LaFargue v. U.S., Civ.A. 97-2393.

• Decision Date: 08 April 1998
• Docket Number: No. Civ.A. 97-2393.,Civ.A. 97-2393.
• Citation: 4 F.Supp.2d 580
• Parties: Jeron J. LAFARGUE, et al., on behalf of themselves and all others similarly situated v. The UNITED STATES of America and Louisiana Intrastate Gas Company.
• Court: U.S. District Court — Eastern District of Louisiana

4 F.Supp.2d 580

Jeron J. LAFARGUE, et al., on behalf of themselves and all others similarly situated v. The UNITED STATES of America and Louisiana Intrastate Gas Company.

No. Civ.A. 97-2393.

United States District Court, E.D. Louisiana.

April 8, 1998.

COPYRIGHT MATERIAL OMITTED

Peter Stephen Title, Andrew A. Braun, Camilo Kossy Salas, III, Sessions & Fishman, New Orleans, LA, Gregg Lindsey Spyridon, Robert Joshua Koch, Jr., Edmund S. LaTour, Spyridon, Koch, Psarellis, Wallace & Palermo, Metairie, LA, for Plaintiffs.

David F. Shuey, U.S. Department of Justice, Washington, DC, Glenn Kenneth Schreiber, U.S. Attorney's Office, New Orleans, LA, Paul T. Michael, U.S. Department of Energy, Economic Regulatory Administration, Washington, DC, for United States of America, defendant.

James P. Dore, George William Jarman, J. Carter Wilkinson, Troy J. Charpentier, Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP, Baton Rouge, LA, Julie Parelman Silbert, Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, LLP, New Orleans, LA, for Louisiana Intrastate Gas Company, L.L.C., defendant.

ORDER AND REASONS DENYING DEFENDANTS' MOTIONS TO DISMISS

VANCE, District Judge.

This matter comes before the Court on motions to dismiss brought by defendants United States of America (the "Government") and Louisiana Intrastate Gas Company, L.L.C. ("LIG"). For the reasons set forth below, the motions are DENIED.

I. BACKGROUND

This case revolves around the ownership of a pipeline and underlying servitudes located in the Louisiana Parishes of Iberia, St. Mary, St. Martin, St. James, and Assumption. In 1975, Congress enacted the Energy Policy and Conservation Act ("EPCA"), 42 U.S.C. § 6201, et seq., pursuant to which the government established the Strategic Petroleum Reserve Program ("SPRP"). The SPRP was intended to serve as a reserve to reduce the impact of energy supply interruptions or reductions in imports of crude oil and refined petroleum products. Under the EPCA, and to the extent necessary or appropriate to implement the SPRP, the government is authorized to "acquire by purchase, condemnation or otherwise, land or interests in land for the location of storage and related facilities." 42 U.S.C. § 6239(f)(5)(B). The government may also "construct, purchase, lease or otherwise acquire storage and related facilities," and "use, lease, maintain, sell, or otherwise dispose of storage and related facilities acquired pursuant to this part." 42 U.S.C. § 6239(f)(5)(C), (D). Further, the government is authorized to "execute any contracts necessary to carry out the provisions" of the SPRP. § 6239(f)(5)(G).

Pursuant to this statutory authority, the Government accepted donations of easements and servitudes from owners of land located in the Louisiana Parishes of Iberia, St. Martin, St. James, and Assumption. The named plaintiffs in this proposed class action were parties to the Donation of Servitude and Easement (hereinafter "the Donation"), attached as Exh. B. to the Decl. of Patricia C. Sigur.¹ The Donation states:

The above named parties declare that we, by this act, do donate, convey, transfer, set over and deliver, without any warranty, liability, or recourse, but with full substitution and subrogation in and to all rights and action of warranty which said grantors have or may have against all preceding owners and vendors, unto the United States of America, and its assigns, including its officers, agents, servants, and contractors, a perpetual and assignable easement and right-of-way in, on, over and across the land for the location, construction, operation, maintenance, alteration, repair, and patrol of a single pipeline in the establishment, management, and maintenance of the Strategic Petroleum Reserve....

Donation at 2. The Donation also specifies the ways in which the easement may terminate:

This donation is made and accepted for and in consideration of Grantors' desire to aid their country in the establishment of a Strategic Petroleum Reserve and in further consideration of Grantee's agreement to construct and operate said pipeline in accordance with the following specific requirements:

1. The rights herein donated to Grantee shall expire, terminate, and cease and this act shall be rendered null, void and unenforceable on December 31, 1981 if by such date Grantee shall have not commenced construction of the Strategic Petroleum Reserve pipeline.

2. The causes for termination of this easement shall include, but not be limited to, the following: (a) abandonment, (b) removal of the pipeline, (c) ten years non-use, or (d) execution of an affidavit by an authorized representative of the United States of America stating that the pipeline has been abandoned. Upon termination for any reason the United States of America shall have the election at its sole discretion of abandoning the pipeline and related improvements in place or removing it at its own expense. Such removal, if so elected, shall be completed within one year after termination. If abandonment in place is elected, Grantee shall have no claim against Grantors for compensation or damages, and the pipeline and related improvements shall become the property of the Grantors without any payment to the Grantee.

Donation at 5.

In recent years, due to a geotechnical problem related to the underground storage facility at Weeks Island, the Government took steps to decommission both the Pipeline and the storage facility. The Government asserts that bids were solicited from interested parties for the sale of the Pipeline and the perpetual easements. After this suit was filed, the Government sold and conveyed to LIG, "as is" and "where is" under a quitclaim deed executed August 22, 1997 all title, right, and interest the Government had in the Pipeline and the perpetual easements for a total sum of $22,000,000. See Decl. of Ms. Sigur, Exh. A. LIG intends to integrate the Pipeline into its existing pipeline system, which is used for the transportation of natural gas.

Prior to the August 22, 1997 sale, LIG— "out of an abundance of caution"—attempted to enter into new conventional right-of-way and servitude agreements with the landowners along the length of the pipeline (hereinafter the "LIG Agreement"). The LIG Agreement states that the new servitude will be subject to the Donation and that the Donation will terminate when LIG begins operations of the existing Pipeline as a natural gas pipeline or when the Government transfers all of its rights in the Donation, whichever comes first. See Compl., Exh. B. LIG contends that 95% of the landowners along the length of the pipeline have entered into such agreements. LIG's Answer ¶ 1A.

Plaintiffs initiated this class action on July 31, 1997 and filed a first amended complaint on October 24, 1997. Plaintiffs' proposed class is defined as all those persons and entities who granted servitudes and easements in favor of the Government for the location, construction, operation, maintenance, alteration, repair, and patrol of the Pipeline. Compl. ¶ 8. The plaintiffs also propose two subclasses: (1) All those persons and entities who fall into the proposed class and who executed the LIG Agreement, or similar documents; (2) All those persons and entities who fall into the proposed class and who did not execute the LIG Agreement, or similar documents. Compl. ¶ 9.

Count I of plaintiffs' complaint states that all of the servitudes granted to the Government have expired and/or terminated, and that plaintiffs are entitled to a decree by this Court declaring that the members of the proposed class are the full owners of the Pipeline and related improvements located upon their respective properties. Compl. ¶ 45. The plaintiffs allege that the servitudes have expired and/or terminated because:

(a) the Government, through its own actions, has permanently discontinued the use of the Servitudes for the purpose for which they were granted, i.e., in connection with the Strategic Petroleum Reserve, and has transferred, or is in the process of transferring its right under the Servitudes and to the Pipeline to a transferee engaged in the business of transporting natural gas, rendering it impossible for the Government to use the Servitudes for the purposes required thereby;

(b) the Servitudes were granted subject to the express or implied resolutory condition that the Pipeline be used solely in connection with the Strategic Petroleum Reserve Program and the resolutory condition has been fulfilled;

(c) the Government has decommissioned, or is in the process of decommissioning the Weeks Island Facility and the Pipeline; and/or

(d) the Government has renounced the Servitudes.

Compl. ¶ 42.

In Count II, if plaintiffs are found not to be the owners of the Pipeline and related improvements, they request that the Government and/or LIG remove the Pipeline at their expense. Compl. ¶ 47. Count III of the Complaint states that LIG and the Government should be permanently enjoined, restrained, and prohibited from using the Pipeline for any use or purpose other than that set forth in the servitude agreements, i.e., for the establishment, management, and maintenance of the SPRP. Compl. ¶ 49.

Counts IV and V seek money damages from the Government and/or LIG in the amount of $22 million. The plaintiffs allege:

The actions of the Government in transferring or attempting to transfer the Pipeline and the rights or interests it claims to have under the Servitudes to LIGC constitute a taking of the property of Plaintiffs and the other Members of the proposed class without due process of law as required by the Fifth Amendment to the United States Constitution because the Servitudes have expired or are deemed to have terminated or extinguished and, as a result, the Plaintiffs and the members of the proposed class are the owners of the interests and rights which the Government has purported or intends to sell or assign to LIGC, not the Government.

Compl. ¶ 41. As a...