National Fuel Gas Supply v. 138 Acres of Land
| Decision Date | 24 January 2000 |
| Docket Number | No. 99-CV-602C(M).,99-CV-602C(M). |
| Citation | 84 F.Supp.2d 405 |
| Parties | NATIONAL FUEL GAS SUPPLY CORPORATION, Plaintiff, v. 138 ACRES OF LAND IN THE VILLAGE OF SPRINGVILLE, COUNTY OF ERIE, State of NEW YORK; Mathew Mahl; Ardent Resources, Inc.; U.S. Energy Development Corporation; Robert Dzara; Maria Dzara; and Unkown Others, Defendants. |
| Court | U.S. District Court — Western District of New York |
Phillips, Lytle, Hitchcock, Blaine & Huber LLP (Edward S. Bloomberg, of counsel), Buffalo, New York, for plaintiff.
Jaeckle Fleischmann & Mugel, LLP (John T. Kolaga, of counsel), Buffalo, New York, for defendants 138 Acres of Land; Mathew Mahl; Ardent Resources, Inc.
Phillips, Lytle, Hitchcock, Blaine & Huber LLP (Richard F. Griffin, of counsel), Buffalo, New York, for defendant U.S. Energy Development Corporation.
DECISION and ORDER
On August 27, 1999, Plaintiff National Fuel Gas Supply Corporation ("National Fuel") commenced this action for condemnation pursuant to the Natural Gas Act, 15 U.S.C. § 717 et seq., and pursuant to an Order Amending Certificate of Public Convenience and Necessity, which was issued by the Federal Energy Regulatory Commission ("FERC"). See Item 1, Exh. A. By this action, National Fuel seeks an order granting it a permanent easement for the underground storage of natural gas ("the storage easement") under 138 acres of land located in Springville, New York. Id. ¶ 1. In addition to naming the land itself, National Fuel has named the following persons and entities as defendants: Robert and Maria Dzara ("the Dzaras"); Matthew Mahl ("Mahl"); Ardent Resources, Inc.; U.S. Energy Development Corporation ("U.S. Energy"); and various "unknown others." Id. ¶¶ 6-10. To date, only the Dzaras and Mahl have filed an answer to National Fuel's complaint. Items 14, 15.
By its complaint, National Fuel asks the court to order that title to the storage easement be vested in National Fuel. By letters submitted to the court, National Fuel has argued that the court can and should grant its requested relief immediately, and that the court may do so without the benefit of a motion or further proceedings. The court has held two informal meetings between counsel for National Fuel and the Dzaras and Mahl; and on November 16, 1999, the court heard oral argument. Subsequent to the oral argument, the court has received other written submissions from the parties. Items 29 and 30. The court has reviewed the papers and considered the parties' oral arguments. For the reasons stated herein, the court now denies National Fuel its requested relief.
On July 1, 1998, National Fuel filed an application with FERC in which National Fuel requested an amendment of its certificate of public convenience and necessity. See Item 1, Exh. A, p. 1. By that application, National Fuel asked FERC to authorize a "revised storage field" for its Zoar Storage Field in Erie and Cattaraugus Counties. See id. Notice of National Fuel's application was published in the Federal Register on July 9, 1998. See 63 Fed.Reg. 38160 (1998). National Fuel, Peoples Natural Gas Company, Columbia Gas Transportation Company, and the New York State Department of Environmental Conservation ("the DEC")1 all timely filed motions to intervene in the FERC proceeding. Id. at 2. FERC granted all of these motions to intervene.
In April and May 1999, the Dzaras opposed National Fuel's application by submitting various affidavits, documents, and pleadings with FERC. Id. at 3. In their submissions, the Dzaras argued that: (1) U.S. Energy's extraction of native gas from underneath the Dzaras' property had partly caused the expansion of the Zoar storage field, and (2) that National Fuel's storage field was an "outwardly drifting `run-away'" field that posed a potential threat to the community. Id. However, FERC did not allow the Dzaras to join the proceedings as parties because the Dzaras had not requested permission for late intervention, nor had they explained why they filed their opposition so delinquently. Id. at 3 n. 3.
On July 28, 1999, FERC held a hearing and received "all evidence, including [National Fuel's] application, and supplements, and exhibits thereto...." Id. at 5. On the basis of the evidence submitted, FERC set forth a helpful factual background for this action:
National Fuel's Zoar Field was first used for the storage of natural gas in 1916, and its present certificated boundaries were established in 1948.... The current certificated storage area of the Zoar Field occupies 1,942 acres plus a 3,000 foot buffer zone, for a total of 5,834 acres.
National Fuel has now determined, based on pressure and production history, gas analysis, and analysis of geological data obtained from recent drilling in the Zoar Field, that the gas stored in the storage reservoir actually occupies a larger area to the northwest and southeast than was estimated decades ago when the present boundary was defined. National Fuel avers that the Zoar Field has not expanded; rather, it has determined that the Zoar Field has all along been occupying a larger area than believed when the storage area was certificated.... In accordance with its studies, it requests that the Commission expand the authorized boundaries of the Zoar Field to reflect the actual size of the storage reservoir.
Under National Fuel's proposed redefinition of the storage field's boundaries the Zoar Field would be expanded to encompass 6,841 acres plus a 5,236 acre buffer zone, for a total of 12,077 acres.
In its resulting order, FERC noted that "it is standard reservoir engineering practice to redefine the actual limits of the storage reservoir ... using data obtained during the later development and operation of the storage field." Id. at 4. FERC concluded that after a
detailed evaluation of the geological and engineering data submitted by National Fuel ... we find ... that ... [National Fuel's] proposed expansion of the certificated Zoar Field reservoir storage boundary area is necessary to protect the storage reservoir from gas loss and to prevent other producers from drilling into the reservoir's gas bubble.
Id. at 4. Thus, on July 29, 1999, FERC ordered that "National Fuel's certificate of public convenience and necessity ... is amended to revise the certificated boundary of National Fuel's Zoar Storage Field as described ... in the body of this order." Id. at 5. By this order, FERC approved National Fuel's application to expand the Zoar Storage Field by more than 6,200 acres.
National Fuel now comes before this court with its FERC order in hand and states that the newly authorized Zoar Storage Field encompasses the Dzaras' property, which consists of 138 acres situated at 13590 Trevett Road in Springville, New York ("the Property"). See Item 1, Exh. B.2
National Fuel seeks "a permanent gas storage easement in the Onondaga rock formation, located approximately 1700 feet below the surface" of the Zoar Storage Field. Id. ¶ 5. National Fuel's proposed easement indicates that National Fuel would also need to install a certain number of monitoring wells on the surface of the condemned property. See Item 28, Exh. B (proposed easement). National Fuel claims that it needs the storage easement in order to operate the Zoar Storage Field, and that "[o]peration of this natural storage field is critical to the ability of National Fuel to supply its customers ... with natural gas during the fall and winter." Item 28, ¶ 6.
National Fuel and the Dzaras have not been able to reach an agreement regarding what National Fuel should pay for the storage easement beneath the Dzaras' land. However, National Fuel asserts in its complaint that it has "made several good faith offers to Robert and Maria Dzara, the owners of the property ..., to purchase the permanent natural gas storage easement at issue." Item 1, ¶ 12; see also Item 28, ¶ 5 (Miga Affidavit) ( that National Fuel made a "fair proposal" to the Dzaras). As evidence of these good faith offers, National Fuel provided the court with the correspondence between the parties regarding a settlement value for the storage easement, as well as an affidavit from a Senior Land Manager. See Item 1, Exh. D; Item 21; Item 28.
For their part, the Dzaras deny that National Fuel has made a good faith offer of settlement. The history of correspondence between National Fuel and the Dzaras reveal that the parties engaged in occasional negotiations over the course of nearly two years. See Item 21. Finally, after one year had passed since the last correspondence, National Fuel offered the Dzaras ten dollars ($10.00) See id. (letter dated Aug. 20, 1999). By letter dated August 27, 1999, counsel for the Dzaras rejected this offer. See id.
Presently, there is no motion before the court.3 Notwithstanding the absence of a motion, National Fuel insists that it is entitled to, and that the court is empowered to grant, an order immediately vesting title to the storage easement in National Fuel. See Item 28, Exh. B (proposed easement). Once title to the storage easement has vested, National Fuel states that it will gladly proceed to a trial or hearing on the subject of just compensation.
National Fuel rightly argues that the holder of a FERC certificate of public convenience and necessity may take land by an eminent domain proceeding in federal court if the utility company is unable to secure the necessary land interest through negotiations with the landowner. See 15 U.S.C. § 717f(h) (1994). National Fuel also argues that New...
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