In Transwestern Pipeline Company v. 17.19 Acres of Property Located in Maricopa County, (— F.3d —, C.A.9 (Ariz.), Dec. 11, 2008), the United States Court of Appeal considered a request by the owner and operator of natural gas pipelines, who had obtained a valid Federal Energy Regulatory Commission (“FERC”) certificate, to immediately take possession of land it sought to condemn in order to construct new natural gas pipelines. The court ruled that until condemnation proceedings are completed and a condemnation order issued, the Natural Gas Act (“Act”) does not grant jurisdiction to a court to issue an injunction granting possession of the property.
Transwestern Pipeline Company (“Transwestern”) owns and operates natural gas pipelines in the southwestern United States. It sought and obtained from FERC a Certificate of Public Convenience and Necessity, authorizing Transwestern to construct a new pipeline in Arizona. Opponents of the new pipeline appealed FERC’s certificate but FERC denied requests for a rehearing. Transwestern began negotiating with property owners in an effort to obtain lands for the pipeline. It reached agreement with 897 landowners, but not with 129 others, and began condemnation proceedings for those parcels pursuant to the Act, which authorizes FERC certificate holders to obtain necessary land through condemnation proceedings when negotiations fail.
While the condemnation efforts proceeded, Transwestern filed suit in federal district court seeking an injunction granting it immediate possession of the desired land, arguing that Section 717f(h) of the Act authorized such an injunction. Transwestern continued to negotiate with the landowners, and eventually came to agreement with all but one.
The district court denied the injunction ruling that it lacked authority to do so under the Act until the condemnation proceedings were completed and an order issued. Transwestern appealed.
The court said that Transwestern was essentially seeking a “quick take” possession of the property, which is authorized by some laws, such as the Atomic Energy Act and the War Powers Act, but is lacking in Section 717f(h). The court further ruled that several precedents cited by Transwestern did not apply here because they each involved efforts by a government entity, not a private party, to obtain immediate possession of properties. Therefore, the guarantee of fair compensation that a government could reliably provide was lacking. “As a private entity, Transwestern has neither sovereign authority nor the backing of the U.S. Treasury to assure adequate provision of payment,” the court explained.
Further, preliminary injunctions are generally issued to preserve the status quo of the parties during proceedings. Here, however, Transwestern sought a mandatory injunction seeking to change the status quo, which the court said is “particularly disfavored” in law.
In Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999), the United States Supreme Court ruled that a party must have a “substantive right” to an injunction to obtain one (in that case by a creditor seeking to freeze a debtor’s assets), and that no substantive right exists until an actual judgment is issued. The likelihood of success alone is insufficient. Transwestern’s substantive right to obtain the property accrued only through the issuance of a condemnation order. Requiring an order of condemnation also protects the due process rights of landowners by affording them an opportunity to show that Transwestern was exceeding its authority, or had failed to negotiate in good faith, before losing possession of their property.
Since the substantive right to condemn under the Act ripens only upon the issuance of a condemnation order, the judgment of the district court was affirmed.
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