow, 357 U.S. at 22-24. In Dow the Court noted that the Government’s
entry into physical possession provides a readily ascertainable time
-11-

for the taking. Moreover, the possibility that the Government might
abandon the condemnation after acquiring possession does not undermine
reliance upon the date of possession, because in that event the taking
would simply be considered temporary in nature rather than permanent.
Aside from a physical taking of property in condemnation, a
governmental taking can also occur through laws or regulations that
place some significant restriction upon the owner’s use of his
property. “The general rule ... is that while property may be
regulated to a certain extent, if that regulation goes too far it will
be recognized as a taking.” Penn. Coal Co. v. Mahon, 260 U.S. 393, 415
(1922).
In Kirby Forest the owner of several forested tracts argued that
a taking occurred upon the filing of the condemnation complaint (with
a lis pendens notice) because the filing effectively prevented the
owner from selling the land or making any profitable use of it. The
Government was authorized by Congress in that case to obtain the
property in a straight condemnation but was also authorized to resort
to a “quick-take” if necessary to prevent damage to the property. In
response to petitioner’s argument the Supreme Court commented:
If petitioner's depiction of the impairment of its
beneficial
interests
during
the
pendency
of
the
condemnation suit were accurate, we would find its
constitutional argument compelling. We have frequently
recognized that a radical curtailment of a landowner's
freedom to make use of or ability to derive income from his
land may give rise to a taking within the meaning of the
Fifth Amendment, even if the Government has not physically
intruded upon the premises or acquired a legal interest in
the property. Thus, we have acknowledged that a taking
would be effected by a zoning ordinance that deprived “an
owner of economically viable use of his land.” [cite
omitted]. And we have suggested that, under some
circumstances,
a
land-use
regulation
that
severely
interfered with an owner's “distinct investment-backed
-12-

expectations” might precipitate a taking. Penn Central
Transportation Co. v. New York City, 438 U.S. 104, 124, 98
S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978). The principle that
underlies this doctrine is that, while most burdens
consequent upon government action undertaken in the public
interest must be borne by individual landowners as
concomitants of “ ‘the advantage of living and doing
business in a civilized community,’ ” ... some are so
substantial and unforeseeable, and can so easily be
identified and redistributed, that “justice and fairness”
require that they be borne by the public as a whole.
[footnote omitted]. These considerations are as applicable
to the problem of determining when in a condemnation
proceeding the taking occurs as they are to the problem of
ascertaining whether a taking has been effected by a
putative exercise of the police power.
Kirby Forest, 467 U.S. at 13-14. But the Court in Kirby declined to
find an interference with petitioner’s property interest severe enough
to constitute a taking, pointing out that even after the complaint was
filed petitioner remained free to sell the property or to harvest the
trees. The fact that the Government would almost surely have resorted
to a “quick take” to prevent this from happening weakened rather than
strengthened petitioner’s argument, because it showed that petitioner
still retained those rights after the complaint was filed.
In Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992),
the Court said whether a regulation rises to the level of a taking is
usually

a

case-by-case

determination,

but

two

types

of

action

categorically qualify as takings: first, regulations that compel the
owner to suffer a physical invasion of his property; and second,
regulations that deny all economically beneficial or productive use
of land. Lucas, 505 U.S. at 1015. The latter category is further
limited by an exception for restrictions that “inhere in the title
itself, in the restrictions that background principles of the State’s
law of property and nuisance already place upon land ownership.”

-13-

Lucas, 505 U.S. at 1028-29. In other words, a law or decree is not a
taking if it does no more “than duplicate the result that could have
been achieved in the courts – by adjacent landowners (or other
uniquely affected persons) under the State’s law of private nuisance,
or by the State under its complementary power to abate nuisances that
affect the public generally,...”8 This standard looks to “common,
shared understandings of permissible limitations derived from a
State’s legal traditions.” Palazzolo v. Rhode Island, 533 U.S. 606,
630 (2001).
Where a claimed regulatory taking does not compel physical
intrusion or deny all beneficial use – and is therefore not a
categorical taking under Lucas – the court must weigh the relevant
circumstances (i.e. “the Penn Central factors”) to determine if a
taking of property occurred. See Palazzolo v. Rhode Island, 533 U.S.
606, 617 (2001). Relevant factors under include: (1) economic impact
of the regulation on the property owner; (2) the extent to which the
regulation

has

interfered

with

distinct

investment-backed

expectations; and (3) the character of the governmental action. See
Warren v. United States, 107 Fed.Cl. 533, 568 (2012); Alto Eldorado
Partnership v. County of Santa Fe, 634 F.3d 1170, 1175 (10th Cir.
2011). In making this determination, the court looks at “the parcel
8

This was a refinement of early cases stating that harmful or
noxious uses of property can be prohibited without any requirement of
compensation, but that regulations conferring a public benefit require
compensation. Lucas, 505 U.S. at 1022. Lucas noted this was a
difficult if not impossible distinction to make, with the difference
largely being one of whose perspective - landowner or government – was
used in making the determination. Lucas therefore rejected a taking
standard that merely asks whether the regulation prevents a harmful
use of private property.
-14-

as a whole,” as opposed to a discrete segment of the property. TahoeSierra Preservation Council, Inc. v. Tahoe Regional Planning Agency,
535 U.S. 302, 329 (2002).
The claim by some defendants that a taking occurred when Judge
Brown

enjoined

further

gas

production

from

the

expansion

area

implicates not only the Lucas nuisance exception discussed above, but
also an unsettled question of law: namely, whether and under what
circumstances a judicial order impairing property rights can be
considered a governmental taking. See Stop the Beach Renourishment,
Inc. v. Florida Dept. of Environmental Protection, 130 S.Ct. 2592
(2010)(no

majority

for

the

proposition

that

judicial

decisions

affecting property rights can be deemed a governmental taking).
Application to defendant property.
Order Giving Northern a Right of Possession. By virtue of the
court’s March 2012 order (Doc. 464), Northern obtained a right of
access to, and exclusive possession and use of, the property interests
that are to be taken in condemnation. This right was conditioned upon
the posting of appropriate security and the giving of notice to
affected landowners. These conditions were first satisfied, and
Northern thus perfected its right to possession of the property, on
March 30, 2012. The nature of the rights granted Northern is such that
they will likely continue as long as Northern uses the property for
a certified storage operation. Under these circumstances, the court
concludes that the defendant property was in fact taken by Northern,
under color of governmental authority, at least as of March 30, 2012.
This granting to Northern of the foregoing exclusive rights
destroyed any remaining rights of the property owners to possess, use,
-15-

or dispose of the property, and essentially amounted to a physical
taking. See Nollan v. Cal. Coastal Comm’n., 483 U.S. 825, 831 (1987)
(a permanent physical occupation occurs “where individuals are given
a permanent and continuous right to pass to and fro....”).

See also

Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982)
(“To the extent that the government permanently occupies physical
property, it effectively destroys” the owner’s right to possess, use
and dispose of it). The right to exclude others is “one of the most
essential sticks in the bundle of rights that are commonly called
property.” Loretto, 458 U.S. 419, 433 (1982). That right was clearly
taken from the property owners and given to Northern by virtue of the
order. Similarly, the right to beneficial use of the property was
precluded by Northern’s acquisition of the exclusive right to use it.
Regardless of whether legal title to the property remained in the
owners after the order, the transfer of the foregoing rights from the
owners to Northern constituted a taking of the defendant property.
The

Huff

group

contends

Northern

“must demonstrate actual,

physical presence and occupancy” of the property in order to show a
taking. It argues this requires a tract-by-tract examination of when
Northern physically entered onto or made use of each property,
something Northern has not demonstrated in its motion. (Doc. 579 at
7-9). But that approach fails to fully consider the rights taken from
defendants and granted to Northern by virtue of the injunction.
Permanently depriving the owners of the principal characteristics of
ownership – i.e., the right to exclusive possession, the right to all
beneficial uses of the properties, and the right to sell them – is
sufficient, under the circumstances of this case, to constitute a
-16-

taking of the property. Cf. United States v. General Motors Corp., 323
U.S. 373, 359-60 (1945) (“Governmental action short of acquisition of
title or occupancy has been held, if its effects are so complete as
to deprive the owner of all or most of his interest in the subject
matter, to amount to a taking.”); Texas Gas Transmission, LLC v. 18.08
Acres, 2012 WL 6057991 (N. D Miss., Dec. 6, 1012) (date of taking was
the date condemnor was granted access to the property).
Having determined that a taking occurred at least as of March 30,
2012, the court turns to the various earlier dates suggested by the
defendants, to determine whether a taking occurred before Northern
obtained the right to possession of the property.
Issuance of FERC certificate. The earliest point at which any
party contends a taking occurred was the issuance of the FERC
certificate on June 2, 2010. The Hudson Group, for example, contends
this event “took away the Defendants’ rights to have their [nonproducing] property leased to produce.” Doc. 548 at 1. But the Hudson
Group does not explain this theory or show any factual basis for it.
The issuance of the FERC certificate itself imposed no legal barrier
to leasing the property. The court can only speculate the Hudson Group
is claiming that the practical effect of the certificate was to
discourage potential mineral exploration and to make it impossible to
lease the property. But such a theory is not supported by any factual
basis or any supporting case law. Certainly no facts are cited to
suggest that issuance of the certificate by itself destroyed all
economic value of the property.
The producer-defendants (L.D. Drilling, et al) similarly argue
that a taking “occurred as early as” the date of the FERC order. (Doc.
-17-

580 at 22). But again L.D. Drilling et al. do not clearly explain how
issuance of the FERC certificate alone took their property. They point
not to the certificate but to Judge Brown’s later (December 2010)
preliminary injunction order, in which he said it “appears clear” that
under Kansas law the issuance of the certificate meant Northern
retains title to any storage gas thereafter migrating to the expansion
area. (Doc. 580 at 23). (See Case 08-1405, Order of 12/22/2010, Doc.
420 at 31) (citing, inter alia, Union Gas System, Inc. v. Carnahan,
245 Kan. 80, 774 P.2d 962 (1989) (upon issuance of a commission
certificate “the gas was no longer ferae naturae and subject to the
rule of capture.”)).9 Even if a judicial ruling of this sort can
constitute a taking of property for public use, this particular ruling
did not do so. The preliminary injunction shut in order did not rule
on the merits of any claim for title to the storage gas and did not
constitute a final judgment on the title question. This point is
emphasized by the Tenth Circuit’s opinion reviewing the injunction,
which

specifically

migrating

after

noted

the

FERC

that

any

question

certificate

was

about
not

title

to

gas

material

to

the

injunction. Northern Nat. Gas Co. v. L.D. Drilling, 697 F.3d 1259,
1270, n.5 (10th Cir. 2012). Defendants identify no evidence to support
a finding that their property was taken by issuance of the June 2,
2010 FERC certificate.
Filing of the condemnation complaint. The next event cited by a
9

In a subsequent order Judge Brown conceded it was unclear what
effect the adoption of K.S.A. § 55-1210 had on the Union Gas rule.
(Doc. 445 at 3). That issue has now been remanded to the state
district court for determination. Northern, 296 P.3d at 1128
(remanding to district court to resolve any claims regarding matters
after issuance of June 2, 2010 FERC order).
-18-

defendant as a date of taking is Northern’s filing of the condemnation
complaint. Kirby Forest found the filing of a condemnation complaint
was insufficient to constitute a taking. Like the filing in Kirby,
Northern’s complaint “did not abridge [the defendants’] right to sell
the land if it wished.” Kirby Forest, 467 U.S. at 15. The filing of
the complaint in itself gave Northern no authorization to restrict or
interfere with defendants’ use of their property. And although it is
“certainly

possible

...

that

the

initiation

of

condemnation

proceedings, publicized by the filing of a notice of lis pendens,
reduced the price that the land would have fetched, ... impairment of
the market value of real property incident to otherwise legitimate
government action ordinarily does not result in a taking. [citations
omitted] At least in the absence of an interference with an owner’s
legal right to dispose of his land, even a substantial reduction of
the attractiveness of the property to potential purchasers does not
entitle the owner to compensation under the Fifth Amendment.” Kirby
Forest, 467 U.S. at 15.
Defendant

Five

Star

nevertheless

argues

the

filing

of

the

complaint “deprived [it] of all economically beneficial or productive
use of its leases.” (Doc. 535 at 2). Specifically, it contends the
pendency of the complaint prevented it from obtaining a clear title
opinion and, consequently, prevented it from drilling a well or
developing its leases. But the affidavit cited in support of this
argument does not address the extent of Five Star’s property interest,
nor does it consider that Northern’s complaint only seeks use of the
Viola and Simpson formations, not the remainder of any mineral
interest.

Cf.

Penn

Central,

438
-19-

U.S.

at

130-31

(“‘Taking’

jurisprudence does not divide a single parcel into discrete segments
and attempt to determine whether rights in a particular segment have
been entirely abrogated. In deciding whether a particular governmental
action has effected a taking, this Court focuses rather both on the
character

of

the

action

and

on

the

nature

and

extent

of

the

interference with rights in the parcel as a whole....”). No facts are
cited to suggest Five Star could not drill or lease the remainder of
its

interests,

nor

are

any

facts

cited

to

show

the

degree

of

impairment of its overall property interest. Additionally, as Kirby
noted, the condemnor’s ability to abandon the proceeding – an ability
Northern retained after the complaint was filed but before it obtained
possession of the property – “would be difficult to understand if a
taking were effectuated any time prior to tendering payment” (or
before obtaining actual possession of the property). See also Danforth
v. United States, 308 U.S. 271, 184 (1939) (“Unless a taking has
occurred previously in actuality or by a statutory provision, ... we
are of the view that the taking in a condemnation suit under this
statute takes place upon payment of the money award by the condemnor.
* * * Until taking, the condemnor may discontinue or abandon his
effort.”).
Finally, the likelihood after the complaint was filed that any
attempt by Five Star or other defendants to develop their leases would
have prompted Northern to try to halt development or to obtain
immediate possession does not mean the filing of the complaint
constituted a taking. On the contrary, it reinforces the fact that
defendants retained the right to possession and use of the property
after the complaint was filed. Kirby, 467 U.S. at 12–13 (“the [quick-20-

take]

option

of

peremptorily

appropriating

land

prior

to

final

judgment, thereby permitting immediate occupancy and improvement of
the property[,] * * * would have been superfluous if, as petitioner
contends, a taking occurred upon the filing of the complaint in a
[straight-condemnation] suit.”); Guardian Pipeline, L.L.C. v. 950.80
Acres

of

Land,

486

F.Supp.2d

741

(N.D.

Ill.

2007)

(filing

of

condemnation complaint did not amount to taking). In sum, the court
concludes there is no genuine issue of fact as to whether a taking of
defendants’ property occurred upon the filing of the condemnation
complaint. The filing of the complaint was not a taking of the
property.
Shut in of producing wells in the expansion area. L.D. Drilling
and other producers contend “the date of taking is the date on which
the Producer Defendants were deprived of the ability to produce
natural gas from their Viola properties.” (Doc. 580 at 17). They say
there can be no dispute that they “acquired their interests in the
Viola properties for the sole purpose of producing and selling natural
gas from them,” as well as an absence of evidence that their interests
“ever had the slightest value independent of their capabilities for
producing natural gas.” As such, they maintain a taking occurred “when
Northern’s action deprived them of the ability to produce natural gas
from their Viola properties....” (Doc. 580 at 19). They assert both
a total regulatory taking theory and a partial taking under the Penn
Central factors. (Doc. 580 at 19).
A categorical taking is precluded, however, because it is clear
that even after the shut in injunction the producers retained a right
to produce minerals from formations other than the Viola. As Northern
-21-

points out, defendants seek to minimize the significance of this fact
by repeatedly referring to the taking of their “Viola properties,”
although they make no showing that their property interests were
limited to the Viola formation.

This focus on “a discrete segment of

the property” is inconsistent with the requirement that the parcel be
viewed

as

a

whole

in

assessing

whether

a

taking

occurred.

Tahoe-Sierra Preservation Council, 535 U.S. at 329. And the claim that
the producers were deprived of all economically beneficial use of
their property when Viola production was shut down is belied by the
fact that they still had a right to sell or develop their leases and
to take minerals from other formations, as L.D. Drilling did with its
Zink 1A well and, presumably, as defendants could have done with other
wells or leases, provided use of the wells to be condemned would not
be irreparably harmed by any such recompletion. The uncontroverted
facts here refute any claim that a categorical taking occurred when
defendants were forced to cease production from the Viola formation.
The court therefore turns to the Penn Central factors and the
particular circumstances under which defendants were forced to stop
production. There can be no question that the producers’ investmentbacked expectations for use of their leasehold or mineral interests
were significantly impacted by the court’s order to halt production.
The primary (if not sole) beneficial use of a mineral lease is the
removal and sale of the minerals covered by the lease. Taking away
that use would deprive the mineral right holder of the primary benefit
of the lease. The producers were (at least temporarily) deprived of
their

investment

expectations

upon

issuance

of

the

preliminary

injunction. The injunction also clearly had a negative economic impact
-22-

on the producers, although the impact is not really quantified in
their response.
The extent to which the producers’ expectations of continued gas
production were reasonable under Kansas law presents a more difficult
question. It turns in part on the question identified in Lucas: did
the restriction on gas production “inhere in [defendants’] title
itself, in the restrictions that background principles of the State’s
law of property and nuisance already place upon land ownership”?
Lucas, 505 U.S. at 1029.10
If the preliminary injunction did “no more than duplicate the
result that could have been achieved in the courts – by adjacent
landowners (or other uniquely affected persons) under the State’s law
of private nuisance, or by the State under its complementary power to
abate nuisances that affect the public generally,” then the injunction
only enforced a pre-existing limit on defendants’ use of their
property, and any claim that the order took away a previously-held
property right is undermined. Cf. Lucas, 505 U.S. at 1029. See also
Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 490-91
(1987) (“Long ago it was recognized that all property in this country
is held under the implied obligation that the owner’s use of it shall
10

Although Lucas dealt with a categorical taking, as a matter of
logic the same inquiry would be germane in the Penn Central taking
analysis. Palazzolo, 533 U.S. at 634 (degree of interference with
investment-backed expectations is one factor to consider). See also
Resource Investments, Inc. v. United States, 85 Fed.Cl. 447 (Fed. Cl.
2009); Appolo Fuels, Inc. v. United States, 381 F.3d 1338, 1347 (Fed.
Cir. 2004) (“under the Penn Central analytic framework, the government
may defend against liability by claiming that the regulated activity
constituted a state law nuisance”); Lucas, 505 U.S. at 1032 (if
background principles of nuisance law prohibit the use then “the State
can fairly claim that, in proscribing all such beneficial uses, the
[governmental action] is taking nothing.”).
-23-

not be injurious to the community, and the Takings Clause did not
transform that principle to one that requires compensation whenever
the State asserts its power to enforce it.”) and id. at 491, n.20
(“[s]ince no individual has a right to use his property so as to
create a nuisance or otherwise harm others, the State has not ‘taken’
anything when it asserts its power to enjoin the nuisance-like
activity.”).
The L.D. Drilling Group argues the Lucas nuisance exception does
not apply because these producer-defendants “had the legal right to
produce any and all gas underlying their Viola properties from the day
it acquired those properties, as the Pratt County District Court
expressly held.” (Doc. 580 at 21-22).
It is true that by virtue of the Pratt County judgment and the
March 2013 Kansas Supreme Court decision, defendants can claim at
least a qualified title to much (if not all) of the gas underlying
their leases – native and storage – and the rule of capture means
their previous and continuing production did not amount to conversion
of the gas. But defendants’ suggestion that this necessarily means
they had an unlimited and unfettered right to continue producing
storage gas – even if their production resulted in massive drainage
from the storage field, caused damage to the reservoir, or otherwise
interfered with Northern’s ability to use or operate the field – is
not reflected in background principles of Kansas property law.
The right to produce gas pursuant to the law of capture is not
unlimited under Kansas law. Kansas recognizes that production rights
can be limited by correlative rights of others in a common reservoir:

-24-

The “correlative rights doctrine” recognizes that
a person operating a well properly located on his
land can significantly affect the rights of other
property owners in the same reservoir. Society
and the common law have historically placed
limits upon a landowner’s use of property to
prevent injury to neighbors and the general
public.
The
rule
of
capture
encouraged
independent action in an effort to exploit the
oil and gas resource for maximum individual gain
without regard for the best interests of the
reservoir community. The landowner’s rights under
the rule of capture have been restrained to
protect other interests in the oil and gas
resource. Reciprocal rights and duties between
landowners overlying a common reservoir are the
essence of the correlative rights doctrine.
Kansas Oil and Gas Handbook, Pierce, David E., §3.03 at 3-4 (Kan. Bar
Assn. 1986).
The Kansas legislature long ago adopted correlative rights with
respect to gas production from common sources of supply:
In the absence of any statutory regulation,
the common-law rule of capture applies to a
common pool. At common law, the owner of a tract
of land acquired title to the oil and gas which
the owner produced from wells drilled thereon
even though it could have been proved that part
of such oil or gas migrated from adjoining lands.
The rule promotes excessive drilling and
production, resulting in economic waste and
damage to reservoirs. Kansas enacted the Natural
Gas Conservation Act in 1935 to prevent such
waste and to protect the rights of adjoining
owners. G.S.1935, 55–701 et seq.
The statutes governing the production and
conservation of natural gas in Kansas empower the
KCC [Kansas Corporation Commission] to prevent
waste, avoid uncompensated drainage, and assure
orderly development and production of natural gas
in Kansas. Along with the prevention of waste,
the KCC is directed to prevent the unfair or
inequitable taking of natural gas from a common
source of supply. This concept of equitable
recovery of a common pool is known as correlative
rights. Correlative rights means that each owner
or producer in a common source of supply is
privileged to produce that source only in a
manner or amount that will not (a) injure the
-25-

reservoir to the detriment of others, (b) take an
undue proportion of the obtainable oil or gas, or
(c) cause undue drainage between developed
leases. K.A.R. 82–3–101(17) (1992).
Mobil Exploration & Producing U.S. Inc. v. State Corp. Comm. of State
of Kansas, 258 Kan. 796, 908 P.2d 1276, 1282-83 (1995). See also
Northwest Central Pipeline Corp. v. State Corp. Com’n. Of Kansas, 489
U.S. 493, 498 (1989) (“The common-law rule of capture, whereby gas was
owned by whoever produced it from the common pool, left unchecked
these twin problems of perceived inequities between owners of rights
in the pool and of waste resulting from strong economic disincentives
to conserve resources. [] In response, producing States like Kansas
have abandoned the rule of capture in favor of assigning more
equitable correlative rights among gas producers and of directly
regulating production so as to prevent waste.”).
As compared to laws governing native gas production, Kansas law
pertaining specifically to storage gas has developed more recently,
as described in Northern Nat. Gas v. Nash Oil & Gas, 296 P.3d 1106.
In 1951, Kansas adopted the Underground Storage of Natural Gas Act to
promote underground gas storage. Among other things, the Act adopted
procedures for natural gas public utilities to establish KCC-certified
underground storage areas and, if necessary, to acquire property by
eminent domain for use in storage facilities. But the Act “was silent
regarding its impact, if any, on the rule of capture as to injected
storage gas.” Northern, 296 P.3d at 1116.
In two subsequent cases the Kansas Supreme Court “extended the
rule of capture to determine ownership of previously injected storage
gas.” Northern Nat. Gas, 296 P.3d at 1116. In the second of these

-26-

cases, Union Gas System, Inc. v. Carnahan, 245 Kan. 80, 774 P.2d 962
(1989), the court held that the rule of capture applied up to the
point at which a public utility obtained a KCC permit to condemn the
property, but not thereafter. As a result, the storage operator could
not recover for any storage gas previously produced by the adjoining
landowner, but the injector did retain title to its migrating storage
gas after it obtained the certificate. Union Gas, 245 Kan. at 88-89.
See also Reese Exploration, Inc. v. Williams Nat. Gas Co., 983 F.2d
1514, 1523, n.9 (10th Cir. 1993) (noting Union Gas holding “that a
public utility is exempt from the rule of capture only after it
received certification from the Corporation Commission.”).11
In 1993 the Kansas legislature adopted K.S.A. § 55-1210, which
provided that natural gas previously captured and injected into
underground storage shall at all times be the property of the
injector. It further prohibited any person from “interfer[ing] with
or exercis[ing] control” over gas injected into a storage field. It
seemed to do away with the rule of capture as applied to storage gas
by providing that the injector shall not lose title to storage gas
that migrates to “adjoining property or to a stratum, or portion
thereof, which has not been condemned,” provided the injector can
prove by a preponderance that the gas was originally injected into
11

The Union Gas court also rejected the landowner’s argument in
condemnation that it should be compensated for “for the value of
injected as well as native gas under the property.” The court noted
“[t]he legislature has specified ... only that native gas be
considered.” Union Gas, 245 Kan. at 89 (citing K.S.A. §§ 55-1201(c),
55-1204(a)(2), and 55-1205)). Northern has now filed a motion for
partial summary judgment claiming that the Kansas Underground Storage
of Natural Gas Act and common law provide that Northern is only
obligated to compensate defendants for recoverable oil and native gas
within the Expansion Area. (Doc. 677).
-27-

storage.12 But within this language the Kansas Supreme Court has
discerned a legislative intent to limit the injector’s title to a onemile section next to a storage field, and beyond that to revert to the
pre-existing rule of capture.13 This clearly precludes any claim for
conversion under Kansas law for producing storage gas that migrates
several miles away from the boundary of a certified storage field
because an injector cannot claim title to such gas.
But

while

these

rulings

clarify

the

question

of

title

to

migrating storage gas, they do not address the extent to which Kansas
law protects correlative rights of producers and storage operators in
a common reservoir. The KCC is statutorily empowered to address
correlative rights by determining a prorated “allowable” production
from a common pool. But allowables are geared toward giving developed
leases a fair opportunity to produce all of the gas in a reservoir,
not

toward

accommodating

the

interests

of

storage

operators

in

injecting and keeping gas in storage. Cf. Colorado Interstate Gas Co.
v. State Corp. Commission, 192 Kan. 1, 386 P.2d 266 (1964) (“The
12

The Kansas Supreme Court and the Tenth Circuit both suggested
as much in subsequent decisions. See Hayes Sight & Sound, Inc. v.
ONEOK, Inc., 281 Kan. 1287, 136 P.3d 428 (2006) (“Subsection (c)
applies when stored gas has migrated to property not controlled by the
gas injector”; applying subsection (c)(3) when storage gas migrated
eight miles from the storage field); Northern Nat. Gas Co. v. Nash
Oil & Gas, Inc., 526 F.3d 626, 632 (10th Cir. 2008)(“In 1993 ... the
Kansas legislature abolished the rule of capture with respect to
migrated gas without limit to where the gas migrates. [] Now, an
injector of natural gas ... does not lose property rights to injected
gas when such gas migrates beyond the boundaries of the injector’s
storage facilities.”).
13

The court found K.S.A. § 55-1210 “abolished the rule of
capture as to [injected] natural gas which migrates horizontally
within a stratum to adjoining property or vertically to a different
stratum, but preserved that rule as to natural gas which migrates
beyond those boundaries.” 296 P.3d at 1111.
-28-

Commission could not be required to shut in an entire gas field to
protect correlative rights where some of the producers desired to
cease production and hold a gas field for a reserve.”). It is unclear
whether the KCC has authority to act when uncompensated drainage or
interference with a certified storage field is claimed – and in
particular a storage field certified and subject to regulation by
FERC.14 Judge Brown noted as much when he refused to stay his shut in
order. (Doc. 445 at 10). The parties have not cited Kansas law clearly
establishing KCC’s jurisdiction to decide such issues. But even
assuming it does have jurisdiction – and that the KCC has the power
to determine defendants’ “fair share” of production from such a common
pool – the recognition of a long-standing state police power to halt
or limit production to prevent unfair drainage undermines rather than
supports defendants’ claim of an entitlement to continue producing gas
even

if

it

drains

the

storage

field,

damages

the

underground

reservoir, and interferes with Northern’s ability to use the field.
Cf. Bennett v. State Corporation Commission, 157 Kan. 589, 142 P.2d
810 (1943) (“The right of the state in the exercise of its police
powers to protect the correlative rights of producers from a common
pool is well established.”); State Corporation Commission v. Wall, 113
F.2d 877, 881 (10th Cir. 1940) (“the state has the power to regulate
the production of oil and gas for the purpose of preventing waste and
protecting the correlative rights of owners producing oil or gas from

14

Cf. Schneidewind v. ANR Pipeline, 485 U.S. 293 (1988) (“The
NGA confers upon FERC exclusive jurisdiction over the transportation
and sale of natural gas in interstate commerce for resale”;
“transportation” of gas in interstate commerce includes underground
gas storage facilities).
-29-

a common pool.”).
Against this background, Judge Brown found Northern had shown a
likelihood of prevailing on a nuisance claim, which alleged that the
defendants were unreasonably interfering with Northern’s use and
enjoyment of the storage field. As the Tenth Circuit’s review of that
order makes clear, the ruling was not dependent upon who held title
to any storage gas being produced by defendants. The Tenth Circuit
therefore rejected defendants’ contention that the Pratt County
judgment precluded a finding that defendants’ production unreasonably
interfered with the storage field. Northern Nat. Gas, 697 F.3d at
1271-72 (“The state case addressed whether Northern had still had
title to the natural gas that migrated several miles away from the
Field. Here, on the other hand, the issue is whether Defendants'
production

from

their

wells

in

the

expansion

area

unreasonably

interfered with Northern's storing its natural gas in the Field.”).
The Tenth Circuit likewise rejected defendants’ argument that their
authorization from KCC to operate the wells precluded a nuisance
claim. The circuit pointed out that under Kansas law, “the fact that
a business is carried on lawfully and in accordance with ordinary
methods does not relieve one from liability if the use is unreasonable
and as such constitutes a nuisance.” Northern Nat. Gas, 697 F.3d at
1271. The court noted that whether a lawful use is a nuisance “depends
upon a number of circumstances – locality and surroundings, the number
of people living there, the prior use, whether it is continual or
occasional, and the extent of the nuisance and injury caused to the
neighbor from the use.”
The foregoing review indicates there was no established property
-30-

right under Kansas law to continue gas production regardless of its
effect on Northern’s storage field. In these circumstances the Kansas
common law of nuisance could conceivably limit a producer’s right to
take gas from a common pool. Cf. Restatement (Second) of Torts §858
(grantee of riparian rights who withdraws ground water from land is
generally not subject to liability for interference with use of water
by another, but may be liable if the withdrawal causes harm to
neighboring land by reducing artesian pressure or if the withdrawal
exceeds the grantor’s reasonable share of the supply).
Defendants accurately point out that Northern’s nuisance claim
depends upon a number of facts yet to be finally determined, including
whether defendants were in fact producing storage gas from the
Cunningham Storage Field. But the background principles of Kansas law
noted above undermine their argument that a temporary halting of their
production, pending a resolution of the nuisance claim, constituted
a taking of their property for a public purpose.
Finally, the nature of the governmental action at issue weighs
against a finding that defendants’ property was taken by the shut in
order. The injunction was issued upon a state law claim for nuisance
in a lawsuit between private parties claiming damages against one
another. The court’s injunction was only preliminary; it did not
constitute a final adjudication of the parties’ rights. The federal
rules of civil procedure authorize preliminary injunctions when
necessary to prevent irreparable harm pending a final determination
of the parties’ claims. When such temporary injunctions are issued,
the rules require the movant to post security for costs and damages
sustained by any party wrongfully restrained.
-31-

Fed. R. Civ. P. 65(c).

These procedures were followed here. After assessing the limitations
on the use of private property arising from Kansas nuisance law, Judge
Brown issued a preliminary restraint to prevent irreparable harm until
the claim could be determined. He required a $2 million bond as
security for the injunction. (Case 08-1405, Doc. 420 at 40). The same
procedural

rule

that

authorized

the

preliminary

restraint

also

authorized a remedy for defendants in the event the restraint turns
out to have been wrongfully issued: Rule 65(c) “creates a cause of
action for the ‘costs and damages’ incurred by the enjoined party
should it later be determined that that party was ‘wrongfully enjoined
or restrained,...’” Atomic Oil Co. of Okla. v. Bardahl Oil Co., 419
F.2d 1097, 1101 (10th Cir. 1969). Defendants cite no authority for the
proposition that such a preliminary restraint pending litigation – one
supported by a remedy for damages caused by a wrongful restraint –
constitutes a governmental taking of property.
There is obviously a connection between the damage claims in Case
No. 08-1405 and the instant condemnation action. The two actions
involve the same property and overlap in many respects. But the
preliminary injunction in the damage case was not a governmental
taking of defendants’ property. It was a preliminary and temporary
restraint on defendant’s use of the property. It was authorized by the
federal rules of civil procedure and is at least facially

consistent

with background principles of Kansas property and nuisance law. That
does not mean that Northern’s nuisance claim is valid. The claim has
yet to be determined, and if Northern fails to prove it, the defendant
producers can seek a remedy in Case 08-1405. As Judge Brown noted in
granting the preliminary injunction:
-32-

Northern’s
current
motion
for
preliminary
injunction does not seek immediate possession of
the wells or property; it seeks an order
prohibiting the defendants from continuing their
production during this litigation. Based on the
evidence that the current production constitutes
an unreasonable interference with the storage
field, the court concludes that preliminary
injunctive relief is appropriate. * * * But,
should it later be determined that the injunction
improperly denied the defendants a right to do
what they had a legal right to do, the defendants
could then seek to obtain damages for being
wrongfully enjoined. See e.g., Blumenthal v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 910
F.2d 1049, 1054 (2d Cir. 1990) (a party is
wrongfully enjoined “if it ultimately found that
the enjoined party at all times had the right to
do the enjoined act.”).
(Case 08-1405, Doc. 420 at 37.). See also State of Kansas ex rel.
Stephan v. Adams, 705 F.2d 1267, 1269-70 (10th Cir. 1983); Atomic Oil
Co. of Okla. v. Bardahl Oil Co., 419 F.2d 1097, 1102 (10th Cir. 1969)
(determination
necessarily

on

the

determines

merits
that

that

the

no

injunction

temporary

was

injunction

warranted
previously

granted was improper). Considering all of the circumstances set forth
by the parties here and in their briefs, the court concludes that the
taking of defendants’ property did not occur upon issuance of the
preliminary injunction shut in order, but on March 30, 2012, when
Northern was granted a right of access to and possession of the
property.
One final point about the nature of the property being condemned
confirms

this

conclusion.

The

focal

point

of

this

condemnation

proceeding – and in fact the reason for any condemnation at all – is
the fact that the Viola and Simpson formations underlie and extend
throughout the Expansion Area. They underlie all of the tracts in the
complaint, all of the wells being condemned for use in Northern’s
-33-

water injection program, and all of the surface areas being taken for
related uses such as installation of pipelines or electrical lines.
In assessing the date of taking, it makes sense to look to the point
at which Northern obtained exclusive possession and use of these
underground formations as a whole. That event more than any other
marks the point at which the property interests were taken from
defendants and acquired by Northern.

And it is more logical to

consider that single date as the taking than to declare a multitude
of different takings as of the various dates that defendants ceased
production from different wells or on which Northern set foot on or
installed equipment on particular tracts of land. As the Supreme Court
noted in United States v. Dow, 357 U.S. 17, 24 (1958), “it would
certainly be bizarre to hold that there were two different ‘takings’
of the same property, with some incidents of the taking determined as
of one date and some as of the other.”
V. Conclusion
Northern’s Motion for Partial Summary Judgment (Doc. 532) is
GRANTED. The court determines that the date of taking of the defendant
property (except for the Zink 1A well) was March 30, 2012, when
Northern perfected a right to possession of the property. As for the
Zink 1A well, the date of taking will be the date compensation is paid
for that property.
A motion for reconsideration of this order pursuant to this
court's Rule 7.3 is not encouraged. Any such motion shall not exceed
three pages and shall strictly comply with the standards enunciated
by this court in Comeau v. Rupp. The response to any motion for
reconsideration shall not exceed three pages. No reply shall be filed.
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IT IS SO ORDERED.
Dated this 2nd day of July 2013, at Wichita, Kansas.

s/Monti Belot
Monti L. Belot
UNITED STATES DISTRICT JUDGE

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