Commonwealth Court of Pennsylvania Vacates Trial Court Order Dismissing De Facto Takings Case

On March 13, 2017, an en banc panel of the Commonwealth Court of Pennsylvania issued an opinion that reversed an order issued by a trial court that had dismissed a de facto takings case brought on behalf of property owners represented by C&T. These plaintiffs own property in Tioga County, Pennsylvania which they allege was subject to a de facto taking by UGI Storage Company (“UGI”). According to the complaint, the taking occurred as a result of UGI’s application with the Federal Energy Regulatory Commission (“FERC”) to, among other things, take ownership and to operate the Meeker Storage Field – an underground natural gas storage facility – and create a 3,000 foot protective buffer zone around this storage area.  The buffer zone, which encompasses some 2,980 acres, is designed to prohibit fracking and drilling operations that could come too close to UGI’s underground storage areas and jeopardize storage operations.  The plaintiffs allege they were injured as a result of the FERC application and subsequent FERC Order because they effectively prohibit fracking from occurring on or under their properties. The plaintiffs in these lawsuits allege that UGI has not provided required notice to property owners about its proposed buffer zone, or provided them with just compensation for this property deprivation.

The trial court dismissed the lawsuit on the grounds that UGI did not have the power of eminent domain with respect to properties within the buffer zone. On appeal, the majority opinion found that UGI “has 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.” The trial court’s order dismissing the case was vacated, and the case remanded with instructions for the trial court to conduct an evidentiary hearing in light of two recently decided eminent domain cases.

One of the Commonwealth Court judges wrote a dissenting opinion which found that the “class-action plaintiffs are isolated on an island in a ‘buffer zone’ in which oil and gas drilling cannot occur.”

An article about the Commonwealth Court opinion is linked here [LAW360], and a copy of the court’s opinion can be viewed below.