Southern Natural v. Land, Cullman

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
12/16/99
THOMAS K. KAHN
No. 99-6008 CLERK
D. C. Docket No. 97-01728-CV-L-S
SOUTHERN NATURAL GAS COMPANY,
Plaintiff-Appellee,
versus
LAND, CULLMAN COUNTY, 2.0 acres of land located
in Cullman County, Alabama; MACK RICE, et al.,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Alabama
(December 16, 1999)
Before DUBINA, Circuit Judge, KRAVITCH, Senior Circuit Judge, and
NESBITT*, Senior District Judge.
_____________________
*Honorable Lenore C. Nesbitt, Senior U.S. District Judge for the Southern District of Florida,
sitting by designation.
DUBINA, Circuit Judge:
This case involves an appeal from a judgment entered in favor of the
appellee in a pipeline condemnation action filed pursuant to the Natural Gas Act,
15 U.S.C. § 717, et seq.1 The landowners, among other things, challenge the use of
a federal land commission, pursuant to Federal Rule of Civil Procedure 71A, to
determine the appropriate compensation for a federally authorized taking of private
land. We affirm in part, and vacate in part.
I. BACKGROUND
Appellee, Southern Natural Gas Company (“Southern”), is an interstate
natural gas pipeline company serving the southeastern United States. Southern
entered into long term service contracts with the cities of Huntsville and Decatur,
Alabama, to provide natural gas transportation services to those north Alabama
cities. In order to provide such services, Southern must construct a 122-mile
extension of its pipeline, extending it from Tuscaloosa to Huntsville. Southern
obtained a Certificate of Public Convenience and Necessity from the Federal
Energy Regulatory Commission (“FERC”) for the purpose of constructing the
pipeline. Extension of the pipeline requires the use of a series of 50-foot-wide
permanent easements that will cross some 500 tracts of land in seven Alabama
1
In addition to the present case, there are approximately 20 additional appeals
pending involving the same issue presented here which have been stayed by order of this
court.
2
counties. Although a majority of the landowners signed right-of-way agreements
with Southern, it became necessary to condemn nearly 200 tracts of land. This
appeal involves the process by which “just compensation” for the taking of these
50-foot easements will be determined.
Pursuant to the Natural Gas Act, 15 U.S.C. § 717, et seq., which governs the
activities of interstate pipelines like Southern’s, Southern filed condemnation
actions in the United States District Court for the Northern District of Alabama.
For judicial efficiency, all of these cases were assigned to Judge Seybourn H.
Lynne, who, exercising the discretion granted him under Rule 71A of the Federal
Rules of Civil Procedure (“Rule 71A”), appointed a federal land commission (“the
Commission”) to hear the just compensation cases. In deciding to use a
commission rather than conduct individual jury trials, Judge Lynne stated his
concern that “[i]t would take years and years in jury trials” to determine the
amount of just compensation due to the landowners in these cases.
Throughout the condemnation process, the district court provided guidance
to the Commission in terms of procedure, just compensation principles, and
applicable standards. In accordance with the district court’s instructions, the
Commissioners viewed the properties and conducted evidentiary hearings. After
each evidentiary hearing, the Commission reported its determination of the amount
3
of just compensation due to the owner of each tract. If either party objected to the
Commission’s report, Judge Lynne heard those objections and permitted
testimony, as well as the presentation of other evidence, before adopting,
modifying, or rejecting the report as provided in Federal Rule of Civil Procedure
53(e)(2).
The route of Southern’s natural gas pipeline crosses a 100 acre cattle pasture
owned by Mack and Callie Mae Rice (“the Rices”) in Cullman County, Alabama.
Southern filed a condemnation complaint in the Northern District of Alabama
against this property. The complaint included a legal description and a plat map
depicting the easements needed across the Rices’ land.
Subsequently, the Commissioners, parties, and lawyers viewed this tract, and
the Commissioners conducted an evidentiary hearing to determine the appropriate
award of just compensation for the taking of the pipeline easement. The
Commissioners had no problem identifying and walking the easement. Witnesses
for both sides testified before the Commission, offering opinions as to the value of
the permanent and temporary takings.
After the Commission issued its report to the district court regarding the
Rices’ land, the district court conducted a hearing on the parties’ specific
objections to the report. The court then entered a judgment and memorandum
4
opinion modifying the Commission’s findings with respect to amounts awarded for
(1) a “limiting effect” on “future improvements,” and (2) dislocation to the Rices’
cattle operation. The Rices appeal the district court’s modification of the
Commission’s determination on these two issues and challenge the court’s
discretion to appoint a commission, as well as the court’s finding that the
complaint for condemnation contained an adequate land description.
II. STANDARDS OF REVIEW
We review the district court’s decision to deny a jury demand and appoint a
Rule 71A commission to determine just compensation in eminent domain cases for
abuse of discretion. See United States v. 2,477.79 Acres, 259 F.2d 23, 27 (5th Cir.
1958).2 The extent to which Rule 71A supersedes the practice and procedure
language of 15 U.S.C. § 717f(h) is a question of law. This court subjects questions
of law to de novo review. See Blackfeet Nat’l Bank v. Nelson, 171 F.3d 1237, 1240
(11th Cir.), cert. denied, ___U.S. ___, 120 S.Ct. 497 (1999).
The district court’s decision that Southern’s legal description was adequate
is a finding of fact that must stand unless clearly erroneous. See Onishea v.
Hopper, 171 F.3d 1289, 1296 (11th Cir. 1999)(en banc)(petition for certiorari filed
2
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981)(en banc), the
Eleventh Circuit Court of Appeals adopted as binding precedent the decisions of the former
Fifth Circuit issued before October 1, 1981.
5
May 20, 1999). Whether the legal description must conform to the standards of
Rule 71A or to the standards of state law is a question of law to be reviewed de
novo. See Blackfeet Nat’l Bank, 171 F.3d at 1240.
This court reviews the district court’s determination of just compensation for
clear error. See O’Brien v. United States, 392 F.2d 949, 952 (5th Cir. 1968).
III. ANALYSIS
The Takings Clause in the Fifth Amendment to the United States
Constitution prohibits the government, or its agents, from taking private property
for “public use” without “just compensation.” U.S. CONST. AMEND. V. Passed in
1938, the Natural Gas Act, 15 U.S.C. § 717f(h), gives private gas companies the
federal power of eminent domain to acquire the necessary right of way to
construct, operate, and maintain a pipe line for the transportation of natural gas.
The statute grants jurisdiction to the U.S. district courts when the amount claimed
by the owner of the property to be condemned exceeds $3,000. 15 U.S.C. §
717f(h).
A. Jury Trial or Commission
This appeal raises the issue of whether Rule 71A of the Federal Rules of
Civil Procedure supersedes the Natural Gas Act’s practice and procedure clause for
6
the condemnation of property.3 The Rices argue that they are entitled to a jury trial
under the Natural Gas Act, 15 U.S.C. § 717, et seq. The Natural Gas Act provides
that the practice and procedure in a condemnation action “shall conform as nearly
as may be with the practice and procedure in similar action or proceeding in the
courts of the State where the property is situated.” 15 U.S.C. § 717f(h). Southern,
however, contends that the Rices are not entitled to a jury trial because Rule 71A
grants the district court, in any action which “involves the exercise of the power of
eminent domain under the law of the United States,” the discretion to determine
whether the issue of just compensation will be heard by a jury or a court-appointed
commission.4 FED. R. CIV. P. 71A(h). In our view, Southern is correct because
Rule 71A authorizes the district court judge to use a commission in this case and
the Rule supersedes the Natural Gas Act’s practice and procedure clause.
Rule 71A(h) expressly provides, in pertinent part, that
any party may have a trial by jury of the issue of just
compensation by filing a demand therefor within the time
allowed for answer or within such further time as the
3
As a threshold matter, Georgia Power Co. v. 138.30 Acres of Land, 596 F.2d 644(5th Cir. 1979), confirms that: (1) landowners have no constitutional right to a jury trial, and
(2) the district court has the discretion, under Rule 71A, to appoint a commission to determine
just compensation. See id. at 647-48; see also Alabama Power Co. v. 1354.02 Acres of Land, 709
F.2d 666, 667-68 (11th Cir. 1983).
4
Federal Rules of Civil Procedure 71A specifically excludes from this provision,
“any tribunal specially constituted by an Act of Congress.” This exception is not applicable
to the present case.
7
court may fix, unless the court in its discretion orders
that, because of the character, location, or quantity of the
property to be condemned, or for other reasons in the
interest of justice, the issue of compensation shall be
determined by a commission of three persons appointed
by it.
FED. R. CIV. P. 71A(h) (emphasis added). The plain language of Rule 71A grants
the district court broad discretion. The district court may, in its discretion, order a
hearing by a commission for any number of reasons: the character of the property,
or the location of the property, or the quantity of the property, or “other reasons in
the interest of justice.” We believe that Southern’s pipeline project, with over 500
tracts of property spread over seven counties and 122 miles, is precisely what the
drafters of Rule 71A had in mind in listing exemplary reasons for denying jury
trials (character, location, and quantity). Thus, the district court correctly exercised
its discretion in appointing a commission to determine the issue of just
compensation.
To apply Rule 71A in the case before us, the court must determine that Rule
71A supersedes the Natural Gas Act’s practice and procedure clause. “Courts
generally adhere to the principle that statutes relating to the same subject matter
should be construed harmoniously if possible, and if not, that more recent or
specific statutes should prevail over older or more general ones.” United States v.
Lara, 181 F.3d 183, 198 (1st Cir. 1999) (citing HCSC-Laundry v. United States,
8
450 U.S. 1, 6 (1981) and Morton v. Mancari, 417 U.S. 535, 550-51 (1974)), cert.
denied, ___ S.Ct. ___ (Nov. 1, 1999) (No. 99-6347). The Supreme Court has
already determined, in cases dealing with statutes other than the Natural Gas Act,
that Rule 71A supersedes the practice and procedure language of the prior statute.
In United States v. 93.970 Acres of Land, 360 U.S. 328 (1959), the Court rejected
the assertion that the practice and procedure language in 50 U.S.C. § 1715controlled over the more recent procedural directives set forth in Rule 71A. See
360 U.S. at 333 n.7. The Court stated, “it is settled that this [practice and
procedure] language required conformity in procedural matters only. And insofar
as it required such procedural conformity it was clearly repealed by Rule 71A,
Federal Rules of Civil Procedure.” Id. (internal citations omitted). Later, in Kirby
Forest Industries, Inc. v. United States, 467 U.S. 1 (1984), the Court again noted
that the practice and procedure language of a prior statute6 had been superseded by
the passage of Rule 71A. See 467 U.S. at 4 n.2.
5
Title 50 U.S.C. § 171 (1918) (repealed 1956) provided that condemnation
proceedings were “to be prosecuted in accordance with the laws relating to suits for the
condemnation of property of the States wherein the proceedings may be instituted.” 50 U.S.C.
§ 171.
6
The Kirby Forest Court noted that “[s]uits under [40 U.S.C.] § 257 originally
were required to ‘conform, as near as may be, to the practice, pleadings, forms and
proceedings existing at the time in like causes in the courts of record of the State’ in which the
suits were instituted,” but that the subsequent passage of Rule 71A rendered that portion of
the statute inapplicable. Kirby Forest, 467 U.S. at 4 n.2 (quoting Act of Aug. 1, 1888, ch. 728,
§ 2, 25 Stat. 357).
9
In accordance with the principle that a more recent statute prevails over an
older conflicting statute, we can find only one case that directly analyzes the
relationship between Rule 71A and § 717f(h). In USG Pipeline Co. v. 1.74 Acres
in Marion County, Tennessee, 1 F.Supp.2d 816 (E.D. Tenn. 1998), the district
court held that Rule 71A superseded the practice and procedure language of §
717f(h). Specifically, the court stated:
The Natural Gas Act was enacted in 1938, and Rule 71A was enacted
in 1951. Rule 71A(a) provides: “The Rules of Civil Procedure for the
United States District Courts govern the procedure for the
condemnation of real and personal property under the power of
eminent domain, except as otherwise provided in this rule.” The
Advisory Committee Notes to Rule 71A state: “Rule 71A affords a
uniform procedure for all cases of condemnation invoking the national
power of eminent domain, and . . . supplants all statutes prescribing a
different procedure.” See Kirby Forest Indus. v. United States, 467
U.S. 1, 104 S.Ct. 2187, 2191 n.2, 81 L.Ed.2d 1 (1984) (“The adoption
in 1951 of Rule 71A capped an effort to establish a uniform set of
procedures governing all federal condemnation actions.”) Interpreting
a statute with similar language requiring conformity with state
practice and procedure, the United States Supreme Court found the
statute’s procedural conformity provision was “clearly repealed” by
Rule 71A. United States v. 93.970 Acres Land, 360 U.S. 328, 79 S.Ct.
1193, 1196 n.7, 3 L.Ed.3d 1275 (1959); see also Kirby Forest, 104
S.Ct. at 2191 & n.2 (determining Rule 71A supersedes requirement of
conformity with state practice and procedure contained in 40 U.S.C. §
257).
USG Pipeline Co., 1 F.Supp.2d at 827. We agree with the Tennessee district court
that Rule 71A, not the practice and procedure language of § 717f(h) and not state
law, governs the proceedings in the instant case. See id.; see also Kirby Forest,
10
467 U.S. at 4 n.2; 93.970 Acres, 360 U.S. at 333 n.7; Alabama Power Co., 709
F.2d at 668.
In addition to USG Pipeline, Kirby Forest, and 93.970 Acres of Land, this
circuit’s holding in Alabama Power Co. v. 1354.02 Acres of Land is particularly
instructive in the case before us because the Federal Power Act, which was at issue
in Alabama Power, contains practice and procedure language that is virtually
identical to the language in the Natural Gas Act’s practice and procedure clause.
Compare 16 U.S.C. § 814, with 15 U.S.C. § 717f(h). The Alabama Power court
affirmed the district court’s appointment of a commission pursuant to Rule 71A
and thus, implicitly recognized that Rule 71A supersedes practice and procedure
language in prior conflicting statutes. See 709 F.2d at 667-68. The Rices attempt
to distinguish Alabama Power by the single fact that Alabama Power concerned
the Federal Power Act, 16 U.S.C. § 814, and not the Natural Gas Act. While this
distinction may prevent Alabama Power from providing binding precedent in this
case, Alabama Power is nonetheless persuasive because of the similarity in the
practice and procedure language of the two statutes. We can conceive of no logical
reason for the practice and procedure language of these two statutes to be given
different meanings.
11
In conclusion, we hold that the practices and procedures of federal eminent
domain actions, including those filed pursuant to the Natural Gas Act, 15 U.S.C. §
717f(h), are governed by Rule 71A and not by state law. Moreover, we hold that
Rule 71A supersedes § 717f(h). It is clear to us that Rule 71A was promulgated to
override a number of confusing federal eminent domain practice and procedure
provisions, such as that of 15 U.S.C. § 717f(h), and to provide a unified and
coherent set of rules and procedures to be used in deciding federal eminent domain
actions. Accordingly, we conclude that the district court acted within its discretion
in denying the Rices’ jury demand and in appointing a commission to determine
just compensation.
B. Adequacy of Legal Description
Concordant with their assertion that the Natural Gas Act’s practice and
procedure language applies to this case, rather than Rule 71A, the Rices argue that
Alabama state law and procedure govern the legal description requirements.
Because we have already determined that Rule 71A supersedes the practice and
procedure language in the Natural Gas Act, 15 U.S.C § 717f(h), their argument on
this point must fail as well.
Rule 71A(c)(2) requires that a condemnation complaint include a description
of the property sufficient for its identification. Southern’s complaint for
12
condemnation easily satisfied this requirement by incorporating both a legal
description and a plat map showing the placement of the pipeline and relevant
easements. Moreover, as a practical matter, the Commissioners, the parties, and
the lawyers have walked the centerline of the easement from one end of the Rices’
property to the other, and no one had any problem locating the easement. Thus, we
see no merit to the Rices’ assertion that the property description was inadequate.
C. Just Compensation
A district court’s review of a commission’s report under Rule 71A(h) is the
same as its power over the findings of fact by a master under Rule 53(e)(2) of the
Federal Rules of Civil Procedure. See FED. R. CIV. P. 71A(h); see also United
States v. Merz, 376 U.S. 192, 198-200 (1964) (discussing Rule 71A(h)). Where a
district court determines that a commission’s findings are inadequate or clearly
erroneous, the court, in accordance with Rule 53(e)(2), may use its informed
discretion to “‘modify’ the report on the basis of the record made before the
commissioners, or it ‘may reject it in whole or in part or may receive further
evidence or may recommit it with instructions.’” Merz, 376 U.S. at 199-200(quoting FED. R. CIV. P. 53(e)(2)).
In reviewing the district court’s determination of just compensation, this
court determines: (1) whether the district court applied the proper standard in
13
considering the findings; (2) whether it erred in rejecting the findings of the
Commission as clearly erroneous; and (3) whether, in turn, the findings made by
the district court are clearly erroneous. See United States v. Twin City Power Co.
of Georgia, 253 F.2d 197, 203 (5th Cir. 1958). This court reviews not the award of
the Commission, but the judgment of the district court. See Parks v. United States,
293 F.2d 482, 485 (5th Cir. 1961).
In the Rices’ just compensation case, the Commission awarded $3,980 in
compensation for the permanent easement over 1.99 acres of the Rices’ land,
$14,000 for the decreased property value of the Rices’ remaining land, and $2,000
for the temporary easement over additional land and the temporary dislocation of
the Rices’ cattle. Neither party disputed the award of $3,980 for the permanent
taking. Southern contested the remaining awards. After reviewing the
Commission’s findings on the Rices’ claim, the district court found that the
Commission violated its instructions and erroneously recommended damages
unsupported by the evidence. In particular, the district court modified two
elements of the Commission’s report that were not supported by substantial
evidence: (1) damages for a “limiting effect” on “future improvements,” and (2)
amounts awarded for dislocation of cattle operations.
14
The Commission awarded $14,000 to the Rices as compensation for the
decrease in property value due to the “limiting effect” of the pipeline on the Rices’
ability to make future improvements to the remainder of their land. Southern
objected that this award was improper in light of the Commission’s instructions. In
its instructions to the Commission, the district court explained that future uses of
the property may be considered in determining just compensation only when the
evidence shows such use to have been, but for the taking, a probable use in the
reasonably near future.
Southern argues that the evidence on future use presented to the Commission
did not show a probable use in the reasonably near future. The Commission heard
the testimony of three expert witnesses regarding the value of the Rices’ land7, as
well as the testimony of Max Rice himself. The only future improvement Mr. Rice
suggested to the Commission was that he or his grandson “might build” some
additional chicken houses. Neither through this testimony, nor elsewhere, did the
Rices provide evidence of actually making a decision to build, provide evidence of
steps taken toward construction, or even describe the location of any future
improvements within the two acre pipeline easement. Moreover, the Rices never
7
One appraiser testified that there would be no damage to the remainder of the
property due to the existence of the pipeline. Two other appraisers estimated that the total
value of the Rices’ land would be reduced by approximately $30,000 to $50,000.
15
established that any suggested improvement could not be built on the almost 100
acres they own outside of the pipeline easement.
Upon review of the evidence, the district court concluded that there was
insufficient evidence that future improvements were planned for the condemned
property. The district court therefore refused to extend an award unsupported by
the evidence. We agree with the district court that the record evidence of plans for
any future improvements to the property was speculative at best and insufficient to
merit an award for future damage. Accordingly, we affirm that aspect of the
district court’s judgment.
The Commission also determined that the Rices were entitled to an
additional $2,000 to compensate for a 20-foot wide temporary construction
easement and to cover the cost of relocating the Rices’ cattle while Southern
installed the gas line. The Commission expressly adopted the valuation offered by
one expert that the rental value of the temporary construction easement was $388.
Neither party disputes this rental value amount. The remaining $1,612 awarded by
the Commission represents unspecified damages arising out of the need to move
the cattle during the installation of the gas line. Southern objected to the
Commission’s award of $1,612.
16
Upon reviewing the evidence presented to the Commission, the district court
determined that the $388 figure was acceptable, but that the additional $1,612
“dislocation” award was clearly erroneous due to a lack of evidence. The
Commission’s report is silent as to any testimony or evidence regarding the cost of
cattle disruption. The Rices admit that no witness testified to any dollar value
associated with disruption to the cattle operations and that the sole witness to raise
the subject, Mr. Rice, uttered very little on the subject. Additionally, Southern’s
expert appraiser attributed no damages to cattle dislocation.
The district court determined that there was a “lack of evidence” to support
the Commission’s $1,612 award for cattle dislocation, but concluded that there was
“evidence of some ‘dislocation’ in cattle operations.” The district court then
reduced the Commission’s dislocation award from $1,612 to $612. We find it
problematic that the district court reduced the Commission’s dislocation award
because of insufficient evidence, but then failed to identify any specific evidence
which supported its own, lower award. In doing so, we conclude the district court
committed clear error. Consequently, we vacate the district court’s award of $612
in compensation for cattle dislocation and remand this case to the district court for
more specific findings as to the damage caused by the dislocation of cattle.8
8
Because the original basis for the Commission’s dislocation award is unclear, the
district court may decide to remand this issue to the Commission for specific findings
17
IV. CONCLUSION
For the reasons set forth in this opinion, we affirm all of the district court’s
judgment, with the exception of the amount awarded for cattle dislocation. That
part of the judgment is vacated and we remand this case to the district court for
further proceedings consistent with this opinion.
AFFIRMED IN PART, VACATED IN PART AND REMANDED.
regarding the cost of moving the Rices’ cattle. We leave that decision to the district court on
remand.
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