Columbia Gas v. Exclusive Natural Gas Storage E.

• Decision Date: 25 September 1990
• Docket Number: No. C88-2935A.,C88-2935A.
• Citation: 747 F. Supp. 401
• Parties: COLUMBIA GAS TRANSMISSION CORPORATION, Plaintiff, v. AN EXCLUSIVE NATURAL GAS STORAGE EASEMENT IN THE CLINTON SUBTERRANEAN GEOLOGICAL FORMATION BENEATH 80 ACRES, WORTHINGTON TWP., RICHLAND COUNTY, OHIO: Earl F. Arnholt, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

747 F. Supp. 401

COLUMBIA GAS TRANSMISSION CORPORATION, Plaintiff, v. AN EXCLUSIVE NATURAL GAS STORAGE EASEMENT IN THE CLINTON SUBTERRANEAN GEOLOGICAL FORMATION BENEATH 80 ACRES, WORTHINGTON TWP., RICHLAND COUNTY, OHIO: Earl F. Arnholt, et al., Defendants.

No. C88-2935A.

United States District Court, N.D. Ohio, E.D.

September 25, 1990.

David Noble, Cleveland, Ohio, Johnny Knisely, II, Charleston, W.Va., for plaintiff.

Bryan Halligan, Troth & Van Tilburg, Ashland, Ohio, George J. Murray, Office of Pros. Atty., Mansfield, Ohio, for defendants.

MEMORANDUM OPINION

DOWD, District Judge.

I. INTRODUCTION.

This action is brought pursuant to § 7(h) of the Natural Gas Act (15 U.S.C. § 717f(h)) whereby Columbia Gas Transmission Corporation seeks to condemn an underground natural gas storage easement in the Clinton Sandstone beneath a tract of land owned by Mr. and Mrs. Earl F. Arnholt. The tract of land is within the "map area" of the natural gas storage field known as the Weaver Storage Field. The power of Columbia Gas Transmission Corporation to condemn the tract in question arises from the fact that the tract is within the Weaver Storage Field and a Certificate of Public Convenience and Necessity to construct, operate and maintain facilities for the purpose of operating the Weaver Storage Field has been issued by the Federal Power Commission, the predecessor to the Federal Energy Regulatory Commission. The Arnholt tract has been subject to Columbia's power to condemn for some time,¹ but this action was not commenced until 1988. As a consequence the Arnholts contend that Columbia has been trespassing upon Arnholt's subsurface interests in the tract from the time it began storing natural gas, an event which pre-dates the filing of this action. The Arnholts have filed a counterclaim for damages in trespass and seek compensatory damages and punitive damages for the trespass. The Arnholts anchor their claim in this Court's ruling in a prior natural gas storage easement case the Bowman case, wherein the Court allowed, over Columbia's objection a similar trespass action to be prosecuted and allowed the jury to assess punitive damages. In an unpublished opinion, the judgment in the Bowman case as it related to trespass and punitive damages, was affirmed.²

In its well reasoned brief, Columbia re-asserts its belief that the nature of this action, a condemnation action pursuant to federal law, preempts any consideration of the substantive law of Ohio. Columbia contends that the law of inverse condemnation applies and negates Arnholt's action for trespass and punitive damages. Upon further reflection and reconsideration of the issue the Court concludes that Columbia is correct. The Court will grant summary judgment to Columbia with respect to the counterclaim based on common law trespass. The Court's reasoning follows.

Columbia accurately characterizes the issue with respect to the trespass action directed to the period that precedes the filing of this condemnation action, i.e., do state law remedies apply to precompensation takings within the federally certificated map area of an underground gas storage field.

For the purposes of its motion, Columbia concedes that its stored natural gas has migrated to that portion of the Clinton formation beneath the Arnholt property and agrees that such storage is the factual predicate for Arnholt's counterclaims for trespass and punitive damages.

Columbia acknowledges that the Ohio Constitution severely restricts the sovereign's right to exercise eminent domain rights in Ohio. Just compensation must be paid before the property in Ohio can be taken for public use and as a consequence, other remedies besides just compensation are available when one's property is taken for public use in Ohio, including civil trespass and punitive damages.

In Bowman, supra, this Court reasoned that the provisions of § 7(h) of the Natural Gas Act, 15 U.S.C. § 717f(h) which provides:

When any holder of a certificate of public convenience and necessity cannot acquire by contract ... the necessary right of way ... for the transportation of natural gas ... 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 practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the property is situated ... (emphasis added)

entitled the property owners to prosecute an action for common law trespass together with punitive damages because the State of Ohio recognized such a cause of action.

Nonetheless, Columbia asserts that state law is preempted as to the exercise of eminent domain rights as they pertain to the transportation, sale and storage of natural gas by the combination of the Supremacy Clause of the United States Constitution³ and the provisions of the Natural Gas Act.⁴

Upon further reflection, the Court finds 15 U.S.C. § 717(b) to be pivotal in the analysis as it provides:

"The provisions of this chapter shall apply to the transportation of natural gas in interstate commerce, to the sale in interstate commerce of natural gas for resale for ultimate public consumption for domestic, commercial, industrial, or any other use and to natural-gas companies engaged in such transportation or sale, but shall not apply to any other transportation or sale, of natural gas or to the local distribution of natural gas or to the facilities used for such distribution or to the production or gathering of natural gas."

The Weaver Storage Field in which the Arnholt property lies is on the federal side of the line drawn by the provisions of 15 U.S.C. § 717(b). The storage of natural gas transported in interstate commerce comes within the purview of the Natural Gas Act. See Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 295 n. 1, 108 S.Ct. 1145, 1148 n. 1, 99 L.Ed.2d 316 (1988).

The Supreme Court has protected the federal jurisdiction under the Natural Gas Act from direct and indirect state regulation. Northern Natural Gas Co. v. State Corporation Commission of Kansas, 372 U.S. 84, 83 S.Ct. 646, 9 L.Ed.2d 601 (1963); Mississippi Power & Light Co. v. Mississippi ex rel Moore, 487 U.S. 354, 108 S.Ct. 2428, 101 L.Ed.2d 322 (1988); Schneidewind, supra; Nantahala Power and Light Co. v. Thornburg, 476 U.S. 953, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986); Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981).

The property owner's and the Court's past reliance on the provisions of § 7(h) of the Natural Gas Act directing the District Courts of the United States to follow the practice and procedures of the state where the property is located in connection with eminent domain cases arising under the Natural Gas Act is and was misplaced. The Court reads § 7(h) in para materia with § 7(b) of the Natural Gas Act and concludes that the landowner's remedies with respect to a taking of his property by the United States Government or by a private corporation authorized to exercise the power of eminent domain are controlled and limited by federal substantive law. The statutory directive in § 7(h) to conform "practice and procedure" in eminent domain actions to state practice and procedure neither negates nor modifies application of federal substantive law with respect to eminent domain issues.

The Court concludes that the State of Ohio has no power to regulate, directly or indirectly, a natural gas storage field certificated by the Federal Energy Regulation Commission (FERC). The Court finds that such an invocation of preemption applies to the exercise of eminent domain powers whether exercised by the U.S. Government or by a private company granted the power of eminent domain such as has been accorded Columbia in connection with its Weaver Storage Field for the storage of natural gas.

The conclusion that Ohio law regarding the taking of property for public use is not applicable because it is preempted by federal law is dispositive of Arnholt's counterclaim for trespass and punitive damages. It will not be allowed to proceed. Federal eminent domain law, anchored in the Fifth...