Wednesday, January 14, 2015

It Ain't Over 'Til It's Over: Nebraska Supreme Court Rules (or Maybe Not) on the Validity of the TransCanada XL Pipeline Route Approval Through Nebraska

The following guest post has been authored by OCA Nebraska Member Bill Blake as a follow up to his earlier post here concerning the recent Nebraska Supreme Court opinion regarding the constitutionality of the process for routing of the TransCanada pipeline through Nebraska.
Probably no appeal to the Nebraska Supreme Court has been watched more closely by more people than the challenge to the statutory routing process for the proposed TransCanada XL Pipeline.

On January 9, 2015, the Nebraska Supreme Court issued its decision, or lack thereof, in a sixty-four page opinion.[1]  By state constitution, the Nebraska Public Service Commission has plenary power over all common carriers.[2]  However, the Legislature adopted a process in 2012 to specifically address the route of the proposed XL Pipeline through Nebraska.  The Legislature allowed the Governor, after input from the Nebraska Department of Environmental Quality, to approve the route.[3]  The proposed route was studied and the Governor issued approval.  A group of citizens then challenged the process, claiming that approval was unconstitutionally taken away from the Public Service Commission and delegated to the Governor.  They made their challenge on the basis of their standing as taxpayer citizens, claiming the approval process was an unlawful expenditure of public funds.  Their standing was challenged, but the trial court found they had standing as taxpayers, that the XL Pipeline would be a common carrier, and that the statutory approval process was unconstitutional.  The decision was immediately appealed to the Nebraska Supreme Court.  The Court’s hearing process was expedited, but many weeks went by without a decision being issued.  We now know the reason for the delay.  Unfortunately, we learn little else from the decision.  It raises more substantive and procedural questions than it answers, exhibiting an unprecedented amount of acrimony among our Nebraska Supreme Court Judges.

Pursuant to the Nebraska Constitution, a statutory enactment cannot be declared unconstitutional without five of our seven judges so ruling.  However, in the challenge to the XL routing process, four of the judges agreed that the plaintiffs had standing and that the courts therefore had jurisdiction to hear the case.  The four also agreed that the statutory approval process was unconstitutional.  However, the other three judges dissented on the question of standing and refused to address the merits of the case.  While no judge stated a vote in favor of the constitutionality of the process, the four member majority was not enough to declare the process unconstitutional.  Therefore, the legislation and the proposed route of the pipeline through Nebraska would appear to be approved by default.  The three member dissent accused the other four members of reaching an absurd result, but the four members were quite clear that they thought the dissenting members had shirked their judicial duty and forced an absurd result.  The two camps could not even agree on whether to refer to the four members as a majority or a plurality.

For condemnation lawyers, the most important part of the opinion is that the four members fairly clearly ruled that eminent domain cannot be exercised by just any company that owns a pipeline.  Prior case law in Nebraska, as well as our statute authorizing eminent domain for pipelines, had made it appear that privately owned pipeline companies could exercise eminent domain for private use pipelines, and in fact case law had approved condemnation proceedings for such pipelines.  However, the court carefully considered the history of pipeline regulation in the state and recognized that the prior decisions allowing private pipeline companies to exercise the power had been issued at a time when it was thought that the federal government had preempted state regulation of interstate pipelines.  The court, referring to a prior opinion[4], stated that:

“[the] argument that a private carrier could exercise the right of eminent domain in this state for a non-public purpose….is simply wrong….[T]he reason common carriers can exercise the right of eminent domain lies in their quasi-public vocation of transporting passengers or commodities for others.  A citizen’s property may not be taken against his or her will, except through the sovereign powers of taxation and eminent domain, both of which must be for a public purpose.  Eminent domain is the State’s inherent power to take property for a public use.”  (Court’s italics).[5]

The court then clarified what is meant by the term “common carrier”, finding assistance from Texas case law and stating that statutes authorizing use of eminent domain power by common carriers do not include the owner of a pipeline built for that owner’s exclusive use.  “Under the Nebraska Constitution’s limitation on the power of eminent domain, pipeline carriers can take private property only for a public use.  That minimally means that a pipeline carrier must be providing a public service by offering to transport the commodities of others, who could use its service, even if they are limited in number.”[6]

The Court did not appear to be comfortable with the conclusion that the XL Pipeline would be a common carrier, but the district court had so concluded, and the parties did not contest the issue.

Given the rather perplexing result and the nature of the matter, this will likely not be the end of the litigation.   News services were quick to declare Nebraska’s approval of the XL, and proponents urged Congress and/or the President to do the same.  However, opponents were just as fast in arguing that they are not ready to give up.  TransCanada still needs easements through more than 100 properties in Nebraska, and must file condemnation before its routing permit expires.  The permit will expire on January 22, 2015.  Any effort to condemn can be expected to be challenged by somebody who has standing as a property owner in the path of the proposed route.  Would such challenge gain the fifth court vote to declare the siting unconstitutional?    Can the Governor extend the siting permit to avoid the two-year window of opportunity?   How will this affect the political battle in Washington, D.C. over Federal approval of the pipeline?

As Yogi said:  “It ain’t over ‘til it’s over.”

William G. Blake
Baylor, Evnen Law Firm
1248 O Street, Suite 600
Lincoln, Nebraska  68408


[1] Thompson v Heineman, 289 Neb. 798 (2015)
[2] Nebraska Constitution, Article IV, Section 20.
[3] Nebraska Unicameral, L.B. 1161 (2012).
[4] City of Bayard v North Central Gas Co., 164 Neb. 819, 83 N.W.2d 861 (1957).
[5] Thompson v Heineman, at 843.
[6] Id. at 845.

Monday, January 12, 2015

Nebraska Supreme Court rules (or maybe not) on the validity of the approval of TransCanada XL pipeline route through Nebraska

The following guest post has been authored by OCA Nebraska member-attorney, William Blake, a partner in the Lincoln office of Nebraska law firm Baylor Evnen.  

In a lengthy and acrimonious opinion issued January 9, 2015, the Nebraska Supreme Court issued a non-decision on the constitutionality of the process for routing of the TransCanada pipeline through Nebraska.  It may prove to approve the route by default.  The Court’s opinion answers very little, and raises far more questions than it answers.  The only thing that is clear is that not every pipeline can be granted the power of eminent domain.  To have that power, the owner must be a common carrier, which means the pipeline cannot exclusively carry the owner’s product.  “[T]he reason common carriers can exercise the right of eminent domain lies in their quasi-public vocation of transporting passengers or commodities for others.  A citizen’s property may not be taken against his or her will, except through the sovereign powers of taxation and eminent domain, both of which must be for a public purpose.” 

It takes five of the Court’s seven judges to declare a statute unconstitutional, and only four judges so opined in this case.  However, the other three declined to offer any opinion other than that they had no jurisdiction to do so.  Therefore, at least for now, the route seems to be approved, and the pipeline will be a common carrier for which the power of eminent domain can be used.

See Bill's previous post here in which he discusses the subject of this Nebraska Supreme Court opinion - the District Court ruling which struck down the state law as unconstitutional that allowed the Governor to approve a route for the TransCanada Keystone XL pipeline to cross the state.  

Friday, December 19, 2014

OCA's Amicus Brief Asks: Can the Most Important Evidence in an Eminent Domain Trial be Withheld From a Jury?

This week we filed an amicus curiae brief in support of Virginia Beach homeowners, James and Janet Ramsey, in Ramsey v. Commissioner of Highways, Record No. 140929 (review granted November 3, 2014), a case we previously discussed here.  

In this eminent domain case, the Virginia Department of Transportation presented testimony at trial that was much lower than the DOT's initial offer and pre-offer statements of value.  The trial court refused to admit any testimony related to the earlier higher statements of value. As a result, the jury did not hear the original value the DOT offered for the property. 

OCA's brief questions whether the jury can be kept in the dark about the most important evidence in an eminent domain trial – the value of the private property taken. The brief focuses upon two arguments.  First, the duty of the government in an eminent domain action must be to seek justice and develop a full and fair record upon which a jury may consider the just compensation to be awarded to a property owner whose land has been involuntarily taken for public use.  Second, the statement of just compensation required by Va. Code § 25.1-204(E)(1) is a legislatively-mandated statement requiring factual documentation as to the government’s financial liability to a landowner in an eminent domain proceeding which the jury must be allowed to consider, not an inadmissible offer to compromise.  
“In this case, the trial court erred by concluding that the Commissioner’s statutorily-required statement of just compensation was merely an offer to settle the dispute over purchase price rather than the required good faith statement and appraisal of value required by Virginia statute,” said Robert H. Thomas, a Director with Damon Key Leong Kupchak Hastert in Honolulu and the Hawaii representative of OCA.  “If affirmed, the tactics employed in this case by the Commissioner and Department of Transportation will not only be an injustice upon the Ramseys but will serve as a template for future systemic undercompensation in eminent domain actions across Virginia.”

OCA urges the Virginia Supreme Court to reverse the judgment of the Virginia Beach Circuit Court and remand the case for a new trial to determine the amount of just compensation required pursuant to the U.S. and Virginia Constitutions.  If VDOT's abusive tactics are allowed to stand, the property rights of all Virginians are at risk.   

For more commentary about the case visit here.  OCA's press release is available here.