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Oil and Gas Update

Virginia Supreme Court Largely Affirms Right of Pipeline to Conduct Property Surveys and Examinations without Landowner Approval

August 2, 2017

By: Robert G. McLusky

The Virginia Supreme Court issued two opinions on July 13, 2017, addressing the rights of pipelines to survey property without landowner permission. In the first, Chaffins v. Atlantic Coast Pipeline, LLC, the Court considered what constitutes adequate prior notice by a pipeline company to gain access for surveys and property evaluation in the absence of landowner approval. In the second, Palmer v. Atlantic Coast Pipeline, LLC, the Court considered whether a company organized under the laws of a state other than Virginia is empowered to utilize Virginia state law to gain access to the property of unconsenting landowners to survey or examine property. We have written about this issue before in the context of cases throughout the region.

Chaffins: Court Clarifies Requirements for Advance Notice to Landowners—Only Temporary Victory for Landowner

Virginia statutes establish a mechanism for natural gas companies to gain access to properties for conducting surveys, examinations, appraisals and tests without the written permission of the landowner. The procedure requires: First, that the gas company send a written request by certified mail to the landowner seeking permission to access the property. The request shall “set forth the date such inspection is proposed to be made” and must be made at least 15 days prior to the proposed date of inspection. Second, if permission is not granted prior to the proposed entry date, then the company must send a “notice of intent to enter” by certified mail and again set forth “the date of the intended entry,” again at least 15 days prior to that date.

Here, The Court ruled that the first effort by Atlantic Coast Pipeline LLC (ACP) was deficient because its notice of intent to enter, issued after permission was refused by the Chaffins, did not provide a date certain for the intended entry. Instead, the notice provided that ACP intended to enter their properties “on or after” a date certain. This notice, the Court ruled, violated the obligation to provide notice of “the date of the intended entry.” Apparently, ACP had since provided a new notice to the Chaffins, but the Court declined to dismiss the case as moot because ACP continued to argue that its original notice was not deficient. In any event, the Chaffins victory provides them with no real measure of relief.

Palmer: Court Rejects Claim that Virginia Statute Grants Access Only to Virginia-Organized Companies and Declines to Rule on Constitutional Challenge as Untimely

In the second case, the Court was presented with two challenges to the authority of “foreign” companies to use Virginia law for gaining access to private property for pipeline-related surveys and examinations. ACP, owned in part by Virginia-based Dominion Energy, is organized under the laws of Delaware. First, Palmer argued that the statute giving “any firm, corporation, company or partnership, organized for the … purpose of operating as a natural gas company” limits the right of access to “domestic” gas companies because the provision is placed in a statutory title limited to “[Virginia] public service companies.” Had the General Assembly intended to grant the authority to other companies, argued Palmer, it would have been located in a statutory title expounding the authorities of corporations generally. The Supreme Court rejected this argument, noting that the statute at issue granted its entry for survey authority to “[a]ny … corporation” organized as natural gas company.

Palmer, though, offered a second argument that foreign-organized companies cannot use the Virginia right of access provisions. She argued that to construe the statute as allowing non-Virginia organized companies a right of access created an impermissible conflict with Article IX, §5 of the Virginia Constitution. That provision states that “[n]o foreign corporation shall be authorized to carry on in this Commonwealth the business of, or to exercise any of the powers or functions of, a public service enterprise.” The Court, however, declined to address the argument because Palmer’s counsel did not raise it in the trial court and did not properly present it in Palmer’s opening appeal brief. Instead, her counsel sought to preserve the argument with a simple reference in the opening brief, explaining that he thought the argument was a “silver bullet” that he intended to explain in detail only in a reply brief after seeing the arguments of ACP. As a result, the argument remains available for others to advance.

Lastly, the Court considered and rejected several other arguments by Palmer that her Constitutionally protected private property rights included the right to exclude access to her property, notwithstanding statutory provisions granting gas companies a right of access. The Court observed that the common law has long recognized that the right to exclude is “not absolute” and does not allow Palmer to exclude ACP.

This article was authored by Robert G. McLusky, Jackson Kelly PLLC.

 

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