Gas Transmission Northwest, LLC v. 15.83 Acres of Permanent Easement et al

Filing 71

Opinion and Order: The Court GRANTS Plaintiff's Motion 49 for Order of Condemnation and Immediate Possession. Signed on 08/27/2015 by Judge Anna J. Brown. See attached 17 page Opinion and Order for full text. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

GAS TRANSMISSION NORTHWEST,
LLC, a Delaware limited
liability company,
Plaintiff,

v.
15.83 ACRES OF PERMANENT
EASEMENT MORE OR LESS,
located in Morrow County;
25.09 ACRES OF TEMPORARY
EASEMENT MORE OR LESS,
located in Morrow County;
CLINTON KREBS; MAUREEN KREBS;
and PILZ & co. I LLC;
Defendants.

CHARLES F. HUDSON
COZETTE T. TRAN-CAFFEE
Lane Powell, PC
601 S.W. Second Avenue
Suite 2100
Portland, OR 97204-3158
[phone]
Attorneys for Plaintiff

1 - OPINION AND ORDER

2:15-CV-00359-BR
OPINION AND ORDER

JILL S. GELINEAU
Schwabe Williamson & Wyatt, PC
1211 s.w. Fifth Avenue
suite 1800
Portland, OR 97204
[phone]
Attorneys for Defendants Clinton and Maureen Krebs
TIMOTHY R. VOLPERT
522-A N.W. 23rd Avenue
Portland, OR 97210
[phone]
Attorney for Defendant Pilz & Co., LLC

BROWN, Judge.
This matter comes before the Court on Plaintiff's Motion
(#49) for Order of Condemnation and Immediate Possession.
the reasons that follow,

For

the Court GRANTS Plaintiff's Motion.

BACKGROUND
Plaintiff Gas Transmission Northwest, LLC (GTN), is a
natural-gas company engaged in the transportation of natural gas
in interstate commerce and, therefore, is subject to the
jurisdiction of the Federal Energy Regulatory Commission (FERC) .
On March 14, 2013, FERC issued to Plaintiff an Order Issuing
Certificate and a Certificate of Public Convenience and

2 - OPINION AND ORDER

Necessity 1 for the construction and operation of a natural-gas
pipeline (the Carty Lateral), which consists of approximately
24.4 miles of 20-inch diameter pipeline between Plaintiff's Ione
Compressor Station and Portland General Electric's planned Carty
Generating Station.

The easements required for the Carty Lateral

"cross 25 parcels in 15 ownerships."
The March 14, 2013, Certificate authorized the ownership,
construction, and operation of the Carty Lateral by Plaintiff.
No party filed a petition for rehearing with respect to the
Certificate within the 30-day limit set out in 15 U.S.C.
§

717r(a).

FERC has required Plaintiff to "place" the Carty

Lateral in service by December 31, 2015.
After FERC issued the Certificate, Plaintiff began
negotiations with the various landowners for purchase of the
easements necessary for construction of the Carty Lateral.
On October 20, 2014, Defendant Pilz & Co., LLC, recorded a
conservation easement on a portion of the property owned by
Defendants Clinton Krebs and Maureen Krebs.

The conservation

easement, which specifically excludes "energy development, or
industrial or commercial development," occupies a portion of the

1

FERC issued only one document titled Order Issuing
Certificate. The Order Issuing Certificate, however, states in
relevant part that "[a) certificate of public convenience and
necessity is issued to GTN" and refers to "[t)he certificate
issued herein." Am. Compl., Ex. 1 at 10. The Court, therefore,
finds the Order Issuing Certificate and the Certificate are the
same document.
3 - OPINION AND ORDER

route that FERC approved for the Carty Lateral pipeline.

At some

point, therefore, Plaintiff provided to the Krebs and to Pilz a
copy of an appraisal of the value of the easement and a
January 7, 2015, written purchase offer from Plaintiff.
Plaintiff, however, was unable to reach an agreement with Pilz
for possession of the necessary property.
On March 2, 2015, Plaintiff filed a Complaint for Eminent
Domain pursuant to 15 U.S.C. § 717f(h) against a number of
property owners, including the Krebs and Pilz.

In its Complaint

Plaintiff seeks an order condemning the necessary property,
determining compensation, and granting any other proper relief.
On April 22, 2015, Plaintiff filed a Motion for Order of
Condemnation in which it seeks an order of condemnation and
immediate possession of the easements sought in the Complaint.
At the time that Plaintiff filed its Motion for Order of
Condemnation, Plaintiff had negotiated the purchase of easements
from all but two property owners and expected to close on the
purchase of an easement from one of the remaining owners shortly
thereafter.

The remaining property that is the subject of

Plaintiff's Motion consists of approximately 15.83 acres on land
owned by the Krebs and on which the Krebs provided the
conservation easement to Pilz.
In its Motion Plaintiff seeks a permanent easement 50 feet
wide for the Carty Lateral underground pipeline and related

4 - OPINION AND ORDER

appurtenances and a "temporary workspace easement" for one year
of 22 acres "of variable width." 2

Plaintiff contends just

compensation for the takings sought in this action is $148,200.
On May 18, 2015, Pilz filed Objections to Plaintiff's Motion
for Order of Condemnation on the grounds that the property that
Plaintiff sought to have condemned in its Complaint did not
conform to the Certificate and that Plaintiff had failed to
comply with certain environmental conditions contained in the
Certificate.
On June 18, 2015, the Court heard oral argument during which
Plaintiff conceded its Complaint did not conform to the
Certificate.

The Court, therefore, directed Plaintiff to file an

Amended Complaint that conformed to the Certificate.

Pilz,

nevertheless, continued to object to Plaintiff's Motion for
Condemnation on the basis that Plaintiff was not complying with
certain environmental requirements.

The Court, therefore,

directed the parties to file by June 24, 2015, a Joint Statement
of Issues remaining for the Court to address together with their
arguments in support of their positions.

The Court set further

oral argument on June 26, 2015.
On June 22, 2015, Plaintiff filed an Amended Complaint
conforming the property sought therein to the Certificate.

2

The permanent and temporary easements sought are described
in detail in Exhibit 2 to the Complaint.
5 - OPINION AND ORDER

On June 26, 2015, the Court heard further oral argument on
Plaintiff's Motion for Order of Condemnation and took the matter
under advisement.

DISCUSSION
I.

Condemnation Standards

"The Natural Gas Act (NGA), 15 U.S.C. § 717f(h), gives a gas
company the power to acquire property by eminent domain, but the
Act does not provide for immediate possession, that is,
possession before just compensation is determined and paid in a
condemnation action."

E. Tenn. Natural Gas Co. v. Sage, 361 F.3d

808, 818 (4th Cir. 2004).

Specifically, § 717f(h) provides:

When any holder of a [FERC] certificate of public
convenience and necessity cannot acquire by
contract, or is unable to agree with the owner of
the property to the compensation to be paid for,
the necessary right-of-way to construct, operate
and maintain a pipe line or pipe lines for the
transportation of natural gas, and the necessary
land or other property, in addition to right-ofway, for the location of compressor stations,
pressure apparatus, or other stations or equipment
necessary to the proper operation of such pipe
line or pipe lines, it may acquire the same by the
exercise of the right of eminent domain in the
district court of the United States for the
district in which such property may be located.
The procedure for obtaining a certificate from FERC is set
out in the NGA and its implementing regulations, 18 C.F.R.
§

157.1, et seq.

The process begins with an application from a

gas company that includes, among other things:
6 - OPINION AND. ORDER

(1) a description

of the proposed pipeline project,

(2) a statement of the facts

showing why the project .is required, and ( 3) the estimated
beginning and completion date for the project.
§ 717f(d); 18 C.F.R. § 157.6(b).

15 U.S.C.

Notice of the application is

filed in the Federal Register, public comment and protest is
allowed, and FERC has to conduct a public hearing on the
application.

15 U.S.C. §§ 157.9-157.11.

As part of its

evaluation, FERC must investigate the environmental consequences
of the proposed project and issue an environmental impact
statement.

42 U.S.C. § 4332.

At the end of the process FERC

issues a certificate when it finds the proposed project "is or
will be required by the present or future public convenience and
necessity."

15 U.S.C. § 717f (e).

The Ninth Circuit has held to obtain an order of
condemnation a plaintiff must meet the requirements of§ 717f of
the NGA,
which include [the plaintiff] showing:
"(l) that
it holds a FERC certificate authorizing the
relevant project, (2) that the land to be taken is
necessary to the project; and (3) that the company
and the landowners have failed to agree on a price
for the taking.
In addition to showing an
inability to agree on a price with the landowner,
I.the plaintiff] must also establish that it
engaged in good faith negotiations with the
landowner."
Transwestern Pipeline Co. v. 17.19 Acres of Prop. Located in
Maricopa Cnty., 550 F.3d 770, 776 (9'h Cir. 2008) (quoting Nat'l
Fuel Gas Supply Corp. v. 138 Acres of Land, 84 F. Supp. 2d 405,

7 - OPINION AND ORDER

416 (W.D.N.Y. 2000)).

The Ninth Circuit has made clear that "an

order of condemnation must be issued before the substantive right
of taking accrues."

Transwestern Pipeline Co., 550 F.3d at 777.

This "strikes the correct balance of requiring the gas company to
satisfy all elements of the statute, but does not require it to
wait for the full determination of just compensation for each
parcel before the district court uses its equitable powers to
grant possession."

Id.

After the court issues an order of condemnation, a plaintiff
is entitled to possession of the property on the same showing
required for a temporary injunction:
on the merits,

(1) likelihood of success

(2) irreparable harm if the injunction is denied,

(3) no greater harm to the defendants if relief is granted, and
(4) the relief is in the public interest.

Nw. Pipeline Corp. v.

The 20' x 1,430' Pipeline Right of Way Easement x 1560' Temp.
Staging Area, 197 F. Supp. 2d 1241, 1245 (E.D. Wash. 2002).
II.

Order of Condemnation

Plaintiff asserts it is entitled to an order of condemnation
because it has complied with all of the requirements of § 717f.
Specifically, Plaintiff notes FERC issued a Certificate of Public
Convenience and Necessity to Plaintiff for the construction,
ownership, and operation of the Carty Lateral, and no party filed
a petition for rehearing within 30 days of the issuance of the
certificate order as required under § 717r(a).

8 - OPINION AND ORDER

In addition,

courts have held "by issuing the Certificate of Public
Convenience and Necessity under the Natural Gas Act, FERC has
already determined that Defendants' property interests are
necessary.n

Williston Basin Interstate Pipeline Co. v. Prop.

Interests Necessary to Conduct Gas Storage Operations in
Subterranean Geological Formations on & Beneath Prop. Located in
Twp.

9 S., Range 23 E., Section 34, 35 & 36, No. CV-09-167-

BLG-RFC, 2010 WL 5104991, at *2 (D. Mont. Dec. 9, 2010).
Finally, Plaintiff has engaged in good-faith negotiations with
Defendants, including Pilz, but Plaintiff has not been able to
reach an agreement with the Krebs and Pilz as to the easements.
At the June 26, 2015, oral argument Pilz conceded for
purposes of Plaintiff's Motion that Pilz's only remaining
objection is that Plaintiff is not complying with certain
environmental requirements underlying the Certificate.
Specifically, Pilz notes the Order Issuing Certificate "attached
reasonable terms and conditions" to the Certificate including
that it "is conditioned on GTN's compliance with the
environmental conditions included in the Appendix to [the Order
Issuing Certificate],n one of which is to avoid all Category 1
Washington ground-squirrel habitat.

Pilz asserts (and Plaintiff

does not deny) the property that Plaintiff currently seeks to
condemn would not avoid all Category 1 Washington groundsquirrel habitat.

9 - OPINION AND ORDER

The Ninth Circuit has made clear that this Court may not
enforce a certificate holder's compliance with the conditions in
a FERC Certificate.

Pilz, however, asserts it is not asking the

Court to enforce compliance with the conditions of the FERC
Certificate itself, but instead is asking the Court to enforce
compliance with the conditions of the Order Issuing Certificate.
Pilz asserts its challenge is within this Court's jurisdiction
because the failure to comply with conditions in the Order
Issuing Certificate renders the Certificate facially invalid;
and, therefore, Plaintiff has not complied with the first element
for condemnation under§ 717.

Pilz does not cite any case in

which a court has evaluated compliance with an order issuing
certificate nor could this Court find any such case.

In

addition, as noted, based on this record the Court has concluded
the Order Issuing Certificate and the Certificate are one and the
same in this matter.

Thus, the Court concludes Pilz is, in

effect, challenging Plaintiff's compliance with the conditions of
the Certificate and/or the validity of

~he

Certificate.

As

noted, the cases cited by both Pilz and Plaintiff indicate this
Court does not have jurisdiction to evaluate Plaintiff's
compliance with the terms of the Certificate or the validity of
the Certificate because those are matters reserved to FERC.
e.g.,

See,

Transwestern, 550 F.3d at 778 n.9 ("The [NGA) does not

allow landowners to collaterally attack the FERC certificate in

10 - OPINION AND ORDER

the district court, it only allows enforcement of its
provisions."); Williams Nat. Gas Co. v. City of Okla. City, 890
F.2d 255, 262

(10~

Cir. 1989) ("We agree with the appellants that

the eminent domain authority granted the district courts under §
7(h) of the NGA, 15 U.S.C. § 717f(h), does not provide
challengers with an additional forum to attack the substance and
validity of a FERC order.

The district court's function under

the statute is not appellate but, rather, to provide for
enforcement.") (citing United States v. McBride, 788 F.2d 1429,
1432 (10th Cir. 1986)).

Compare Bradwood Landing LLC

NorthernStar Energy LLC, 126 FERC P 61035, 2009 WL 107122
(2009) (proceedings before FERC in which FERC addressed a
landowner's objections to the validity of a certificate of public
convenience and necessity) .
Thus, courts have specifically held ''when a landowner
contends that the certificate holder is not in compliance with
the certificate, that challenge must be made to FERC, not the
court."

Millennium Pipeline Co., L.L.C. v. Certain Permanent and

Temp. Easements, 777 F. Supp. 2d 475, 481 (W.D.N.Y. 2011)
(citation and internal quotation marks omitted).

See also

Portland Natural Gas Transmission Sys. v. 4.83 Acres of Land, 26
F. Supp. 2d 332, 339 (D.N.H. 1998) ("The district court does not
have the authority to enforce compliance with pre-construction
conditions."); Columbia Gas Transmission, LLC v. 16 Acres More or
11 - OPINION AND ORDER

Less, No. ELH-14-0110, 2014 WL 2960836, at *3 (D. Md. July 27,

2014) ("Complaints that the holder of a certificate is violating
the certificate must be made to FERC not the district court in a
condemnation proceeding.") ; Guardian Pipeline, L. L. C. v, 295. 49
Acres of Land, No. 08-C-0028, 2008 WL 1751358, at *16 n.6 (E.D.

Wis. Apr. 11, 2008), amended by No. 08-C-28, 2008 WL 2790179
(E.D. Wis. July 15, 2008) (same).
Moreover, "[e]ven assuming, for argument's sake, that [the
certificate holder] is violating the FERC Certificate conditions,
this would not affect the validity of the FERC Certificate or
[the certificate holder's] ability to exercise its authority of
eminent domain."

Columbia Gas Transmission LLC v.

0. 85 Acres,

More or Less, No. WDQ-14-2288, 2014 WL 4471541, at *4

Sept. 8, 2014).

(D. Md.

Thus, to the extent that Pilz asserts

Plaintiff's alleged failure to comply with the conditions of the
Certificate renders the FERC certificate invalid, courts also
have held that is an issue for FERC rather than the district
court.

For example, in

Millennium Pipeline the court held:

[T]o the extent that Hendricks seeks to challenge
ahy aspect of the FERC certificate, he may not do
so here.
For one thing, he failed to seek
administrative review under the NGA, see 15 U.S.C.
§ 717r(a), and judicial review is only available
in the Court of Appeals.
15 U.S.C. § 717r(b).
See Williston Basin Interstate Pipeline Co. v.
Dolyniuk Family Trust, No. Al-03-66, 2005 WL
1398692, at *2 (D.N.D. June 7, 2005) ("District
Courts . . . are limited to jurisdiction to order
condemnation of property in accord with a facially
valid certificate.
Questions of the propriety or
12 - OPINION AND ORDER

validity of the certificate must first be brought
to {FERC] upon an application for rehearing and
the Commissioner's action thereafter may be
reviewed by a United States Court of Appeals") .

777 F. Supp. 2d at 480 (emphasis added).
Similarly in Williston Basin Interstate Pipeline Co. v.
Dolyniuk Family Trust the court held:

The District Court's role is to evaluate the scope
of the certificate and to order condemnation of
property as authorized in the certificate.
See
Williams Natural Vas Co. v. Okla. City, 890 F.2d
255, 262 (10th Cir. 1989) ("Judicial review .
is exclusive in the courts of appeals once the ·
FERC certificate issues.").
District
Courts, therefore, are limited to jurisdiction to
order condemnation of property in accord with a
facially valid certificate.
Questions of the
propriety or validity of the certificate must
first be brought to the Commission upon an
application for rehearing and the Commissioner's
action thereafter may be reviewed by a United
States Court of Appeals.
No. Al-03-66, 2005 WL 1398692, at *2 (D.N.D. June 7, 2005)
(emphasis added) .
In Tennessee Gas Pipeline Co. v. 104 Acres of Land More or
Less the court explained:

United States District Courts have a limited scope
of review in condemnation proceedings brought
under Section 7(h) of the Natural Gas Act.
Disputes over the reasons and procedures for
issuing certificates of public convenience and
necessity must be brought to the Federal Energy
Regulatory Commission for rehearing.
15 U.S.C.
§ 717r(a).
Appeals may thereafter be brought to a
United States Court of Appeals.
15 U.S.C.
§ 717r(b).
The District Court's role is to
evaluate the scope of the certificate and to order
condemnation of property as authorized in the
certificate.
District Courts, therefore, are
13 - OPINION AND ORDER

limited to jurisdiction to order condemnation of
property in accord with a facially valid
certificate.
Questions of the propriety or
validity of the certificate must first be brought
to the Commission upon an application for
rehearing and the Commission's action thereafter
may be reviewed by a United States Court of
Appeals.
749 F. Supp. 427, 430 (D.R.I. 1990) (emphasis added).
In summary, these cases make clear that questions of
compliance with the conditions of a FERC certificate or the
validity of a FERC certificate must be made before FERC and
appealed to the Ninth Circuit Court of Appeals rather than
addressed by this Court in a condemnation proceeding.
Accordingly, the Court grants Plaintiff's Motion for Order
of Condemnation.
III. Immediate Possession

As noted, after the Court issues an order of condemnation, a
plaintiff is entitled to possession of the property after the
same showing required for a t.emporary injunction:
of success on the merits,
is denied,

(1) likelihood

(2) irreparable harm if the injunction

(3) no greater harm to the defendants if relief is

granted, and (4) the relief is in the public interest.
Pipeline Corp., 197 F. Supp. 2d at 1245.

Nw.

''The elements of [this]

test are balanced, so that a stronger showing of one element may
offset a weaker showing of another.

For example, a stronger

showing of irreparable harm to plaintiff might offset a lesser
showing of likelihood of success on the merits."
14 - OPINION AND ORDER

Alliance For

The Wild Rockies v. Cottrell,

632 F.3d 1127, 1131 (9th Cir.

2011) (citation omitted).
A.

Success on the Merits
"For actions pursuant to the [NGA when] an order of

condemnation has issued, the question is not whether the status
quo will change, but merely when timing.

it is simply an issue of

Thus, success on the merits is apparent."

Tenn. Gas

Pipeline Co. v. 0.018 Acres of Land in the Twp. of Vernon, Sussex
Cnty., New Jersey, No. 10-4465 JLL, 2010 WL 3883260, at *2
(D.N.J. Sept. 28, 2010) (citing E. Tenn. Natural Gas Co., 361 F.3d
at 830).

See also Columbia Gas Transmission, 2014 WL 2960836, at

*13 (this element is "coextensive" with confirmation of the right
to condemn) .

Here Plaintiff has met the requirements for an

order of condemnation and, therefore, has shown its likelihood of
success on the merits with respect to possession of the property.
B.

Irreparable Harm
Plaintiff points out that FERC initially required

Plaintiff to place the Carty Lateral in service by March 14,
2015.

Plaintiff obtained an extension of the in-service date to

December 15, 2015, but any further construction delays caused by
Plaintiff's lack of immediate possession of the property would
jeopardize Plaintiff's ability to make the December 15, 2015,
deadline, which, in turn, threatens Portland General Electric's
May 2016 in-service date for the Carty Generating Station.
15 - OPINION AND ORDER

The

Carty Generating Station is part of Portland General Electric's
efforts to meet electrical power demand in its service territory
and to increase supply diversity and reliability.

Accordingly,

delays in getting the Carty Generating Station online may cause
irreparable loss of Portland General Electric's ability to meet
power demands.

C.

Harm to Defendants
In an NGA condemnation action "[t]he harm to be

analyzed [by the court] is not the harm of possession, since that
is a given, but, rather, the harm of immediate possession."
Tenn. Gas Pipeline, 2010 WL 3883260, at *2.

Here any harm caused

by the construction of the Carty Lateral will be the same
regardless when Plaintiff is granted possession.

Pilz has not

pointed to any special or particular harm that will result from
immediate possession of the property rather than from possession
at a later date.
D.

Public Interest
"Congress passed the [NGA] and gave gas companies

condemnation power to ensure that consumers would have access to
an adequate supply of natural gas at reasonable prices."
Columbia Gas Transmission, 2014 WL 2960836, at *16 (quoting E.
Tenn. Natural Gas Co., 361 F.3d at 830).

Thus, by granting the

Certificate, FERC determined the Carty Lateral promoted the goals
of Congress and the NGA.
16 - OPINION AND ORDER

See Columbia Gas Transmission,

2014 WL

2960836, at *16.
at *3

(~By

See also Tenn. Gas Pipeline, 2010 WL 3883260,

granting the certificate, FERC made a determination

that the pipeline is necessary and in the public interest.").

In

addition, Plaintiff asserts Portland General Electric will be
better able to satisfy the public's need for adequate and
sustainable electric power by increasing the diversity and
reliability of the supply of natural gas via the Carty Generating
Station.
On this record the Court conclude.s Plaintiff has satisfied
the elements for an order of immediate possession.

Accordingly,

the Court grants Plaintiff's Motion for immediate possession of
the property at issue.

CONCLUSION

For these reasons, the Court GRANTS Plaintiff's Motion (#49)
for Order of Condemnation and Immediate Possession.
IT IS SO ORDERED.
DATED this 27th day of August, 2015.

ANNA J. BROWN
United States District Judge

17 - OPINION AND ORDER