Tenn. Gas Pipeline Co. v. Permanent Easement for 7.053 Acres
931 F.3d 237
| 3rd Cir. | 2019Background
- Tennessee Gas, holding a FERC certificate under the Natural Gas Act (NGA), sought to condemn easements on a 975-acre tract in Pike County, PA owned by King Arthur Estates after purchase negotiations failed; it brought the action in federal court under Fed. R. Civ. P. 71.1.
- Parties stipulated to possession; remaining dispute concerned the measure of just compensation, including consequential damages (professional fees, development costs, timber/reforestation) totaling ~ $1M.
- At summary judgment the district court held federal law governs the substantive measure of compensation and denied recovery of certain consequential items under federal law.
- King Arthur obtained interlocutory appeal under 28 U.S.C. §1292(b); the Third Circuit framed the sole issue as whether federal or state substantive law governs just compensation in NGA condemnations by private entities.
- The panel held the NGA is a federal program but silent on this specific remedial question; applying Kimbell Foods, the court concluded federal common-lawmaking should incorporate state substantive compensation law as the federal rule and reversed the district court.
Issues
| Issue | Plaintiff's Argument (King Arthur) | Defendant's Argument (Tennessee Gas) | Held |
|---|---|---|---|
| Which law governs the substantive measure of just compensation in NGA condemnations by private entities? | State substantive law (PA law) should apply; it permits recovery of consequential items and greater compensation. | Federal substantive law applies (invoking Miller and Fifth Amendment principles), so consequential damages are largely excluded. | Federal law supplies the interpretive basis, but because NGA and precedent do not supply a controlling federal rule for private-party NGA condemnations, federal common law fills the gap by adopting state substantive law as the federal rule. |
| Does United States v. Miller control and mandate a federal-only rule? | (King Arthur) Miller does not control because it involved condemnations by the United States, not private delegates. | (Tennessee Gas) Miller establishes the federal standard for just compensation and should apply here. | Miller governs federal condemnations by the U.S. but does not dictate the result for private-party condemnations under the NGA; it is not dispositive here. |
| Does the NGA phrase requiring conformity to state "practice and procedure" or Rule 71.1 resolve the issue? | (King Arthur) The NGA's reference to state practice supports applying state substantive law. | (Tennessee Gas) NGA/regulatory scheme and federal interests favor federal rules. | The NGA phrase concerns procedure; Rule 71.1 supersedes the procedural clause. The NGA is silent on substantive compensation, so Kimbell Foods common-law choice applies. |
Key Cases Cited
- United States v. Miller, 317 U.S. 369 (1943) (federal substantive law governs measure of just compensation where Fifth Amendment right is implicated)
- United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979) (framework for when federal courts should adopt state law or fashion a uniform federal rule in gaps of federal statute)
- Georgia Power Co. v. Sanders, 617 F.2d 1112 (5th Cir. 1980) (en banc) (applied Kimbell Foods and adopted state law as federal rule for compensation in analogous FPA condemnations)
- Columbia Gas Transmission Corp. v. Exclusive Natural Gas Storage Easement, 962 F.2d 1192 (6th Cir. 1992) (adopted state law as federal rule for NGA private-party condemnations)
- United States v. 93.970 Acres of Land, 360 U.S. 328 (1959) (statutory "practice and procedure" language addresses procedural conformity; Rule 71.1 supplanted conflicting statutory procedural rules)
- Kirby Forest Indus., Inc. v. United States, 467 U.S. 1 (1984) (explains just compensation as fair market value under the Fifth Amendment and that consequential damages are generally excluded)