Court Opinion

ID: 4585448
Source: CourtListenerOpinion
Date Created: 2020-11-12 15:08:30.855153+00
Date Added: 2024-06-11T13:46:52.195083
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Carl F. Hughes and Ellen B. Hughes,      :
h/w, and Bruce D. Hughes and Margaret :
K. Hughes, h/w, individually and on      :
behalf of all others similarly situated, :
                     Appellants          :
                                         :
              v.                         :
                                         :   No. 453 C.D. 2019
UGI Storage Company                      :
                                         :
                                         :
John Albrecht, individually and on       :
behalf of all others similarly situated, :
                     Appellant           :
                                         :
              v.                         :
                                         :   No. 454 C.D. 2019
UGI Storage Company                      :   Argued: December 11, 2019

BEFORE:     HONORABLE MARY HANNAH LEAVITT, President Judge
            HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE P. KEVIN BROBSON, Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE ANNE E. COVEY, Judge
            HONORABLE CHRISTINE FIZZANO CANNON, Judge
            HONORABLE ELLEN CEISLER, Judge

OPINION BY
JUDGE FIZZANO CANNON                         FILED: November 12, 2020

            Carl F. Hughes and Ellen B. Hughes, husband and wife, Bruce D.
Hughes and Margaret K. Hughes, husband and wife, individually and on behalf of
all others similarly situated, and John Albrecht, individually and on behalf of all
others similarly situated (collectively, Appellants), appeal from the March 25, 2019
order of the Court of Common Pleas of Tioga County (trial court), which sustained
the preliminary objections of UGI Storage Company (UGI) and dismissed
Appellants’ respective petitions for appointment of a board of viewers pursuant to
Section 502(c) of the Eminent Domain Code, 26 Pa.C.S. § 502(c). For the reasons
that follow, we now affirm, albeit on other grounds.1

                              Facts and Procedural History
              This matter returns to this Court following our March 13, 2017 opinion
and order vacating the trial court’s April 4, 2016 orders sustaining UGI’s preliminary
objections and dismissing Appellants’ petitions for appointment of a board of
viewers. See Hughes v. UGI Storage Company (Pa. Cmwlth., Nos. 629 and 630
C.D. 2016, filed March 13, 2017) (2017 Opinion). The 2017 Opinion further
directed that the matter be remanded to the trial court for an evidentiary hearing to
address the potential impact of our Supreme Court’s decision in Robinson Township
v. Commonwealth, 147 A.3d 536 (Pa. 2016) (known as Robinson IV), as well as this
Court’s decision in In re Sunoco Pipeline, L.P., 143 A.3d 1000 (Pa. Cmwlth.)
(Sunoco), appeal denied, 164 A.3d 485 (Pa. 2016). The 2017 Opinion set forth the
following underlying facts:

              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

       1
         This Court may affirm on grounds different than those relied upon by the court or agency
below if such grounds for affirmance exist. Belitskus v. Hamlin Twp., 764 A.2d 669, 671 (Pa.
Cmwlth. 2000); Continuous Metal Tech., Inc. v. Unemployment Comp. Bd. of Review, 740 A.2d
1219, 1224 (Pa. Cmwlth. 1999).
                                               2
                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.”[2]

                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 for the appointment of
                a [b]oard of [v]iewers pursuant to Section 502 of the []
                Eminent Domain Code. . . . On November 13, 2015, [the
                Hughes Appellants] filed an Amended Petition for the
                appointment of a [b]oard of [v]iewers pursuant to the
                [Eminent Domain] 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.
                ....

                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.

2017 Opinion, slip op. at 2-4 (citations and footnote omitted) (footnote added).
        2
          Section 157.6(d) of FERC’s regulations, 18 C.F.R. § 157.6(d), outlines the landowner
notification requirements for applications for certificates of public convenience and necessity. Of
note here, that section provides that an applicant shall make a good faith effort to notify all affected
landowners, including owners whose property is directly affected by the proposed activity, id. §
157.6(d)(1) & (2)(i), or “is within the area of proposed new storage fields or proposed expansions
of storage fields, including any applicable buffer zone.” Id. § 157.6(d)(2)(iv).
                                                   3
               Following remand, the trial court conducted an evidentiary hearing on
January 18, 2019. See Reproduced Record (R.R.) at 550a-81a. By opinion and order
filed March 25, 2019, and amended April 23, 2019,3 the trial court again sustained
UGI’s preliminary objections and dismissed Appellants’ petitions seeking the
appointment of a board of viewers for UGI’s purported de facto taking of their
subsurface mineral rights.
               The trial court explained that the primary issue in the matter was
“whether UGI possesse[d] the power of condemnation with regard to Appellants’
properties without a [c]ertificate of [p]ublic [c]onvenience issued by the appropriate
regulatory body.” Tr. Ct. Op., 3/25/19, at 1. The trial court noted Appellants’
allegation that UGI “had used its power of eminent domain, conferred upon it by
[FERC], to take oil and gas rights in the Marcellus Shale and Utica Shale regions
owned by said Appellants in Tioga County.” Id. The trial court identified the three
factors that must be established in order to have a de facto taking, namely that (1)
the condemning party must have the authority to condemn, (2) there are exceptional
circumstances that substantially deprive the property owner of the beneficial use and
enjoyment of their land, and (3) the deprivation is the direct, necessary, and
unavoidable result of the exercise of the power to condemn. Id. at 1-2. Ultimately,
the trial court concluded that no de facto taking occurred here because UGI lacked
the power to condemn and that it was not necessary to examine the remaining factors.
Id. at 6.
               In reaching this conclusion, the trial court concurred with UGI’s
contention that FERC is the controlling regulatory body herein, noting that FERC’s

       3
          The trial court’s March 25, 2019 opinion and order only referenced the dismissal of the
petition for the appointment of a board of viewers filed by the Hughes Appellants. The April 23,
2019 amendment corrected the earlier opinion to reflect a dismissal of the petitions filed by both
the Hughes Appellants and Albrecht Appellants. See Tr. Ct. Am. Op., 4/23/19.
                                                4
exclusive jurisdiction over the transportation and sale of natural gas in interstate
commerce for resale was authorized pursuant to Section 717(a) of the Natural Gas
Act (NGA), 15 U.S.C. § 717(a). Tr. Ct. Op., 3/25/19, at 2. The trial court noted that
Section 717f(h) of the NGA, 15 U.S.C. § 717f(h),4 grants the power of eminent
domain to the holder of a certificate of public convenience and necessity that 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. Tr. Ct. Op., 3/25/19, at 2.
The trial court stated that “UGI has the power of eminent domain under the NGA
after it has received [c]ertification from FERC.” Id. In other words, “FERC and the
NGA require that UGI [] obtain FERC certification relative to the Meeker Buffer
Zone before it possesses the power of eminent domain.” Id. at 3.
               The trial court indicated that UGI’s existing eminent domain power
pertained solely to the land certified by FERC and that uncertified parcels of the
Meeker Buffer Zone, such as Appellants’ properties, did not fall within FERC’s
regulatory scope. Id.    Assuming, arguendo, that UGI operated under state
jurisdiction, the trial court noted that the Pennsylvania Public Utility Commission
(PUC), the state regulatory body, had not issued UGI a certificate of public
convenience to include the Meeker Buffer Zone. Id.
               Consistent with the remand directives set forth in the 2017 Opinion, the
trial court reviewed the decisions in Robinson IV and Sunoco. With regard to
Robinson IV, the trial court noted that the Pennsylvania Supreme Court declared
Section 3241 of the Oil and Gas Act to be unconstitutional as it authorized a private

       4
          Specifically, Section 717f(h) of the NGA permits the exercise of the right of eminent
domain when a right-of-way is necessary “to . . . 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 . . . other stations or equipment necessary to the proper operation” of such
pipe lines. 15 U.S.C. § 717f(h).
                                                 5
corporation, which did not possess a certificate of public convenience, to take real
property for the storage of natural gas.5 Tr. Ct. Op., 3/25/19, at 6. The trial court
further noted that in Sunoco, this Court held that the issuance of a certificate of public
convenience is prima facie evidence of the public need for a proposed service and
authorizes the entity receiving the same to exercise the power of eminent domain.
Tr. Ct. Op., 3/25/19, at 4 (citing Sunoco, 143 A.3d at 1018). The trial court then
cited the following passage from Sunoco:

                Jurisdiction over the certification and regulation of public
                utilities in the Commonwealth is vested in the PUC
                through the Public Utility Code.[6] However, simply being
                subject to PUC regulation is insufficient for an entity to
                have the power of eminent domain. . . . Section 1104 of
                the [Public Utility] Code, 66 Pa.C.S. § 1104, requires that
                a public utility must possess a [c]ertificate of [p]ublic
                [c]onvenience issued by [the] PUC . . . before exercising
                the power of eminent domain.

Tr. Ct. Op., 3/25/19 at 4-5 (citing 143 A.3d at 1003). Ultimately, the trial court
concluded that Robinson IV and Sunoco support its position that UGI was “not
clothed with the power of eminent domain as to [] Appellants’ oil and gas rights in
the [p]roperty.” Tr. Ct. Op., 3/25/19, at 6.
                Finally, the trial court addressed Section 1511(a)(3) of the Business
Corporation Law of 1988 (BCL), 15 Pa.C.S. § 1511(a)(3), which grants a public
utility “the right to take, occupy and condemn property” for storage of natural or

       5
         Section 3241 of the Oil and Gas Act was added by the Act of February 14, 2012, P.L. 87,
No. 13, 58 Pa.C.S. §§ 2301-3504, known as Act 13. The Supreme Court described Act 13 as “a
sweeping law regulating the oil and gas industry—which, inter alia, repealed parts of the existing
Oil and Gas Act of 1984 codified in Title 58 of the Pennsylvania Consolidated Statutes and created
six new chapters therein,” including Chapter 32. Robinson IV, 147 A.3d at 542 (footnote omitted).
       6
           66 Pa.C.S. §§ 101-3316.
                                                6
artificial gas. Tr. Ct. Op., 3/25/19, at 5. The trial court noted that Section 1511(f)
of the BCL, 15 Pa.C.S. § 1511(f), addresses the effect on other statutes and
specifically provides that subsections (a) through (e) of Section 1511 “shall not be
construed to . . . affect or modify any of the provisions of . . . [Section 1104 of the
Public Utility Code,] 66 Pa.C.S. § 1104 (relating to certain appropriations by the
right of eminent domain prohibited) . . . .” Id. The trial court stated that Section
1104 of the Public Utility Code requires a public utility to possess a certificate of
public convenience before exercising any power of eminent domain within this
Commonwealth. Id. The trial court indicated that there have been no assertions
herein that UGI possesses a certificate of public convenience “from state regulator
PUC or FERC, the federal equivalent, which would allow UGI to establish a buffer
zone around a gas storage facility under Appellants’ properties.” Id. Because UGI
had not been granted a certificate of public convenience from the PUC or FERC, the
trial court held that Section 1511 of the BCL does not afford UGI “the power” of
eminent domain. Id.
             Appellants filed separate notices of appeal with the trial court.
Thereafter, Appellants filed a concise statement of errors complained of on appeal,
alleging that the trial court erred in concluding that: (1) Section 1511 of the BCL
does not independently confer upon UGI the power of eminent domain; (2) in order
for UGI to have the power of eminent domain under the BCL, it was first required
to possess a certificate of public convenience from the PUC; (3) UGI does not have
eminent domain power with respect to Appellants’ properties situated within the
Meeker Buffer Zone; and (4) UGI’s action did not constitute a de facto taking of
property rights for those properties, such as Appellants’, that are within the Meeker
Buffer Zone. Tr. Ct. Op., 6/25/19, at 2.

                                           7
                On June 25, 2019, the trial court issued an opinion in support of its
order. The trial court acknowledged the power of eminent domain granted to an
entity for the acquisition of underground gas storage facilities under state and federal
law, but reiterated that UGI would need to update the certification it received from
FERC relative to the Meeker Buffer Zone, specifically with respect to Appellants’
properties, before it possessed such power. Id. at 3-4. While explaining that
operation of the Meeker Storage Field and Meeker Buffer Zone are governed by the
NGA and not state law, even assuming arguendo that state law applies, the trial court
again stated that UGI lacks the power to condemn under state law because it does
not possess the necessary certificate of public convenience from the PUC. Id. at 3-
5. Further, the trial court stressed that a PUC certificate was necessary before UGI
could “exercise the power of eminent domain” conferred by Section 1511 of the
BCL. Id. at 6-7.

                                           Discussion
                On appeal,7 Appellants argue that the trial court erred in concluding that
UGI lacked the power of eminent domain such that a de facto taking of their
properties did not occur here.8 We agree with Appellants that the trial court erred
insofar as it concluded that UGI lacked the power of eminent domain. However, we
agree with the trial court that UGI could not exercise its power of eminent domain
with respect to Appellants’ properties and, as a result, a de facto taking did not occur.

       7
          “This court’s scope of review of a trial court’s ruling on preliminary objections to a
petition for appointment of a board of view[ers] is limited to determining whether there is
competent evidence in the record to support the necessary findings and whether the trial court
committed an error of law.” Hill v. City of Bethlehem, 909 A.2d 439, 442 n.6 (Pa. Cmwlth. 2006).
       8
           By order dated June 25, 2019, this Court consolidated Appellants’ appeals.

                                                 8
                         De Facto Condemnation/Taking
             As this Court described in In re Condemnation by Department of
Transportation, of Right-of-Way for State Route 0079, Section 290, A Limited Access
Highway in Township of Cranberry, 805 A.2d 59 (Pa. Cmwlth. 2002) (Norberry
One Condominium Association):

             A de facto condemnation occurs when the entity clothed
             with the power of eminent domain substantially deprives
             an owner of the beneficial use and enjoyment of his
             property. There are three elements that a property owner
             must show in order to establish a de facto taking. First,
             the condemnor must have the power to condemn the
             property. Second, the property owner must establish that
             there are exceptional circumstances that substantially
             deprive the property owner of the beneficial use and
             enjoyment of the property. Third, the property owner must
             demonstrate that the deprivation is the immediate,
             necessary and unavoidable consequence of the exercise of
             the power to condemn.
Id. at 68 (citations omitted) (emphasis in original deleted) (emphasis added). This
Court has described the burden on a property owner seeking damages for an alleged
de facto taking as “a heavy” one. Thomas A. McElwee & Son, Inc. v. Se. Pa. Transp.
Auth., 896 A.2d 13, 19 (Pa. Cmwlth. 2006). Further, “[t]here is no bright line test to
determine when government action shall be deemed a de facto taking; instead, each
case must be examined and decided on its own facts.” Id.

                                Power to Condemn
             “In 1866, our Supreme Court explained that the Commonwealth’s right
‘to take private property without the owner’s assent on compensation made . . . exists

                                          9
in her sovereign right of eminent domain . . . . The power arises out of that natural
principle which teaches that private convenience must yield to the public wants.’”
In Re Condemnation by Dep’t of Transp., of Right-of-Way for State Route 0022,
Section 034, in Twp. of Frankstown, 194 A.3d 722, 730 (Pa. Cmwlth. 2018) (Twp.
of Frankstown) (quoting Appeal of Lance, 55 Pa. 16, 25 (1866)). In 1913, our
Supreme Court reiterated that “every private owner holds his property subject to the
right of the sovereign to take the same, or such part of it as may be required to serve
the public use,” and described this power as “not necessarily created either by
Constitution or statute, but [a]s an inherent attribute of sovereignty itself.” Twp. of
Frankstown, 194 A.3d at 730 (quoting Phila. Clay Co. v. York Clay Co., 88 A. 487,
487-88 (Pa. 1913)) (emphasis added). Moreover, this Court has recognized that “the
sovereignty can delegate the power to such entities as it sees fit, provided that its
exercise is for a public use. This includes not only governmental bodies, but
corporations and individuals.” Nw. Lehigh Sch. Dist. v. Agric. Lands Condemnation
Approval Bd., 559 A.2d 978, 979-80 (Pa. Cmwlth. 1989) (emphasis added).
             As our Supreme Court recognized in Robinson IV:

             [T]he power of eminent domain is an inherent one
             possessed by the Commonwealth, as sovereign, which
             permits it to take private property for a public use if the
             landowner receives just compensation for the taking.
             Reading Area Water Auth[.] v. Schuylkill [River]
             Greenway Ass[’]n, []100 A.3d 572, 578 ([Pa.] 2014).
             Although the Commonwealth may choose to delegate such
             power to other entities, the Commonwealth’s 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 579. The primary federal and state
             constitutional limitation imposed on the exercise of this
             power by the Commonwealth, or by any entity to which
             the Commonwealth has delegated such power, is that
             private property may only be taken to serve a public

                                          10
               purpose. [In re Opening Private Rd. for Benefit of]
               O’Reilly, 5 A.3d [246,] 258 [(Pa. 2010)]; Phila[.] Clay
               Co.[], []88 A. [at] 488 (“[T]he power of the Legislature to
               invest individuals or corporations with the right of eminent
               domain has its limitations, the most important of which is
               that the property taken must be for a public use.”). In order
               to satisfy this public purpose requirement, “the public
               must be the primary and paramount beneficiary of the
               taking.” O’Reilly, 5 A.3d at 258. A mere incidental
               benefit to the public from the taking is insufficient to
               render it lawful under both the United States and
               Pennsylvania Constitutions. Id. Further, because the
               exercise of eminent domain power is in derogation of
               private property rights, any statute that authorizes its use
               will be strictly construed in favor of landowners. Reading
               Area Water Auth[.], 100 A.3d at 578.

147 A.3d at 586.
               UGI has been clothed with the power of eminent domain both by the
Commonwealth, via Section 1511(a)(3) of the BCL, and the federal government, via
Section 717f(h) of the NGA as regulated by FERC.9 Section 1511(a)(3) of the BCL
unambiguously states as follows:

               (a) General rule.—A public utility corporation shall, in
               addition to any other power of eminent domain conferred
               by any other statute, have the right to take, occupy and
               condemn property for one or more of the following
               principal purposes and ancillary purposes reasonably
               necessary or appropriate for the accomplishment of the
               principal purposes:
               ....

                       (3) The . . . storage . . . of natural or artificial
                       gas . . . for the public.

       9
          Appellants originally relied in part on Section 3241 of the Oil and Gas Act as authorizing
UGI’s exercise of the power of eminent domain. However, as noted above, our Supreme Court
declared Section 3241 to be unconstitutional in Robinson IV, which necessitated consideration of
that case upon remand. Our Supreme Court’s declaration in Robinson IV, however, does not affect
Section 1511 of the BCL or Section 717 of the NGA.
                                                11
15 Pa.C.S. § 1511(a)(3) (emphasis added).
               There is no dispute that UGI fits within the definition of a “public utility
corporation” under the BCL, as Section 1103 defines this term as:

               [a]ny domestic or foreign corporation for profit that:

               (1) is subject to regulation as a public utility by the [PUC]
               or an officer or agency of the United States; or

               (2) was subject to such regulation on December 31, 1980,
               or would have been so subject if it had been then existing.

15 Pa.C.S. § 1103 (emphasis added); see also UGI Utils., Inc. v. City of Reading,
179 A.3d 624, 626 (Pa. Cmwlth. 2017) (“UGI is a public utility corporation and
natural gas distribution company regulated by the PUC.”). UGI is a corporation
subject to regulation by FERC,10 an “agency of the United States,” and, hence,
qualifies as a “public utility corporation” under the BCL. See 15 Pa.C.S. § 1103;
Sunoco, 143 A.3d at 1003. As such, UGI has the power under state law to condemn
property for the storage of natural gas when such taking is “reasonably necessary or
appropriate.” 15 Pa.C.S. § 1511(a)(3).
               As for federal law, the NGA authorizes condemnation for:

               [T]he 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 line
               or pipe lines. . . .

      10
           See 15 U.S.C. §§ 717 & 717f(c).
                                             12
15 U.S.C. § 717f(h) (emphasis added). Therefore, natural gas companies are clothed
with the federal power of eminent domain to secure the necessary property for
underground storage areas and related facilities.       Id.; see also Columbia Gas
Transmission Corp. v. Exclusive Nat. Gas Storage Easement, 962 F.2d 1192, 1193
(6th Cir.), cert. denied, 506 U.S. 1022 (1992) (citing 15 U.S.C. § 717f(h)).

                           The Right to Exercise the Power
             Before a natural gas company can condemn a particular property for a
storage facility, it must first obtain a certificate of public convenience and necessity
from the state or federal regulatory body. Sunoco, 143 A.3d at 1003 (“Section 1104
of the [Public Utility] Code, 66 Pa.C.S. § 1104, requires that a public utility must
possess a certificate of public convenience [] issued by [the] PUC . . . before
exercising the power of eminent domain.”) (emphasis added); 15 U.S.C. §
717f(c)(1)(A) (stating that a natural gas company may not “undertake the
construction or extension of any facilities” for the transportation or sale of natural
gas without “a certificate of public convenience and necessity issued by the
Commission authorizing such acts”); see also Tenn. Gas Pipeline Co., LLC v.
Permanent Easement for 7.053 Acres, 931 F.3d 237, 243 (3d Cir. 2019) (stating that
before natural gas company can acquire private property by eminent domain under
the NGA, it “must first successfully obtain a certificate of public convenience and
necessity from FERC and unsuccessfully attempt to purchase the required property
from its owner”); Columbia Gas Transmission Corp. v. Exclusive Gas Storage
Easement, 776 F.2d 125 (6th Cir. 1985) (Parrott); Steckman Ridge GP, LLC v.
Exclusive Nat. Gas Storage Easement (W.D. Pa., Nos. 08-168, 08-169, 08-177, 08-

                                          13
179 & 08-180, filed September 19, 2008), 2008 WL 4346405 (citing E. Tenn. Nat.
Gas Co. v. Sage, 361 F.3d 808 (4th Cir. 2004)).
               In the case sub judice, UGI has obtained a certificate of public
convenience from FERC to operate the Meeker Storage Field and certain portions
of the Meeker Buffer Zone for which UGI had already acquired property rights. See
FERC Order Issuing Certificate to UGI ¶ 1; R.R. at 44a. Thus, FERC is the
Commission authorizing the storage field and buffer zone in question.11
               Once FERC issues a certification, the NGA empowers the holder of the
certification to exercise its power of eminent domain as to those properties
delineated in the certification. See Steckman, slip op. at __, 2008 WL 4346405, at
*3 (citing Sage, 361 F.3d at 822; 15 U.S.C. § 717f(h)). In order to exercise the power
of eminent domain relative to a particular property that property must be included
within the certification. See Parrott, 776 F.2d at 129 (holding NGA authorized
invoking the power of eminent domain to seek a gas storage easement if natural gas
company secured a valid certificate of public convenience and necessity which
included the area underneath landowners’ property). If the property is not included
in the certificated area, the natural gas company cannot use its condemnation power
until the certificated area is amended to include the subject property within the
boundaries of the certification. Id.
               This Court’s decision in Sunoco confirmed that a natural gas company
may exercise the power of eminent domain when it has acquired a certificate of
public convenience from the PUC (for matters of intrastate concern) or a certification
       11
           In its Pa.R.A.P. 1925(a) Opinion, the trial court indicates there is agreement among the
parties that UGI is exclusively regulated by FERC. Tr. Ct. Op., 6/25/19, at 3. While, in this matter,
this Court does not address the dual regulatory nature of natural gas, see Sunoco, 143 A.3d at 1003-
04, or any agreement between the parties regarding exclusive jurisdiction, we need not reach this
issue here as UGI does not possess a certificate of public convenience from either FERC or the
PUC with respect to Appellants’ properties.
                                                14
from FERC (for matters of interstate concern). 143 A.3d at 1016 (finding no error
in trial court’s conclusion that a PUC certificate of public convenience allowed a
natural gas company to exercise the power of eminent domain to condemn property
for the construction of a pipeline that is also utilized for the intrastate shipment of
gas). Here, UGI has obtained a certificate of public convenience and necessity from
FERC to operate the Meeker Storage Field and certain portions of the Meeker Buffer
Zone for which UGI had already acquired property rights. See FERC Order Issuing
Certificate to UGI ¶¶ 1-2; R.R. at 44a. Analogous to Sunoco, wherein this Court
held that “[a] [certificate of public convenience] issued by [the] PUC is prima facie
evidence that [the] PUC has determined that there is a public need for the proposed
service and that the holder is clothed with the eminent domain power,” 143 A.3d at
1018, FERC’s issuance of a certificate of public convenience and necessity to UGI
here evidences that FERC has determined there is a necessary public purpose for the
Meeker Storage Field and Buffer Zone, and that the holder is also clothed with the
power of eminent domain. Notably, the certificate could not be issued to an entity
that did not have the power of eminent domain. See 15 U.S.C. § 717f(c) & (f). The
certificate defines the scope of the taking that is necessary for the public purpose
and, as such, expresses the terms by which the power of eminent domain can be
exercised. See 15 U.S.C. § 717f(e).
             Here, Appellants’ properties were not subject to the FERC certification,
because UGI had not yet taken steps to include those properties in the scope of the
certification. FERC specified in its order issuing the certificate to UGI as follows:

                    56. However, UGI [] also seeks to acquire the entire
             Meeker storage facility, which is not currently certificated.
             . . . UGI [] did not provide any information regarding any
             negotiations to acquire the rights to the rest of the

                                          15
               proposed buffer area. In addition, UGI [] did not comply
               with [the] landowner notification requirements in section
               157.6(d) of [FERC]’s regulations.

                      57. UGI [] has provided no evidence that it has
               contacted the owners of the properties in the proposed
               buffer zone for which CPG does not already have the
               necessary property rights or any information regarding
               what efforts, if any, have been made to acquire those
               property rights. Therefore, [FERC] finds, with respect
               only to those areas of the proposed buffer zone for the
               Meeker facility for which CPG or UGI [] does not already
               own sufficient property rights, that UGI[]’s proposal does
               not satisfy the Certificate Policy Statement. Therefore,
               this order will certificate only those portions of the 2,980
               acres of the proposed buffer zone for the Meeker facility
               for which UGI [] has already acquired the necessary
               property rights or will be able to acquire such rights from
               CPG. . . .

See FERC Order Issuing Certificate to UGI ¶¶ 56-57; R.R. at 65a-66a.
               While UGI indicated to FERC its intent to proceed to secure rights to
the subject properties in accordance with FERC’s landowner notification
requirements, after which UGI would apply to FERC to expand its certificated
Meeker Buffer Zone, such application for expansion of the certification has not yet
taken place.12 See R.R. at 109a-17a. After Appellants’ properties are included
within the FERC certification, if UGI and Appellants are unable to reach an
agreement for UGI to acquire Appellants’ properties, UGI can exercise its power to
condemn Appellants’ properties through its power of eminent domain. The fact that
the parties have not reached this stage in the proceedings does not mean that UGI
does not possess the power of eminent domain. Rather, the lack of inclusion of

       12
          Such intent is reflected in a November 22, 2010 letter sent by UGI’s counsel to Kimberly
D. Bose, in her position as FERC Secretary.

                                               16
Appellants’ properties in the FERC certification affects UGI’s ability to exercise its
power of eminent domain over Appellants’ properties. See 15 U.S.C. § 717f(c);
Parrott, 776 F.2d at 129; Steckman, slip op. at ___, 2008 WL 4346405, at *13.
Therefore, the trial court erred insofar as it held that UGI lacked the power of
eminent domain, and the trial court should have continued its analysis beyond this
first factor required for a de facto taking. See Norberry One Condo. Ass’n, 805 A.2d
at 68.
             Nevertheless, the trial court’s order sustaining UGI’s preliminary
objections and dismissing Appellants’ respective petitions for appointment of a
board of viewers must stand. As discussed above, while UGI is clothed with the
power of eminent domain under federal law, UGI would need to take additional steps
to update its FERC certification relative to the Meeker Buffer Zone, specifically with
respect to Appellants’ properties, before it could exercise that power of eminent
domain over Appellants’ properties. In our 2017 Opinion, we explained that FERC’s
October 10, 2010 order issued UGI a certification to operate certain portions of the
Meeker Buffer Zone where UGI had already acquired property rights, and provided
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.” 2017 Opinion, slip op. at 2. Section 717f(h) of the NGA confirms
the ability of the holder of a FERC certification, such as UGI, to exercise the power
of eminent domain, but only after the certification includes the property at issue. 15
U.S.C. § 717f(h); see also Parrott, 776 F.2d at 129; Steckman, slip op. at ___, 2008
WL 4346405, at *13. UGI’s failure to obtain certification from FERC evidencing
Appellants’ properties are a necessary part of the Meeker Buffer Zone precludes
UGI from exercising the power of eminent domain over such properties. This failure

                                          17
also precludes a finding that a de facto taking occurred here, since Appellants cannot
establish that any purported deprivation of the beneficial use and enjoyment of their
properties “is the immediate, necessary and unavoidable consequence of the exercise
of the power to condemn,” the third prong necessary to find a de facto taking.
Norberry One Condo. Ass’n, 805 A.2d at 68 (citation omitted) (emphasis added).
This is not to say, however, that Appellants may not have other available remedies
in tort. See, e.g., Bowman v. Columbia Gas Transmission Corp. (6th Cir., No. 87-
3166, filed July 6, 1988), 1988 WL 68890 (affirming jury award of punitive damages
to landowners in trespass action given willful and outrageous character of natural
gas company’s actions); Humphries v. Williams Nat. Gas Co., 48 F. Supp. 2d 1276
(D. Kansas 1999) (holding gas company’s condemnation action under section
717f(h) of the NGA did not preempt all of landowner’s pre-condemnation state law
claims, such as trespass); Griffith v. Millcreek Township, 215 A.3d 72 (Pa. Cmwlth.
2019) (discussing difference between de facto taking and trespass); McMaster v.
Township of Bensalem, 161 A.3d 1031, 1036 (Pa. Cmwlth. 2017); In re
Condemnation by Dep’t of Transp., of Right-of-Way for State Route 1032, Section
B02, in Borough of Rochester, 137 A.3d 666, 670-73 (Pa. Cmwlth. 2016); Kennedy
v. Consol Energy Inc., 116 A.3d 626, 636 (Pa. Super. 2015) (“It is well-settled law
that in order to establish a claim for trespass, a plaintiff must prove an intentional
entrance upon land in the possession of another without a privilege to do so.” (citing
Kopka v. Bell Tel. Co., 91 A.2d 232, 235 (Pa. 1952); Restatement (Second) of Torts
§ 164 (Am. Law. Inst. 1965))); Poole v. Township of District, 843 A.2d 422, 424-25
(Pa. Cmwlth. 2004); Restatement (Second) of Torts §§ 158 (Liability for Intentional
Intrusions on Land) & 159 (Intrusions Upon, Beneath, and Above Surface of Earth)
(Am. Law. Inst. 1965).

                                         18
           Accordingly, the order of the trial court is affirmed, albeit on other
grounds.

                                    __________________________________
                                    CHRISTINE FIZZANO CANNON, Judge

                                      19
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Carl F. Hughes and Ellen B. Hughes,      :
h/w, and Bruce D. Hughes and Margaret :
K. Hughes, h/w, individually and on      :
behalf of all others similarly situated, :
                     Appellants          :
                                         :
              v.                         :
                                         :   No. 453 C.D. 2019
UGI Storage Company                      :
                                         :
                                         :
John Albrecht, individually and on       :
behalf of all others similarly situated, :
                     Appellant           :
                                         :
              v.                         :
                                         :   No. 454 C.D. 2019
UGI Storage Company                      :

                                    ORDER

            AND NOW, this 12th day of November, 2020, the March 25, 2019
order of the Court of Common Pleas of Tioga County is hereby AFFIRMED.

                                      __________________________________
                                      CHRISTINE FIZZANO CANNON, Judge
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Carl F. Hughes and Ellen B. Hughes,        :
h/w, and Bruce D. Hughes and Margaret      :
K. Hughes, h/w, individually and on        :
behalf of all others similarly situated,   :
                     Appellants            :
                                           :
             v.                            :      No. 453 C.D. 2019
                                           :
UGI Storage Company                        :
                                           :
John Albrecht, individually and on         :
behalf of all others similarly situated,   :
                     Appellant             :
                                           :
             v.                            :      No. 454 C.D. 2019
                                           :      Argued: December 11, 2019
UGI Storage Company                        :

BEFORE:      HONORABLE MARY HANNAH LEAVITT, President Judge
             HONORABLE RENÉE COHN JUBELIRER, Judge
             HONORABLE P. KEVIN BROBSON, Judge
             HONORABLE PATRICIA A. McCULLOUGH, Judge
             HONORABLE ANNE E. COVEY, Judge
             HONORABLE CHRISTINE FIZZANO CANNON, Judge
             HONORABLE ELLEN CEISLER, Judge

CONCURRING/DISSENTING OPINION
BY PRESIDENT JUDGE LEAVITT                           FILED: November 12, 2020

             I agree with the majority that UGI Storage Company (UGI) is a public
utility clothed with the power of eminent domain and that the Court of Common
Pleas of Tioga County (trial court) erred in otherwise holding. I depart from the
majority’s conclusion that because UGI cannot yet undertake a formal condemnation
of property owned by Carl F. Hughes and others (Landowners), UGI cannot be the
subject of a de facto condemnation proceeding. Respectfully, I dissent from that
portion of the majority opinion, and I join the dissent of Judge McCullough.
            Depleted oil and gas fields can be effectively converted into vast
storage containers for natural gas. Northern Natural Gas Company v. ONEOK Field
Services Company, LLC, 448 P.3d 383, 389 (Kan. 2019). The rock formation of the
underground reservoir must be porous enough to accommodate a large quantity of
gas and sufficiently permeable to allow gas to be injected and withdrawn rapidly.
Id. The reservoir must be sealed by a barrier of impermeable rock lest the natural
gas migrate out of the underground reservoir. Id. This geologic barrier is known as
the buffer zone. Natural gas storage fields have generated controversy around the
country. See Steven D. McGrew, Note, Selected Issues in Federal Condemnations
for Underground Natural Gas Storage Rights: Valuation Methods, Inverse
Condemnation, and Trespass, 51 CASE W. RES. L. REV. 131, 134 (2000) (review of
“property owner’s rights to the subsurface geological formations” beneath the
surface land and the issues created where gas companies have not “scrupulously
followed” the procedures prescribed in the federal Natural Gas Act, 15 U.S.C.
§§717-717z, for condemning property used in gas storage fields).
            The Natural Gas Act confers the power of eminent domain upon gas
companies to construct underground storage fields, including buffer zones. To
pursue a lawful condemnation under the Natural Gas Act, the gas company must be
granted a “certificate of public convenience and necessity” by the Federal Energy
Regulatory Commission (FERC). 15 U.S.C. §717f(h). Section 1511(a)(3) of
Pennsylvania’s Business Corporation Law of 1988 also confers on a public utility
corporation “in addition to any other power of eminent domain conferred by any

                                     MHL-2
other statute,” the right “to take, occupy and condemn property for” the storage of
natural or artificial gas. 15 Pa. C.S. §1511(a)(3). In short, the Natural Gas Act and
the Business Corporation Law establish that UGI is a utility corporation expressly
clothed with the power to condemn property to develop a natural gas storage field
and buffer zone.
             In 2010, FERC granted a certificate of public convenience to UGI for
its natural gas storage field known as the Meeker Storage Field and for a protective
buffer surrounding the precinct of that field known as the Meeker Buffer Zone.
UGI’s application with FERC showed Landowners’ property as falling within the
Meeker Buffer Zone for which UGI sought a certificate.              FERC exempted
Landowners’ property from UGI’s certificate because UGI had not given
Landowners notice of the certificate application. Notably, FERC’s certification
advised UGI that it “may file a further application to include … other areas within
the certificated buffer zone at a later date, [to comply] with … landowner notification
requirements.” Reproduced Record at 66a (R.R. __). To date, UGI has not complied
with these notification requirements with regard to Landowners. Amended Petition
at 17, ¶57; R.R. 18a.
             Landowners contend that UGI has used and continues to use their
subsurface rock as a barrier to prevent gas from migrating out of the Meeker Storage
Field. Amended Petition at 5, ¶12; R.R. 6a. Indeed, UGI has identified Landowners’
property as part of the Meeker Buffer Zone in all of its filings with FERC.
Landowners further contend that UGI’s designation of land for the Meeker Buffer
Zone has “precluded all potential fracking activities within that buffer zone.”
Amended Petition at 19, ¶65; R.R. 20a. Landowners contend that “natural gas

                                       MHL-3
exploration, drilling and production companies … no longer have any interest in
leasing property rights” from Landowners to do deep drilling. Amended Petition at
19, ¶66; R.R. 20a. Landowners initiated a de facto condemnation action under
Section 502(c) of the Eminent Domain Code, 26 Pa. C.S. §502(c), seeking just
compensation from UGI for the substantial deprivation of their use and enjoyment
of their land.1 Visco v. Department of Transportation, 498 A.2d 984, 986 (Pa.
Cmwlth. 1985) (holding that a substantial deprivation of the owner’s beneficial use
includes all potential uses, including its highest and best use). The trial court

1
  Landowners petitioned for the appointment of a board of viewers under Section 502(c) of the
Eminent Domain Code, which states:
        (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.
26 Pa. C.S. §502(c) (emphasis added).
        “By its very nature, this type of claim involves specified property that has not been formally
taken by a governmental entity through the actual exercise of the power of eminent domain, and it
‘is applicable only where a condemnor is found by the court to have taken property without the
filing of a declaration of taking.’” Somera Road – 835 West Hamilton Street, LLC v. City of
Allentown (Pa. Cmwlth., No. 568 C.D. 2019, filed August 25, 2020), slip op. at 13-14 (unreported)
(quoting Department of Transportation v. Schodde, 512 A.2d 101, 102 n.1 (Pa. Cmwlth. 1986)).
                                              MHL-4
dismissed Landowners’ action for the stated reason that UGI was not a public utility
clothed with the power of condemnation.
             The majority rejects this conclusion of the trial court, holding that “UGI
has been clothed with the power of eminent domain both by the Commonwealth, via
Section 1511(a)(3) of the [Business Corporation Law], and the federal government,
via Section 717f(f) of the [Natural Gas Act] as regulated by FERC.” Hughes v. UGI
Storage Company, __ A.3d __, __ (Pa. Cmwlth., Nos. 453, 454 C.D. 2019, filed
November 12, 2020), slip op. at 11 (emphasis in original). I agree. The majority
then reasons that “the lack of inclusion of [Landowners’] properties in the FERC
certification affects UGI’s ability to exercise its power of eminent domain over
[Landowners’] properties.” Id. at __, slip op. at 17 (emphasis in original). This
observation, while correct, does not account for the difference between a de jure and
de facto condemnation. A petition filed under Section 502(c) is reserved for the
situation where an “interest has been condemned without the filing of a declaration
of taking.” 26 Pa. C.S. §502(c).
             “A de jure condemnation is one initiated by the condemning body in
compliance with all statutory requirements[.]” Captline v. County of Allegheny, 727
A.2d 169, 171 n.7 (Pa. Cmwlth. 1999). By contrast, a “de facto condemnation occurs
outside the legal process when an entity clothed with the power of eminent domain
substantially deprives an owner of the beneficial use and enjoyment of his or her
property.” Id. (emphasis added). In other words, a de facto taking is a response to
the reality that activities carried on incident to a governmental (or utility) action may
interfere with land ownership, “even though the power of eminent domain has not
been formally exercised against the property in question.” Redevelopment Authority

                                        MHL-5
of City of Hazleton v. Hudock, 281 A.2d 914, 917 (Pa. Cmwlth. 1971). Landowners’
petition asserts that UGI has exercised its powers of eminent domain, albeit not in
accordance with the Natural Gas Act.
             The majority is correct that UGI cannot undertake a de jure
condemnation of Landowners’ property pursuant to the Natural Gas Act until it has
the approval of FERC. However, the condemnor’s failure to follow the statutory
procedure for effecting a lawful condemnation is the sine qua non of a de facto
condemnation.     It is a condemnation that “occurs outside the legal process.”
Captline, 727 A.2d at 171 n.7.
             In Fulmer v. White Oak Borough, 606 A.2d 589 (Pa. Cmwlth. 1992),
the borough left its lawful right-of-way and entered onto the plaintiff’s land by five
or six feet while grading a road. The plaintiff pursued a trespass and negligence
action against the borough for damages. The borough argued that the plaintiff’s
exclusive remedy was under the Eminent Domain Code. The trial court agreed, and
this Court affirmed the trial court.
             In so holding, this Court reviewed the difference between a trespass
action and a de facto condemnation. Generally,
             landowners have been relegated to an action in trespass when an
             entity possessing the power of eminent domain has caused
             damage to private property in a more direct manner, but where
             the damage is not incidental to or the result of the exercise of that
             eminent domain power. See, e.g., Jacobs [v. Nether Providence
             Township, 453 A.2d 336 (Pa. 1982)] (township may have
             negligently issued building permits for construction which result
             in flooding damage to neighboring properties, but such action
             was not related or incidental to exercise of power of eminent
             domain and landowners could not proceed under the [Eminent
             Domain] Code); Enon Valley Telephone [Company v. Market,
             493 A.2d 800 (Pa. Cmwlth. 1985)] (landowner may only proceed
                                       MHL-6
              in trespass where telephone company installs equipment on land
              on which it mistakenly believes it has a right-of-way).

Fulmer, 606 A.2d at 591 (citations omitted).
              In Fulmer, the borough did not mistakenly use the land owned by the
plaintiff. Rather, the borough intended to use the plaintiff’s land and did so without
following the lawful process for obtaining an easement. We explained as follows:
              This Court has held that where an entity clothed with the power
              of eminent domain enters upon and appropriates for its own use
              the private property of another, the landowner may treat this as
              a valid condemnation even though the statutorily described
              procedure was not followed. O’Keefe v. Altoona City Authority,
              [] 304 A.2d 916 ([Pa. Cmwlth. ]1973). While the question of
              when a [de facto] taking has occurred may be a difficult one, it
              is clear that when property is actually taken or entered, a
              condemnation has occurred. See Ewalt v. Pennsylvania Turnpike
              Commission, [] 115 A.2d 729 ([Pa. ]1955).
Id. (emphasis added). The borough’s intentional action in leveling a hill owned by
the plaintiff was treated as a “condemnation even though the statutorily prescribed
procedure was not followed” and, thus, authorized a de facto condemnation
proceeding. Id. at 591.2
              Similarly, in St. Catherine Church v. Mountaintop Area Joint Sanitary
Authority, 427 A.2d 726 (Pa. Cmwlth. 1981), the landowners filed an action in
trespass and ejectment, alleging that the sewer authority constructed sewer lines
across their land without filing a declaration of taking. The trial court dismissed the
action, concluding that the exclusive remedy of the landowners was to petition for

2
  This Court further held that the Eminent Domain Code provides “a complete and exclusive
procedure to govern all condemnation[] of property for public purposes and the assessment of
damages therefore.” Fulmer, 606 A.2d at 593 (citing former Section 303 of the Eminent Domain
Code, Act of June 22, 1964, Spec. Sess., P.L. 84, formerly 26 P.S. §1-303, repealed by the Act of
May 4, 2006, P.L. 112) (emphasis in original).
                                            MHL-7
the appointment of viewers under former Section 502(e) of the Eminent Domain
Code of 1964.3
              As Judge McCullough notes in her dissent, a “de facto condemnation
does not require an intention to acquire a property but only that the injury is a direct
result of intentional action by an entity clothed with the power of eminent domain.”
Hughes, __ A.3d at __, slip op. at 6 (McCullough, J., dissenting) (quoting In re
Mountaintop Area Joint Sanitary Authority, 166 A.3d 553, 562 (Pa. Cmwlth. 2017)).
A de facto condemnation does not require “the physical seizure of property” but,
rather, an interference with the rights of ownership that deprives the “owner of the
beneficial use of his property.” Id. at __, slip op. at 6 (quotation omitted). This was
the holding of this Court in McGaffic v. Redevelopment Authority of the City of New
Castle, 548 A.2d 653 (Pa. Cmwlth. 1988).
              In McGaffic, the Redevelopment Authority of New Castle recorded a
plan to redevelop the downtown area. The plan identified 212 buildings slated for
demolition, including one owned by McGaffic.                  After filing the plan, the
Redevelopment Authority delayed its filing of its declaration of taking McGaffic’s
building. Twelve years later, the Redevelopment Authority withdrew McGaffic’s
building from its downtown plan. McGaffic then instituted a de facto condemnation
proceeding.4 McGaffic asserted that the Redevelopment Authority’s public filings
caused McGaffic to lose tenants and effectively made it impossible to compete in

3
  Act of June 22, 1964, Spec. Sess., P.L. 84, as amended, formerly 26 P.S. §502(e), repealed by
the Act of May 4, 2006, P.L. 112.
4
 McGaffic filed a petition for appointment of viewers pursuant to former Section 502(e) of the
Eminent Domain Code of 1964.
                                           MHL-8
the commercial real estate market. The trial court granted McGaffic’s petition for
the appointment of viewers, and this Court affirmed.
               McGaffic teaches that precondemnation activity can constitute a de
facto taking, notwithstanding the fact that there has been no actual exercise of the
power of eminent domain by the condemnor or physical intrusion upon the
petitioner’s land. As in McGaffic, UGI’s actions prefatory to a declaration of taking
have diminished the value of Landowners’ property.
               That UGI needs certification from FERC to pursue a lawful
condemnation of Landowners’ property is irrelevant to whether UGI has effected a
de facto condemnation of Landowners’ property incident to its maintenance and
operation of the Meeker Storage Field.5                UGI has announced to the federal
government and to the world that UGI intends to use Landowners’ property to
prevent natural gas from escaping the Meeker Storage Field.                         Landowners’
allegations that UGI’s actions have deprived Landowners of their ability to develop
their mineral rights may be difficult to prove, but they state a de facto condemnation
claim. Under Section 502(c) of the Eminent Domain Code and the above-reviewed
precedent, Landowners are entitled to make their evidentiary case that, in fact, a
taking has occurred. Mountain Area Joint Sanitary Authority v. St. Jude Church,
457 A.2d 1024 (Pa. Cmwlth. 1983) (holding that trial court, not board of viewers,
determines the factual question of whether a de facto taking has occurred).
               The majority’s decision immunizes UGI from liability for its
intentional actions that are alleged to have diminished Landowners’ beneficial use

5
  Under Fulmer and St. Catherine Church, Landowners’ allegations may not support an action in
trespass. I do not agree with this part of the majority’s discussion, which, in any case, is not the
holding and need not be addressed.
                                             MHL-9
of their property. Not even government condemnors enjoy such an immunity. I
would reverse the trial court’s order and remand this matter to the trial court for a
hearing on the factual question of whether a de facto condemnation of Landowners’
property has occurred.

                                   _____________________________________
                                   MARY HANNAH LEAVITT, President Judge

Judge McCullough joins in this concurring/dissenting opinion.

                                     MHL-10
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Carl F. Hughes and Ellen B. Hughes,        :
h/w, and Bruce D. Hughes and               :
Margaret K. Hughes, h/w, individually      :
and on behalf of all others similarly      :
situated,                                  :
                    Appellants             :
                                           :   No. 453 C.D. 2019
                    v.                     :
                                           :
UGI Storage Company                        :
                                           :
                                           :
John Albrecht, individually and on         :
behalf of all others similarly situated,   :
                     Appellant             :
                                           :   No. 454 C.D. 2019
                    v.                     :
                                           :   Argued: December 11, 2019
UGI Storage Company                        :
                                           :

BEFORE:      HONORABLE MARY HANNAH LEAVITT, President Judge
             HONORABLE RENÉE COHN JUBELIRER, Judge
             HONORABLE P. KEVIN BROBSON, Judge
             HONORABLE PATRICIA A. McCULLOUGH, Judge
             HONORABLE ANNE E. COVEY, Judge
             HONORABLE CHRISTINE FIZZANO CANNON, Judge
             HONORABLE ELLEN CEISLER, Judge

DISSENTING OPINION
BY JUDGE McCULLOUGH                                  FILED: November 12, 2020

             I respectfully disagree with the Majority’s conclusion that the
averments in the petitions of the condemnees-landowners (Appellants) in the above-
captioned case1 have failed to state a valid cause of action for a de facto taking
because there has been no exercise of a power to condemn, particularly with respect
to Appellants’ property rights.            In my view, the Majority misinterprets and
misapplies the relevant case law and, in essence, requires Appellants to prove that a
de jure taking has been effectuated in order to state a legally cognizable claim for a
de facto taking.
                Here, the Federal Energy Regulatory Commission (FERC) granted UGI
Storage Company (UGI) a certificate of public convenience and necessity (FERC
Certificate) to a construct a natural gas storage field. FERC also granted UGI a
FERC Certificate for a protective buffer surrounding the precinct of that field, a
“buffer zone,” in order to protect the integrity of the storage field and prevent natural
gas from migrating to areas outside the geographic contours of the storage facility.
Ultimately, a FERC Certificate conclusively establishes that the proposed oil and
gas project listed therein fulfills and furthers the public interest. See Williston Basin
Cloverly Subterranean Geological Formation, 524 F.3d 1090, 1097 (9th Cir. 2008)
(“[A] key Congressional goal in enacting the [Natural Gas Act (NGA)2], namely, to
have FERC balance the competing public interests involved in a proposed project
through the issuance of certificates of public convenience and necessity.”);
Transwestern Pipeline Co. v. 17.19 Acres of Property Located in Maricopa County,
550 F.3d 770, 778 n.9 (9th Cir. 2008) (“The NGA does not allow landowners to
collaterally attack [] FERC [C]ertificate in the district court[.]”). Consequently, and
for the reasons discussed below, a FERC Certificate, for all intents and purposes, is

       1
         Carl F. Hughes and Ellen B. Hughes, h/w, and Bruce D. Hughes and Margaret K. Hughes,
h/w, individually and on behalf of all others similarly situated, and John Albrecht, individually and
on behalf of all others similarly situated.

       2
           15 U.S.C. §§717-717z.
                                             PAM - 2
tantamount to an intentional governmental act that is substantially related to, and
inexorably intertwined with, the exercise of the authority to condemn property.
                Significantly, once parcels of property are certified within the FERC
Certificate, section 717f(h) of the NGA vests a gas producer with the unconditional
right to condemn that property.3 As such, when FERC issues a FERC Certificate,
the act of filing an official condemnation petition is a ministerial formality whereby
the court merely determines an appropriate amount of damages—or just
compensation—that is owed to a landowner that is unable to agree on the monetary
amount with the gas producer. See Equitrans, L.P. v. Moore, 725 F. App’x 221, 224
(4th Cir. 2018) (“Here, [the gas company] has a [FERC] [C]ertificate and cannot
acquire the needed land by contract with the [landowners]. That is all the NGA
requires for a condemnation.”); Maritimes & Northeast Pipeline, L.L.C. v. Decoulos,
146 F. App’x 495, 498 (1st Cir. 2005) (observing that when “a gas company is
unable to acquire the needed land by contract or agreement with the owner, the only
issue before the district court in the ensuing eminent domain proceeding is the
amount to be paid to the property owner as just compensation for the taking”). Stated
differently, the right of condemnation flows from the FERC Certificate and, under

       3
           In pertinent part, section 717f(h) of the NGA provides as follows:

                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, . . . 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.

15 U.S.C. §717f(h).

                                              PAM - 3
the NGA, is obtainable as a matter of course.4 Even the Majority appears to
recognize this legal precept, at least to some extent. See Hughes v. UGI Storage Co.,
__ A.3d __, __ (Pa. Cmwlth., Nos. 453 and 454 C.D. 2019, filed November 12,
2020), slip op. at 15 (“FERC’s issuance of a [FERC Certificate] to UGI here
evidences that FERC has determined there is a necessary public purpose for the []
[s]torage [f]ield and [b]uffer [z]one, and that the holder is also clothed with the
power of eminent domain . . . . The [FERC] [C]ertificate defines the scope of the
taking that is necessary for the public purpose and, as such, expresses the terms by
which the power of eminent domain can be exercised.”).
               That said, I believe that the Majority misapprehended or overlooked the
practical and legal effects that the FERC Certificate had on UGI’s freestanding
ability to wield the power to condemn property officially and formally. Quite

       4
           In essence, in the event a landowner and gas producer agree on the amount of
compensation, and this information is included within the FERC Certificate, the FERC Certificate
effectively operates as a formal condemnation under the Eminent Domain Code (Code). 26
Pa.C.S. §§101-1106. More specifically, such an agreement entered pursuant to FERC’s
administrative regime and the NGA is equivalent to the scenario where an official declaration of
taking is filed under the Code, a landowners’ preliminary objections are overruled, and the matter
is later settled because the parties agreed on the amount of compensation. See sections 302, 306
and 501 of the Code, 26 Pa.C.S. §§302 (“Condemnation under the power of condemnation given
by law to a condemnor shall be effected only by the filing in court of a declaration of taking . . .
.”); 306 (stating that “the condemnee may file preliminary objections to the declaration of taking,”
which “shall be the exclusive method of challenging,” among other things, “[t]he power or right
of the condemnor to appropriate the condemned property unless it has been previously
adjudicated”); 501 (“At any stage of the proceedings, the condemnor and the condemnee may
agree upon all or any part or item of the damages and proceed to have those parts or items not
agreed upon assessed as provided in this chapter. The condemnor may make payment of any part
or item agreed upon.”); cf. Breinig v. Allegheny County, 2 A.2d 842, 846-47 (Pa. 1938) (“Even
where the State, by purchase or eminent domain, acquires a fee in the land upon which the highway
rests, the abutting owner . . . retains, as an incident to ownership of the remainder of his land, the
right of access, or of ingress and egress. This right cannot be taken from him unless compensation
is made therefor under the law.”). In both instances, the governmental entity, or its delegate, has
the authority to take property and commits an overt act with respect to the condemnation of
property and its purchase price.

                                             PAM - 4
simply, the FERC Certificate, per se, authorized UGI to take property and the
exercise of its power to condemn property in the public interest is necessarily
included and subsumed within the FERC Certificate. In other words, a FERC
Certificate, if applied to the provisions of the Eminent Domain Code (Code),
“previously adjudicated,” as a matter of law, “[t]he power or right of [UGI] to
appropriate the condemned property” designated in the FERC Certificate. Section
306 of the Code, 26 Pa.C.S. §306. See generally In re Condemnation by Sunoco
Pipeline, L.P., 143 A.3d 1000 (Pa. Cmwlth. 2016) (en banc) (discussing gas utilities’
power and authority, per a certificate of convenience (CPC), to take property through
eminent domain and how the CPC definitely established the public need or necessity
of the gas project); cf. Williston Basin Interstate Pipeline Co., 524 F.3d at 1099
(explaining that a gas company has the unconditional authority of eminent domain
under the NGA and that power extends to any property located within the
geographical area that is designated on the map(s) attached to the application for the
FERC Certification). Therefore, I do not think that the Majority fully appreciates
the power of eminent domain that UGI possesses under the NGA or the manner in
or extent to which UGI utilized that power in this case, courtesy of the FERC
Certificate.
               More pointedly, I take issue with the Majority’s conclusion that “UGI
would need to take additional steps to update its FERC certification relative to the .
. . [b]uffer [z]one, specifically with respect to Appellants’ properties, before it could
exercise that power of eminent domain over Appellants’ properties.” Hughes, __
A.3d at __, slip op. at 17 (emphasis in original). Contrary to the way the Majority
frames the issue, this is not case of de jure condemnation, and, thus, it was not
necessary for Appellants to prove that UGI has specified their property for
condemnation in a FERC Certificate.

                                       PAM - 5
             As this Court has stated, “a de facto condemnation does not require an
intention to acquire a property but only that the injury is a direct result of intentional
action by an entity clothed with the power of eminent domain.” In re Mountaintop
Area Joint Sanitary Authority, 166 A.3d 553, 562 (Pa. Cmwlth. 2017) (internal
citations omitted; emphasis in original). In somewhat different language, we have
said:

             A de facto taking is not the physical seizure of property;
             rather, it is an interference with one of the rights of
             ownership that substantially deprives the owner of the
             beneficial use of his property . . . . Where the injury is a
             direct result of intentional action by an entity clothed with
             the power of eminent domain, that entity will be held liable
             in a de facto condemnation action.
McGaffic v. City of New Castle, 74 A.3d 306, 315 (Pa. Cmwlth. 2013); see also
Sansom Street, Caplan’s Appeal, 143 A. 134, 136 (Pa. 1928) (“There need not be an
actual, physical taking, but any destruction, restriction or interruption of the common
and necessary use and enjoyment of property in a lawful manner may constitute a
taking for which compensation must be made to the owner of the property.”); In re
Mountaintop Area Joint Sanitary Authority, 166 A.3d at 562 (holding that a claim
for a de facto taking is cognizable when the harm to the property is simply “related
to or incidental to [the condemnor’s] condemnation powers”) (internal citations
omitted; emphasis in original). Succinctly put, Pennsylvania precedent clearly
establishes that “intentional action” on the part of condemnor—action that is related
to or incident to its condemnation power—will suffice to support a de facto claim in
the situation where that action, coordinated in and to a specific area, nonetheless has
a collateral and detrimental effect on the property rights of surrounding landowners.
             Importantly, this proposition holds true regardless of whether the
condemnation of Appellants’ property was inevitable or imminent. See McCracken

                                        PAM - 6
v. City of Philadelphia, 451 A.2d 1046, 1050 (Pa. Cmwlth. 1982) (“When pre-
condemnation activities, pursuant to a planned prospective public improvement,
result in the loss of tenants, or the inability to obtain a building permit, or any other
adverse interim consequence which deprives an owner of the use and enjoyment of
the property, such activities will constitute a de facto taking. Even in the absence of
the imminence of condemnation, we conclude here that these adverse interim
consequences, depriving [landowner] of the same use and enjoyment of his property,
constituted a de facto taking.”) (internal citations and quotation marks omitted).
Here, in their petitions, Appellants have sufficiently alleged in paragraphs 49, 59,
65, and 68 that UGI intentionally created the buffer zone, via a FERC Certificate
and acquisition of adjacent properties under the NGA, to ensure that gas producers
would not extract or “capture” natural gas through fracking. Appellants have also
averred that, as a direct result of UGI’s conduct, they have sustained harm to their
property because they have been effectively deprived of their possessory interests in
the subsurface mineral rights. See Reproduced Record (R.R.) at 16a-21a.
             As I previously expressed in a dissenting opinion in this case:

             [UGI] has already obtained certification from [FERC] to
             utilize and devote a substantial portion of a “buffer zone”
             to protect its natural gas interests and storage field
             boundary. [Appellants] are quarantined in a small part of
             the “buffer zone.”
             ....

             Despite the fact that UGI has not received certification
             from FERC to obtain [Appellants’] 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. [Appellants] 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
             [Appellants’] subsurface mineral rights would discover
                                       PAM - 7
             through the exercise of due diligence that UGI has [a
             FERC Certificate]. It should come as no surprise, then,
             that [Appellants] have asserted a de 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.

             Accepting the allegations in [Appellants’] petitions as
             true, I would conclude that they are sufficient to entitle
             [Appellants] to the appointment of viewers and that the
             [court of common pleas] 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 [Appellants’] claims and any
             factual issues related thereto.
Hughes v. UGI Storage Co. (Pa. Cmwlth., Nos. 629 and 630 C.D. 2016, filed March
13, 2017) (unreported) (McCullough, J., dissenting), slip op. at 2-4 (internal citations
omitted).
             Upon review and consideration, I am not convinced that anything has
occurred on remand following our decision in 2017, or during this second round of
appeal, that could alter the position that I have previously taken. Hence, I continue
to adhere to it today and, for the reasons stated above, respectfully dissent.

                                            ________________________________
                                            PATRICIA A. McCULLOUGH, Judge

President Judge Leavitt joins in this dissent.

                                       PAM - 8