290 F.3d 753 (5th Cir. 2002), 01-30385, Canova v. Shell Pipeline Co.

Docket Nº:01-30385.
Citation:290 F.3d 753
Party Name:Carlo J. CANOVA, Plaintiff-Appellant, v. SHELL PIPELINE COMPANY; Equilon Pipeline Company, L.L.C; United States of America, Defendants-Appellees.
Case Date:May 07, 2002
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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290 F.3d 753 (5th Cir. 2002)

Carlo J. CANOVA, Plaintiff-Appellant,


SHELL PIPELINE COMPANY; Equilon Pipeline Company, L.L.C; United States of America, Defendants-Appellees.

No. 01-30385.

United States Court of Appeals, Fifth Circuit

May 7, 2002

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Patrick W. Pendley (argued), Pendley Law Firm, Plaquemine, LA, David M. Ellison, Jr. (argued), Ellison & Ellison, Baton Rouge, LA, for Plaintiff-Appellant.

Cheryl M. Kornick, John M. Wilson, Liskow & Lewis, New Orleans, LA, for Shell Pipeline Co. and Equilon Pipeline Co.

David Jack Lazerwitz (argued), David C. Shilton, U.S. Dept. of Justice, Environment & Natural Resources Div., Washington, DC, for U.S.

Appeal from the United States District Court for the Middle District of Louisiana.

Before KING, Chief Judge, and REAVLEY and WIENER, Circuit Judges.

REAVLEY, Circuit Judge:

Plaintiff-Appellant Carlo Canova is the owner of Louisiana land over which the United States acquired an easement for pipelines to access a storage facility in the Strategic Petroleum Reserve (SPR). Equilon Pipeline Company has leased the pipeline from the United States for commercial use. Canova1 seeks to enjoin this use by Equilon. The district court granted judgment in favor of Equilon and the United States denying the relief requested by Canova. We affirm.

I. Background

In 1979, the United States Department of Energy exercised the power of eminent domain to acquire easements and property in a number of Louisiana parishes to facilitate the development of the Strategic Petroleum

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Reserve, as authorized by the Energy Policy and Conservation Act (EPCA).2 Among the interests acquired was an easement across property belonging to Carlo Canova, necessary to the construction and operation of a thirty-seven mile pipeline connecting the government's Bayou Choctaw Oil Storage Facility (consisting of underground salt dome caverns), and the government's St. James Terminal facility on the Mississippi River.

After an asset utilization review in the early 1990s, the Strategic Petroleum Reserve Management Office decided to lease the Bayou Choctaw Pipeline to reduce operating costs and increase government revenue. Equilon successfully bid on the lease of the pipeline, and the lease was executed in May 1997. Under the lease, Equilon has the right to use the pipeline to transport oil commercially in exchange for rental payments and assumption of responsibility for maintenance of the pipeline. The government retains the right to priority use of the pipeline to access the Bayou Choctaw Storage Facility in the event of a national energy emergency and to transport oil through the pipeline during non-emergencies at Equilon's published rates. The government may also conduct annual system test exercises using the pipeline, to be scheduled and coordinated with Equilon to minimize interruption of the pipeline's commercial use. There is no dispute that the United States has exercised its right under the lease to use the pipeline for the transport of SPR oil.

Canova sued Equilon in state court seeking to enjoin it from continuing to use the pipeline for private profit, a use which Canova argues falls outside the scope of the easement taken by the Government. Canova's original state court petition alleged that Equilon's use of the easement was in bad faith and that it was unjustly enriching itself by that use, and requested a "determination of the legal rights, duties and obligations obtained by and imposed on the Department of Energy as a result of the granting of rights of way or easements." In his motion to remand the case after removal to federal court,3 Canova claimed not to "contest the right, title or interest of the United States of America nor its right to lease to [Equilon] or its assigns. Plaintiff only contests the rights of [Equilon] or its assigns to utilize the line for a purpose contrary to the purposes for which the acquisition was authorized." Despite this disclaimer, the district court determined that the United States was a necessary party to the litigation due the nature of the relief sought, and ordered its joinder.

The district court ultimately granted summary judgment in favor of Equilon and the United States, holding that the easement taken by the United States is not restricted in scope to uses furthering the Strategic Petroleum Reserve, and that the lease with Equilon in any case serves the Strategic Petroleum Reserve's purposes. It is from that judgment that Canova appeals.

II. Analysis

Summary judgment is reviewed de novo,4 and is appropriate when, viewing the evidence in the light most favorable to the nonmoving party, no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law.5

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No facts of any significance are in dispute in this case. Only questions of law are before us.

A. Scope of the Government's Property Interest

Canova argues that the property interest actually taken by United States pursuant to the Declaration of Taking does not allow for any commercial use of the pipeline. When a declaration of taking is filed, "title to the said lands in fee simple absolute, or such less estate or interest therein as is specified in said declaration, shall vest in the United States of America, and said lands shall be deemed to be condemned and taken for the use of the United States."6 The issue before us is the nature of the estate or interest in land taken and paid for by the United States, and whether the government's lease of the pipeline to Equilon for commercial use exceeds the scope of that interest.7

The Declaration of Taking, entered in the Middle District of Louisiana in 1979, describes a taking of:

A perpetual and assignable easement and right-of-way 50 feet in width, in, on, over and across the land for the location, construction, operation, maintenance, alteration, repair and patrol of the multi-pipelines in the establishment, management and maintenance of the Strategic Petroleum Reserve, as authorized by the Act of Congress approved December 22, 1975, Public Law 94-163, 89 Stat. 871, 42 U.S.C. § 6201, including the right to trim, cut, fell and remove therefrom all trees, underbrush, obstructions and any other vegetation, structures or obstacles within the limits of the right-of-way; reserving, however, to the landowners, their heirs and assigns, all such rights and privileges as may be used without interfering with or abridging the rights and easements hereby acquired; subject, however, to existing easements for public roads and highways, public utilities, railroads, pipelines, and existing easements for drainage facilities of Iberville Parish, Louisiana.

In determining the nature of the interest the government has acquired through the condemnation proceedings, we are first confronted with a choice of law problem: do we look to federal common law, or state property law? "[W]hen the government acquires property pursuant to a federal law that does not specify the appropriate rule of decision, the Supreme Court has held that federal common law applies to property disputes."8 Even once we establish that federal common law applies in this situation, we must still decide "whether the court should apply uniform national law or should apply, as federal law, the law of the state where the property is located."9 We will decline to borrow state law principles as rules of decision if

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the state rules are hostile to federal interests, or if federal uniformity is required.10

In the present case, use of Louisiana law is problematic not because its rules are necessarily hostile to federal interests as a matter of policy, but because the interest in the Declaration defines the taking in common law terms (an "easement"), and Louisiana civil law uses an entirely different terminology (predial and personal servitudes) for classifying limited interests in land. Because Louisiana law does not speak in terms of "easements" at all, we apply general common law principles in determining the government's interest.11

Using common law property principles, the interest described in the instant Declaration of Taking resembles an easement in gross, which runs in favor of a person (natural or legal), rather than a dominant estate.12 At common law, easements in gross were historically presumed to be non-transferable, but the almost universally accepted rule is now that easements in gross taken for commercial purposes, particularly public utility purposes such as railroads, telephone lines, and pipelines, are freely transferable property interests.13

But having established the general type of interest in land at issue, a commercial easement in gross, we must still determine the effect of language in the Declaration of Taking pertaining to the purposes for which the taking was made. Easements may be limited not only as to physical scope, but also as to purpose.14 The Declaration of Taking in the present case provides that the easement is acquired "for the location, construction, operation, maintenance, alteration, repair and patrol of the multipipelines in the establishment, management, and maintenance of the Strategic Petroleum Reserve."

The United States argues that the reference to the Strategic Petroleum Reserve is in effect a recitation of the legitimate public purpose of the taking, but is not intended to act as an additional limitation on the permissible scope of the easement's use. In other words, this portion of the sentence ("in the establishment, management, and maintenance of the Strategic Petroleum Reserve") states why the Government took the easement, but does not

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limit what it took. Canova argues that this clause does in fact impose a limitation on the scope of the easement, and that the easement acquired by the government permits use of his land exclusively for the establishment, management and maintenance of the Strategic...

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