Judge Attacks “Kafkaesque Regime” That Lets Pipeline Companies Seize Land With Eminent Domain

In an opinion that referenced Dante Alighieri, Franz Kafka, and If You Give a Mouse A Cookie, a federal judge blasted the Federal Energy Regulatory Commission (FERC) for creating a “seemingly endless administrative limbo” that traps property owners who want to protect their land from natural-gas pipelines. The case, Allegheny Defense Project v. FERC, centers around Michelle and Gary Erb, who were forced to sell their land in rustic, southeastern Pennsylvania to Transco, in order to clear the way for the company’s Atlantic Sunrise Project, a 200-mile pipeline that connects to the gas-rich Marcellus Shale.

Unanimously, the U.S. Court of Appeals for the D.C. Circuit rejected the homeowners’ argument that FERC had infringed on their constitutional right to due process, declaring that they “cannot surmount the deferential standards of agency review and binding circuit precedent.” Though bound by precedent and thus compelled to vote with her colleagues, Judge Patricia Millett nevertheless urged the circuit to reconsider its past decisions, writing separately that “this case starkly illustrates why a second look by us or by the Commission is overdue.”

In a blistering concurrence, Millett slammed FERC for “twist[ing] our precedent into a Kafkaesque regime” that lets “energy companies plow ahead seizing land and constructing the very pipeline that the procedurally handcuffed homeowners seek to stop.” “In cases involving private property rights, the Commission has transformed this court’s decisions upholding its tolling orders into a bureaucratic purgatory that only Dante could love,” she added.

Bolstered by the judge’s literary rebuke, Siobhan Cole, who represents the homeowners, said they are now planning to file a petition for a rehearing en banc, i.e. before the entire court. If the petition is granted and a majority of the court sides with the homeowners, the D.C. Circuit could overturn its flawed precedents. By taking the unusual step of publicly calling for en banc review, Millett’s concurrence invites her colleagues to overturn decades of harmful precedent, an opportunity the Erbs are happy to take up.

“It seems to me that every judge to this point has turned a blind eye to what is truly happening,” Michelle Erb told Energywire. “Judge Millett has just shined a spotlight on this glaring injustice.”

The D.C. Circuit’s decision is just the latest legal skirmish for the Erbs. In a separate lawsuit, the couple sued Transco for not paying them any compensation more than two years after the pipeline upended their land. Represented by the Institute for Justice, the Erbs filed a cert petition asking the U.S. Supreme Court to review their case and end this particularly abusive form of eminent domain; it was denied in late May.

Traditionally, the power of eminent domain has been limited to the government to build “public uses,” like roads. But under the Natural Gas Act, if a private natural-gas company acquires a certificate of “public convenience and necessity” from FERC, it can wield eminent domain and condemn the land it deems necessary to build and maintain its pipeline networks. 

Property owners or other interested parties who want to challenge a certificate’s issuing must first file a petition for rehearing with FERC. Under federal law, the Commission is supposed to have 30 days to grant or deny rehearing. If FERC fails to act, the rehearing “may be deemed to have been denied,” which would then let the challengers seek judicial review. As the D.C. Circuit explained, “Until the Commission disposes of that rehearing petition, the agency action is not final for purposes of judicial review,” making it “a mandatory prerequisite to obtaining judicial review.”

In the Erbs’ case, FERC issued Transco its certificate for the Atlantic Sunrise project in February 2017. Homeowners and environmentalists quickly filed petitions for rehearing as well as motions to stop the pipeline’s construction while the case was pending.

Unfortunately, the Commission, rubber-stamped by the D.C. Circuit, has created an “administrative quagmire for those who seek to challenge its decisions,” Millett wrote. Right before the 30-day deadline was up, the Commission issued a “tolling order” that “granted” the petition but only “for the limited purpose of further consideration.” 

With this stalling tactic, the Erbs’ rehearing petition was still technically under review until December 2017, when it was finally denied—more than nine months after FERC had blown past its deadline. As Millett phrased it, the Commission’s “continued inaction on rehearing—the non-finality of the Certificate Order—jurisdictionally locked the homeowners out of federal court.”

This let Transco successfully dismiss the homeowners’ petition for being “incurably premature.” But in a stunning display of chutzpah, Transco also argued that that very same certificate order should be considered “final” for the purposes of eminent domain.

As a result, in August 2017, a federal district court granted Transco with “immediate possession” of the Erbs’ land, rejecting the homeowners’ opposition as “attacks on the FERC order itself,” which “can only be challenged in front of FERC, and then in the United States Court of Appeals for the District of Columbia Circuit.” Less than a month later in September 2017, the Commission authorized construction for the pipeline. But FERC wouldn’t formally deny the rehearing petition until nearly three months later.  

“By casting aside the time limit on rehearing that Congress ordered,” Millett wrote, the Commission can treat “its decision as final enough for the pipeline companies to go forward with their construction plans, but not final for the injured landowners to obtain judicial review.” And once construction is underway, courts frequently treat the pipeline as a fait accompli, making it almost impossible to undo the damage done.

What happened to the Erbs is far from unique. Between 2009 and 2017, when a rehearing was requested for a gas pipeline certificate, FERC issued a tolling order in 99% of cases. Those orders lasted for 194 days on average—more than six times as long as federal law demands.

“There is no point to that statutory time limit if the Commission can ignore it for no reason at all and with no consequence at all,” Millett wrote. “The Commission has taken this court’s patience and turned it into a license to routinely blow past Congress’s deadline, granting itself as much time as it desires to act on rehearing requests.”

As the Supreme Court declared nearly 50 years ago, the constitutional right to due process exists to protect individuals’ “use and possession of property from arbitrary encroachment…a danger that is especially great when the State seizes goods simply upon the application of and for the benefit of a private party,” like multi-billion-dollar energy corporations.

Moreover, the Commission’s process of constant delays puts the Erbs at “the risk of an erroneous deprivation.” While the couple’s home is threatened by Transco’s “physical invasion” of their property, “the Commission has no legitimate interest that outweighs the unfairness and risk of harm imposed by the current regime, especially given how easy it would be for the Commission to fix the problem,” the judge noted.

FERC could delay construction orders, if it truly needs more time to decide, or the Commission “could try the easiest path of all: take absolutely no action on the rehearing application.” By literally doing nothing, the Erbs’ rehearing petition would have been denied, which “would have opened the courthouse doors to the homeowners four months before the eminent domain decision and five months before construction started.”

“In my view, we should put an end to it,” Millett concluded. “A scheme that walls homeowners off from timely judicial review of the Commission’s public-use determination, while allowing eminent domain and functionally irreversible construction to go forward, is in substantial tension with statutory text and runs roughshod over basic principles of fair process.”

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I'm a writer and legislative analyst at the Institute for Justice (IJ), a public interest law firm. As a member of IJ’s Communications team, I regularly write opeds and

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