U.S. v. 8.41 Acres of Land, More or Less, Situated in Orange County, State of Tex.
| Decision Date | 14 July 1982 |
| Docket Number | No. 81-2136,81-2136 |
| Citation | 680 F.2d 388 |
| Parties | UNITED STATES of America, Plaintiff-Appellant, v. 8.41 ACRES OF LAND, More or Less, SITUATED IN ORANGE COUNTY, STATE OF TEXAS, and KWW Associates, et al. and Unknown Owners, Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. 5.00 ACRES OF LAND, More or Less, SITUATED IN ORANGE COUNTY, STATE OF TEXAS, and Firestone Tire and Rubber Company, et al., Defendants-Appellees. UNITED STATES of America, Plaintiff-Appellant, v. 6.90 ACRES OF LAND, More or Less, SITUATED IN ORANGE COUNTY, STATE OF TEXAS, and Firestone Tire and Rubber Company, et al. and Unknown Owners, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
David C. Shilton, Carol E. Dinkins, Jacques G. Gelin, Attys., Appellate Section, U. S. Dept. of Justice, Land and Natural Resources Div., Washington, D. C., for plaintiff-appellant.
George W. Brown, Jr., Beaumont, Tex., for Firestone Tire & Rubber Co. and KWW Associates.
Appeal from the United States District Court for the Eastern District of Texas.
Before DYER *, JOHNSON and WILLIAMS, Circuit Judges.
The Government is appealing the compensation award in this condemnation case involving pipeline easements for the Strategic Petroleum Reserve. The district court appointed a condemnation commission, which determined an award for easements on two tracts owned by Firestone Tire & Rubber Company (Firestone) and one tract owned by KWW Associates (KWW). The district court consolidated the actions for trial, affirmed the Commission's award, and entered judgment of $164,611 for Firestone and $96,200 for KWW. United States v. 5.00 Acres of Land, etc., 507 F.Supp. 589 (E.D.Tex.1981).
After the 1974 Arab oil embargo, Congress authorized creation of the Strategic Petroleum Reserve (Reserve) for the storage of up to one billion barrels of petroleum as protection against energy supply interruptions. As amended in 1978, 42 U.S.C. § 6201 et seq. allows acquisition of land for this project. Acquisition of multiple pipeline easements was necessary in order to carry petroleum, brine, and fresh water running to and from the Reserve's salt-dome storage caverns.
On March 8, 1978, the Department of Energy (DOE) filed a declaration of taking for one such multiple pipeline easement on three adjacent tracts of land in Orange County, Texas. The easements adjoined the north side of an existing "pipeline corridor" which followed an east-west farm-to-market road. The road, the pipeline corridor, and the new easements all bisected a 700-acre tract owned by KWW and an 1100-acre parcel of two tracts owned by Firestone. The entire KWW tract and the Firestone tracts north of the road were used as pasture, and a factory stood on the Firestone tracts south of the road. Many of the world's largest chemical plants were located in the same area. The interest acquired by the DOE was a perpetual, assignable, fifty-foot easement for multiple pipelines and a twenty-five foot temporary work easement for a period of three years. The total taking was 6.90 acres from Firestone as a permanent easement, 4.73 acres from Firestone as a temporary working easement, 5.3 acres from KWW as a permanent easement, and 3.11 acres from KWW as a temporary work easement. Shortly after a declaration of taking, the DOE placed a single 42-inch pipeline within the fifty-foot easement.
The district court appointed a three-person condemnation commission (Commission) to make a finding on just compensation for easements on these adjacent tracts. The normal procedure in awarding compensation for an easement is to determine the highest and best use of the entire acreage within the property lines of the parent tract and then calculate the difference between the market value of that tract before and after the taking. Indeed, the district court carefully instructed the Commission to use such a "before-and-after" valuation as a measure of compensation where a segment of a larger tract is taken. 1 Consistent with this approach, Jack Aulbaugh, the Government's valuation witness, testified that the highest and best use of the KWW and Firestone tracts was for industrial plant sites. Using five comparable sales of industrial property in the area, Aulbaugh valued the tracts at the time of the taking at $3500 per acre, and calculated the before-and-after value of the tracts on this basis. Aulbaugh found the value of the permanent easements to be $16,695 and $21,700 for KWW's and Firestone's property, respectively. 2
The landowners' valuation witnesses, however, presented the Commission with an unorthodox theory of easement valuation which provided a dramatically higher compensation award. William Cook for KWW and Willard Hall for Firestone asserted that the Commission should treat the fifty-foot strip of condemned land as a separate entity from the remaining acreage within the property lines of each tract. On this basis, they determined the highest and best use of the condemned strip of land to be for pipeline right-of-way. Using comparable sales of pipeline easements in the area, they valued the condemned strips at approximately $16,000 to.$19,000 per acre, and treated the Government's permanent easement as a total taking. Cook valued the permanent easement at $85,000 on KWW property-Hall, at $132,751 on Firestone's property.
Cook and Hall had never used this procedure for valuing pipeline easements before, and failed to define the exact boundaries of the "potential" pipeline corridor which they claimed existed on the Firestone and KWW tracts. 3 Nevertheless, the Commission accepted the landowners' method of appraisal, finding that the particular strips of land subject to the easements had been effectively "severed" from the larger parcels. The Commission determined the highest and best use of the condemned property was for pipeline right-of-way, not industrial plant sites. The Commission accepted the landowners' estimates of damages and awarded $164,611.27 to Firestone and $96,200.00 to KWW for both permanent and temporary easements.
Applying the clearly erroneous standard, the district court affirmed the Commission's findings that (1) the condemned tracts had been severed from the large parent tracts at the time of the taking and constituted a separate and distinct pipeline corridor; (2) the highest and best use of the property was as a pipeline right-of-way and easement; and (3) the landowners would have a right to return to the court for additional compensation if additional lines were laid in the easement, in order to avoid forcing the Commission to speculate on how many lines the Government would lay in the easement. The district court also approved the Commissioner's compensation awards. The Government appeals all three findings.
The district court adopted the Commission's finding that the fifty-foot condemned tract was constructively "severed" from the remaining part of each of the three parent tracts. Accordingly, the district court rejected the before-and-after method of valuing each parent tract as a basis for awarding compensation. The Government asserts that the district court erred in finding this method of valuation inappropriate.
Federal courts have long held that an appropriate measure of damages in a partial-taking case is the difference between the value of the parent tract before the taking and its value after the taking. 4 United States v. Virginia Electric Co., 365 U.S. 624, 632, 81 S.Ct. 784, 790, 5 L.Ed.2d 838 (1961); United States v. Grizzard, 219 U.S. 180, 185-86, 31 S.Ct. 162, 164, 55 L.Ed. 165 (1911); Shepherd v. Baltimore & O.R. Co., 130 U.S. 426, 433, 9 S.Ct. 598, 601, 32 L.Ed. 970 (1889); United States v. Trout, 386 F.2d 216, 221 (5th Cir. 1967); Stephenson Brick Co. v. United States, 110 F.2d 360, 361 (5th Cir. 1940). When the property interest taken from a parent tract is merely an easement, the proper measure of damages is still the before-and-after method of valuation, expressed as the difference between the market value of the land free of the easement and the market value as burdened with the easement. Virginia Electric, 365 U.S. at 630, 81 S.Ct. at 789; Olson v. United States, 292 U.S. 246, 54 S.Ct. 704, 78 L.Ed. 1236 (1934); 158.4 Acres of Land, in Bee County, Texas, 515 F.2d at 232; United States v. Brumfield, 354 F.2d 882 (5th Cir. 1966); Slattery Company v. United States, 231 F.2d 37 (5th Cir. 1956). See also United States v. 1,129.75 Acres of Land, etc., 473 F.2d 996, 998 (8th Cir. 1973). This Court in Transwestern Pipeline Co. v. O'Brien, 418 F.2d 15, 21 (5th Cir. 1969), explicitly upheld the appropriateness of this method for valuing pipeline easements. 5
The district court, however, has held that each condemned strip of land is the appropriate "parent tract" for purposes of valuation, because it was "severed" from the remaining acreage within the property lines of each KWW and Firestone tract. When applicable, the issue of unity or separateness of tracts is a question of fact to be presented to the trier of fact. United States v. Reynolds, 397 U.S. 14, 18-19, 90 S.Ct. 803, 806-807, 25 L.Ed.2d 12 (1970); United States v. 3276.21 Acres of Land, 194 F.Supp. 297 (S.D.Cal.1961). Three factors are particularly helpful in ascertaining whether property taken is part of a single, larger tract: physical contiguity, unity of ownership, and unity of use. Nichols, 4A Eminent Domain (1981 Supp.) at 14-393, 14-416, 14-424; Babinec v. State, 512 P.2d 563 (Sup.Ct.Alaska 1973). When an owner actually uses parts of what would otherwise constitute a unified tract for different or separate purposes, however, the parts may be held to be functionally "separate" tracts, though they are not physically separate. 6 See Sharp v. United States, 191 U.S. 341, 24 S.Ct. 114, 48 L.Ed. 211 (1903); United States v. Honolulu Plantation Co., 182 F.2d 172, 179 (9th Cir. 1950). Integrated use is the key test for...
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