Tennessee Gas Pipeline Co v. Permanent Easement for 7.053 Acres, No. 17-3700 (3d Cir. 2019)Annotate this Case
Under the Natural Gas Act of 1938 (NGA), 15 U.S.C. 717, Tennessee Gas holds a certificate of public convenience and necessity from the Federal Energy Regulatory Commission, authorizing it to construct natural gas pipelines in New Jersey and Pennsylvania. Tennessee Gas sought easements over King’s 975-acre Pike County, Pennsylvania tract. After unsuccessfully attempting to purchase the easements, Tennessee Gas filed a condemnation action under Federal Rule of Civil Procedure 71.1. The parties stipulated that Tennessee Gas could access and possess the easements, then engaged in discovery pertinent to determining the appropriate compensation. The district court ruled that federal law governs the substantive determination of just compensation and that, although King could recover consequential damages for professional fees and development costs under Pennsylvania law, it could not do so under federal law. The Third Circuit reversed. Because federal law does not supply a rule of decision on this precise issue, the court created a common law remedy, opting to incorporate state law as the federal standard. The court reasoned that fashioning a nationally uniform rule is unnecessary, incorporating state law does not frustrate the NGA’s objectives, and application of a uniform federal rule would risk “upsetting the parties’ commercial expectations” based upon “the already well-developed state property regime.”
The court issued a subsequent related opinion or order on July 25, 2019.