A three-judge panel of the Pennsylvania Commonwealth Court, in a pair of memorandum opinions, recently affirmed a trial court decision authorizing a natural gas public utility to use its eminent domain power to condemn an easement for the construction and maintenance of a pipeline that will supply gas to a private power plant. The owners of the property subject to the easement had protested the condemnation sought by UGI Penn Natural Gas, Inc. (“UGI”), arguing that the taking was for private instead of public use. Reed Smith previously published an alert discussing the trial court decision.

On appeal to the Pennsylvania Commonwealth Court, the landowners argued that the trial court erred in concluding that UGI qualifies for the public utility exception under section 204(b) of the Pennsylvania Property Rights Protection Act (PRPA), because UGI sought to obtain an easement through eminent domain that was not for a valid, public purpose, but instead was for a private entity, which is prohibited under section 204(a) of the PRPA. In response, UGI argued that it is a regulated public utility falling within a limited class of condemnors to which section 204(a) does not apply. The court agreed with UGI, finding that UGI was a public utility vested with the power of eminent domain to condemn property for the transportation of natural gas to or for the public. The court reasoned that the purpose of the pipeline is to supply natural gas to a power plant within UGI’s service area; that UGI is the chosen supplier of natural gas in that area; that UGI is a public utility regulated by the Pennsylvania Utility Commission; that UGI is the sole owner of the pipeline easements; and finally, that the private power company will not own, operate, or control the condemned easement or natural gas line. The landowners also argued that the trial court erred in concluding that the scope of the easement was not greater than necessary to acquire property rights in connection with the pipeline easement.

The landowners noted that UGI sought to condemn property rights for multiple pipelines, and to increase the size of the pipeline, if needed, for its intended purpose. In support of its argument, the landowners cited to a 1995 Pennsylvania Commonwealth Court decision where the court held that PennDOT could not condemn a property for a potential future highway because the condemnation was premature. UGI argued, and the court agreed, that the 1995 decision was distinguishable from the present case because UGI intended to condemn the property for use in an active property, of which there was no future uncertainty. The court concluded that UGI’s scope of the easement was not greater than necessary to acquire property rights in connection with the easement.

The decisions were issued on January 5, 2016. The case is In Re: Condemnation of Temporary Construction Easement Across Lands of Curtis R. Lauchle and Terri L. Lauchle, No. 2216 C.D. 2014, 2215 C.D. 2014.

Client Alert 2016-007