Tenn. Gas Pipeline Co. v. Permanent Easement for 7.053 Acres

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 17-3700

_____________

TENNESSEE GAS PIPELINE COMPANY, LLC

v.

PERMANENT EASEMENT FOR 7.053 ACRES,

PERMANENT OVERLAY EASEMENT

FOR 1.709 ACRES AND TEMPORARY

EASEMENTS FOR 8.551 ACRES IN MILFORD

AND WESTFALL TOWNSHIPS, PIKE COUNTY,

PENNSYLVANIA, TAX PARCEL NUMBERS;

KING ARTHUR ESTATES, A Limited Partnership;

RIOTHAMUS CORP, General Partner of King Estates

c/o Ernest Bertuzzi President; ALL UNKNOWN OWNERS

AND INTERESTED PARTIES

King Arthur Estates, L.P. and Riothamus Corporation,

Appellants

______________

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE MIDDLE DISTRICT OF

PENNSYLVANIA

(D.C. No. 3-12-cv-01477)

District Judge: Hon. A. Richard Caputo

______________

Argued

November 28, 2018

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Before: AMBRO, CHAGARES, and GREENAWAY, JR.,

Circuit Judges.

(Opinion Filed: July 23, 2019)

Albert F. Moran

Patrick F. Nugent

Sean T. O’Neill

John F. Stoviak

Saul Ewing Arnstein & Lehr

1500 Market Street

Centre Square West, 38th Floor

Philadelphia, PA 19102

Elizabeth U. Witmer [Argued]

Saul Ewing Arnstein & Lehr

1200 Liberty Ridge Drive

Suite 200

Wayne, PA 19087

Counsel for Appellee

John T. Stieh [Argued]

Levy Stieh Gaughan & Baron

542 Routes 6 & 209

P.O. Box D

Milford, PA 18337

Counsel for Appellants

2

______________

OPINION

______________

GREENAWAY, JR., Circuit Judge.

The Natural Gas Act of 1938 (“NGA”), 15 U.S.C.

§§ 717–717z, allows natural gas companies to acquire private

property by eminent domain to construct, operate, and

maintain natural gas pipelines. Id. § 717f(h). Here, Tennessee

Gas Pipeline Company, LLC (“Tennessee Gas”) commenced a

condemnation action under the NGA to acquire easements on

property owned by King Arthur Estates, LP (“King Arthur”).

On interlocutory appeal, this case now presents us with a single

legal issue: whether state law or federal law governs the

substantive determination of just compensation in

condemnation actions brought by private entities under the

NGA. Because federal law does not supply a rule of decision

on this precise issue, we must fill the void with a common law

remedy. In doing so, we opt to incorporate state law as the

federal standard. Accordingly, we will reverse the District

Court’s order reaching the opposite result.

I. BACKGROUND

As required by the NGA, Tennessee Gas holds a

certificate of public convenience and necessity from the

Federal Energy Regulatory Commission (“FERC”)

authorizing it, inter alia, to construct natural gas pipelines in

New Jersey and Pennsylvania to augment its natural gas

delivery capacity in the region. As part of this project,

Tennessee Gas seeks to obtain easements over a 975-acre tract

3

of land in Pike County, Pennsylvania owned by King Arthur.

Upon unsuccessfully attempting to purchase the requisite

easements from King Arthur, Tennessee Gas filed the instant

condemnation action under Federal Rule of Civil Procedure

71.1 (“Rule 71.1”).

After the parties stipulated that Tennessee Gas could

access and possess the easements, they engaged in discovery

pertinent to determining the appropriate compensation for the

condemnation. Both parties retained various experts to

appraise, inter alia, the value of the land before and after the

taking, the value of the timber removed from the land,

professional fees, development costs, and timber replacement

and reforestation costs. Following the close of this discovery,

Tennessee Gas moved for summary judgment on various

issues, including that of compensation.

As to the issue of compensation, the District Court

granted in part Tennessee Gas’ motion. Relying entirely on a

prior opinion deciding the same issue, 1 the District Court ruled

that federal law governs the substantive determination of just

compensation in this dispute. The District Court hence

1

That case also concerned a condemnation action

brought by Tennessee Gas under the NGA. Tennessee Gas

Pipeline Co. v. Permanent Easement for 1.7320 Acres and

Temporary Easements for 5.4130 Acres in Shohola Twp., Pike

Cty., Pa., No. 11-028, 2014 WL 690700, at *1 (M.D. Pa. Feb.

24, 2014). There, the District Court noted the lack of binding

authority on the substantive determination of compensation,

discussed persuasive case law on the issue, reviewed the

parties’ extended arguments on both sides, and, upon doing so,

determined that federal law applies. Id. at *6–10.

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determined that, although King Arthur could recover

consequential damages for professional fees and development

costs under Pennsylvania law, it could not do so under federal

law. Together, the consequential damages at issue total just

under $1 million.

A few weeks later, King Arthur filed a motion to certify

the District Court’s order for interlocutory appeal, which the

District Court granted. Another Panel of our Court then

granted King Arthur’s petition for interlocutory appeal. We

are now faced with the purely legal question of whether state

law or federal law governs the substantive determination of just

compensation in condemnation actions brought by private

entities under the NGA.

II. JURISDICTION AND STANDARD OF REVIEW

The District Court had subject matter jurisdiction under

28 U.S.C. § 1331 and 15 U.S.C. § 717f(h). We have appellate

jurisdiction under 28 U.S.C. § 1292(b) and review the legal

issue presented in this appeal de novo. Geness v. Cox, 902 F.3d

344, 354 (3d Cir. 2018) (citation omitted); United States v.

Hendricks, 395 F.3d 173, 176–77 (3d Cir. 2005) (citations

omitted).

III. DISCUSSION

A. Relevant Law

Before we delve into the merits of the instant issue, we

pause to consider the legal landscape in which this dispute

arises. In particular, we discuss the background legal

principles relevant to (1) the NGA, (2) just compensation,

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(3) federal common lawmaking, and (4) persuasive case law

on this subject.

1. The NGA

It is well-established that the federal government wields

the authority to exercise eminent domain. See Kohl v. United

States, 91 U.S. 367, 370 (1875) (“The right of eminent domain

is an ‘inseparable incident of sovereignty.’” (citations

omitted)). But that is not all. Rather, because “the power of

eminent domain is merely the means to the end,” the federal

government also has the authority to delegate its eminent

domain power to private entities. Berman v. Parker, 348 U.S.

26, 33 (1954). Indeed, Congress has done so in a number of

legislative settings, including the District of Columbia

Redevelopment Act of 1945, D.C. Code §§ 5-701 to -737; the

Federal Power Act (“FPA”), 16 U.S.C. §§ 824–824w; and, of

course, the NGA.

In 1938, Congress enacted the NGA based on its

recognition that “the business of transporting and selling

natural gas for ultimate distribution to the public is affected

with a public interest.” 15 U.S.C. § 717(a). Acknowledging

that “[f]ederal regulation in matters relating to the

transportation of natural gas and the sale thereof in interstate

and foreign commerce is necessary in the public interest,”

Congress ensured that the NGA delegated regulatory authority

to an appropriate body. Id. Decades later, this body became

FERC. 42 U.S.C. § 7171.

As relevant here, the NGA allows gas companies to

acquire private property by eminent domain to construct,

operate, and maintain natural gas pipelines. 15 U.S.C.

§ 717f(h). To do so, however, a natural gas company must first

6

successfully obtain a certificate of public convenience and

necessity from FERC and unsuccessfully attempt to purchase

the required property from its owner. Id. More fully, the NGA

provides:

When any holder of a certificate of public

convenience and necessity cannot acquire by

contract, or is unable to agree with the owner of

property to the compensation to be paid for, the

necessary right-of-way to construct, operate, and

maintain a pipe line or pipe lines for the

transportation of natural gas, and the necessary

land or other property, in addition to right-of-

way, for the location of compressor stations,

pressure apparatus, or other stations or

equipment necessary to the proper operation of

such pipe line or pipe lines, it may acquire the

same by the exercise of the right of eminent

domain in the district court of the United States

for the district in which such property may be

located, or in the State courts. The practice and

procedure in any action or proceeding for that

purpose in the district court of the United States

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: Provided, That the United

States district courts shall only have jurisdiction

of cases when the amount claimed by the owner

of the property to be condemned exceeds $3,000.

Id. (emphasis in original).

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The statute’s reference to state “practice and

procedure,” however, does not mean that it incorporates state

law for the substantive determination of compensation. Id.

Although some courts have concluded otherwise, see, e.g.,

Miss. River Transmission Corp. v. Tabor, 757 F.2d 662, 665

n.3 (5th Cir. 1985), “this language require[s] conformity in

procedural matters only.” United States v. 93.970 Acres of

Land, 360 U.S. 328, 333 n.7 (1959) (citations omitted). In any

event, that language has been superseded by Rule 71.1, which

establishes its own procedures applicable to all condemnation

cases in federal court. See Fed. R. Civ. P. 71.1, Advisory

Committee Notes (1951) (explaining that the new rule “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 also Alliance

Pipeline LP v. 4.360 Acres of Land, 746 F.3d 362, 367 (8th Cir.

2014) (collecting cases).

As a result, the NGA is silent regarding the applicability

of state law in condemnation proceedings under the statute.

Indeed, the NGA is generally silent on the remedies available

in the condemnation proceedings it allows. For example, it

does not even expressly require that just compensation be

provided.

2. Just Compensation

That concept of just compensation originates from the

Fifth Amendment: although the federal government has “the

authority to take private property for public use by eminent

domain . . . [it] is obliged by the Fifth Amendment to provide

‘just compensation’ to the owner” of the property. Kirby

Forest Indus., Inc. v. United States, 467 U.S. 1, 9 (1984) (citing

Kohl, 91 U.S. at 371). Under the Fifth Amendment, just

8

compensation generally means “the fair market value of the

property on the date it is appropriated” and nothing more. Id.

at 10; see also United States v. Miller, 317 U.S. 369, 374–76

(1943). In other words, in such contexts, “the Constitution has

never been construed as requiring payment of consequential

damages” like lost profits or development costs. Miller, 317

U.S. at 376. This is because “the sovereign need only pay for

what it actually takes rather than for all that the owner has lost.”

Air Pegasus of D.C., Inc. v. United States, 424 F.3d 1206, 1215

(Fed. Cir. 2005) (quoting Klein v. United States, 375 F.2d 825,

829 (Ct. Cl. 1967)).

Thus, in cases involving partial takings, as here, the

standard is “the difference between the market value of the

entire holding immediately before the taking and the remaining

market value immediately thereafter of the portion of property

rights not taken.” United States v. 68.94 Acres of Land, 918

F.2d 389, 393 n.3 (3d Cir. 1990). “If the value of the remaining

land, on a unit basis, diminishes when the condemned parcel is

removed from the larger whole, the landowner is entitled to

compensation ‘both for that which is physically appropriated

and for the diminution in value to the non-condemned

property.’” United States v. 4.0 Acres of Land, 175 F.3d 1133,

1139 (9th Cir. 1999) (quoting United States v. 33.5 Acres of

Land, 789 F.2d 1396, 1398 (9th Cir. 1986)); see also Miller,

317 U.S. at 376 (“If only a portion of a single tract is taken[,]

the owner’s compensation for that taking includes any element

of value arising out of the relation of the part taken to the entire

tract.”). But, if the taking somehow benefits the value of the

remaining land, “the benefit may be set off against the value of

the land taken.” Miller, 317 U.S. at 376.

By contrast, Pennsylvania has enacted its own remedial

scheme that is applicable to condemnation proceedings that

9

take place within the state. Similar to federal law,

Pennsylvania law defines just compensation as consisting of

“the difference between the fair market value of the

condemnee’s entire property interest immediately before the

condemnation and as unaffected by the condemnation and the

fair market value of the property interest remaining

immediately after the condemnation and as affected by the

condemnation.” 26 Pa. Cons. Stat. § 702(a).

But fair market value appears to be a more inclusive

concept under Pennsylvania law. In contrast to the federal rule

regarding partial takings, the recoverable market value under

Pennsylvania law appears to include any benefits to the value

of the remaining property as a result of the taking. See id.

§ 706(a).

Further, although Pennsylvania law generally defines

fair market value as “the price which would be agreed to by a

willing and informed seller and buyer,” it allows consideration

of certain consequential damages within the concept. Id. § 703.

For example, the relevant law provides that one of the factors

for determining fair market value is the “cost of adjustments

and alterations to any remaining property made necessary or

reasonably required by the condemnation.” Id. § 1105(2)(v);

see also id. § 703(4) (stating that considerations for fair market

value include factors regarding what evidence may be

proffered pursuant to §§ 1101–06).

Pennsylvania law also permits recovery of professional

fees such as appraisal, attorney, and engineering fees. Id.

§ 710. The default rule limits such recovery to $4,000. Id.

§ 710(a). But a property owner is entitled to complete

reimbursement for those professional fees when the

“condemnor attempts to avoid the payment of monetary just

10

compensation to which the [owner] otherwise would be

entitled by use of a substitute for monetary compensation and

the [owner] incurs expenses” as a result. Id. § 716. On the

whole, then, Pennsylvania law allows private property owners

within the state to obtain more money from condemnors than

they could under federal law.

3. Federal Common Law

“Federal common law refers to the development of

legally binding federal rules articulated by a federal court

which cannot be easily found on the face of a constitutional or

statutory provision.” McGurl v. Trucking Emps. of N. Jersey

Welfare Fund, Inc., 124 F.3d 471, 480 (3d Cir. 1997) (citations

omitted). The need for common lawmaking “stems from the

inability of legislators to anticipate every possible contingency

and the impracticability of judges[’] returning all unanswered

questions to the legislature.” Id. at 481 (citation omitted).

Justice Jackson once explained that federal common law

“implements the federal Constitution and statutes[] and is

conditioned by them. Within these limits, federal courts are

free to apply the traditional common-law technique of decision

and to draw upon all the sources of the common law.”

D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 472 (1942)

(Jackson, J., concurring) (citing Bd. of Comm’rs v. United

States, 308 U.S. 343, 350 (1939)).

Thus, “when Congress has not spoken ‘in an area

comprising issues substantially related to an established

program of government operation,’” United States v. Kimbell

Foods, Inc., 440 U.S. 715, 727 (1979) (quoting United States

v. Little Lake Misere Land Co., 412 U.S. 580, 593 (1973)), the

Supreme Court has “direct[ed] federal courts to fill the

interstices of federal legislation ‘according to their own

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standards,’” id. (quoting Clearfield Trust Co. v. United States,

318 U.S. 363, 367 (1943)).

In crafting such federal common law, however, courts

need not “inevitably . . . resort to uniform federal rules.” Id. at

727–28 (citations omitted). Instead, “[w]hether to adopt state

law or to fashion a nationwide federal rule is a matter of

judicial policy ‘dependent upon a variety of considerations

always relevant to the nature of the specific governmental

interests and to the effects upon them of applying state law.’”

Id. at 728 (quoting United States v. Standard Oil Co., 332 U.S.

301, 310 (1947)).

In Kimbell Foods, the Supreme Court addressed the

propriety of applying state law under an ambiguous or

incomplete federal statute. Id. at 718, 723. There, the issue

was whether, lacking an express statutory directive, a certain

federal loans program needed a uniform federal rule of lien

priorities. Id. at 718. The Supreme Court answered this

question in the negative, holding that state law governed the

priority of the liens. Id. at 740. In incorporating state law as

the federal rule, the Supreme Court employed a three-factor

test, considering (1) whether the federal program, by its very

nature, required uniformity; (2) whether application of state

law would frustrate specific objectives of the federal program;

and (3) whether application of uniform federal law would

disrupt existing commercial relationships predicated on state

law. Id. at 728–29.

In light of Kimbell Foods and its progeny, where federal

law governs a controversy but there is no federal rule of

decision on a particular matter, a federal court must fill the void

through common lawmaking, either by fashioning a uniform,

national rule or by incorporating state law as the federal

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standard. Deciding which route to take turns on application of

the Kimbell Foods factors outlined above.

4. Persuasive Case Law

The precise issue before us now is whether state law or

federal law governs the measure of just compensation in

condemnation proceedings brought by a private entity under

the NGA. Although this is the first time we have considered

this issue precedentially, 2 ample other courts have opined on

it. Despite an array of district court decisions on the matter,

we focus our attention on seminal opinions from two of our

sister circuits: the Fifth Circuit and the Sixth Circuit.

In Georgia Power Company v. Sanders, the Fifth

Circuit, sitting en banc, encountered the same core issue, albeit

in an analogous FPA context. 617 F.2d 1112, 1113 (5th Cir.

1980). The FPA, employing language substantially similar to

that in the NGA, allows private entities to use eminent domain

to condemn private property in efforts to develop waterways.

2

Another Panel of our Court recently remarked on this

issue in a footnote of an unpublished opinion. See Columbia

Gas Transmission, LLC v. Easement in Washington Cty., 745

F. App’x 446, 449 n.4 (3d Cir. 2018) (“Federal law governs the

measure of just compensation owed to landowners in

condemnation actions under the [NGA].” (citing United States

v. Certain Parcels of Land in Phila., 144 F.2d 626, 628–30 (3d

Cir. 1944)). We are not bound by our unpublished decisions

and neither party here has cited the case. In any event, the

statement was not necessary to the Court’s decision affirming

the exclusion of “speculative” expert testimony regarding the

“future profitability” of a condemned property. Id. at 450.

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Id. at 1114 (quoting 16 U.S.C. § 797(e)). But, like the NGA,

it does not prescribe a rule of decision as to the appropriate

compensation owed to condemnees. Id. at 1115.

Accordingly, the Georgia Power court undertook the

federal common lawmaking analysis described above. As a

threshold matter, because the condemnation at issue arose

under the FPA, a federal statute, the court determined that the

measure of compensation should also derive from a federal

source. Id. Given the statutory gap, the court then turned to

Kimbell Foods to decide whether to fashion a uniform common

law or incorporate state law as the applicable federal rule. Id.

(citations omitted).

At the outset, the court noted that “[b]asic

considerations of federalism,” id., create a “presumption

favoring adoption of state law as the federal rule,” id. at 1116

n.6, “unless it is shown that legislative intent or other sufficient

reasons exist to displace state law,” id. at 1118. But the court

found neither. Id. Hence, upon determining that the balance

of Kimbell Foods factors weighed in favor of incorporating

state law, the court concluded that “the law of the state where

the condemned property is located is to be adopted as the

appropriate federal rule for determining the measure of

compensation when a licensee exercises the power of eminent

domain” under the FPA. Id. at 1124.

The Sixth Circuit reached the same conclusion in

Columbia Gas Transmission Corporation v. Exclusive Natural

Gas Storage Easement, 962 F.2d 1192, 1199 (6th Cir. 1992).

There, as here, a natural gas company sought to condemn

private property under the NGA, giving rise to the issue of

whether state law somehow applies in measuring the

appropriate compensation. Id. at 1193–94. As to the threshold

14

inquiry, the court concluded with “no hesitation” that, since the

NGA is a federal statute, its interpretation is a matter of federal

law. Id. at 1196. Thus, given the NGA’s void in prescribing

the appropriate compensation, the court turned to Kimbell

Foods. Id. In applying its factors, the court determined that

(1) it is unnecessary to fashion a nationally uniform rule of

compensation for private parties condemning land under the

NGA, (2) incorporating state law as the federal standard would

not frustrate the specific objectives of the NGA, and

(3) property rights have traditionally been defined by state law.

Id. at 1198–99. Therefore, the court adopted state law as the

federal standard to govern compensation determinations under

the NGA. Id. at 1199.

B. Application

Having established the basic legal principles relevant to

this dispute, we turn to applying them to the specific facts of

this case. As an initial matter, we declare without hesitation

that defining the contours of the compensation owed here is an

issue of federal law. Indeed, the NGA is a federal statute

implementing a nationwide federal program. Id. at 1196. As

a result, its interpretation is naturally a matter of federal law.

1. Kimbell Foods Applies Here

Given that conclusion, in order to resort to the Kimbell

Foods analysis, we must also determine that there exists a gap

in the statutory scheme. Here, we do so because (i) Miller does

not resolve this case, (ii) the NGA does not answer the question

at issue, and (iii) the existence of related common law in this

domain is of no moment. We explain each in turn.

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i. Miller Does Not Resolve This Case

Tennessee Gas’ chief argument on appeal is that Miller

dispositively resolves this case. In ruling in Tennessee Gas’

favor at summary judgment, the District Court agreed. We,

however, disagree.

In Miller, the Supreme Court considered “questions

respecting standards for valuing property taken for public use”

in relation to the federal government’s condemnation of land

for the purpose of building railroad tracks. 317 U.S. at 370.

Noting that the “measure of compensation” is a “question[] of

substantive right . . . grounded upon the Constitution,” the

Supreme Court rejected the argument that state substantive law

should apply to the determination of compensation in that

dispute because the federal statutes at issue there only required

adoption of state procedural law. Id. at 379–80 (citations

omitted). The Supreme Court thus held, as relevant here, that

federal law—not state law—governs the determination of

compensation in eminent domain actions brought by the

federal government. Id. at 380 (citations omitted).

Over time, Miller and its progeny have added content to

the federal common law of just compensation. See, e.g., id. at

373 (explaining that the condemnee is to be “put in as good

position pecuniarily as he would have occupied if his property

had not been taken” (citations omitted)); id. at 373–74

(defining just compensation to mean the fair market value of

the property on the date of the taking); id. at 375 (excluding the

condemned property’s “special value to the condemnor” from

the measure of just compensation (citations omitted)); id. at

376 (including “severance damage” in the measure of just

compensation but excluding “consequential damages” such as

the change in value of “separate tracts adjoining that affected

16

by the taking” (citations omitted)); see also United States v.

Bodcaw Co., 440 U.S. 202, 203 (1979) (per curiam) (excluding

appraisal and attorneys’ fees); United States v. Petty Motor

Co., 327 U.S. 372, 377–78 (1946) (excluding “loss of profits,

damage to good will, the expense of relocation and other such

consequential losses” from the measure of just compensation

(citations omitted)).

But nothing in Miller or its progeny expands its reach to

condemnations by private entities. Indeed, Miller itself only

concerned a condemnation by the federal government. 317

U.S. at 370. We have explicitly recognized this limitation,

previously noting that Miller announced the standard for

determining only “the amount of compensation due an owner

of land condemned by the United States.” Certain Parcels of

Land in Phila., 144 F.2d at 629 (emphasis added). Other courts

have similarly constrained Miller to “condemnation

proceedings brought by the federal government.” 33.5 Acres

of Land, 789 F.2d at 1400 (emphasis added); see Ga. Power,

617 F.2d at 1119 & n.10 (“[W]e do not deem [Miller]

controlling[.]”).

Further, Tennessee Gas is unable to muster any binding

authority for the proposition that Miller applies beyond

instances where the federal government is the condemnor.

Although it contends that we have “applied federal law in every

case involving the determination of compensation in a

condemnation pursuant to the federal power of eminent

domain,” it can only cite cases in which the condemnor was the

federal government. Appellee’s Br. 16 (emphasis omitted)

(citing, inter alia, United States v. 27.93 Acres of Land, 924

F.2d 506 (3d Cir. 1991); United States v. 412.93 Acres of Land,

455 F.2d 1242 (3d Cir. 1972); and United States v. 60.14 Acres

of Land, 362 F.2d 660, 662, 665 (3d Cir. 1966)). This is also

17

true for the cases from our sister circuits that it cites, allegedly

for the broad proposition that these other courts “similarly

follow[] Miller for federal condemnations.” Id. at 17–18

(citing U.S. ex rel. Tenn. Valley Auth. v. 1.72 Acres of Land,

821 F.3d 742 (6th Cir. 2016); United States v. 2,560.00 Acres

of Land, More or Less, 836 F.2d 498 (10th Cir. 1988); 33.5

Acres of Land, 789 F.2d 1396; United States v. 320.0 Acres of

Land, More or Less, 605 F.2d 762 (5th Cir. 1979); United

States v. Certain Prop. Located in Borough of Manhattan, 344

F.2d 142 (2d Cir. 1965); United States v. Certain Interests in

Prop. in Champaign Cty., 271 F.2d 379 (7th Cir. 1959); and

United States v. Mahowald, 209 F.2d 751 (8th Cir. 1954)).

But, again, none of these cases relying on Miller involved a

private entity as the condemnor.

That is because no such binding case exists. This makes

sense, of course, because the powerful federal interest at play

when the federal government is the condemnor is considerably

weakened when a private entity is the condemnor. Two

independent reasons support our view on this matter.

First, the development of natural gas pipelines is not an

“essential governmental function[].” 93.970 Acres of Land,

360 U.S. at 332 (citation omitted). Long ago, in a

condemnation action brought by the federal government to

create a post office, the Supreme Court noted that it is

“essential” to the federal government’s “independent existence

and perpetuity” that it be able to “perform its proper functions.”

Kohl, 91 U.S. at 368, 371. Nearly a century later, the Supreme

Court reaffirmed that concern, this time ruling that, because the

federal government’s condemnation of land for naval aviation

activities involved “essential governmental functions,” federal

law, not state law, determined the appropriate remedies for the

condemnation. 93.970 Acres of Land, 360 U.S. at 332–33

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(citing Kohl, 91 U.S. at 371). Here, by contrast, developing

natural gas pipelines is not a function—much less an essential

function—of the federal government. Accordingly, the federal

interest at play here is materially less than if the federal

government were pursuing condemnation for an important

governmental function.

Second, where the federal government is the

condemnor, there exists a significant concern about the

spending of federal dollars, one that does not exist when a

private entity is the condemnor. Indeed, the federal

government has a strong interest in reducing the costs of its

own exercises of eminent domain and being subject to different

states’ compensation regimes may defeat that. Cf. Edelman v.

Jordan, 415 U.S. 651, 677 (1974) (considering the impact of

available relief, albeit in the sovereign immunity context, on

government treasuries). However, that concern is not at all in

play where, as here, the condemnor is a private entity pursuing

the condemnation “for purposes of profit.” Pub. Util. Dist. No.

1 of Pend Oreille Cty. v. City of Seattle, 382 F.2d 666, 670 (9th

Cir. 1967). Because of these two distinct reasons, Miller is

distinguishable and therefore does not resolve this case. 3

3

That said, we recognize that Miller articulates

principles for compensation “grounded upon the Constitution.”

317 U.S. at 380. Those principles are thus more properly

understood as a constitutional baseline upon which states may

allow for more, but not less, compensation for condemnees.

Such additional protections by states arise in an array of legal

contexts. See Gregg v. Georgia, 428 U.S. 153, 187 (1976)

(holding that the death penalty is not per se unconstitutional);

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ii. The NGA Does Not Answer the Question

Miller aside, the NGA also does not provide a federal

rule of decision as to the appropriate compensation owed to

condemnees under the statute. As mentioned previously, the

NGA does provide that the “practice and procedure” in

condemnation actions under the statute must “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). Some courts have

concluded that this statutory directive mandates that state law

govern the measure of just compensation. See, e.g., Tabor, 757

F.2d at 665 n.3. Other courts have read this clause as “raising

a strong presumption that state law does provide the proper

measure for such determination.” Columbia Gas, 962 F.2d at

1197. For two reasons, however, this clause is inapplicable

here, rendering the NGA silent on the issue of compensation.

First, the clause has been superseded by Rule 71.1,

which now “govern[s] proceedings to condemn real and

personal property by eminent domain.” Fed. R. Civ. P. 71.1(a).

As a “law[] in conflict with” a rule of civil procedure, the

clause has “no further force or effect.” 28 U.S.C. § 2072(b).

“As several other courts have observed,” then, “Rule 71.1

displaces state procedural law in this condemnation

proceeding.” Alliance Pipeline, 746 F.3d at 367 (collecting

cases); see also S. Nat. Gas Co. v. Land, Cullman Cty., 197

F.3d 1368, 1374 (11th Cir. 1999). Several decades ago, the

Supreme Court itself determined that analogous language in

another federal statute was “clearly repealed” by a precursor to

see also N.J. Stat. Ann. § 2C:11-3b (indicating that New Jersey

banned the death penalty in 2007).

20

Rule 71.1. 93.970 Acres of Land, 360 U.S. at 333 n.7 (1959)

(citing 50 U.S.C. § 171).

Second, even if the clause was still in force, it would

determine only procedural rules and nothing more. Faced with

a similar statutory instruction to try condemnation cases

according to “the forms and methods of procedure” provided

by state law, Miller held that the federal substantive measure

of just compensation was unchanged. 317 U.S. at 380 (citing

40 U.S.C. § 258 (1940)). For good reason, then, the First

Circuit has expressed “surpris[e]” that “several circuits have

read the phrase ‘practice and procedure’ to encompass state

substantive law as well as formal practice.” Portland Nat. Gas

Transmission Sys. v. 19.2 Acres of Land, 318 F.3d 279, 282 n.1

(1st Cir. 2003). Even the Sixth Circuit, which ultimately

applied state law to determine just compensation under the

NGA, expressed that the effect of the clause on the substantive

measure of just compensation was “arguably open to

question.” Columbia Gas, 962 F.2d at 1197. Accordingly, the

NGA does not speak to the appropriate measure of

compensation in proceedings under the statute.

iii. That There Exists a Body of Related

Common Law Does Not Matter

Tennessee Gas asserts as a secondary argument that

Kimbell Foods applies only when no federal common law

exists. But we have previously applied the Kimbell Foods

framework to choose between incorporating state law and

applying preexisting federal common law. See In re Columbia

Gas Sys. Inc., 997 F.2d 1039, 1056 (3d Cir. 1993) (“[T]his

court already has developed federal common law concerning

trusts.”). Consistent with this approach, the Georgia Power

21

court applied Kimbell Foods to decide between state rules of

just compensation and the “established body of federal law on

the issue.” 617 F.2d at 1123 n.17; cf. Cal. ex rel. State Lands

Comm’n v. United States, 457 U.S. 273, 283–84 (1982) (noting

that federal common law of land accretion already existed in

the course of deciding that federal common law, rather than

state law, would supply a rule of decision). The Kimbell Foods

framework is thus not reserved for situations in which federal

common law has yet to be fashioned. As a result, we now turn

to Kimbell Foods to resolve this case.

2. State Law Should Be Incorporated as the Federal Standard

Because the source of eminent domain power at issue

here is federal, as embodied in the NGA, but neither the statute

nor binding precedent specifies a rule of decision in this

particular context, the task of “interstitial federal lawmaking”

falls upon us. Ga. Power, 617 F.2d at 1115 (citing Little Lake

Misere Land, 412 U.S. at 593). We must now determine

whether, in developing a federal standard for just

compensation in condemnation proceedings brought by private

entities under the NGA, we should fashion a uniform federal

rule or instead incorporate state law as the applicable federal

rule.

We start with the presumption that state law should be

incorporated unless there is an expression of legislative intent

to the contrary or a showing that state law significantly

conflicts with the federal interest present. See Kimbell Foods,

440 U.S. at 739 (“Thus, the prudent course is to adopt the

ready[-]made body of state law as the federal rule of decision

until Congress strikes a different accommodation.” (citations

omitted)); Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 98

(1991) (“The presumption that state law should be

22

incorporated into federal common law is particularly strong in

areas in which private parties have entered legal relationships

with the expectation that their rights and obligations would be

governed by state-law standards.” (citing, inter alia, Kimbell

Foods, 440 U.S. at 728–29, 39–40)). Here, as explained below,

there is neither. We thus presume that state law should be

incorporated in this case.

But, even without such a starting presumption, we

choose to incorporate state law as the federal rule in this

context because the balance of Kimbell Foods factors weighs

in favor of that. In particular, (i) fashioning a nationally

uniform rule is unnecessary, (ii) incorporating state law does

not frustrate the NGA’s objectives, and (iii) application of a

uniform federal rule would upset commercial relationships.

We address each factor in turn.

i. Fashioning a Nationally Uniform Rule is Unnecessary

For five principal reasons, this case does not require a

nationally uniform rule. First, the United States is not a party

here—or in NGA condemnation proceedings generally—so

the federal interest in a nationally uniform rule is relatively

weak. The Fifth Circuit, for example, has noted that “the

nature of the federal interests involved [where a private entity

is the condemnor] differs markedly from the nature of the

federal interests involved where the United States is the

condemnor.” Ga. Power, 617 F.2d at 1119–20. So has the

Ninth Circuit, recognizing that “[b]y issuance of a license the

United States is not acting in the national interest through the

licensee to the same extent as it would if it undertook the

project itself.” City of Seattle, 382 F.2d at 669.

23

The Supreme Court has also suggested that whether the

federal government is present in a case is important in deciding

between state law and federal law. See Kimbell Foods, 440

U.S. at 726 (“This Court has consistently held that federal law

governs questions involving the rights of the United States

arising under nationwide federal programs.” (emphasis

added)). More specifically, the Supreme Court has

distinguished between, on the one hand, cases involving the

federal government that “generate immediate interests” and

therefore warrant federal law and, on the other hand, cases

“purely between private parties” that “do[] not touch the rights

and duties of the United States” and are thus “far too

speculative, far too remote . . . to justify the application of

federal law to transactions essentially of local concern.” Bank

of Am. Nat’l Tr. & Sav. Ass’n v. Parnell, 352 U.S. 29, 33–34

(1956); see also Ga. Power, 617 F.2d at 1117 (citing Parnell

for the proposition that federal interests are weaker in

condemnation actions to which the federal government is not a

party).

Second, because property rights are traditionally an area

of state concern, the federal interest in a nationally uniform rule

for property valuation is especially weak. See id. at 1123. A

court fashioning a uniform rule of just compensation would not

be writing on a blank slate: “far from offering an analytically

distinct and self-contained analysis,” such a rule “would at best

merely superimpose a layer of property right allocation onto

the already well-developed state property regime.” Columbia

Gas, 962 F.2d at 1198. Instead of achieving nationwide

uniformity, introducing a federal standard for compensation

here risks muddying elaborate state property rules.

24

Third, the NGA contemplates state participation in

multiple ways, further undermining the case for a nationally

uniform rule of compensation in such actions. Most notably,

the statute allows licensees to bring condemnation proceedings

in state court. 15 U.S.C. § 717f(h) (articulating that private

entities may bring condemnation proceedings “in the district

court of the United States for the district in which such property

may be located, or in the State courts” (emphasis added)).

Indeed, the NGA requires that the proceedings take place in

state court if the amount claimed by the property owner does

not exceed $3,000. See id. Both the statutory option and

mandate to proceed in state court suggest that incorporating

state law would not upset any important interest in national

uniformity.

But that is not the extent of the NGA’s involving states.

As another example, the NGA explicitly exempts from its

coverage any entities or facilities that receive natural gas for

distribution “within or at the boundary of a State if all the

natural gas so received is ultimately consumed within such

State, . . . provided that the rates and service of such [entities]

and facilities [are] subject to regulation by a State

commission.” Id. § 717(c). Moreover, the NGA does not

prohibit states from regulating natural gas companies involved

in interstate activities covered by the statute. We recently held

that the “NGA leaves untouched the [states’] internal

[environmental] administrative review process[es]” applicable

to natural gas facilities, “which may continue to operate as

[they] would in the ordinary course under state law,” even

though the facilities at issue might be part of a larger interstate

project. Twp. of Bordentown, N.J. v. FERC, 903 F.3d 234, 268

(3d Cir. 2018); see Del. Riverkeeper Network v. Sec’y Pa.

Dep’t of Envtl. Prot., 833 F.3d 360, 368 (3d Cir. 2016) (citing

25

15 U.S.C. § 717b(d)). Collectively, these instances of the

NGA’s explicitly allowing state involvement militate against

the need for a nationally uniform rule.

Fourth, to the extent that some nationwide uniformity is

needed in NGA condemnation actions, Rule 71.1 provides a

sufficient amount of that. Indeed, Rule 71.1 was promulgated

precisely “to provide a unified and coherent set of rules and

procedures to be used in deciding federal eminent domain

actions.” Land, Cullman Cty., 197 F.3d at 1375. Further

uniformity in substantive property valuation is unnecessary

where there is already uniformity in procedure.

Fifth, Tennessee Gas’ primary argument in favor of

uniformity misses the mark. In particular, Tennessee Gas avers

that applying various states’ rules on compensation will lead to

landowners in different states receiving different payouts from

the same pipeline project. But how inequitable this may be is

unfortunately of no moment in this analysis. The first Kimbell

Foods factor is not whether a nationally uniform law would be

fairer. Rather, it is whether proper “administration of the

federal program[]” requires uniformity. See Kimbell Foods,

440 U.S. at 730. Here, that is not the case. As a result, this

factor weighs in favor of incorporating state law as the federal

rule of decision.

ii. Incorporating State Law Does Not

Frustrate the NGA’s Objectives

The second Kimbell Foods factor calls for considering

whether the incorporation of state law would frustrate specific

objectives of the federal program at issue. “[C]onsiderations

of federalism militate in favor of adopting state law as the

26

federal rule of decision” unless “state law conflicts

significantly with any federal interests or policies.” Nat’l R.R.

Passenger Corp. v. Two Parcels of Land, 822 F.2d 1261, 1266

(2d Cir. 1987) (citing Ga. Power, 617 F.2d at 1116); see Wallis

v. Pan Am. Petroleum Corp., 384 U.S. 63, 68 (1966). Because

state law would not frustrate the NGA’s goals, this factor

weighs in favor of incorporating state law as the federal rule of

decision.

To begin, we must identify the federal objectives

potentially at risk. The NGA declares that the federal interest

is in regulating “matters relating to the transportation of natural

gas and the sale thereof.” 15 U.S.C. § 717(a). Nothing in the

NGA suggests that Congress was particularly concerned with

protecting natural gas companies from the additional costs that

varying state laws may impose, or even with making natural

gas companies’ transactions streamlined or efficient. Rather,

the Supreme Court has articulated that, in enacting the NGA,

Congress was instead concerned with protecting the interests

of the public, including consumers and property owners. See

Sunray Mid-Continent Oil Co. v. Fed. Power Comm’n, 364

U.S. 137, 147 (1960) (“[T]he primary aim of the [NGA is] to

protect consumers against exploitation at the hands of natural

gas companies.” (quotations omitted)).

Here, applying Pennsylvania law on just compensation

would require Tennessee Gas to pay approximately $1 million

more than it is required to pay under federal law. In other

words, “[t]he only conceivable effect that adopting state law as

the measure of compensation might have” is that “condemnors

proceeding under the [NGA] might be required to pay more . . .

than under an alternative federal common-law rule.” Columbia

Gas, 962 F.2d at 1198. But we have already identified

27

condemnors’ having to pay more than they would otherwise

pay under federal law as merely being an “ancillary issue.” In

re Columbia Gas, 997 F.2d at 1058.

That said, a state could theoretically have a

compensation law so far out of step with federal law as to

create a significant conflict. At oral argument, counsel for

Tennessee Gas was only able to muster one case in support of

that proposition. See Nat’l R.R. Passenger, 822 F.2d at 1265–

68. But that case is easily distinguishable from this case.

In National Railroad Passenger, the Second Circuit

considered, as relevant here, whether to fashion a uniform

federal rule or incorporate state law as the rule of decision in

determining the appropriate compensation due to a property

owner whose land the National Railroad Passenger

Corporation (“Amtrak”) had condemned. Id. at 1262, 1265–

66. Applying the Georgia Power analysis, which it deemed

“sound,” id. at 1266, the court nonetheless reached a different

result: upon concluding that the application of state law would

“seriously interfer[e]” with the federal objectives of the

intercity rail passenger service program, id. at 1266–67, the

court opted to fashion a uniform federal rule in lieu of

incorporating state law, id. at 1266. But the court itself noted

a major distinction between the two cases that thus counseled

the different result. Id. at 1267. In particular, the court

explained:

In Georgia Power, moreover, resolving the

question of compensation according to state law

resulted solely in higher condemnation costs to

FPA licensees. That would not be the case here.

Under [state] law, a partial taking rendering

28

excess property nonconforming under local

zoning laws requires the condemnor to apply for

a variance prior to the taking; failing that, the

condemnor is to reimburse the owner for the

entire parcel and take title in fee simple thereto.

We agree with [Amtrak] that application of the

state rule of compensation here would place

Amtrak in the unenviable position of having

either to enmesh itself in the variance procedures

of each locality in [the state] where property is

sought to be condemned, or to pay for entire

parcels irrespective of the nexus between the

property so taken and the project necessitating

condemnation. Inasmuch as Amtrak is

authorized only to condemn property required

for intercity rail passenger service, see 45 U.S.C.

§ 545(d)(1)(B), the latter alternative under [state]

law conflicts with an express statutory limit on

Amtrak’s eminent domain power.

Nat’l R.R. Passenger, 822 F.2d at 1267.

Here, those considerations are simply not at play. Like

the condemnor in Georgia Power, Tennessee Gas would only

be subject to higher condemnation costs if subjected to state

laws on compensation. Pennsylvania compensation law does

not entail a complicated variance requirement in which

Tennessee Gas would have to “enmesh itself.” Id. National

Railroad Passenger is thus inapposite.

Pressed at length for other examples of “crazy state

laws,” counsel for Tennessee Gas could not produce any. Oral

Arg. Audio 36:03–38:23 (mentioning Sabal Trail

29

Transmission, LLC v. Real Estate, No. 16-CV-063, 2017 WL

2783995 (N.D. Fla. June 27, 2017), which also only involved

potentially higher condemnation costs). In the absence of any

further, concrete examples of significantly divergent state laws

that could frustrate the NGA’s purpose of protecting the public

interest, we are unpersuaded by the theoretical possibility that

some others may exist. Consequently, this factor also weighs

in favor of incorporating state law as the federal rule of

decision.

iii. Application of a Uniform Federal Rule

Would Upset Commercial Relationships

The third Kimbell Foods factor calls for us to consider

whether application of a uniform federal rule would upset

commercial expectations founded on state law. On the one

hand, because there already exists “an established body of

federal law on the issue of just compensation” in general,

parties that conduct business in this industry are already on

notice of the potential application of federal law. Ga. Power,

617 F.2d at 1123 n.17 (citation omitted).

On the other hand, “property rights have traditionally

been, and to a large degree are still, defined in substantial part

by state law.” Columbia Gas, 962 F.2d at 1198 (citation

omitted). Thus, were we to fashion a uniform federal rule, “far

from offering an analytically distinct and self-contained

analysis,” the rule would “merely superimpose a layer of

property right allocation onto the already well-developed state

property regime.” Id. Indeed, “when dealing with those

powers left to the states, the courts should tread gingerly” in

attempting to create a uniform common law. Ga. Power, 617

F.2d at 1125 (Fay, J., concurring); see Nat’l R.R. Passenger,

30

822 F.2d at 1267 (“[S]ince state law usually governs the

question of what constitutes property, the value of property

rights is ordinarily best determined according to state law as

well.” (internal quotation marks and citation omitted)).

Though the balance is close, we conclude that

fashioning a uniform federal common law to determine just

compensation in condemnation actions by private entities

under the NGA would risk “upsetting the parties’ commercial

expectations” based upon “the already well-developed state

property regime.” Columbia Gas, 962 F.2d at 1198. Hence,

this factor also militates in favor of incorporating state law as

the federal rule of decision.

***

In sum, we determine that, at the threshold, federal law

is the interpretive basis to determine just compensation in

condemnation proceedings arising out of the NGA. But,

because neither Miller nor any other binding authority provides

a federal rule of decision as to what constitutes just

compensation precisely where a private entity condemns

private property under the statute, we turn to Kimbell Foods.

That case and its progeny reflect a presumption in favor of state

law, one not rebutted here. Even without that presumption,

however, the Kimbell Foods factors collectively weigh in favor

of state law because, for the reasons explained previously,

(1) fashioning a nationally uniform rule is unnecessary,

(2) incorporating state law does not frustrate the NGA’s

objectives, and (3) application of a uniform federal rule would

upset commercial relationships. In light of this analysis, we

decide to incorporate state substantive law as the federal

standard of measuring just compensation in condemnation

31

proceedings by private entities acting under the authority of the

NGA.

IV. CONCLUSION

For the foregoing reasons, we will reverse the District

Court’s order and remand this case for further proceedings

consistent with this opinion.

32

Tennessee Gas Pipeline Company, LLC v. Permanent

Easement for 7.053 Acres, Permanent Overlay Easement for

1.709 Acres and Temporary Easements for 8.551 Acres

No. 17-3700

CHAGARES, Circuit Judge, dissenting.

The United States has delegated its eminent domain

power under the Fifth Amendment to natural gas companies in

certain instances pursuant to the Natural Gas Act (the “NGA”

or the “Act”), 15 U.S.C. §§ 717–717z. The Supreme Court in

United States v. Miller, 317 U.S. 369 (1943), held that federal

substantive law applies to determine just compensation for an

exercise of the eminent domain power under the Fifth

Amendment. However, Miller featured the Government and

not a private party exercising the Fifth Amendment eminent

domain power. My learned colleagues cogently explain why

that makes all the difference. The Supreme Court may well

agree when it considers this legal issue. Indeed, other courts’

holdings support my colleagues’ position.

In my view, however, resolution of the question here

presented begins and ends with the Miller decision. I believe

that the standard by which we measure just compensation due

for an exercise of the Fifth Amendment eminent domain power

is the same regardless of whether it is the Government or a

Government-delegatee that exercises that power. 1 Because I

1

Indeed, the only time this Court has passed on the precise

issue presented here, the panel unanimously held that federal

substantive law applies — albeit in a non-precedential

decision. See Columbia Gas Transmission, LLC v. An

Easement to Construct Operate & Maintain a 20 Inch Gas

1

believe that the Supreme Court’s Miller decision controls here

and that federal substantive law applies to determine just

compensation under the Fifth Amendment, I respectfully

dissent.

I.

A.

The Fifth Amendment assures that private property

shall not “be taken for public use, without just compensation.”

U.S. Const. amend. V. The eminent domain power belongs to

the federal government, but Congress may “delegate[ it] to

private corporations, to be exercised by them in the execution

of works in which the public is interested.” Boom Co. v.

Patterson, 98 U.S. 403, 406 (1878). As noted by the majority,

Congress did just that in the NGA. See E. Tenn. Nat. Gas Co.

v. Sage, 361 F.3d 808, 821 (4th Cir. 2004); S. Nat. Gas Co. v.

Land, Cullman Cty., 197 F.3d 1368, 1372 (11th Cir. 1999).

The NGA recognizes that “the business of transporting

and selling natural gas for ultimate distribution to the public is

affected with a public interest, and that Federal regulation in

matters relating to the transportation of natural gas and the sale

thereof in interstate and foreign commerce is necessary in the

public interest.” 15 U.S.C. § 717(a). The Act, under certain

conditions, authorizes a natural gas company to acquire “by the

exercise of the right of eminent domain” property rights

Transmission Pipeline Across Props., 745 F. App’x 446, 449

n.4 (3d Cir. 2018) (“Federal law governs the measure of just

compensation owed to landowners in condemnation actions

under the Natural Gas Act.”).

2

necessary “to construct, operate, and maintain a pipe line . . .

for the transportation of natural gas.” Id. § 717f(h). One of

those conditions is that the company hold a certificate of public

convenience and necessity, id., which the Federal Energy

Regulatory Commission (“FERC”) issues when the project “is

or will be required by the present or future public convenience

and necessity,” id. § 717f(e). In other words, the NGA

delegates — as here — federal eminent domain power to a

natural gas company to promote the construction of a gas

pipeline that FERC has determined to be required by public

convenience and necessity.

B.

The Supreme Court long ago established that exercises

of the federal eminent domain power require the application of

federal substantive law regarding just compensation. See

Miller, 317 U.S. at 379–80. The Court in Miller addressed

issues concerning the just compensation due as a result of the

federal government’s condemnation of property in California,

including whether any increase in value to the land taken due

to the Government’s proposed action is properly included in

the measure of compensation. Id. at 370, 375. Under federal

substantive law, the answer was no, but under California law,

the answer was yes. Id. at 376–79.

The landowners urged the Court to apply state law by

arguing that “Congress ha[d] adopted the local rule followed

in the state where the federal court” sat. Id. at 379. The Court

declined the invitation, determining that the pertinent statutes

required only the adoption of state “forms and methods of

procedure,” and “d[id] not, and could not, affect questions of

substantive right—such as the measure of compensation—

3

grounded upon the Constitution of the United States.” Id. at

379–80 (emphasis added). That is, the Supreme Court in

Miller held that when the right to compensation is based in the

federal Constitution, federal substantive law applies to

determine just compensation. Id.

We followed Miller’s lead in United States v. Certain

Parcels of Land, 144 F.2d 626, 627 (3d Cir. 1944), where we

considered whether a pre-taking contract for the sale of

property condemned by the United States was admissible to

prove the property’s market value. The trial court applied

Pennsylvania law, which considered the contract inadmissible,

and excluded the document. Id. But we held that, according

to federal law, the contract should have been admitted because

it spoke to “just compensation, affecting the appellant’s

substantive right, and its relevancy is therefore a federal

question to be determined unfettered by any local rule.” Id. at

629–30. We have reaffirmed that federal law controls how we

measure the federal substantive right of just compensation.

See United States v. 13,255.53 Acres of Land, 158 F.2d 874,

876 (3d Cir. 1946) (“This question of substantive right,

namely, the measure of compensation, is grounded on the

Constitution of the United States and federal law controls.”);

Kinter v. United States, 156 F.2d 5, 6 (3d Cir. 1946) (“The

matter in controversy being the right of compensation of a

landowner under the Fifth Amendment, the answers to the

questions involved do not depend upon local law.”); United

States v. Certain Parcels of Land, 145 F.2d 374, 375 (3d Cir.

1944). 2

2

As the majority recognizes, a body of federal law regarding

just compensation already exists. Maj. Op. 21.

4

C.

Miller and our cases interpreting it are clear that when

the substantive right to just compensation derives from the

Constitution, such compensation is measured according to

federal substantive law. One’s right to just compensation

under the Fifth Amendment is certainly triggered by an

exercise of the federal eminent domain power. See, e.g., Kirby

Forest Indus., Inc. v. United States, 467 U.S. 1, 9 (1984). And

Congress may delegate that power to private entities. See

Boom Co., 98 U.S. at 406.

These principles lead to the following conclusion:

because Congress has authorized natural gas companies to

invoke the federal eminent domain power under the NGA, and

because exercise of that power entitles a landowner to just

compensation under the Fifth Amendment, the question of just

compensation in an NGA condemnation action is a question of

federal substantive right to which federal substantive law

applies.

The landowner (“King Arthur”) and the majority

disagree, cabining Miller’s scope to condemnation actions by

the federal government only and adopting the view that the law

properly applicable to determining just compensation depends

on who is exercising the federal power to condemn property.

But the right to just compensation “grounded upon the

Constitution of the United States” is a federal substantive right,

Miller, 317 U.S. at 380, that is triggered by an exercise of the

federal eminent domain power, not necessarily the

Government’s exercise of that power. And although the

Supreme Court in Miller did not explicitly expound that its

holding applies to a private party’s exercise of the federal

5

power, it did not explicitly limit its reach to the Government’s

exercise, either. 3 Its focus was on the condemnee’s federal

right to compensation. Miller, 317 U.S. at 379–80.

To carve out a separate set of rules for private parties

exercising federal eminent domain power for a federal public

purpose under 15 U.S.C. § 717f(h) would create “an artificial

wedge between federal condemnations brought by the United

States and federal condemnations brought by private entities

acting pursuant to congressionally delegated authority.” Tenn.

Gas Br. 10; see also Ga. Power Co. v. Sanders, 617 F.2d 1112,

1129 (5th Cir. 1980) (en banc) (Rubin, J., dissenting)

(observing that there is no “sound reason to distinguish

between condemnation proceedings brought by the United

States and those in which it authorizes its power to be used by

its statutory licensee for a federal public purpose”). 4 In either

3

The majority reads Certain Parcels of Land as recognizing

that Miller applies only to condemnation actions by the

Government. But our statement that Miller “set forth . . . the

standard by which the amount of compensation due an owner

of land condemned by the United States is to be determined” is

merely an acknowledgement that Miller provided law for the

same situation we addressed in that case. Certain Parcels of

Land, 144 F.2d at 629.

4

The majority notes that two other Courts of Appeals have

opined on the issue before us. I do not consider the opinions

from those courts to be persuasive. In reverse chronological

order, the Court of Appeals for the Sixth Circuit in Columbia

Gas Transmission Corp. v. Exclusive Natural Gas Storage

Easement, 962 F.2d 1192, 1195 n.4 (6th Cir. 1992), reached its

conclusion notwithstanding that the parties apparently agreed

that federal common law applied and that neither party

6

action, the federal eminent domain power is exercised and

triggers the constitutional right to compensation.

My colleagues rest their acceptance of this distinction

(and Miller’s inapplicability) on the conclusion that “the

powerful federal interest at play when the federal government

is the condemnor is considerably weakened when a private

entity is the condemnor.” Maj. Op. 17–18. This is so,

according to the majority, because “the development of natural

gas pipelines is not an ‘essential governmental function[,]’”

Maj. Op. 18 (quoting United States v. 93.970 Acres of Land,

360 U.S. 328, 332 (1959)), and the “significant concern about

the spending of federal dollars” by the Government-

addressed the issue. In addition, the court did not even mention

the Supreme Court’s Miller decision in its opinion. Similarly,

the Court of Appeals for the Fifth Circuit in Mississippi River

Transmission Corp. v. Tabor, 757 F.2d 662, 665 n.3 (5th Cir.

1985), also failed to mention Miller in what the Court of

Appeals for the Sixth Circuit correctly noted was a “summary

treatment of th[e] issue.” Columbia Gas, 962 F.2d at 1197.

Indeed, the analysis was limited to two sentences in a footnote.

The holding of the Tabor court is also problematic in that the

court relied solely on the “practice and procedure” clause of 15

U.S.C. § 717f(h) to reach its conclusion — an approach both

my colleagues in the majority and I reject. Maj. Op. 19–21.

Finally, the Court of Appeals for the Fifth Circuit in Georgia

Power, 617 F.2d at 1124, noted how the issue of which law to

apply was “a close one” and relied upon (as does the majority)

United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979).

Insofar as I believe the Supreme Court’s decision in Miller

controls, we need not conduct the inquiry prescribed by the

Kimbell Foods decision.

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condemnor is missing in eminent domain actions brought by a

private party, Maj. Op. 18. 5 But these concerns are not

determinative, in my view. The Supreme Court’s holding in

Miller — at least as pertinent to this appeal — did not turn on

either concern, but instead on the fact that the substantive right

of just compensation was grounded on the United States

Constitution. Miller, 317 U.S. at 380. In other words, federal

law applies to determine the just compensation owed upon an

exercise of the federal eminent domain power because the right

to just compensation is a federal substantive right, regardless

of whether the taking is for an “essential governmental

function” or requires the spending of federal dollars.

The majority’s final argument to distinguish Miller is

likewise unpersuasive. My colleagues contend that Miller

merely sets a constitutional floor for just compensation and that

states may, through their own laws, provide for greater

compensation for landowners. Assuming that that observation

is correct, it still does not explain why Miller does not apply

here, a federal condemnation proceeding. That states may

provide landowners more generous compensation (under state

law) is immaterial.

Because I view the Supreme Court’s decision in Miller

as controlling, I would affirm the District Court’s application

of federal substantive law to determine just compensation

under the Fifth Amendment.

5

King Arthur also argues that Miller is inapplicable because

there, unlike here, private property was taken for a public use.

The majority does not appear to accept King Arthur’s assertion

that its land was not taken for a public use, and neither do I.

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II.

For the above reasons, I respectfully dissent.

9