Transwestern Pipeline v. 17.19 Acres of Property

• Decision Date: 11 December 2008
• Docket Number: No. 08-15991.,08-15991.
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: TRANSWESTERN PIPELINE COMPANY, LLC, a Delaware limited liability company, Plaintiff-Appellant, v. 17.19 ACRES OF PROPERTY LOCATED IN MARICOPA COUNTY, more or less; Agua Fria Investments, LLC, a Delaware limited liability company; First National Bank of Olathe, a Kansas corporation; J. Lawrence McCormley, Defendants-Appellees.

550 F.3d 770

TRANSWESTERN PIPELINE COMPANY, LLC, a Delaware limited liability company, Plaintiff-Appellant, v. 17.19 ACRES OF PROPERTY LOCATED IN MARICOPA COUNTY, more or less; Agua Fria Investments, LLC, a Delaware limited liability company; First National Bank of Olathe, a Kansas corporation; J. Lawrence McCormley, Defendants-Appellees.

No. 08-15991.

United States Court of Appeals, Ninth Circuit.

Submitted December 1, 2008.^*

Filed December 11, 2008.

John C. Lemaster, Ryley Carlock & Applewhite, Phoenix, AZ, and Jeffrey L. Hinds, Bricklemyer Smolker & Bolves, P.A., Tampa, FL, for the appellant.

Steven A. Hirsch, Bryan Cave LLP, Phoenix, AZ, for the appellees.

Kenneth B. Bley, Cox, Castle & Nicholson LLP, Los Angeles, CA, for the amici curiae.

Appeal from the United States District Court for the District of Arizona; John W. Sedwick, District Judge, Presiding. D.C. No. 2:08-cv-00033-JWS.

Before: HARRY PREGERSON, CYNTHIA HOLCOMB HALL and N. RANDY SMITH, Circuit Judges.

HALL, Senior Circuit Judge:

Transwestern Pipeline Co. (Transwestern) appeals the district court's denial of its preliminary injunction motion seeking immediate possession of appellee landowners' parcels of land. As a holder of a valid Federal Energy Regulatory Commission (FERC) certificate, Transwestern claims it is entitled to condemn appellees' land pursuant to § 717f(h) of the Natural Gas Act (NGA). The district court denied the injunction, holding that, until condemnation proceedings are completed, Transwestern maintains no substantive right of possession and therefore the district court lacked authority to grant preliminary equitable relief. The district court had jurisdiction pursuant to 15 U.S.C. § 717f(h) and 28 U.S.C. § 1331. We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1). We affirm and hold that, until an order of condemnation issues pursuant to the requirements of 15 U.S.C. § 717f(h), Transwestern has no substantive right of possession.

I. Background

Transwestern owns and operates natural gas pipelines serving much of the Southwest. Following the review of its application and completion of public hearings, the Federal Energy Regulatory Commission (FERC) issued a Certificate of Public Convenience and Necessity (the Certificate) approving Transwestern's proposed construction and expansion of a natural gas pipeline to meet the demands of a growing Phoenix market. The Certificate provided that Transwestern was to complete the construction within one year of issuance, or by November 15, 2008.¹

Several property owners affected by the Certificate, most prominently the Town of Buckeye, Arizona, opposed the Certificate's issuance and filed a petition for rehearing of the Certificate with FERC. The petition alleged insufficient process in approving the Certificate and requested that the proposed pipeline route bypass a number of master planned communities. FERC denied the petition for rehearing, see 2008 WL 461054 (F.E.R.C.) and, pursuant to the process outlined by the Natural Gas Act (NGA), several petitioners appealed the denial to the D.C. Circuit. See 15 U.S.C. § 717r. These appeals have since been dismissed during the pendency of this appeal. See Town of Buckeye v. F.E.R.C., No. 08-1126 (D.C.Cir. filed June 27, 2008); El Paso Natural Gas Co. v. F.E.R.C., No. 08-1161 (D.C.Cir. filed Aug. 25, 2008).²

Because neither the rehearing nor the appeal automatically stayed the Certificate's enforcement, see § 717r(c), Transwestern continued to pursue its construction objectives throughout this time. Transwestern was able to reach an agreement on an easement price with most of the 897 affected landowners. With regard to the remaining 129 parcels, Transwestern filed condemnation actions in the district court of Arizona. The NGA authorizes FERC Certificate holders to acquire necessary land by the exercise of the right of eminent domain, after negotiations with affected landowners fail. § 717f(h).³

After consolidating the actions, Transwestern sought a preliminary injunction to obtain immediate possession of the contested parcels. Transwestern claimed entitlement to relief under the court's equitable powers and, specifically, Rule 65 of the Federal Rules of Civil Procedure. Transwestern argued that the FERC certificate and NGA § 717f(h) guaranteed its success on the merits, and it would suffer irreparable harm if it could not take possession immediately, citing construction delays and resulting expenses, the necessity of complying with the timeline provided by the Certificate, its desire to meet contractual forecasts with suppliers and customers, and the public interest in getting the pipeline in service before fall 2008. The landowners argued the Certificate was improperly granted and also contested the severity and nature of Transwestern's harm. They argued primarily that any harm incurred by Transwestern was illusory and created by Transwestern's own choice to prematurely enter contracts, and that Transwestern could easily obtain an extension of the FERC deadline.

Following a lengthy evidentiary hearing, the district court denied the preliminary injunction. Without reaching the parties' factual contentions or balancing hardships, the district court held that it lacked authority to grant immediate possession under the terms of the NGA, and doing so would effectively grant Transwestern a substantive quick-take power not authorized by the statute.

During this appeal process, Transwestern was able to settle with all but one affected landowner, Agua Fria Investments, LLC, the remaining appellee in this action.

II. Standard of Review

"In general, we review the denial of a preliminary injunction for abuse of discretion. The district court, however, necessarily abuses it discretion when it bases its decision on an erroneous legal standard or on clearly erroneous findings of fact. When the district court is alleged to have relied on an erroneous legal premise, we review the underlying issues of law de novo." Earth Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1298 (9th Cir. 2003) (citations omitted). Here, the district court found that it lacked authority to grant the preliminary injunction. This appeal thus presents a legal question that we review de novo.

III. Discussion

A. Statutory Right to Possession Under NGA § 717f(h)

The usual process by which the government or another authorized party takes property for public use is through the straight condemnation proceeding. In straight condemnation actions, the government takes possession of the land following an order of condemnation and a trial determining just compensation. See 40 U.S.C. § 3113; Kirby Forest Ind., Inc. v. United States, 467 U.S. 1, 3-4, 104 S.Ct. 2187, 81 L.Ed.2d 1 (1984) (outlining different authority and procedures used by the government to condemn property).

Certain other statutes, chiefly the Declaration of Taking Act (DTA), provide an additional quick-take power, by which the government's right of possession vests immediately upon filing a declaration of public use and assuring the court that the government will pay the full just compensation amount, once determined, by deposit, appropriation, or otherwise. See 40 U.S.C. § 3114(DTA); Kirby, 467 U.S. at 4-5, 104 S.Ct. 2187; Commercial Station Post Office v. United States, 48 F.2d 183, 184-186 (8th Cir.1931) (granting immediate possession to the government after the order of condemnation issued, but before just compensation was determined, because a congressional appropriation existed to acquire contested property). Congress has granted quick-take authority in only a limited number of statutes, including the Atomic Energy Act and the Second War Powers Act, and only for use by the federal government. See United States v. Parcel of Land, etc., 100 F.Supp. 498, 501, 503, n. 8 (D.D.C.1951). Furthermore, the Uniform Relocation Assistance and Real Property Acquisitions Policy Act of 1970 limits the use of quick-take power and requires "to the greatest extent practicable," that the federal government use straight condemnation proceedings. 42 U.S.C. § 4651.

The "additional [quick-take] right conferred" by Congress is missing from § 717f(h) of the NGA. See Parcel of Land, 100 F.Supp. at 501 (discussing the separate substantive right of the quick-take power, which must be expressly granted in a statute by Congress) (citing Catlin v. United States, 324 U.S. 229, 239, 65 S.Ct. 631, 89 L.Ed. 911 (1945)). All courts examining the issue have agreed that the NGA does not authorize quick-take power, nor can it be implied, because eminent domain statutes are strictly construed to exclude those rights not expressly granted. See Humphries v. Williams Nat'l Gas Co., 48 F.Supp.2d 1276, 1281 (D.Kan.1999); see also Northern Border Pipeline Co. v. 86.72 Acres of Land, 144 F.3d 469, 471 (7th Cir.1998) (Northern Border); Northwest Pipeline Corp. v. The 20" × 1,430' Pipeline Right of Way, 197 F.Supp.2d 1241, 1243-1244 (E.D.Wash.2002); Northern Border Pipeline Co. v. 127.79 Acres of Land, More or Less in Williams County, N.D., 520 F.Supp. 170, 173 (D.C.N.D.1981).

Transwestern concedes that the NGA itself does not authorize quick-take power, but cites numerous cases for the proposition that courts nonetheless have authority to grant immediate possession in condemnation actions under their equitable powers. See, e.g., City of Oakland v. United States, 124 F.2d 959, 963 (9th Cir. 1942); Commercial Station, 48 F.2d at 184; United States v. Fisk Bldg., 99 F.Supp. 592, 594-595 (S.D.N.Y.1951); United States v. A Certain Tract or Parcel of Land in Chatham County, 44 F.Supp. 712, 716 (S.D.Ga.1942). These cases, however, do not address a private entity condemning property under the limited statutory authority of the NGA. Instead, these cases rely on other statutes, or on the inherent power of the United States government as sovereign, to condemn property. See, e.g., Commercial Station, 48 F.2d at 185 (relying on direct legislative act and...