Barr v. Atlantic Coast Pipeline, LLC, 070518 VASC, 170620

Docket Nº:Record 170620
Opinion Judge:CLEO E. POWELL JUSTICE.
Party Name:WILLIAM BARR, ET AL. v. ATLANTIC COAST PIPELINE, LLC
Judge Panel:PRESENT: Goodwyn, Mims, McClanahan, Powell, Kelsey and McCullough, JJ., and Millette, S.JJ. JUSTICE KELSEY, dissenting.
Case Date:July 05, 2018
Court:Supreme Court of Virginia
 
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WILLIAM BARR, ET AL.

v.

ATLANTIC COAST PIPELINE, LLC

Record No. 170620

Supreme Court of Virginia

July 5, 2018

          FROM THE CIRCUIT COURT OF NELSON COUNTY Michael T. Garrett, Judge

          PRESENT: Goodwyn, Mims, McClanahan, Powell, Kelsey and McCullough, JJ., and Millette, S.JJ.

          OPINION

          CLEO E. POWELL JUSTICE.

         In this appeal, we consider whether Code § 56-49.01(A) allows a natural gas company to gain access to private property for the purpose of conducting surveys and other activities that are only necessary for the selection of the most advantageous route. We further consider whether the trial court in this case misapplied Code § 56-49.01 and, if so, whether a natural gas company's subsequent entry onto the property to conduct activities authorized by the trial court results in an illegal taking of private property without compensation under Article I, § 11 of the Constitution of Virginia.

         I. BACKGROUND

         Atlantic Coast Pipeline, LLC ("ACP") is a limited liability company organized under the laws of the State of Delaware. It was organized for the purpose of "operating as a natural gas company as defined by 15 U.S.C. § 717a."1 As such, ACP is subject to the jurisdiction of the Federal Energy Regulatory Commission ("FERC") under the Natural Gas Act, 15 U.S.C. § 717 et seq.

         Presently, ACP is engaged in the regulatory approval process to build a natural gas pipeline that would extend from West Virginia, through the Commonwealth, to North Carolina. As part of this process, ACP sought to conduct surveys, tests, appraisals, and other examinations on the properties located along its proposed route. William Barr, Melissa Barr, Mary J. Hoffman, Nancy Holstein, Hazel H. Rhames, Trustee and Joseph L. Rhames, Trustee (collectively, the "landowners") own or are trustees for real properties along this proposed route.

         On March 6, 2015, ACP mailed the landowners certified letters seeking permission to enter their properties to conduct preliminary surveys and other activities. When the landowners withheld their consent, ACP sent notices of intent to enter their properties pursuant to Code § 56-49.01. ACP then filed petitions for declaratory judgment against the landowners, seeking an order affirming ACP's authority to enter their properties "for the limited purposes defined in Va. Code § 56-49.01."

         The landowners demurred, asserting that (1) the allegations in ACP's petition "fail to meet the pre-entry requirements of Va. Code § 56-49.01;" (2) the activities authorized by Code § 56-49.01 are "vague and overbroad" and constitute a taking of private property that cannot be authorized by the legislature because such a taking violates the Fifth Amendment of the United States Constitution and Article I, § 11 of the Constitution of Virginia; and (3) ACP is not a Virginia public service corporation and cannot exercise the power of eminent domain under Code § 56-49. After considering the parties' arguments, the trial court overruled the demurrers related to the landowners' constitutional arguments. In its ruling, the trial court explained that entry under Code § 56-49.01 was not an unconstitutional taking because the statute did not provide ACP with an unlimited right of entry with regard to date, scope or duration. The trial court further noted that activities ACP sought to perform were not for a private use, as the transmission of natural gas serves a public purpose. See Code § 56-605; 15 U.S.C. 717(A). However, the trial court found that ACP's notices of intent to enter were deficient under Code § 56-49.01(A) as they did not indicate the specific dates that ACP would enter the properties. Therefore, the trial court sustained the landowners' demurrer without prejudice on that limited basis.2

         On May 31, 2016, ACP filed its amended petitions for declaratory judgment. In its amended petitions, ACP acknowledged that it had not sent a new notice of intent to enter. However, ACP alleged that a new notice of intent to enter would be sent prior to entry. As an exhibit to its amended petitions, ACP included a template of its new notice.

         The landowners again demurred, arguing that the amended petitions "fail to establish that ACP is entitled to invoke the statutory powers for which it seeks entry of a declaratory order" because ACP's amended petition did not allege that the activities were necessary to both satisfy regulatory requirements and to select the most advantageous route. According to the landowners, Code § 56-49.01 only permits entry to conduct activities for the purpose of satisfying both purposes. Additionally, the landowners asserted that the amended petitions failed to state an adequate claim for declaratory relief because, by only including a template of the new notice of intent to enter, ACP was seeking an advisory opinion. The trial court overruled the demurrers with regard to the statutory construction issue, but sustained the demurrers on the basis that the amended petitions did not state an adequate claim for declaratory relief. In its order sustaining the demurrer, the trial court granted ACP leave to file a second amended petition.

         On December 6, 2016, ACP sent the landowners new notices of intent to enter. These notices indicated the various activities that ACP intended to perform and specified the date ranges that ACP intended to enter the properties to conduct these activities. The notices indicated that, due to the nature of the activities, two of them would take place approximately four months after the initial entry. ACP provided a specific date range that these activities would be carried out as well.

         The following day, on December 7, 2016, ACP filed its second amended petition for declaratory judgment. The landowners demurred, again arguing that the amended petition failed to state a claim under Code § 56-49.01 because ACP only alleged that the activities were for the purpose of selecting the most advantageous route. Additionally, the landowners' asserted that the notices of intent to enter were statutorily deficient under Code § 56-49.01 because the notices provided a range of dates upon which entry would occur. The trial court overruled the demurrers. The landowners subsequently filed responsive pleadings to ACP's petitions and the case proceeded to trial.

         At trial, ACP presented evidence that demonstrated its need to conduct activities in order to determine the most advantageous route for the pipeline. After ACP had presented its evidence, the landowners moved to strike, noting that Code § 56-49.01(A) permits activities that are necessary for two reasons: to both satisfy regulatory requirements and to select the most advantageous route. As these provisions are separated by the word "and," the landowners assert that these provisions must be read in the conjunctive. Therefore, according to the landowners, because ACP failed to present any evidence that the activities were necessary to satisfy any regulatory requirements, its petitions must fail. ACP argued that proper construction of the statute requires that the "and" separating the two provision be construed as disjunctive, not conjunctive. After considering the parties' arguments, the trial court agreed with ACP, ruling that construing the operative language as disjunctive was the more logical reading of the statute. The trial court then granted ACP permission to enter the landowners' properties to conduct the necessary activities.

         The landowners appeal.

         II. ANALYSIS

         In their appeal, the landowners raise two issues. They first assert that the trial court erred in construing portions of Code § 56-49.01(A) in the disjunctive, because the statute is written in the conjunctive. They also argue that by relying on improper facts and allowing ACP to conduct activities that are outside of the scope of the statute, the trial court misapplied Code § 56-49.01. According to the landowners, as a result of the trial court's misapplication of the statute, ACP's entry onto their property was outside the scope of the statute and thus amounted to an illegal taking of private property without compensation, in violation of Article I, Section 11 of the Constitution of Virginia.

         A. Code § 56-49.01(A)

         In their first assignment of error, the landowners take issue with the trial court's construction of Code § 56-49.01(A). Specifically, the landowners argue that the trial court erred by construing the "and" separating the provisions delineated by romanettes (i) and (ii) in the statute as disjunctive rather than conjunctive. The landowners insist that, the word "and," as used in this portion of the statute, must be read in the conjunctive. According to the landowners, the proper construction of the statute requires ACP to prove that its activities were necessary both "to satisfy any regulatory requirements" and...

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