Natural Gas Pipeline Co. of Am. LLC v. Foster Ok Res. LP

• Decision Date: 05 May 2020
• Docket Number: No. 118,185,118,185
• Citation: 465 P.3d 1206
• Parties: NATURAL GAS PIPELINE COMPANY OF AMERICA LLC, Plaintiff/Appellee, v. FOSTER OK RESOURCES LP, Defendant/Appellant.
• Court: Oklahoma Supreme Court

465 P.3d 1206

NATURAL GAS PIPELINE COMPANY OF AMERICA LLC, Plaintiff/Appellee,

v.FOSTER OK RESOURCES LP, Defendant/Appellant.

No. 118,185

Supreme Court of Oklahoma.

FILED MAY 5, 2020

James R. Waldo, James R. Waldo, P.L.L.C., Oklahoma City, Oklahoma, for Defendant/Appellant Foster OK Resources LP.

David W. Kelly, David W. Kelley, Inc., Durant, Oklahoma, for Defendant/Appellant Foster OK Resources LP.

John D. Dale, Barbara M. Moschovidis, and Ryan A. Pittman, GableGotwals, Tulsa, Oklahoma, for Plaintiff/Appellee Natural Gas Pipeline Company of America LLC.

Heather H. Burrage, The Burrage Law Firm, Durant, Oklahoma, for Plaintiff/Appellee Natural Gas Pipeline Company of America LLC.

Winchester, J.

¶1 Plaintiff/Appellee Natural Gas Pipeline Company of America LLC (NGPL) operates two interstate natural gas pipelines that cross property owned by Defendant/Appellant Foster OK Resources LP (Foster). NGPL brought this condemnation action seeking four separate easements to have consistent access to operate and maintain the pipelines and to clear title issues involving the pipelines. Foster challenged NGPL's exercise of eminent domain and whether NGPL's taking met the legal standard of necessity.

¶2 The issues before the Court are (1) whether the existing easement agreements between NGPL and Foster prevent NGPL from seeking the easements requested in this case, (2) the necessity of the taking by NGPL, and (3) the necessity of surveying Foster's property in determining the amount of just compensation owed to Foster. For the reasons stated herein, we hold that NGPL cannot contract away its right of eminent domain and is not prevented from seeking the easements at issue to operate and maintain the pipelines. NGPL's condemnation of Foster's property was for public use and meets the legal standard of necessity. We further rule the issue of the necessity of a survey in computing just compensation owed to Foster is premature and cannot be determined at this time.

I. FACTS AND PROCEDURE

¶3 Foster owns a 1,330-acre ranch that borders the north shore of the Red River in Bryan County, Oklahoma. NGPL is a Federal Energy Regulatory Commission (FERC) interstate natural gas pipeline company under the Natural Gas Act, 15 U.S.C. § 717a (2020). NGPL operates two interstate natural gas pipelines—AG #1 Pipeline and AG #2 Pipeline—that traverse Foster's property. NGPL operates the pipelines under Certificates of Public Convenience and Necessity issued by FERC.¹ The parties agree that NGPL possesses the right of eminent domain.

¶4 NGPL and its predecessor negotiated two 50-foot easements with Foster for AG #1 Pipeline in 1995 and AG #2 Pipeline in 1989 (Easement Agreements).² Foster and NGPL's predecessor also entered into a letter agreement in August 1996 granting NGPL's predecessor the right to install the Palisade System, an above-ground structural support and erosion control system, on an exposed segment of the AG #2 Pipeline near the north shore of the Red River. NGPL's predecessor compensated Foster for this project.

¶5 NGPL brought this condemnation action alleging the combination of constant erosion and necessary maintenance requires NGPL to have consistent and reliable access over Foster's property to properly maintain the pipelines at issue. NGPL further contends the Easement Agreements do not accurately reflect that Foster's property includes a portion of land underneath the Red River or provide notice to third parties of the Palisade System. Specifically, NGPL seeks the following four easements:

1. The "Red River Permanent Easement" spanning the width of the Red River;

2. The "Maintenance Work Temporary Workspace" adjacent and parallel to the existing easement for the AG #2 Pipeline;

3. The "Permanent Access Road Easement" granting NGPL a non-exclusive easement to use Foster's existing road to access the pipelines; and

4. The "Palisade Permanent Easement" involving the structural support system in the Red River.

¶6 The district court appointed three Commissioners to determine the just compensation owed to Foster due to NGPL's taking of the permanent and temporary easements. The Commissioners filed their Report, and Foster filed its Exceptions to the Report. The district court conducted a hearing and overruled Foster's exceptions; Foster appealed. The Court retained the appeal.

II. STANDARD OF REVIEW

¶7 Condemnation proceedings involve both factual determinations and legal rulings. The issue of whether a proposed taking is for a "public use" is a judicial question. McCrady v. W. Farmers Elec. Coop. , 1958 OK 43, ¶ 5, 323 P.2d 356, 359. "Whether it is necessary to take particular property for the economic and efficient accomplishment of a lawful public purpose is a question of fact to be determined from the attendant facts and circumstances developed by the evidence." Pub. Serv. Co. of Okla. v. Willis , 1997 OK 78, ¶ 18, 941 P.2d 995, 1000. The Court will view a valid declaration of necessity by the appropriate body as conclusive in the absence of a showing of actual fraud, bad faith, or an abuse of discretion by the condemning authority. Rueb v. Okla. City , 1967 OK 233, ¶ 12, 435 P.2d 139, 141. The Court will not disturb on appeal the findings of the district court on the issue of the necessity of the taking where there is evidence to support such findings. City of Tulsa v. Williams , 1924 OK 136, ¶ 11, 100 Okla. 116, 227 P. 876, 878.

III. DISCUSSION

A. The Easement Agreements do not divest NGPL of its right to eminent domain.

¶8 Foster argues the current Easement Agreements between Foster and NGPL prevent NGPL from seeking the easements requested in this case. Foster specifically contends NGPL seeks to utilize eminent domain to circumvent the existing Easement Agreements and to grant NGPL permanent easements that conflict with and abrogate the protections negotiated by the parties in the Easement Agreements. The Court disagrees.

¶9 This Court in Burke v. Oklahoma City , 1960 OK 29, 350 P.2d 264, previously rejected a similar argument. The property owners in Burke argued that an agreement settling an earlier condemnation proceeding relating to the same property determined the issue of the necessity for taking in a subsequent condemnation proceeding. By such agreement, the defendants contended the condemnor was estopped to maintain the subsequent condemnation proceeding. Id . ¶ 15, 350 P.2d at 267. In answering these contentions, the Court stated:

We conclude and hold that the right of eminent domain is inalienable, cannot be surrendered in whole or in part and cannot be contracted away and res adjudicata and estoppel do not constitute defenses to the causes of action set forth in the petition to condemn as filed by the City herein.

Id . ¶ 20, 350 P.2d at 268.³

¶10 We apply Burke and hold NGPL cannot surrender, alienate, contract away, or waive its right of eminent domain. The parties are still operating under the Easement Agreements. And the temporary and permanent easements requested by NGPL in this matter are outside the scope of the Easement Agreements. Even if the parties contemplated similar rights in the existing Easement Agreements, the Agreements do not divest NGPL of its right to eminent domain.

B. NGPL's condemnation of Foster's property meets the legal standard of necessity.

¶11 Although NGPL has the right to condemn Foster's property, that determination does not end our analysis. Foster argues that NGPL's taking through the temporary and permanent easements does not meet the legal standard of necessity for public use.

¶12 NGPL claims no right of eminent domain under the Constitution or statutes of Oklahoma but relies solely upon the powers delegated to it under provisions of the Natural Gas Act, 15 U.S.C. § 717f(h) (2020).⁴ The Natural Gas Act declares that "the business of transporting and selling natural gas for ultimate distribution to the public is affected with a public interest." 15 U.S.C. § 717a (2020) ; Parkes v. Natural Gas Pipe Line Co. , 1952 OK 157, ¶ 25, 207 Okla. 91, 249 P.2d 462, 466. It is the function of Congress to decide what type of taking is for public use and that the agency authorized to do the taking may do so to the full extent of its statutory authority. Parkes , 1952 OK 157, ¶ 26, 249 P.2d at 467. This Court must defer to Congress's decision. Id . Under the Natural Gas Act, NGPL has the right of eminent domain to construct, operate, and maintain pipelines for the transportation of natural gas pipelines. 15 U.S.C. § 717f(h). NGPL—operating under certificates of public convenience and necessity issued by FERC—exercised its right of eminent domain to operate and maintain AG #1 Pipeline and AG #2 Pipeline. Congress has decided this power of eminent domain is for public use.⁵

¶13 Under Oklahoma law, the Court will not disturb NGPL's decision as to the necessity for taking in the absence of fraud, bad faith, or an abuse of discretion. Willis , 1997 OK 78, ¶ 14, 941 P.2d at 999 ; Rueb , 1967 OK 233, ¶ 12, 435 P.2d at 141. The word "necessity" in connection with condemnation proceedings does not mean an absolute but only a reasonable necessity, such as would combine the greatest benefit to the public with the least inconvenience and expense to the condemning party and property owner. White v. Pawhuska , 1928 OK 136, ¶ 9, 265 P. 1059, 1062.

¶14 The parties agree that the Red River Permanent Easement and the Palisade Permanent Easement requested by NGPL are simply to clear title issues. The Easement Agreement for AG #2 Pipeline fails to describe or include the portion of the lands owned by Foster under the Red River.⁶ The Easement Agreement also does not include the Palisade System, and the parties' letter agreement executed in 1996 is not recorded in the county land records. We hold such easements are necessary to clear title issues, and NGPL's decision to take such property is not fraudulent, in bad faith, or an abuse of discretion.

¶15 NGPL requested the Maintenance Work Temporary Workspace for work performed to...