C. Hughes v. UGI Storage Company J. Albrecht, individually and o/b/o all others similarly situated v. UGI Storage Company

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Carl Hughes, Ellen Hughes, : CASES NOT CONSOLIDATED
Bruce Hughes, and Margaret Hughes, :
Appellants :
:
v. :
: No. 629 C.D. 2016
UGI Storage Company : Argued: September 14, 2016
:
:
:
John Albrecht, individually and on :
behalf of all others similarly situated, :
Appellant :
:
v. :
: No. 630 C.D. 2016
UGI Storage Company : Argued: September 14, 2016
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE ROBERT E. SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE COSGROVE FILED: March 13, 2017
These matters are before this court on separate appeals from orders of
the Court of Common Pleas of Tioga County (trial court) that sustained UGI
Storage Company’s preliminary objections and dismissed Appellants’ Petitions for
the Appointment of a Board of Viewers.1 For reasons set forth below, we vacate
and remand.
UGI Storage Company (UGI) filed an application with the Federal
Energy Regulatory Commission (FERC) in 2009 seeking to operate underground
natural gas storage facilities, including a gas storage field (the Meeker Storage
Field). UGI further sought to delineate a 2,980 acre protective buffer zone
(Meeker Buffer Zone) around the Meeker Storage Field. On October 10, 2010,
FERC granted UGI’s application to operate the Meeker Storage Field and certified
portions of the Meeker Buffer Zone for those areas to which UGI had property
rights. The FERC order indicated that UGI "may file a further application to
include other areas within the certificated buffer zone at a later date, [after]
complying with [FERC's] landowner notification requirements." (Hughes
Reproduced Record (R.R.) at 66a.)
To date, UGI has not acquired rights to properties of the Appellants
which are located within the Meeker Buffer Zone. UGI has further failed to
implement the owner notification program as part of the eminent domain process,
but has used and continues to use the benefit of the complete protective Meeker
Buffer Zone.
On November 5, 2015, John Albrecht, on behalf of himself and a class
of similarly-situated individuals, filed a Class Action Petition with the trial court
1
The cases before this court are docketed separately; however, the issues raised by
Appellants are identical. A request to consolidate the cases was denied because separate
certified records were filed. This Court will address the matters with one opinion, however,
since our conclusions are the same for each. For the sake of simplicity, citations to the
reproduced record or briefs of the parties will reference documents filed in Hughes v. UGI, 629
C.D. 2016, unless the document differs substantively from that which was filed in Albrecht v.
UGI, 630 C.D. 2016. In such an instance, a citation to each record will be included.
2
for the appointment of a Board of Viewers pursuant to Section 502 of the
Pennsylvania Eminent Domain Code (Code).2 On November 13, 2015, Carl F.
Hughes, Ellen B. Hughes, h/w, and Bruce D. Hughes and Margaret K. Hughes,
h/w, filed an Amended Petition for the appointment of a Board of Viewers
pursuant to the Code. All parties alleged that UGI effected a de facto taking of
certain subsurface mineral rights within a buffer zone surrounding UGI’s Meeker
Storage Field – a buffer zone for which UGI sought certification and that was
partially certified by FERC.
2
26 Pa.C.S. § 502. Petition for appointment of viewers.
…
(c) Condemnation where no declaration of taking has been filed.--
(1) An owner of a property interest who
asserts that the owner's property interest has been
condemned without the filing of a declaration of
taking may file a petition for the appointment of
viewers substantially in the form provided for in
subsection (a) setting forth the factual basis of the
petition.
(2) The court shall determine whether a
condemnation has occurred, and, if the court
determines that a condemnation has occurred, the
court shall determine the condemnation date and the
extent and nature of any property interest
condemned.
(3) The court shall enter an order specifying
any property interest which has been condemned
and the date of the condemnation.
(4) A copy of the order and any modification
shall be filed by the condemnor in the office of the
recorder of deeds of the county in which the
property is located and shall be indexed in the deed
indices showing the condemnee as grantor and the
condemnor as grantee.
….
3
After UGI failed to timely file preliminary objections to either
Petition, the trial court entered Orders for both matters on January 6, 2016,
affirmatively finding that UGI effected a de facto taking of the oil, gas, and
mineral rights at issue, and appointing a Board of Viewers. UGI thereafter filed
preliminary objections for both matters on January 14, 2016, asserting that the
Petitions should be dismissed on grounds that UGI does not have the power of
eminent domain and Appellants did not establish a de facto taking occurred.
On January 19, 2016, the trial court entered a Scheduling Order for a
proceeding to address the preliminary objections, and held the same on February
24, 2016. Supplemental briefing schedules were issued thereafter, with UGI then
filing a response to Appellants' Memoranda and Affidavits. On April 4, 2016 the
trial court sustained UGI’s preliminary objections, dismissed both the Class Action
Petition and Amended Petition for the Appointment of a Board of Viewers and
vacated the January 6, 2016 Orders appointing a Board of Viewers. Appellants
appealed to this court.3
On appeal, Appellants ask this court to review three issues: (1)
whether the trial court erred in finding that UGI does not have the power of
eminent domain with respect to Appellants’ property situated within the protective
buffer zone surrounding UGI’s Meeker Storage Field; (2) whether the trial court
erred in concluding that, for those properties in the protective buffer zone for
which UGI sought certification from FERC, UGI’s actions did not constitute a de
3
In an eminent domain case disposed of on preliminary objections, this Court is limited
to determining if common pleas' necessary findings of fact are supported by competent evidence
and if an error of law or an abuse of discretion was committed. In re Sunoco Pipeline, L.P., 143
A.3d 1000, 1014 n. 17 (Pa. Cmwlth. 2016); Stark v. Equitable Gas Co., LLC, 116 A.3d 760, 765
n. 8 (Pa. Cmwlth. 2015).
4
facto taking; and, (3) whether the trial court abused its discretion in refusing to
consider the Affidavits that were submitted as attachments to Appellants’
Supplemental Memoranda of Law in Further Opposition to UGI’s Preliminary
Objections.
Appellants first argue that the trial court erred in finding that UGI did
not have the power of eminent domain with respect to Appellants’ property located
within the buffer zone. Appellants rely in part on the language of Section 3241 of
the Oil and Gas Act (Act) that allows a corporation empowered to transport, sell or
store natural gas or manufactured gas in this Commonwealth to appropriate an
interest in real property located in a storage reservoir or reservoir protective area
for storage of natural gas in a stratum which is or previously has been
commercially productive of natural gas.4
The Supreme Court recently issued its decision in Robinson Township
v. Commonwealth, 147 A.3d 536 (Pa. 2016) (Robinson IV) which addressed, in
part, the issue of whether 58 Pa. C.S. § 3241 is constitutional as it grants a
corporation the power of eminent domain to take private property for a private
purpose. The Court recognized that while the Commonwealth possesses the power
of eminent domain and may delegate that power to other entities, this power of
delegation is not plenary, as it is restrained by our federal and state Constitutions,
and may be further limited by statute. Id. at 586. The primary limitation on the
exercise of this power is that private property may only be taken to serve a public
purpose. Id. In order to satisfy this requirement “‘the public must be the primary
and paramount beneficiary of the taking.’” Id., citing In re Opening Private Road
for Benefit of O’Reilly, 5 A.3d 246 (Pa. 2010).
4
58 Pa.C.S. § 3241.
5
The Court stated that, on its face, § 3241(a) confers a broad power on
private corporations to use the private property of a landowner to store natural gas
thereon. 147 A.3d at 587. “This type of forced use of another landowner’s
property unquestionably deprives that landowner of the use and enjoyment of the
subterranean portion of the property, given that natural gas is now physically
occupying it; hence, it constitutes a de facto taking by the corporation. Id., citing
McElwee v. Southeastern Pennsylvania Transportation Authority a/k/a SEPTA,
948 A.2d 762, 765 n. 2 (Pa. 2008). The Court therefore concluded that § 3241 was
unconstitutional as it violates the Fifth Amendment to the United States
Constitution, and Article I, Section 10 of the Pennsylvania Constitution. Id. at 589.
For its part, UGI argues that it only has the power of eminent domain
over the properties that are certified by FERC, and presently, it has not instituted a
taking of Appellants' property. But since the decision in Robinson IV goes to the
heart of the parties' issues, we must, in fairness, remand to allow the trial court to
address that decision's impact on this matter. This is especially so given the sparse
record we have before us. While the trial court had ordered a
"hearing/argument/conference" on January 19, 2016 regarding UGI's preliminary
objections, in February, the trial court held what was “essentially an informal
conference.” (Hughes’ Brief at 5a.) For these reasons, we remand to the trial court
and direct that it conduct an evidentiary hearing (as was initially intended) with
specific direction that Robinson IV’s impact be addressed at that level. Further,
since briefing in this case was completed prior to this court’s issuance of its
opinion in In re Sunoco Pipeline, L.P., 143 A.3d 1000 (Pa. Cmwlth. 2016), the trial
court is further directed to address the impact of that decision on the issues
6
presented in this case. Any proceedings at the trial level, whether argument or
evidentiary hearing, are to be conducted on the record.
___________________________
JOSEPH M. COSGROVE, Judge
7
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Carl Hughes, Ellen Hughes, :
Bruce Hughes, and Margaret Hughes, :
Appellants :
:
v. :
: No. 629 C.D. 2016
UGI Storage Company :
:
:
:
John Albrecht, individually and on :
behalf of all others similarly situated, :
Appellant :
:
v. :
: No. 630 C.D. 2016
UGI Storage Company :
ORDER
AND NOW, this 13th day of March, 2017, the orders of the Court of
Common Pleas of Tioga County are vacated and this matter is remanded to the trial
court for proceedings consistent with this opinion.
Jurisdiction is relinquished.
___________________________
JOSEPH M. COSGROVE, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Carl Hughes, Ellen Hughes, : CASES NOT CONSOLIDATED
Bruce Hughes, and Margaret Hughes, :
Appellants :
:
v. : No. 629 C.D. 2016
:
UGI Storage Company :
John Albrecht, individually and on :
behalf of all others similarly situated, :
Appellant :
:
v. : No. 630 C.D. 2016
: Argued: September 14, 2016
UGI Storage Company :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
OPINION NOT REPORTED
CONCURRING OPINION
BY JUDGE SIMPSON FILED: March 13, 2017
These class action lawsuits asserting a de facto condemnation involve
the Meeker Buffer Zone, a buffer zone around an underground gas storage facility
in Tioga County proposed by UGI Storage Company (UGI). Plaintiffs/appellants
own property in the proposed buffer zone. One principal issue is whether UGI has
the power of condemnation with regard to plaintiffs’/appellants’ properties in the
absence of a certificate of public convenience (or its equivalent) issued by the
appropriate state or federal regulatory body.
I concur in the result reached by the Majority, which is a remand to
the trial court in part to determine the impact of our Supreme Court’s recent
decision in Robinson Township v. Commonwealth, 147 A.3d 536 (Pa. 2016)
(Robinson Twp. IV). In Robinson Twp. IV, the Court held that a statutory
provision upon which plaintiffs/appellants rely in asserting UGI’s power of
condemnation, Section 3241 of Act 13, 58 Pa. C.S. §3241, is unconstitutional.
I write separately to more clearly explain the Majority’s additional
brief reference to this Court’s recent decision in In re Sunoco Pipeline, L.P., 143
A.3d 1000 (Pa. Cmwlth. 2016) (en banc).
Plaintiffs/appellants also rely on Sections 102 and 1103 of the Public
Utility Code, 66 Pa. C.S. §§102, 1103 (definitions of “public utility”), and Section
1511(a)(3) of the Business Corporation Law of 1988, 15 Pa. C.S. §1511(a)(3)
(public utility corporation shall have right to condemn property for storage of
natural or artificial gas). Br. of Appellants at 19a-21a. Plaintiffs/appellants assert
that the issuance of a “certificate” to establish a buffer zone ancillary to a gas
storage facility under their properties is not a precondition to UGI’s possessing
condemnation power with respect to those properties as a matter of state law. Id. at
10a-11a. Significant for the current discussion, plaintiffs/appellants do not assert
that UGI has a certificate from either the Pennsylvania Public Utility Commission
(PUC) or its federal equivalent, the Federal Energy Regulatory Commission
(FERC), to establish a buffer zone ancillary to a gas storage facility under their
properties.
RES - 2
Unfortunately, in their state law argument plaintiffs/appellants do not
cite Section 1104 of the Public Utility Code, 66 Pa. C.S. §1104. That Section
provides that unless the power of eminent domain existed under prior law, “no
domestic public utility … authorized to do business in this Commonwealth shall
exercise any power of eminent domain within this Commonwealth until it shall
have received the certificate of public convenience required by section 1101
(relating to organization of public utilities and beginning of service).” Id.
(emphasis added). Thus, state law usually requires a certificate prior to the
exercise of eminent domain by a public utility.
The reasoning behind this statutory requirement was addressed in our
recent decision in In re Sunoco Pipeline: “A [certificate of public convenience]
issued by the PUC is prima facie evidence that there is a public need for the
proposed service and that the holder is clothed with the eminent domain power.”
In re Sunoco Pipeline, 143 A.3d at 1018 (emphasis added). Stated differently,
under state law the appropriate certificate from the controlling regulatory body
demonstrates that the underlying public need has been addressed and the public
utility may exercise a power of eminent domain.
Both Section 1104 of the Public Utility Code, which modifies the
definition of “public utility” in Section 1103 of the Public Utility Code quoted by
plaintiffs/appellants, and our recent decision in In re Sunoco Pipeline, pertain to
the assertion that UGI does not need a certificate to establish a buffer zone
ancillary to a gas storage facility under plaintiffs’/appellants’ properties before
RES - 3
enjoying the power of eminent domain over those properties. Thus, the trial court
is encouraged to consider them on remand.
ROBERT SIMPSON, Judge
Judge Covey joins in this concurring opinion.
RES - 4
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Carl Hughes, Ellen Hughes, : CASES NOT CONSOLIDATED
Bruce Hughes, and Margaret Hughes, :
Appellants :
:
v. : No. 629 C.D. 2016
:
UGI Storage Company :
:
:
John Albrecht, individually and on :
behalf of all others similarly situated, :
Appellant :
:
v. : No. 630 C.D. 2016
: Argued: September 14, 2016
UGI Storage Company :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE JULIA K. HEARTHWAY, Judge
HONORABLE JOSEPH M. COSGROVE, Judge
OPINION NOT REPORTED
DISSENTING OPINION BY
JUDGE McCULLOUGH FILED: March 13, 2017
I respectfully dissent from the Majority’s thoughtful decision insofar as
it fails to address the merits of the class-action plaintiffs’ claims.1
1
In its opinion, the Majority does not discuss whether the averments in the class-action
plaintiffs’ petitions state a valid cause of action for a de facto taking, which is a threshold
(Footnote continued on next page…)
In this case, UGI Storage Company (UGI) has already obtained
certification from the Federal Energy Regulatory Commission (FERC) to utilize and
devote a substantial portion of a “buffer zone” to protect its natural gas interests and
storage field boundary. The class-action plaintiffs are quarantined in a small part of
the “buffer zone.” UGI has already sought certification from FERC to condemn the
(continued…)
determination that must be made before an evidentiary hearing is held. See Linde Enterprises, Inc.
v. Lackawanna River Basin Sewer Authority, 911 A.2d 658, 661 (Pa. Cmwlth. 2006). In Linde
Enterprises, we explained the procedure to be employed when preliminary objections are filed in a
de facto taking case:
[t]he trial court must determine first whether, as matter of law, the
averments of the petition for the appointment of viewers, taken as
true, in addition to any stipulated facts, are sufficient to state a cause
of action for a de facto taking. If not, the preliminary objections must
be sustained and the petition dismissed or allowed to be amended. If
the averments, taken as true, might establish a de facto taking the trial
court must take evidence by depositions, or otherwise [e.g., a
hearing], so that a judicial determination might be made.
Id. (emphasis in original and citation omitted.)
Because the Majority does not decide the legal sufficiency (or insufficiency) of the petitions,
it is unclear to me what the Majority has exactly determined in its opinion and why it is remanding
the case to the trial court. It appears that the predominate purpose for the Majority’s remand is for
the trial court and the parties to discuss Robinson Township v. Commonwealth, 147 A.3d 536 (Pa.
2016), and In re Sunoco Pipeline, L.P., 143 A.3d 1000 (Pa. Cmwlth. 2016). (See Maj. op. at 5-6.)
However, the Supreme Court in Robinson Township unequivocally held that power of eminent
domain conferred on private corporations in section 3241(a) of Act 13, 58 Pa. C.S. §3241(a), is
facially unconstitutional and enjoined its enforcement; therefore, it is obvious that this statute
cannot clothe UGI with the power of eminent domain and has no bearing on the present matter.
Moreover, our decision in In re Sunoco Pipeline, although providing an illustrative and informative
example of when a public utility seeks to condemn property to construct pipelines for the shipment
of natural gas and petroleum, has no readily discernable impact or application to the particular facts
and circumstances of this case.
PAM - 2
class-action plaintiffs’ property. Although UGI’s proposed condemnation of the
class-action plaintiffs’ property is clearly within the scope of the condemnation
power contained in section 717f(h) of the Natural Gas Act, 15 U.S.C. §717f(h),2
FERC denied certification on the relatively technical ground that UGI failed to
properly notify the class-action plaintiffs and inform them of their right to protest the
proposed taking. Assuming that UGI desires to safeguard its business assets, it is
entirely reasonable for a fact-finder to believe or infer that UGI will try to condemn
the class-action plaintiffs’ property in the future.
Despite the fact that UGI has not received certification from FERC to
obtain the class-action plaintiffs’ property or commenced a de jure condemnation, the
end result is that the brunt of the harm has been inflicted, and the wound remains and
will continue to remain. The class-action plaintiffs are isolated on an island in a
“buffer zone” in which oil and gas drilling cannot occur. UGI’s actions and conduct
are a matter of public record and any person interested in the class-action plaintiffs’
subsurface mineral rights would discover through the exercise of due diligence that
UGI has attempted – and most likely will attempt in the future – to condemn the class
action plaintiffs’ property. See Conroy-Prugh Glass Company v. Commonwealth of
Pennsylvania, Department of Transportation, 321 A.2d 598, 602 (Pa. 1974).3 It
should come as no surprise, then, that the class-action plaintiffs have asserted a de
2
See also Williston Basin Interstate Pipeline Co. v. An Exclusive Gas Storage Leasehold &
Easement in the Cloverly Subterranean Geological Formation, 524 F.3d 1090, 1097 (9th Cir.
2008); Columbia Gas Transmission Corp. v. An Exclusive Gas Storage Easement, 776 F.2d 125,
128-29 (6th Cir. 1985).
3
See also McCracken v. City of Philadelphia, 451 A.2d 1046, 1050 (Pa. Cmwlth. 1982);
Petition of Cornell Industrial Electric, Inc., 338 A.2d 752, 753-54 (Pa. Cmwlth. 1975).
PAM - 3
facto taking, alleging that UGI has essentially placed an ever-present dooming cloud
over their island in the “buffer zone,” and, as a result, they are unable to enter into
lucrative leases with third-parties for oil and gas exploration. See Robinson Township
v. Commonwealth, 147 A.3d 536, 587 (Pa. 2016).
Accepting the allegations in the class-action plaintiffs’ petitions as true, I
would conclude that they are sufficient to entitle the class-action plaintiffs to the
appointment of viewers and that the trial court erred in granting UGI’s preliminary
objections. Accordingly, I would reverse the trial court’s order and remand to the
trial court to convene a hearing on the merits of the class-action plaintiffs’ claims and
any factual issues related thereto. See Linde Enterprises, Inc. v. Lackawanna River
Basin Sewer Authority, 911 A.2d 658, 661-62 (Pa. Cmwlth. 2006).
________________________________
PATRICIA A. McCULLOUGH, Judge
PAM - 4