On December 7, 2018, the United States Court of Appeals for the Sixth Circuit (“Sixth Circuit”) affirmed the United States District Court for the Northern District of Ohio’s (“District Court”) granting of a preliminary injunction to Nexus Gas Transmission, LLC (“Nexus”). The preliminary injunction will allow Nexus to exercise the right of eminent domain under the Natural Gas Act (“NGA”) to build an interstate natural gas pipeline through parts of Ohio and Michigan. The Sixth Circuit held that the District Court did not abuse its discretion in balancing the preliminary injunction factors and in refusing to allow an evidentiary hearing on the issue.
In November 2015, Nexus requested that FERC authorize the company to build an interstate natural gas pipeline through parts of Ohio and Michigan, including a 1.4-acre tract of land on the properties of John Selzer, Elaine Selzer, and Judy Jane Hamrick (collectively, the “Landowners”). After a lengthy notice and comment period, FERC issued a certificate of public convenience and necessity under the NGA, enabling Nexus to exercise the right of eminent domain to condemn the properties of any affected land owners that refuse to voluntarily grant easements. While Nexus negotiated voluntary easements with most landowners in the path of the pipeline, several dozen, including the Landowners, refused to give easements to Nexus. After Nexus filed an eminent domain action in the District Court in October 2017, all remaining property owners—except Landowners—settled or provided immediate access to their land. In December 2017, the District Court found that Nexus had successfully established its right to condemn Landowners’ property under the NGA. After Landowners and Nexus could not reach a settlement as to compensation, in April 2018, the District Court, without an evidentiary hearing, ordered Landowners to provide immediate access to their property. Landowners appealed the District Court’s April 2018 decision.
On appeal, the Sixth Circuit emphasized that the lower court decision could be overturned only if the District Court abused its discretion in weighing the four factors necessary for deciding whether to grant the preliminary injunction: (1) whether Nexus had a strong likelihood of succeeding on the merits of the issue; (2) whether Nexus would suffer irreparable harm without the preliminary injunction; (3) whether the injunction would cause serious harm to others; and (4) whether the public interest would be served if the injunction were in place.
Upon determining that the District Court did not abuse its discretion in weighing the relevant factors, the Sixth Circuit affirmed the District Court’s decision. First, the Sixth Circuit explained that the District Court did not abuse its discretion in deciding that Nexus had a strong likelihood of winning on the merits. Nexus possessed a FERC certificate of public convenience and necessity, the tract of land at issue was necessary for the pipeline’s construction, and the company was unable to negotiate a voluntary easement with Landowners—all of which are necessary elements for exercising eminent domain under the NGA. Second, the Sixth Circuit agreed that Nexus would suffer irreparable harm without the injunction, as building around the Landowners’ property would cost approximately $553,000 and Nexus could lose an additional $800,000 per day to retain its construction crew throughout any delays. Third, the Sixth Circuit determined that the District Court appropriately considered the Landowners’ allegations that an injunction would deprive them of rent income and force them to continue paying property taxes. Such economic harms are fully compensable, the Sixth Circuit noted, and thus, the District Court reasonably decided that the balance of harms tipped in favor of Nexus. Fourth, on the question of whether an injunction was in the public interest, the Sixth Circuit determined that the District Court correctly deferred to FERC’s “carefully considered” 90-page order granting Nexus a certificate of public convenience, noting that “[d]istrict courts may reasonably credit the findings” of such reports.
The Sixth Circuit also determined that the District Court did not abuse its discretion when it decided not to conduct additional discovery or permit an evidentiary hearing. As the Sixth Circuit explained, “[w]here material facts are not in dispute, or where facts in dispute are not material to the preliminary injunction sought, district courts generally need not hold an evidentiary hearing.” According to the Sixth Circuit, the Landowners did not explain “what material facts disputes related to the pipeline’s effect on the public interest,” there was no “material factual dispute related to the expenses Nexus would incur without an injunction,” and the record demonstrated that Nexus would face “significant” financial exposure if it continued to face delays in the construction process.
The Sixth Circuit’s decision can be found here.