Louisiana Federal Court Allows Injunctive Relief Under FERC Certificate of Public Convenience and Necessity

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Resistance was futile for defendants opposing a temporary injunction sought by a party armed with a FERC Certificate of Public Convenience and Necessity that includes condemnation rights under the Natural Gas Act. In Venture Global Gator Express v. Land et al., Venture Global sought to condemn land in Plaquemines Parish, Louisiana, and a preliminary injunction for immediate possession of the property.

The NGA requires that the party seeking to condemn be unable to acquire the property by contract or unable to agree on compensation to be paid. Defendants, Capt. Zack’s Myrtle Grove Properties and ESB Louisiana Opportunities (who held an Option to acquire certain rights) challenged the characterization of a portion of the proposed servitude as temporary instead of permanent and accused Venture Global of not negotiating in good faith.

The right to condemn

Defendants insisted that Venture Global was really seeking a permanent servitude because the rights it sought involved the right to do things that would necessarily require future use of the property. The court declined to “take a deep dive into Louisiana property law” but cited two Civil Code articles:

  • 744: The owner of the dominant estate has the right to make at his expense all the works are necessary for the use and preservation of the servitude.
  • 745: The owner of the dominant estate has the right to enter with his workman and equipment into the part of the servient estate that is needed for the construction or repair of works required for the use and preservation of the servitude.

The Court noted that although the articles seem to call for a written contract, they provide the most basic rights of dominant estate holders under Louisiana servitude law. The so-called permanent rights are simply a more specific recitation of the rights of the dominant estate holder.

Defendants’ claim that Venture Global did not negotiate in good faith was based entirely around its knowledge or not of the Option Agreement, which was not recorded until five months after Venture Global’s expropriation demand to Captain Zacks. Venture Global was entitled to rely on the public records of Plaquemines Parish in which the Option was nowhere to be found. Venture Global negotiated in good faith with Captain Zack when, without knowledge of the Option, it made a bona fide effort to obtain the property by conventional agreement prior to filing suit.

Right to an injunction

Because Venture Global held a federal certificate, Federal Rule of Civil Procedure 71.1 supplanted Louisiana statutes regarding injunctions. Venture Global alleged that it would suffer irreparable harm if the road were not completed by the certificate deadline, because if the injunction was denied several millions of dollars of expenditures would be lost. Purely speculative and monetary losses are not typically considered irreparable harm for the purposes of injunctive relief, but in condemnation a victorious plaintiff does not receive compensation for injuries suffered by delays in access to the property.

On the right to injunctive relief, the court ruled:

  • Venture Global’s deadlines were not the result of its own bad faith and lack of action,
  • The case involved a significant public interest,
  • The harm to Venture Global if the injunction was not issued outweighed the monetary interest of the defendants, and
  • The pipeline did not disserve the public interest.

Preliminary injunction granted. Compensation to be paid to the defendants will be decided at a trial.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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