United States District Court, W.D. Virginia, Roanoke Division
MEMORANDUM OPINION AND ORDER
ELIZABETH K. DILLON, UNITED STATES DISTRICT JUDGE
By
opinion and order entered January 31, 2018, the court
conditionally granted plaintiff Mountain Valley Pipeline,
LLC's (MVP) motion for immediate possession. As to nine
properties for which the court had appraisals, MVP was
directed to comply with the court's directives regarding
posting security and providing draft orders granting
immediate possession, which it has now done. The deadline for
filing objections to the last of those orders, and all other
orders submitted by MVP as to all properties, is March 2,
2018. By separate order, the court will address any
objections to MVP's proposed orders.
As to
the Remaining Properties (which term the court uses in this
order to mean all of the properties named in the amended
complaint, except for the nine and except for any properties
that have been dismissed), the court's order was
“conditioned on MVP's first presenting sufficient
additional evidence that satisfies the constitutional
requirements” referenced in the court's memorandum
opinion. (Dkt. No. 140 at 5.) In an attempt to satisfy this
condition, MVP has submitted, on a rolling basis, appraisals
of all of the Remaining Properties. The court permitted
defendants to file responses to those appraisals, and
objections have been filed relating to nearly all of the
appraisals. MVP has also filed a response to many of the
objections (Dkt. No. 468), and defendants filed a reply (Dkt.
No. 478). The court has reviewed and considered all of the
submissions.
The
appraisals submitted by MVP were prepared and signed by
appraisers from the same firm, Miller, Long, &
Associates, that prepared the first nine appraisals accepted
by the court as satisfactory to meet constitutional mandates,
when coupled with the multiplier applied by the court.
Defendants acknowledge this fact, but they contend that the
appraisals here “stand in stark contrast” to
(see, e.g., Dkt. No. 425 at 3), and are even less
thorough than, those first nine appraisals, which defendants
also challenged. They repeatedly assert that the appraisals
are so unreliable that the court cannot rely on them to
conclude that there is “reasonable, certain, and
adequate provision” for the landowners to obtain
compensation, Cherokee Nation v. S. Kansas Ry. Co.,
135 U.S. 641, 659 (1890), or to set adequate security.
Defendants
object to the appraisals on numerous grounds, including that
the appraisers failed to inspect properties, to value
improvements, and to consult with landowners. They also
contend that the appraisals failed to value the entire
property before and the entire residue after the proposed
acquisition, which MVP acknowledged in its discovery
responses is the proper way to calculate just compensation in
this federal condemnation proceeding. They point out that the
appraisals themselves state they are not intended for
litigation use and thus should not be used. They further
claim that the appraisals do not meet the requirements of the
Uniform Standards of Professional Appraisal
Practice, The Appraisal Foundation (2018-2019), or the
Uniform Standards for Federal Land Acquisitions, also known
as the Yellow Book, and that the appraisers did not follow
the policies set forth in 42 U.S.C. § 4651. As to a
number of properties, they object on the grounds that the
appraiser failed to do a proper “highest and best use
analysis” for the site, or failed to undertake an
appropriate “larger parcel” or “unity of
use” analysis. They also assert that many of the
appraisals, which by all accounts were hastily prepared, are
riddled with errors that make them so unreliable that the
court cannot consider them. Numerous defendants have pointed
out specific errors in the appraisals relating to their
specific property. These include, for example, supposed
errors in acreage and zoning, inconsistencies within the
reports regarding whether and from where a property was
viewed, incorrect descriptions of features of the property,
and a failure to use proper comparable sales.[1]
Similar
to the response to the first nine appraisals, none of the
defendants offer their own appraisals. A small group of
property owners offer an alternative measure of value, but
those values are merely bald assertions-for the most part,
there is no explanation as to how they were reached or upon
what those figures were based. (See Dkt. Nos. 421,
427-31, 434, 439-40, 442, 444-45, 470-72, 451-55, 457-60,
467, 474, 475.) Thus, the court will not use those offered
amounts to set security here. Of course, at the just
compensation phase of this case, the landowners may present
whatever evidence they believe is relevant to establishing
the final amount of just compensation.
The
court has carefully reviewed the objections to the
appraisals, and at least some of them appear to be
well-founded. Indeed, the court shares the defendants'
concerns that there are certain appraisals with significant
errors that likely led to an inaccurate appraisal amount. But
the court cannot say that the appraisals are so inherently
unreliable that they cannot be used, in conjunction with the
court's multiplier, to provide adequate assurances that
just compensation will be made at the conclusion of the case.
See Cherokee Nation, 135 U.S. at 659.
Now is
not the time to determine the precise amount of just
compensation or to determine with certainty the accuracy of
MVP's estimated amounts; that must be done after any
desired discovery and a trial or other proceeding at which
both MVP and the affected landowner for each easement may
present evidence as to the proper amount of just
compensation. The court simply cannot determine a precise or
100% accurate figure for just compensation on the record
before it, nor is it required to do so in order to find
Cherokee Nation satisfied. Instead, MVP need only
present evidence from which the court can be satisfied that
an adequate process is in place to assure that the landowners
will receive just compensation at the conclusion of the case.
Mountain Valley Pipeline, LLC v. An Easement to
Construct, Operate and Maintain a 42-Inch Gas Transmission
Line, No. 2:17-cv-04214, 2018 WL 1004745, at *12 (S.D.
W.Va. Feb. 21, 2018) (describing the information before it as
sufficient because “the court has a baseline against
which to properly fix the amount of the deposit that Mountain
Valley must provide prior to taking possession”);
Mountain Valley Pipeline, LLC v. Simmons, No.
1:17-cv-211, 2018 WL 701297, at *10 (N.D. W.Va. Feb. 2, 2018)
(noting that “[w]ithout the benefit of a trial on just
compensation, it is impossible for the Court to fix the bond
at precisely the correct amount”). As another judge
dealing with a different part of MVP's pipeline noted in
response to similar arguments: “The landowners would
have just compensation fully litigated prior to the issuance
of the preliminary injunction. Of course, doing so would
defeat the purpose of immediate relief.” Mountain
Valley Pipeline, LLC v. An Easement to Construct, Operate and
Maintain a 42-Inch Gas Transmission Line, No.
2:17-cv-04214, 2018 WL 1004745, at *11.
Just as
this court did with the first nine properties, this court is
not requiring a deposit of only the appraised
amounts. Instead, the court will require security in the
amount of five times MVP's appraised values, in the form
of three times the value for a deposit and two times the
value for a bond. Furthermore, the court has required for the
first nine properties, and will require for the Remaining
Properties, that each bond be conditioned on MVP's
payment of just compensation on all properties. This, coupled
with the multiplier imposed by the court, is sufficient to
assure just compensation and satisfy the mandates of
Cherokee Nation. See, e.g., Columbia
Gas Transmission, LLC v. 252.071 Acres More or Less, No.
15-cv-3462, 2016 WL 1248670, at *18-19 (D. Md. Mar. 25, 2016)
(requiring both a deposit and a bond to ensure sufficient
security); Tex. E. Transmission, LP v. 3.2 Acres
Permanent Easement, No. 2:14-cv-2650(L), 2015 WL 152680,
at *8 (S.D. Ohio Jan. 12, 2015) (same); N. Nat. Gas Co.
v. Approximately 9117.53 Acres, No. 10-cv-1232, 2012 WL
859728, at *10-11, 14 (D. Kan. Mar. 13, 2012) (same).
It is
worth noting that the other two courts presiding over
MVP's condemnation proceedings have also accepted
appraisals challenged on similar grounds, used them as a
baseline amount for security, and then ordered a multiplier
to assure just compensation. See Mountain Valley
Pipeline, LLC v. An Easement to Construct, Operate, and
Maintain 42-Inch Gas Transmission Line, No.
2:17-cv-04214, 2018 WL 1004745, at *11-12 (requiring four
times MVP's appraised amount as a deposit and a bond in
two times the appraised amount because the court was not
“satisfied” with the estimation amount and did
not believe that a deposit of only that amount would ensure
that just compensation would be paid); Mountain Valley
Pipeline, LLC v. Simmons, No. 1:17-cv-211, 2018 WL
701297, at *10, 19-20 (concluding that the same multiplier as
the court is imposing here fully protected against any
deficiencies in the appraisals).
In
Sage, the court noted that adequate assurance of
just compensation also included the fact that, if the
security were short, the pipeline company would “be
able to make up the difference” and could be sued by
any aggrieved parties. E. Tenn. Nat. Gas Co. v.
Sage, 361 F.3d 808, 824 (4th Cir. 2004). Here, although
the court has no information about MVP's financial
strength because it upheld MVP's objections to providing
that information in discovery, there is some information in
the record supporting MVP's contention that the
defendants will be able to recover from them any deficiency.
Specifically, the MVP Project has a total budget of $3.7
billion (Day 1 Hr'g Tr. 141, Dkt. No. 300), and FERC has
concluded that MVP is “prepared to financially support
the project.” (Dkt. No. 1-1, at 12.) This is some
additional assurance that there will be sufficient assets to
ensure the landowners receive just compensation.
For the
reasons set forth above, the objections filed by defendants
are hereby OVERRULED WITHOUT PREJUDICE to their ability to
challenge the appraisals at the just compensation phase of
the case, and MVP's motion for immediate possession is
GRANTED upon the posting of the required security and the
court's entry of separate orders as to each property.
Upon
posting of the security ordered herein, the court will enter
an order as to each property granting such possession. The
court notes that MVP has already submitted proposed orders
granting MVP the immediate right of entry for ...