We’ve had a chance to review the Judge’s ruling in the case we reported on this morning. So we’re now in a position to offer some details. But in order for it all to make sense, you need to know a little bit about “condemnation”– or “eminent domain” (we’ll use those terms interchangeably)– and how it works. We’ll try to keep that explanation brief:
Prior to all this Enbridge business, we, like most people, always thought that eminent domain meant that some entity could just come along and take your house away from you. But that’s not really how it works. The entity– in this case Enbridge– doesn’t just get to take your house away. They just get access to whatever portion of your property they need to use. And they still have to compensate you for that use. So what happens (legally, I mean) is this: if some party–let’s call them the Joneses– fails to reach an agreement for Enbridge’s use of the land, Enbridge has to make the Joneses a final “good faith” offer, at which point they can serve them with a condemnation notice, which is really just a lawsuit. At that point, the Joneses have a fixed number of days to challenge the “necessity” of the the suit, or “taking”– that is, the Joneses could make some kind of argument saying that Enbridge has no right to take it or that they don’t need to take it. Generally, there’s not much chance a landowner will win on that score. So let’s say Enbridge wins that. At that point, the proceedings move on to the compensation phase, in which a mediator or judge or a jury decides what is fair compensation to the Joneses for the taking and use and any damages.
That’s condemnation in a nutshell (I trust that my attorney friends will correct anything I got wrong!). Now here’s a rundown of the case that was dismissed this morning:
Back in July, Enbridge filed a complaint in Circuit Court (that is, they initiated a condemnation suit) against landowners in Brandon Township seeking to “take” a portion of their land under the authority granted them by the MPSC when it approved the Line 6B project. They made their final offer and deposited it, as required, and sought relief from the Court.
The defendants in the case– let’s call them the Smiths (this is public information, but we have not spoken to them so there’s no reason to use their real names)–hired some very smart attorneys. Those attorneys made two arguments in response to Enbridge’s suit:
First, they argued that Enbridge did not have the right to condemn the Smiths property in order to construct a “crude oil pipeline.” Enbridge, they said, claims the authority to condemn under the Michigan Crude Oil and Petroleum Act. However, that Act, the Smiths’ attorneys argued does not allow for eminent domain for crude oil pipelines. That is, the Act only explicitly grants condemnation authority for “petroleum” and says nothing about “crude oil.” And since Enbridge was granted MPSC approval to ship “crude oil”– not petroleum– they therefore do not have the authority to condemn. In our opinion, the Smiths’ attorneys make an exceedingly subtle argument here based on a very fine (maybe too fine!) distinction between petroleum and crude oil, insisting that the two can (or should) be distinguished.
Now I confess that I am pretty fond of ingenious arguments of this sort (ask me some time about the 1819 case in New York City that turned on the surprisingly complicated question of whether a whale is a fish), but I don’t think it ever had much of a chance of holding up. And sure enough, the Judge rejected it on the simple grounds that “petroleum is a broad term that includes crude oil.”
It was the second argument the Smiths’ attorneys made that carried the day. Here, they argued that Enbridge’s proposed taking goes beyond what was allowed by MPSC approval. Enbridge applied to the MPSC– successfully– to operate a “crude oil and petroleum pipeline.” However, in their letter to the Smiths in which they tendered their final “good faith” offer, Enbridge said they needed access to the Smiths’ property to build and operate a pipeline “for the transportation of crude petroleum, and any product, by-product and derivateives thereof, whether liquid or gaseous, or any material or substance that could be conveyed through a pipeline” (italics mine). That last italicized part is the problem. You see, the MPSC did NOT approve an application for Enbridge to ship just any old thing imaginable through that pipeline, which is what their letter claims.
In other words, Enbridge over-reached. They were given a cookie, but they tried to take the whole jar. And they got caught. As the Judge said in his ruling:
By including the broad phrase, “or any material or substance that could be conveyed through a pipeline,” Plaintiff [Enbridge] seeks to impermissibly expand the right granted by the MPSC– which limited Plaintiff’s approval to operation of a crude oil and petroleum pipeline.”
Therefore, the Judge ruled that Enbridge’s offer was not, in fact, made in “good faith.” Therefore “absent a good faith offer,” no condemnation proceedings can take place. Case dismissed.
We plan to think through the implications of this ruling more in the next couple of days. Aside aside from the obvious good news for the Smiths (and the other landowners who received the over-reaching letter from Enbridge), we suspect it might well bear upon some of the other issues we’ve been thinking and talking about here over the past month or so. But that will require some more cogitation. For now, we’ll just note that this matter provides yet another illustration of how Enbridge conducts its business: not, openly and honestly as they profess, but in such a way as to see just how much they can get away with.