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WBI Energy Transmissions, Inc. v. Subsurface Easements for Storage of Natural Gas

United States District Court, D. Montana, Billings Division

July 8, 2019

WBI ENERGY TRANSMISSION, INC., Plaintiff,
v.
SUBSURFACE EASEMENTS FOR THE STORAGE OF NATURAL GAS IN THE JUDITH RIVER SUBTERRANEAN GEOLOGICAL FORMATION, et al., Defendants.

          FINDINGS AND RECOMMENDATION OF U.S. MAGISTRATE JUDGE

          TIMOTHY J. CAVAN, UNITED STATES MAGISTRATE JUDGE

         Plaintiff WBI Energy Transmission, Inc. (“WBI”) brings this action for condemnation under the Natural Gas Act, 15 U.S.C. § 717-717z, to acquire natural gas storage easements in the Cedar Creek (Baker) Storage Field (“Baker Storage Field”). (Doc. 1.) Defendants Nicole L. Adamson, Trey Adamson, LLC, Batterman Properties, LLC, Erna Greenlee, Kelly J. Heiser, Angela K. Heiser, Wei Jun Li, Shao Hua Kuang, Dora G. Leyba, William B. Nelson, Straub Heating & Cooling, LLC, and Ellen C. Dockter (the “Counterclaim Landowners”) have brought counterclaims for trespass, unjust enrichment, and inverse condemnation. (Doc. 23.)

         Presently before the Court is WBI's Motion to Strike, or in the Alternative, Dismiss the Counterclaims. (Doc. 37.) The motion has been referred to the undersigned under 28 U.S.C. § 636(b)(1)(B), and is fully briefed and ripe for the Court's review. (Docs. 38, 50, 52.)

         Having considered the parties' submissions, the Court RECOMMENDS WBI's motion be GRANTED.

         I. BACKGROUND

         The Baker Storage Field is located in Fallon County, Montana, and has been continuously operated as a federally certified natural gas storage field since the 1940's. The Federal Power Commission, the predecessor to the Federal Energy Regulatory Commission (“FERC”), originally certified the Baker Storage Field and determined that its operation was a matter of public convenience and necessity in 1946. In 1985, the FERC issued WBI a Certificate of Public Convenience and Necessity to operate the natural gas facilities at the Baker Storage Field. At that time, WBI obtained rights to operate the Baker Storage Field from the fee and mineral rights owners of the properties included in the storage field.[1]

         In 2011, however, the Montana Supreme Court held that the surface owner owns the pore space and rights to subsurface storage of natural gas. See Burlington Res. Oil & Gas Co. v. Lang and Sons Inc., 259 P.3d 766 (Mont. 2011). Due to the change in the law, WBI began working to acquire subsurface storage easements from the surface owners of the properties in the Baker Storage Field. WBI reports that it was able to acquire 99% of the easements by agreement. For the remaining properties, including those owned by the Counterclaim Landowners, WBI filed this action to condemn the natural gas storage easements.

         After the Complaint was filed, two of the Counterclaim Landowners, Angela K. Heiser and Kelly J. Heiser (“the Heisers”), executed an easement on July 3, 2018, granting to WBI the subsurface storage rights condemned in the Complaint. (Doc. 38-1.) As a result, the Heisers were dismissed from this case on July 13, 2018. (See Doc. 13.)

         On August 9, 2018, the Counterclaim Landowners filed an Answer and Counterclaim. (Doc. 23.) The Counterclaim Landowners do not contest WBI's authority to condemn the natural gas storage easements. Rather, the Counterclaim Landowners seek damages for trespass, unjust enrichment and inverse condemnation for the time between 1985 - when WBI began storing natural gas in their pore space - until this condemnation action was filed.

         II. DISCUSSION

         WBI now moves to strike the counterclaims on grounds that Federal Rule of Civil Procedure 71.1 does not permit counterclaims to be asserted in a condemnation action. WBI also argues the claims by the Heisers should be stricken because they signed an easement conveying storage rights to WBI prior to the filing of the Answer and Counterclaim. In the alternative, WBI argues the counterclaims should be dismissed because (1) the trespass and unjust enrichment claims are preempted; (2) the inverse condemnation claim is unnecessary; and (3) the counterclaims are an impermissible collateral attack on WBI's FERC Certificate. The Counterclaim Landowners assert their counterclaims should be allowed because they are not presented in opposition to the condemnation or to challenge WBI's FERC Certificate, but are rather related to actions pre-dating condemnation.

         A. The Heisers' Answer and Counterclaim Should be Stricken

         The Counterclaim Landowners concede that the Heisers should be removed from this action. In light of the fact the Heisers executed an easement with WBI and were dismissed from this case prior to the date the Answer and Counterclaim was filed, WBI's motion to strike should be granted as to these defendants.

         B. The Counterclaims ...


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