Opinion
Case No. 2:02-CV-694 TC.
June 21, 2004
ORDER
This matter is before the court on Plaintiff Kern River Gas Transmission Company's ("Kern River") Motion for Immediate Occupancy of Tracts 137.04W, 137.06W, 137.071W, 137.08W, 137.12W, 137.235W, 137.03W, 137.21B, 137.26W, 163.01W, 170W, 173, 175, 177W, 179W, 179.01W, 180W, 137.025W and 137.125W. This property is owned by Defendant Salt Lake City and, at least in relevant part, lies within the boundaries of the Salt Lake City International Airport. The property is the target of a condemnation action filed by Kern River, who ultimately seeks a permanent easement to operate and maintain an already existing interstate natural gas pipeline.
In its current motion seeking an order for immediate occupancy, Kern River also seeks an injunction enjoining Salt Lake City and its agents from preventing or interfering with Kern River's access to the property or otherwise interfering with the pipeline. Salt Lake City opposes Kern River's Motion.
For the reasons set forth below, the court GRANTS Kern River's Motion for Immediate Occupancy.
FINDINGS OF FACT
Kern River is a natural gas company that owns two adjacent natural gas pipelines running from Opal, Wyoming, and extending through portions of Wyoming, Utah, and Nevada, to a terminal point in Kern County, California. Kern River's right to construct, operate and maintain the two pipelines came from the Federal Energy Regulatory Commission ("FERC"). On January 24, 1990, and July 17, 2002, the FERC issued Kern River two certificates of public convenience and necessity. Under the January 24, 1990 Certificate, Kern River built a natural gas pipeline ("original pipeline"). Pursuant to the July 17, 2002 Certificate, Kern River built an expansion pipeline running essentially parallel to the original natural gas pipeline. Construction of the expansion pipeline was completed in May 2003. The expansion pipeline is thirty-six inches in diameter and buried approximately five feet below ground.
Portions of both the original and the expansion pipelines run through the Airport property at issue. Kern River was able to construct the expansion pipeline on the Airport property without initiating formal condemnation proceedings because it entered into two temporary agreements with Salt Lake City: an August 5, 2002 Consent for Access Agreement ("Agreement"), and an August 8, 2002 Temporary Construction Permit.
The portion of the expansion pipeline on Airport property runs twenty-five to fifty feet inside the western boundary of the Airport and five feet below the surface in an undeveloped section of the Airport property. The expansion pipeline's proximity to the nearest Airport runways ranges from 1505 feet to 5615 feet. According to Salt Lake City, the western area of the Airport "has been identified as the best location for a future runway at the Airport" and that "[i]t is almost a certainty that the Airport will require the construction of an additional runway within a 40-80 year time frame." (Def.'s Opp'n Mem. at p. 10, ¶¶ 16, 18.)
The expansion pipeline runs parallel to the original pipeline, which has been on the Airport property for twelve years.
Having entered into the temporary agreements, Kern River and Salt Lake City were attempting to negotiate the terms of a permanent easement that would give Kern River permanent access to the property to operate and maintain the expansion pipeline. Kern River had been operating and maintaining the pipeline pursuant to the Agreement, but that Agreement recently expired. Since expiration of the Agreement, it appears that Salt Lake City continues to give Kern River access. But, without specific terms governing that access, Kern River is currently operating in an atmosphere of uncertainty as to its future access and the future status of the pipeline. In particular, during the hearing on Kern River's Motion, Kern River noted that the uncertain status would have a negative impact on an upcoming rate proceeding.
After negotiations regarding the permanent easement reached an impasse, Kern River filed the immediate condemnation proceeding and the current Motion. The Agreement contains a provision that reads "Nothing herein shall limit Kern River's right to eminent domain under applicable law." (Ex. 1 to Def.'s Opp'n Mem. at ¶ 13.)
To date, compensation has not been an issue between Kern River and Salt Lake City. Rather, the parties apparently disagree on permanent easement language and who shall bear the cost of moving the expansion pipeline in the event the Airport decides to develop a new runway in the area currently containing the expansion pipeline.
CONCLUSIONS OF LAW
In 1977, the United States Congress created the FERC. 42 U.S.C. § 7171. Because Congress determined that "the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest, and that Federal regulation in matters relating to the transportation of natural gas and the sale thereof in interstate and foreign commerce is necessary in the public interest," Congress delegated to the FERC regulatory authority over natural gas and natural gas companies. 15 U.S.C. § 717. Congress barred natural gas companies and individuals from engaging in transportation or sale of natural gas, subject to the jurisdiction of FERC, unless the company or person has been issued a certificate of public convenience and necessity. 15 U.S.C. § 717f(c). Congress granted to holders of certificates of public convenience and necessity the right of eminent domain for construction, operation and maintenance of pipelines for the transportation of natural gas. 15 U.S.C. § 717f(h).
Section 717f(h) gives Kern River condemnation authority:
When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of 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-of-way, 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, or in the State courts. . . . Provided, That the United States district courts shall only have jurisdiction of cases when the amount claimed by the owner of the property to be condemned exceeds $3,000.Id. (emphasis added).
Section 717f(h) does not create a substantive right to occupy property before a judgment of condemnation. National Fuel Gas Supply Corp. v. 138 Acres of Land in Village of Springville, County of Erie, State of N.Y., 84 F. Supp.2d 405, 415-16 (W.D.N.Y. 2000); Northwest Pipeline Corp. v. The 20' × 1,430' Pipeline Right of Way Easement, 197 F. Supp.2d 1241, 1243-45 (E.D. Wash. 2002). Nevertheless, a district court, by its inherent equitable power, may grant a utility company immediate occupancy of the subject property. (See Aug. 2, 2002 Order (Dkt. No. 68) at 4-5 (citing multiple cases).)
In deciding whether to exercise their equitable powers, several courts have considered motions for immediate occupancy under the preliminary injunction standard. See, e.g., Northern Border Pipeline Co. v. 86.72 Acres of Land, 144 F.3d 469, 472 (7th Cir. 1998); Northwest Pipeline Corp., 197 F. Supp.2d at 1244-46. Other courts have considered the motions under the general equitable relief standard; namely, whether there is a likelihood of substantial and immediate irreparable injury, and the inadequacy of remedies at law. See, e.g., National Fuel Gas Supply Corp., 84 F. Supp.2d at 416.
Because the preliminary injunction standard considers the likelihood of success on the merits and, thereby, provides more protection to the Defendant, this court will follow that standard. The four factors to be considered are: (1) is Kern River likely to succeed on the merits of its condemnation action; (2) will Kern River suffer irreparable harm absent issuance of the order; (3) does the balance of harms to Kern River outweigh the harm, if any, to Salt Lake City; and (4) is issuance of an order of immediate occupancy in the best interest of the public.See SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991) (setting forth preliminary injunction criteria).
1. Likelihood of Success on the Merits
In order to succeed on the merits of its condemnation action in this court, Kern River must show (1) that it is a holder of a certificate of public convenience and necessity, (2) that it is unable to acquire by contract the necessary right-of-way to construct, operate and maintain the natural gas pipeline (or is unable to agree with the property owner about the compensation to be paid), and (3) that the property to be condemned is valued at more than $3,000. 15 U.S.C. § 717f(h). There is no question that the value of the property to be condemned exceeds $3,000, so this court has jurisdiction. There is also no dispute that Kern River holds a certificate of public convenience and necessity issued by the FERC on July 17, 2002. Rather, Salt Lake City raises other issues in its opposition to Kern River's Motion for Immediate Occupancy.
Kern River must also comply with the procedural requirements of Rule 71A of the Federal Rules of Civil Procedure. But Kern River's compliance with the appropriate procedures is not in question here, so it will not be discussed further.
Salt Lake City contends that Kern River is not likely to succeed on the merits because "the City interposes valid and substantial defenses to condemnation of the Permanent Easement as proposed by Kern River, including conflict with Federal law and policy, prior dedication of the [Airport] Property to a prior public use, and Kern River's failure to satisfy the requirements for entitlement to take property by eminent domain under the Natural Gas Act [ 15 U.S.C. § 717f(h)]." (Def.'s Opp'n Mem. at 14-15.)
Salt Lake City raises the primary jurisdiction doctrine in support of its challenge to Kern River's authority to condemn. But the primary jurisdiction doctrine has no application to the situation at hand, and the court does not consider it.
Much of Salt Lake City's argument constitutes a collateral attack on the validity of the expansion pipeline location and the FERC-approved corridor. Because Kern River has the right to "act unilaterally to choose a specific route within [the FERC-approved corridor]," Kern River Gas Transmission Co. v. Clark County, Nevada, 757 F. Supp. 1110, 1116 (D. Nev. 1990), the court may not consider the appropriateness of Kern River's chosen route as long as it falls within the FERC-approved corridor. The sole role of the court is to enforce the FERC order. Williams Natural Gas Co. v. City of Oklahoma City, 890 F.2d 255, 264 (10th Cir. 1989) ("[T]he eminent domain authority granted the district courts under . . . 15 U.S.C. § 717f(h), does not provide challengers with an additional forum to attack the substance and validity of a FERC order."); Kansas Pipeline Co. v. 200 Foot By 250 Foot Piece of Land, 210 F. Supp.2d 1253, 1255-56 (D. Kan. 2002). Kern River's Certificate is prima facie evidence of Kern River's condemnation authority needed for immediate occupancy. See USG Pipeline Co. v. 1.74 Acres in Marion County, Tennessee, 1 F. Supp.2d 816, 825 (E.D. Tenn. 1998) (pipeline company's "acquisition of a FERC Certificate cloaks it with the federal power of eminent domain pursuant to 15 U.S.C. § 717f(h).").
The time for Salt Lake City to raise many of the issues it now brings before the court was during the 2001-2002 administrative proceedings when FERC considered Kern River's application for a certificate of public necessity and convenience. Indeed, the Federal Aviation Administration ("FAA") was notified of the FERC proceedings and proposed pipeline route (as was Salt Lake City) and had no objection to the pipeline location, as set forth in a July 31, 2002 letter from the FAA:
An Aviation Impact Analysis of the proposed underground natural gas expansion pipeline and temporary construction equipment (maximum 25') located on Salt Lake City International Airport . . . has been completed. Based on this analysis, the [FAA] has no objection to the proposal, it will not adversely affect the safe and efficient use of airspace by aircraft or the safety of persons and property on the ground. . . .
(Ex. B to the Kris Hohenshelt Aff.)
Salt Lake City contends that because the Airport property is land dedicated to a prior public use, it cannot be condemned. In support of its argument, Salt Lake City cites to Clarke v. Boysen, 39 F.2d 800, 816 (10th Cir. 1930) ("The general rule is that property already devoted to a public use cannot be taken for another public use under the power of eminent domain, where the latter taking will totally destroy or materially interfere with the first use."); see also Kern River Gas Transmission Co., 757 F. Supp. at 1117 (noting that express Congressional authorization for condemnation of land already dedicated to public use is required when proposed use will "either destroy such existing use or interfere with it to such an extent as is tantamount to destruction") (internal citation omitted).
Salt Lake City points to the possibility that, in forty to eighty years, a new runway may be built on the currently undeveloped land below which the expansion pipeline lies, which could create a conflict with the current placement of the expansion pipeline. According to Salt Lake City, this possibility of runway expansion when considered in conjunction with the terms of Kern River's proposed easement is "tantamount to destruction" of the Airport property.
But the basis for Salt Lake City's argument is too speculative to have any bearing on Kern River's current authority to condemn. And, as Kern River notes, no Airport Layout Plan or other master plan incorporating such a proposed runway expansion has been presented to the court. In short, there is no evidence that the expansion pipeline easement actually would be tantamount to destruction of the Airport property.
Salt Lake City also argues that Kern River negotiated in bad faith and so it cannot demonstrate that it was unable to acquire the easement by contract. The court disagrees. The parties negotiated for almost two years. The record shows that each party had problems with proposed terms and that, despite the efforts of both sides, they could not reach an agreement. Moreover, courts have found that "the mere existence of [the condemnation] suit is evidence that [the pipeline company] was unable to acquire the [property] by contract." USG Pipeline Co., 1 F. Supp.2d at 822 (internal citation omitted).
Finally, Salt Lake City's contention that Kern River has not shown that the land to be taken is "necessary" to the pipeline project is not persuasive. As Kern River notes, the Tenth Circuit has specifically rejected such an argument in the context of Section 717f(h) condemnation actions. See Kansas City Pipeline Co., 210 F. Supp.2d at 1255-56 (citing Williams Natural Gas Co., 890 F.2d at 262, for proposition that FERC's issuance of a certificate essentially certifies that the land to be condemned is necessary to the project and that an argument about the necessity of the land is an impermissible collateral attack on the FERC certificate).
In short, Kern River holds the eventual right to occupy the tracts in question. This court may not review FERC's decision, nor may it control the chosen route within the FERC-approved corridor. It is likely that Kern River will succeed on the merits and that the court will order condemnation of a permanent easement on Salt Lake City's property.
2. Irreparable Harm
Kern River asserts that it will be irreparably harmed if it does not obtain the court's order for immediate occupancy. But Salt Lake City points out that the City has "never unreasonably restricted Kern River's access to the Airport Property for operation or maintenance of the Pipeline . . . [and that] Kern River has not demonstrated that the Pipeline is in imminent danger of being removed by the City." (Def.'s Opp'n Mem. at 25-26.) And during the hearing, Salt Lake City's counsel offered to stipulate that Kern River is allowed access to the property pursuant to the same terms of the recently expired Consent to Access Agreement.
Kern River admits that it currently has access to the expansion pipeline for maintenance and operation, but Kern River was not willing to stipulate to the terms offered by the City. Instead, Kern River argued that Salt Lake City wants to control the conditions of access to the point that Kern River is concerned it would not be able to respond appropriately in case of an emergency.
Because the parties have not been able to reach an agreement, Kern River is currently operating in limbo. According to Kern River, this uncertainty casts a shadow over the future of the pipeline and would negatively affect an upcoming rate proceeding. Kern River does not want any uncertainty about its ability to deliver natural gas to its customers.
The court finds that Kern River's loss of this "definiteness" is harm sufficient to justify granting of Kern River's request for immediate occupancy. Accordingly, the court finds that Kern River has demonstrated the requisite harm.
3. Balance of Harms
The question is whether the threatened harm to Kern River outweighs the harm to Salt Lake City, if any, that would result from issuance of an order of immediate occupancy. Salt Lake City alleges that if the court issues the order, Kern River will have uncontrolled access to the Airport property and so Salt Lake City's ability to enforce allegedly conflicting federal rules and regulations will be hindered. Consequently, Salt Lake City alleges, unspecified security risks may arise.
Salt Lake City has not identified any actual conflicts between Kern River's immediate occupancy and federal rules governing operation of the Airport. Moreover, Kern River acknowledges that it is not going to flout any federal rules and regulations, and the court's order will not nullify any such rules or regulations. With respect to Salt Lake City's concern about its ability to keep future runway construction options open, the expansion pipeline is already in place and immediate occupancy of Kern River will not run up against something that might occur forty years (at the earliest) from now. That alleged harm is purely speculative.
On the other hand, if the court does not grant Kern River a right to immediate occupancy, Kern River will be operating a natural gas pipeline and serving utility customers in the western region of the United States under a cloud of uncertainty, even assuming Kern River continues to have access pursuant to the City's unilateral consent. This uncertainty may negatively affect Kern River's rate proceeding and reduce confidence on the part of utility regulators, customers, and investors regarding the pipeline's future, the availability of the energy resource it currently supplies, and Kern River's ability to safely and effectively operate the pipeline. The balance of harms weighs in favor of Kern River.
4. Public Interest
Under this criterion, the question is whether the public interest will be served by granting immediate occupancy to Kern River. FERC has issued a certificate of public convenience and necessity to Kern River. In its decision, FERC decided that "[a]pproval of this project will assist in satisfying the large demand for natural gas supplies in the western states, and will do so in an environmentally responsible manner." (July 17, 2002 FERC Order, 100 FERC 61,056 (attached as Ex. B to Fourth Am. Compl.) at 1.) As noted above, the court cannot and will not question the FERC's determination. And Salt Lake City has not presented any compelling reason why issuing an order of immediate occupancy at this time will harm the public interest. Accordingly, the court finds that an order of immediate occupancy favors the public interest.
ORDER
For the foregoing reasons, Kern River's Motion for Immediate Occupancy is GRANTED. Specifically, the court ORDERS as follows:
1. Kern River is hereby granted the right of immediate occupancy of the following tracts of land: 137.04W, 137.06W, 137.071W, 137.08W, 137.12W, 137.235W, 137.03W, 137.21B, 137.26W, 163.01W, 170W, 173, 175, 177W, 179W, 179.01W, 180W, 137.025W and 137.125W.
2. Pending resolution of this condemnation matter, Salt Lake City, its officers, agents, employees, and all others acting in concert with any of them, are prohibited from excluding Kern River from, or preventing or interfering with access to, the real property at issue in this case and otherwise interfering with Kern River's interstate natural gas pipeline. Kern River has already deposited $270,562.00 (Kern River's fair market value appraisal of the property to be condemned) with the Clerk of the Court, and the court finds this to be a sufficient bond amount.